UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 10-Q
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended
June 30, 2016
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
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For the transition period from to
Commission File Number: 001-35568 (Healthcare Trust of America, Inc.)
Commission File Number: 333-190916 (Healthcare Trust of America Holdings, LP)
_________________________
HEALTHCARE TRUST OF AMERICA, INC.
HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
(Exact name of registrant as specified in its charter)
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Maryland (Healthcare Trust of America, Inc.)
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20-4738467
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Delaware (Healthcare Trust of America Holdings, LP)
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20-4738347
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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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16435 N. Scottsdale Road, Suite 320
Scottsdale, Arizona 85254
(Address of principal executive offices)
(480) 998-3478
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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Healthcare Trust of America, Inc.
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x
Yes
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¨
No
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Healthcare Trust of America Holdings, LP
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x
Yes
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¨
No
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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
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Healthcare Trust of America, Inc.
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x
Yes
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¨
No
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Healthcare Trust of America Holdings, LP
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x
Yes
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¨
No
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Healthcare Trust of America, Inc.
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Large-accelerated filer
x
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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(Do not check if a smaller reporting company)
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Healthcare Trust of America Holdings, LP
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Large-accelerated filer
¨
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Accelerated filer
¨
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Non-accelerated filer
x
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Smaller reporting company
¨
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(Do not check if a smaller reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
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Healthcare Trust of America, Inc.
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¨
Yes
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x
No
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Healthcare Trust of America Holdings, LP
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¨
Yes
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x
No
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As of
July 27, 2016
, there were
137,942,553
shares of Class A common stock
of Healthcare Trust of America, Inc. outstanding.
Explanatory Note
This Quarterly Report combines the Quarterly Reports on Form 10-Q (“Quarterly Report”) for the quarter ended
June 30, 2016
of Healthcare Trust of America, Inc. (“HTA”), a Maryland corporation, and Healthcare Trust of America Holdings, LP (“
HTALP
”), a Delaware limited partnership. Unless otherwise indicated or unless the context requires otherwise, all references in this Quarterly Report to “we,” “us,” “our,” “the Company” or “our Company” refer to HTA and
HTALP
, collectively, and all references to “common stock” shall refer to the Class A common stock of HTA.
HTA operates as a real estate investment trust (“REIT”) and is the general partner of
HTALP
. As of
June 30, 2016
, HTA owned a
96.9%
partnership interest in
HTALP
, and other limited partners, including some of HTA’s directors, executive officers and their affiliates, owned the remaining partnership interest (including the long-term incentive plan (“LTIP”) units) in
HTALP
. As the sole general partner of
HTALP
, HTA has the full, exclusive and complete responsibility for
HTALP
’s day-to-day management and control, including its compliance with the Securities and Exchange Commission (“SEC”) filing requirements.
We believe it is important to understand the few differences between HTA and
HTALP
in the context of how we operate as an integrated consolidated company. HTA operates in an umbrella partnership REIT structure in which
HTALP
and its subsidiaries hold substantially all of the assets. HTA’s only material asset is its ownership of partnership interests of
HTALP
. As a result, HTA does not conduct business itself, other than acting as the sole general partner of
HTALP
, issuing public equity from time to time and guaranteeing certain debts of
HTALP
.
HTALP
conducts the operations of the business and issues publicly-traded debt, but has no publicly-traded equity. Except for net proceeds from public equity issuances by HTA, which are generally contributed to
HTALP
in exchange for partnership units of
HTALP
,
HTALP
generates the capital required for the business through its operations and by direct or indirect incurrence of indebtedness or through the issuance of its partnership units.
Noncontrolling interests, stockholders’ equity and partners’ capital are the primary areas of difference between the condensed consolidated financial statements of HTA and
HTALP
. Limited partnership units in
HTALP
are accounted for as partners’ capital in
HTALP
’s condensed consolidated balance sheets and as noncontrolling interest reflected within equity in HTA’s condensed consolidated balance sheets. The differences between HTA’s stockholders’ equity and
HTALP
’s partners’ capital are due to the differences in the equity issued by HTA and
HTALP
, respectively.
The Company believes combining the Quarterly Reports of HTA and
HTALP
, including the notes to the condensed consolidated financial statements, into this single Quarterly Report results in the following benefits:
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•
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enhances stockholders’ understanding of HTA and
HTALP
by enabling stockholders to view the business as a whole in the same manner that management views and operates the business;
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•
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eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure in this Quarterly Report applies to both HTA and
HTALP
; and
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•
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creates time and cost efficiencies through the preparation of a single combined Quarterly Report instead of two separate Quarterly Reports.
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In order to highlight the material differences between HTA and
HTALP
, this Quarterly Report includes sections that separately present and discuss areas that are materially different between HTA and
HTALP
, including:
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•
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the condensed consolidated financial statements;
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•
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certain accompanying notes to the condensed consolidated financial statements, including
Note 7 - Debt
,
Note 9 - Stockholders’ Equity and Partners’ Capital
,
Note 11 - Per Share Data of HTA
and
Note 12 - Per Unit Data of HTALP
;
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•
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the Funds From Operations (“FFO”) and Normalized FFO in Part 1, Item 2 of this Quarterly Report;
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•
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the controls and procedures in Part 1, Item 4 of this Quarterly Report; and
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•
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the certifications of the Chief Executive Officer and the Chief Financial Officer included as Exhibits 31 and 32 to this Quarterly Report.
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In the sections of this Quarterly Report that combine disclosure for HTA and
HTALP
, this Quarterly Report refers to actions or holdings as being actions or holdings of the Company. Although
HTALP
(directly or indirectly through one of its subsidiaries) is generally the entity that enters into contracts, holds assets and issues or incurs debt, management believes this presentation is appropriate for the reasons set forth above and because the business of the Company is a single integrated enterprise operated through
HTALP
.
HEALTHCARE TRUST OF AMERICA, INC. AND
HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
TABLE OF CONTENTS
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Page
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Healthcare Trust of America, Inc.
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Healthcare Trust of America Holdings, LP
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Notes for Healthcare Trust of America, Inc. and Healthcare Trust of America Holdings, LP
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
HEALTHCARE TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
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June 30, 2016
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December 31, 2015
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ASSETS
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Real estate investments:
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Land
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$
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357,602
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$
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303,706
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Building and improvements
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3,240,979
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2,901,157
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Lease intangibles
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459,490
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430,749
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4,058,071
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3,635,612
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Accumulated depreciation and amortization
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(741,186
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)
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(676,144
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)
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Real estate investments, net
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3,316,885
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2,959,468
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Cash and cash equivalents
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8,148
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13,070
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Restricted cash and escrow deposits
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16,268
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15,892
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Receivables and other assets, net
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145,851
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141,703
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Other intangibles, net
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45,137
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42,167
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Total assets
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$
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3,532,289
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$
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3,172,300
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LIABILITIES AND EQUITY
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Liabilities:
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Debt
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$
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1,631,642
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$
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1,590,696
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Accounts payable and accrued liabilities
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90,123
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94,933
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Derivative financial instruments - interest rate swaps
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5,393
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2,370
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Security deposits, prepaid rent and other liabilities
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46,241
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46,295
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Intangible liabilities, net
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37,226
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26,611
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Total liabilities
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1,810,625
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1,760,905
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Commitments and contingencies
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Redeemable noncontrolling interests
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9,462
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4,437
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Equity:
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Preferred stock, $0.01 par value; 200,000,000 shares authorized; none issued and outstanding
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—
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—
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Class A common stock, $0.01 par value; 1,000,000,000 shares authorized; 137,752,741 and 127,026,839 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively
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1,378
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1,270
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Additional paid-in capital
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2,625,269
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2,328,806
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Cumulative dividends in excess of earnings
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(1,006,888
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)
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(950,652
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)
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Total stockholders’ equity
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1,619,759
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1,379,424
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Noncontrolling interests
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92,443
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27,534
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Total equity
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1,712,202
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1,406,958
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Total liabilities and equity
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$
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3,532,289
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$
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3,172,300
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The accompanying notes are an integral part of these condensed consolidated financial statements.
HEALTHCARE TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
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Three Months Ended June 30,
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Six Months Ended June 30,
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2016
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2015
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2016
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2015
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Revenues:
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Rental income
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$
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113,144
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$
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99,243
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$
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220,394
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$
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197,695
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Interest and other operating income
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90
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68
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|
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155
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136
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Total revenues
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113,234
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99,311
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220,549
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197,831
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Expenses:
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Rental
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35,061
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29,237
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68,414
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59,934
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General and administrative
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6,813
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6,224
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13,586
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12,799
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Acquisition-related
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2,062
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1,101
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3,875
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|
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2,458
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Depreciation and amortization
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44,738
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|
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38,066
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|
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82,566
|
|
|
74,661
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Impairment
|
—
|
|
|
1,655
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|
|
—
|
|
|
1,655
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Total expenses
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88,674
|
|
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76,283
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|
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168,441
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151,507
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Income before other income (expense)
|
24,560
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23,028
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52,108
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46,324
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Interest expense:
|
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Interest related to derivative financial instruments
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(659
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)
|
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(820
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)
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(1,304
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)
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(1,375
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)
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(Loss) gain on change in fair value of derivative financial instruments, net
|
(658
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)
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1,314
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(3,450
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)
|
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(696
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)
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Total interest related to derivative financial instruments, including net change in fair value of derivative financial instruments
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(1,317
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)
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494
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(4,754
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)
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(2,071
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)
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Interest related to debt
|
(13,989
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)
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(14,159
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)
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(28,117
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)
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(27,963
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)
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Gain on sale of real estate, net
|
4,212
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|
—
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4,212
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—
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(Loss) gain on extinguishment of debt, net
|
(22
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)
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121
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|
|
(22
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)
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121
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Other income
|
72
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|
|
4
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|
125
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|
|
19
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Net income
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$
|
13,516
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$
|
9,488
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$
|
23,552
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$
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16,430
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Net income attributable to noncontrolling interests
(1)
|
(442
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)
|
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(196
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)
|
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(618
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)
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(334
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)
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Net income attributable to common stockholders
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$
|
13,074
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$
|
9,292
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$
|
22,934
|
|
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$
|
16,096
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Earnings per common share - basic:
|
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Net income attributable to common stockholders
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$
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0.10
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$
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0.07
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$
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0.17
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$
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0.13
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Earnings per common share - diluted:
|
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Net income attributable to common stockholders
|
$
|
0.09
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|
|
$
|
0.07
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|
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$
|
0.17
|
|
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$
|
0.13
|
|
Weighted average common shares outstanding:
|
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Basic
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136,528
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125,194
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132,932
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|
|
125,184
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Diluted
|
140,512
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127,124
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135,876
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127,114
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Dividends declared per common share
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$
|
0.295
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|
$
|
0.290
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|
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$
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0.590
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$
|
0.580
|
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|
|
|
|
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(1) Includes amounts attributable to redeemable noncontrolling interests.
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The accompanying notes are an integral part of these condensed consolidated financial statements.
HEALTHCARE TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In thousands)
(Unaudited)
|
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Class A Common Stock
|
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Additional Paid-In Capital
|
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Cumulative Dividends in Excess of Earnings
|
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Total Stockholders’ Equity
|
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Noncontrolling Interests
|
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Total Equity
|
|
Shares
|
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Amount
|
Balance as of December 31, 2014
|
125,087
|
|
|
$
|
1,251
|
|
|
$
|
2,281,932
|
|
|
$
|
(836,044
|
)
|
|
$
|
1,447,139
|
|
|
$
|
29,282
|
|
|
$
|
1,476,421
|
|
Share-based award transactions, net
|
155
|
|
|
1
|
|
|
3,103
|
|
|
—
|
|
|
3,104
|
|
|
—
|
|
|
3,104
|
|
Repurchase and cancellation of common stock
|
(48
|
)
|
|
—
|
|
|
(1,298
|
)
|
|
—
|
|
|
(1,298
|
)
|
|
—
|
|
|
(1,298
|
)
|
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(72,595
|
)
|
|
(72,595
|
)
|
|
(1,123
|
)
|
|
(73,718
|
)
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
16,096
|
|
|
16,096
|
|
|
277
|
|
|
16,373
|
|
Balance as of June 30, 2015
|
125,194
|
|
|
$
|
1,252
|
|
|
$
|
2,283,737
|
|
|
$
|
(892,543
|
)
|
|
$
|
1,392,446
|
|
|
$
|
28,436
|
|
|
$
|
1,420,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2015
|
127,027
|
|
|
$
|
1,270
|
|
|
$
|
2,328,806
|
|
|
$
|
(950,652
|
)
|
|
$
|
1,379,424
|
|
|
$
|
27,534
|
|
|
$
|
1,406,958
|
|
Issuance of common stock, net
|
10,399
|
|
|
105
|
|
|
291,580
|
|
|
—
|
|
|
291,685
|
|
|
—
|
|
|
291,685
|
|
Issuance of operating partnership units in connection with an acquisition
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
70,754
|
|
|
70,754
|
|
Share-based award transactions, net
|
203
|
|
|
2
|
|
|
3,031
|
|
|
—
|
|
|
3,033
|
|
|
—
|
|
|
3,033
|
|
Repurchase and cancellation of common stock
|
(83
|
)
|
|
(1
|
)
|
|
(2,286
|
)
|
|
—
|
|
|
(2,287
|
)
|
|
—
|
|
|
(2,287
|
)
|
Redemption of noncontrolling interest and other
|
207
|
|
|
2
|
|
|
4,138
|
|
|
—
|
|
|
4,140
|
|
|
(4,598
|
)
|
|
(458
|
)
|
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(79,170
|
)
|
|
(79,170
|
)
|
|
(1,838
|
)
|
|
(81,008
|
)
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
22,934
|
|
|
22,934
|
|
|
591
|
|
|
23,525
|
|
Balance as of June 30, 2016
|
137,753
|
|
|
$
|
1,378
|
|
|
$
|
2,625,269
|
|
|
$
|
(1,006,888
|
)
|
|
$
|
1,619,759
|
|
|
$
|
92,443
|
|
|
$
|
1,712,202
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
HEALTHCARE TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
2016
|
|
2015
|
Cash flows from operating activities:
|
|
|
|
|
Net income
|
|
$
|
23,552
|
|
|
$
|
16,430
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
Depreciation, amortization and other
|
|
81,362
|
|
|
72,905
|
|
Share-based compensation expense
|
|
3,033
|
|
|
3,104
|
|
Bad debt expense
|
|
386
|
|
|
289
|
|
Gain on sale of real estate, net
|
|
(4,212
|
)
|
|
—
|
|
Impairment
|
|
—
|
|
|
1,655
|
|
Loss (gain) on extinguishment of debt, net
|
|
22
|
|
|
(121
|
)
|
Change in fair value of derivative financial instruments
|
|
3,450
|
|
|
696
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
Receivables and other assets, net
|
|
(667
|
)
|
|
(3,885
|
)
|
Accounts payable and accrued liabilities
|
|
(5,983
|
)
|
|
(12,024
|
)
|
Prepaid rent and other liabilities
|
|
(4,543
|
)
|
|
8,117
|
|
Net cash provided by operating activities
|
|
96,400
|
|
|
87,166
|
|
Cash flows from investing activities:
|
|
|
|
|
Investments in real estate
|
|
(336,760
|
)
|
|
(224,345
|
)
|
Proceeds from the sale of real estate
|
|
23,368
|
|
|
—
|
|
Capital expenditures
|
|
(21,826
|
)
|
|
(13,131
|
)
|
Restricted cash, escrow deposits and other assets
|
|
(426
|
)
|
|
4,550
|
|
Net cash used in investing activities
|
|
(335,644
|
)
|
|
(232,926
|
)
|
Cash flows from financing activities:
|
|
|
|
|
Borrowings on unsecured revolving credit facility
|
|
336,000
|
|
|
361,000
|
|
Payments on unsecured revolving credit facility
|
|
(293,000
|
)
|
|
(167,000
|
)
|
Borrowings on unsecured term loans
|
|
—
|
|
|
100,000
|
|
Payments on secured real estate term loan and mortgage loans
|
|
(22,791
|
)
|
|
(67,171
|
)
|
Deferred financing costs
|
|
—
|
|
|
(276
|
)
|
Security deposits
|
|
765
|
|
|
183
|
|
Proceeds from issuance of common stock
|
|
292,984
|
|
|
—
|
|
Repurchase and cancellation of common stock
|
|
(2,287
|
)
|
|
(1,298
|
)
|
Dividends paid
|
|
(76,018
|
)
|
|
(72,584
|
)
|
Distributions paid to noncontrolling interest of limited partners
|
|
(1,331
|
)
|
|
(930
|
)
|
Net cash provided by financing activities
|
|
234,322
|
|
|
151,924
|
|
Net change in cash and cash equivalents
|
|
(4,922
|
)
|
|
6,164
|
|
Cash and cash equivalents - beginning of period
|
|
13,070
|
|
|
10,413
|
|
Cash and cash equivalents - end of period
|
|
$
|
8,148
|
|
|
$
|
16,577
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except unit data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
December 31, 2015
|
ASSETS
|
|
|
|
|
Real estate investments:
|
|
|
|
|
Land
|
|
$
|
357,602
|
|
|
$
|
303,706
|
|
Building and improvements
|
|
3,240,979
|
|
|
2,901,157
|
|
Lease intangibles
|
|
459,490
|
|
|
430,749
|
|
|
|
4,058,071
|
|
|
3,635,612
|
|
Accumulated depreciation and amortization
|
|
(741,186
|
)
|
|
(676,144
|
)
|
Real estate investments, net
|
|
3,316,885
|
|
|
2,959,468
|
|
Cash and cash equivalents
|
|
8,148
|
|
|
13,070
|
|
Restricted cash and escrow deposits
|
|
16,268
|
|
|
15,892
|
|
Receivables and other assets, net
|
|
145,851
|
|
|
141,703
|
|
Other intangibles, net
|
|
45,137
|
|
|
42,167
|
|
Total assets
|
|
$
|
3,532,289
|
|
|
$
|
3,172,300
|
|
LIABILITIES AND PARTNERS’ CAPITAL
|
|
|
|
|
Liabilities:
|
|
|
|
|
Debt
|
|
$
|
1,631,642
|
|
|
$
|
1,590,696
|
|
Accounts payable and accrued liabilities
|
|
90,123
|
|
|
94,933
|
|
Derivative financial instruments - interest rate swaps
|
|
5,393
|
|
|
2,370
|
|
Security deposits, prepaid rent and other liabilities
|
|
46,241
|
|
|
46,295
|
|
Intangible liabilities, net
|
|
37,226
|
|
|
26,611
|
|
Total liabilities
|
|
1,810,625
|
|
|
1,760,905
|
|
Commitments and contingencies
|
|
|
|
|
|
|
Redeemable noncontrolling interests
|
|
9,462
|
|
|
4,437
|
|
Partners’ Capital:
|
|
|
|
|
Limited partners’ capital, 4,343,197 and 1,929,942 units issued and outstanding as of June 30, 2016 and December 31, 2015, respectively
|
|
92,173
|
|
|
27,264
|
|
General partners’ capital, 137,752,741 and 127,026,839 units issued and outstanding as of June 30, 2016 and December 31, 2015, respectively
|
|
1,620,029
|
|
|
1,379,694
|
|
Total partners’ capital
|
|
1,712,202
|
|
|
1,406,958
|
|
Total liabilities and partners’ capital
|
|
$
|
3,532,289
|
|
|
$
|
3,172,300
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenues:
|
|
|
|
|
|
|
|
Rental income
|
$
|
113,144
|
|
|
$
|
99,243
|
|
|
$
|
220,394
|
|
|
$
|
197,695
|
|
Interest and other operating income
|
90
|
|
|
68
|
|
|
155
|
|
|
136
|
|
Total revenues
|
113,234
|
|
|
99,311
|
|
|
220,549
|
|
|
197,831
|
|
Expenses:
|
|
|
|
|
|
|
|
Rental
|
35,061
|
|
|
29,237
|
|
|
68,414
|
|
|
59,934
|
|
General and administrative
|
6,813
|
|
|
6,224
|
|
|
13,586
|
|
|
12,799
|
|
Acquisition-related
|
2,062
|
|
|
1,101
|
|
|
3,875
|
|
|
2,458
|
|
Depreciation and amortization
|
44,738
|
|
|
38,066
|
|
|
82,566
|
|
|
74,661
|
|
Impairment
|
—
|
|
|
1,655
|
|
|
—
|
|
|
1,655
|
|
Total expenses
|
88,674
|
|
|
76,283
|
|
|
168,441
|
|
|
151,507
|
|
Income before other income (expense)
|
24,560
|
|
|
23,028
|
|
|
52,108
|
|
|
46,324
|
|
Interest expense:
|
|
|
|
|
|
|
|
Interest related to derivative financial instruments
|
(659
|
)
|
|
(820
|
)
|
|
(1,304
|
)
|
|
(1,375
|
)
|
(Loss) gain on change in fair value of derivative financial instruments, net
|
(658
|
)
|
|
1,314
|
|
|
(3,450
|
)
|
|
(696
|
)
|
Total interest related to derivative financial instruments, including net change in fair value of derivative financial instruments
|
(1,317
|
)
|
|
494
|
|
|
(4,754
|
)
|
|
(2,071
|
)
|
Interest related to debt
|
(13,989
|
)
|
|
(14,159
|
)
|
|
(28,117
|
)
|
|
(27,963
|
)
|
Gain on sale of real estate, net
|
4,212
|
|
|
—
|
|
|
4,212
|
|
|
—
|
|
(Loss) gain on extinguishment of debt, net
|
(22
|
)
|
|
121
|
|
|
(22
|
)
|
|
121
|
|
Other income
|
72
|
|
|
4
|
|
|
125
|
|
|
19
|
|
Net income
|
$
|
13,516
|
|
|
$
|
9,488
|
|
|
$
|
23,552
|
|
|
$
|
16,430
|
|
Net loss (income) attributable to noncontrolling interests
|
4
|
|
|
(24
|
)
|
|
(27
|
)
|
|
(57
|
)
|
Net income attributable to common unitholders
|
$
|
13,520
|
|
|
$
|
9,464
|
|
|
$
|
23,525
|
|
|
$
|
16,373
|
|
Earnings per common unit - basic:
|
|
|
|
|
|
|
|
Net income attributable to common unitholders
|
$
|
0.10
|
|
|
$
|
0.07
|
|
|
$
|
0.17
|
|
|
$
|
0.13
|
|
Earnings per common unit - diluted:
|
|
|
|
|
|
|
|
Net income attributable to common unitholders
|
$
|
0.10
|
|
|
$
|
0.07
|
|
|
$
|
0.17
|
|
|
$
|
0.13
|
|
Weighted average common units outstanding:
|
|
|
|
|
|
|
|
Basic
|
140,512
|
|
|
127,203
|
|
|
135,877
|
|
|
127,266
|
|
Diluted
|
140,512
|
|
|
127,203
|
|
|
135,877
|
|
|
127,266
|
|
Dividends declared per common unit
|
$
|
0.295
|
|
|
$
|
0.290
|
|
|
$
|
0.590
|
|
|
$
|
0.580
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS
’
CAPITAL
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Partners’ Capital
|
|
Limited Partners’ Capital
|
|
Total Partners’ Capital
|
|
Units
|
|
Amount
|
|
Units
|
|
Amount
|
|
Balance as of December 31, 2014
|
125,087
|
|
|
$
|
1,447,409
|
|
|
2,155
|
|
|
$
|
29,012
|
|
|
$
|
1,476,421
|
|
Share-based award transactions, net
|
155
|
|
|
3,104
|
|
|
(225
|
)
|
|
—
|
|
|
3,104
|
|
Redemption and cancellation of general partner units
|
(48
|
)
|
|
(1,298
|
)
|
|
—
|
|
|
—
|
|
|
(1,298
|
)
|
Distributions declared
|
—
|
|
|
(72,595
|
)
|
|
—
|
|
|
(1,123
|
)
|
|
(73,718
|
)
|
Net income
|
—
|
|
|
16,096
|
|
|
—
|
|
|
277
|
|
|
16,373
|
|
Balance as of June 30, 2015
|
125,194
|
|
|
$
|
1,392,716
|
|
|
1,930
|
|
|
$
|
28,166
|
|
|
$
|
1,420,882
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2015
|
127,027
|
|
|
$
|
1,379,694
|
|
|
1,930
|
|
|
$
|
27,264
|
|
|
$
|
1,406,958
|
|
Issuance of general partner units, net
|
10,399
|
|
|
291,685
|
|
|
—
|
|
|
—
|
|
|
291,685
|
|
Issuance of limited partner units in connection with an acquisition
|
—
|
|
|
—
|
|
|
2,620
|
|
|
70,754
|
|
|
70,754
|
|
Share-based award transactions, net
|
203
|
|
|
3,033
|
|
|
—
|
|
|
—
|
|
|
3,033
|
|
Redemption and cancellation of general partner units
|
(83
|
)
|
|
(2,287
|
)
|
|
—
|
|
|
—
|
|
|
(2,287
|
)
|
Redemption of limited partner units and other
|
207
|
|
|
4,140
|
|
|
(207
|
)
|
|
(4,598
|
)
|
|
(458
|
)
|
Distributions declared
|
—
|
|
|
(79,170
|
)
|
|
—
|
|
|
(1,838
|
)
|
|
(81,008
|
)
|
Net income
|
—
|
|
|
22,934
|
|
|
—
|
|
|
591
|
|
|
23,525
|
|
Balance as of June 30, 2016
|
137,753
|
|
|
$
|
1,620,029
|
|
|
4,343
|
|
|
$
|
92,173
|
|
|
$
|
1,712,202
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
2016
|
|
2015
|
Cash flows from operating activities:
|
|
|
|
|
Net income
|
|
$
|
23,552
|
|
|
$
|
16,430
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
Depreciation, amortization and other
|
|
81,362
|
|
|
72,905
|
|
Share-based compensation expense
|
|
3,033
|
|
|
3,104
|
|
Bad debt expense
|
|
386
|
|
|
289
|
|
Gain on sale of real estate, net
|
|
(4,212
|
)
|
|
—
|
|
Impairment
|
|
—
|
|
|
1,655
|
|
Loss (gain) on extinguishment of debt, net
|
|
22
|
|
|
(121
|
)
|
Change in fair value of derivative financial instruments
|
|
3,450
|
|
|
696
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
Receivables and other assets, net
|
|
(667
|
)
|
|
(3,885
|
)
|
Accounts payable and accrued liabilities
|
|
(5,983
|
)
|
|
(12,024
|
)
|
Prepaid rent and other liabilities
|
|
(4,543
|
)
|
|
8,117
|
|
Net cash provided by operating activities
|
|
96,400
|
|
|
87,166
|
|
Cash flows from investing activities:
|
|
|
|
|
Investments in real estate
|
|
(336,760
|
)
|
|
(224,345
|
)
|
Proceeds from the sale of real estate
|
|
23,368
|
|
|
—
|
|
Capital expenditures
|
|
(21,826
|
)
|
|
(13,131
|
)
|
Restricted cash, escrow deposits and other assets
|
|
(426
|
)
|
|
4,550
|
|
Net cash used in investing activities
|
|
(335,644
|
)
|
|
(232,926
|
)
|
Cash flows from financing activities:
|
|
|
|
|
Borrowings on unsecured revolving credit facility
|
|
336,000
|
|
|
361,000
|
|
Payments on unsecured revolving credit facility
|
|
(293,000
|
)
|
|
(167,000
|
)
|
Borrowings on unsecured term loans
|
|
—
|
|
|
100,000
|
|
Payments on secured real estate term loan and mortgage loans
|
|
(22,791
|
)
|
|
(67,171
|
)
|
Deferred financing costs
|
|
—
|
|
|
(276
|
)
|
Security deposits
|
|
765
|
|
|
183
|
|
Proceeds from issuance of general partner units
|
|
292,984
|
|
|
—
|
|
Repurchase and cancellation of general partner units
|
|
(2,287
|
)
|
|
(1,298
|
)
|
Distributions paid to general partner
|
|
(76,018
|
)
|
|
(72,584
|
)
|
Distributions paid to limited partners and redeemable noncontrolling interests
|
|
(1,331
|
)
|
|
(930
|
)
|
Net cash provided by financing activities
|
|
234,322
|
|
|
151,924
|
|
Net change in cash and cash equivalents
|
|
(4,922
|
)
|
|
6,164
|
|
Cash and cash equivalents - beginning of period
|
|
13,070
|
|
|
10,413
|
|
Cash and cash equivalents - end of period
|
|
$
|
8,148
|
|
|
$
|
16,577
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unless otherwise indicated or unless the context requires otherwise the use of the words “we,” “us” or “our” refers to Healthcare Trust of America, Inc. and Healthcare Trust of America Holdings, LP, collectively.
1. Organization and Description of Business
HTA, a Maryland corporation, and
HTALP
, a Delaware limited partnership, were incorporated or formed, as applicable, on
April 20, 2006
. HTA operates as a REIT and is the general partner of
HTALP
, which is the operating partnership. As of
June 30, 2016
, HTA owned a
96.9%
partnership interest and other limited partners, including some of HTA’s directors, executive officers and their affiliates, owned the remaining partnership interest (including the LTIP units) in
HTALP
. As the sole general partner of
HTALP
, HTA has the full, exclusive and complete responsibility for
HTALP
’s day-to-day management and control. HTA operates in an umbrella partnership REIT structure in which
HTALP
and its subsidiaries hold substantially all of the assets. HTA’s only material asset is its ownership of partnership interests of
HTALP
. As a result, HTA does not conduct business itself, other than acting as the sole general partner of
HTALP
, issuing public equity from time to time and guaranteeing certain debts of
HTALP
.
HTALP
conducts the operations of the business and issues publicly-traded debt, but has no publicly-traded equity.
HTA is one of the largest publicly-traded REITs focused on medical office buildings (“MOBs”) in the United States (“U.S.”) based on gross leasable area (“GLA”). We invest in MOBs that will serve the future of healthcare delivery; primarily located on health system campuses, around university medical centers, or in core community outpatient locations. We also focus on our key markets that have certain demographic and macro-economic trends and where we can utilize our institutional property management and leasing platform to generate strong tenant relationships and operating cost efficiencies. Our portfolio consists of MOBs and other facilities that serve the healthcare industry with an aggregate purchase price of
$4.0 billion
through
June 30, 2016
.
Our primary objective is to maximize stockholder value with disciplined growth through strategic investments that provide an attractive risk-adjusted return for our stockholders by consistently increasing our cash flow. In pursuing this objective, we (i) seek internal growth through proactive asset management, leasing and property management oversight; (ii) target accretive acquisitions of MOBs in markets with attractive demographics that complement our existing portfolio; and (iii) actively manage our balance sheet to maintain flexibility with conservative leverage. HTA has qualified to be taxed as a REIT for federal income tax purposes and intends to continue to be taxed as a REIT.
Our principal executive office is located at 16435 North Scottsdale Road, Suite 320, Scottsdale, Arizona, 85254.
2. Summary of Significant Accounting Policies
The summary of significant accounting policies presented below is designed to assist in understanding our condensed consolidated financial statements. Such condensed consolidated financial statements and the accompanying notes are the representations of our management, who are responsible for their integrity and objectivity. These accounting policies conform to U.S. generally accepted accounting principles (“GAAP”) in all material respects and have been consistently applied in preparing our accompanying condensed consolidated financial statements.
Basis of Presentation
Our accompanying condensed consolidated financial statements include our accounts and those of our subsidiaries and any consolidated variable interest entities (“VIEs”). All inter-company balances and transactions have been eliminated in the accompanying condensed consolidated financial statements.
HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Interim Unaudited Financial Data
Our accompanying condensed consolidated financial statements have been prepared by us in accordance with GAAP in conjunction with the rules and regulations of the SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, our accompanying condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. Our accompanying condensed consolidated financial statements reflect all adjustments, which are, in our opinion, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods. Interim results of operations are not necessarily indicative of the results to be expected for the full year; such results may be less favorable for the full year. Our accompanying condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our 2015 Annual Report on Form 10-K.
There have been no significant changes to the Company’s significant accounting policies during the
six months ended June 30, 2016
, except as noted below regarding the adoption of U.S. Financial Accounting Standards Board (the “FASB”) Accounting Standards Update (“ASU”) 2015-02, Amendments to the Consolidation Analysis and ASU 2015-16, Business Combinations - Simplifying the Accounting for Measurement-Period Adjustments.
Principles of Consolidation
As of January 1, 2016, the Company adopted FASB ASU 2015-02, Amendments to the Consolidation Analysis, as described below in “Recently Issued or Adopted Accounting Pronouncements”, which simplifies consolidation accounting by reducing the number of consolidation models and changing various aspects of current GAAP, including certain consolidation criteria for VIEs. The consolidated financial statements include the accounts of HTA and its subsidiaries and consolidated joint venture arrangements. The portions of the operating partnership not owned by HTA are presented as non-controlling interests in HTA’s consolidated balance sheets and statements of operations, consolidated statements of equity, and consolidated statements of changes in partners’ capital. The portions of other joint venture arrangements not owned by HTA are presented as redeemable non-controlling interests in HTA’s consolidated balance sheets. In addition, as described in
Note 1 - Organization and Description of Business
, certain third parties have been issued limited partner units in HTALP (“OP Units”). Holders of OP Units are considered to be non-controlling interest holders in HTALP and their ownership interests are reflected as equity in the consolidated balance sheets. Further, a portion of the earnings and losses of HTALP are allocated to non-controlling interest holders based on their respective ownership percentages. Upon conversion of OP Units to common stock, any difference between the fair value of common shares issued and the carrying value of the OP Units converted is recorded as a component of equity. As of
June 30, 2016
and
December 31, 2015
, there were approximately
4.3 million
and
1.9 million
, respectively, of OP Units issued and outstanding.
VIEs are entities where investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or where equity investors, as a group, lack one of the following: (i) the power to direct the activities that most significantly impact the entity’s economic performance; (ii) the obligation to absorb the expected losses of the entity; and (iii) the right to receive the expected returns of the entity. We consolidate our investment in VIEs when we determine that we are the primary beneficiary. A primary beneficiary is one that has both: (i) the power to direct the activities of the VIE that most significantly impacts the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. Our analysis of FASB ASU 2015-02 was concluded that the Company’s operating partnership and other joint venture arrangements are VIEs, as the limited partners in the related partnerships, although entitled to vote on certain matters, do not possess kick-out rights or substantive participating rights. Accordingly, the Company consolidates its interest in the operating partnership and other joint venture arrangements. Although, as the Company holds what is deemed a majority voting interest in the operating partnership and other joint venture arrangements, it qualifies for the exemption from providing certain of the disclosure requirements associated with investments in VIEs. The Company will evaluate on an ongoing basis the need to consolidate entities based on the standards set forth in GAAP as described above.
Investments in Real Estate
Depreciation expense of buildings and improvements for the
three months ended June 30, 2016
and
2015
was
$29.9 million
and
$24.7 million
, respectively. Depreciation expense of buildings and improvements for the
six months ended June 30, 2016
and
2015
was
$55.6 million
and
$48.0 million
, respectively.
HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Recently Issued or Adopted Accounting Pronouncements
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (i.e., payment) to which the company expects to be entitled in exchange for those goods or services. In adopting ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach. In July 2015, the FASB deferred the effective date of ASU 2014-09 to the first interim period within annual reporting periods beginning after December 15, 2017 along with the ability to early adopt as of the original effective date. We do not anticipate early adoption and we are evaluating the impact of adopting ASU 2014-09 on our consolidated financial statements.
In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis. ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. The amendments in ASU 2015-02 affect the following areas: (i) limited partnerships and similar legal entities; (ii) evaluating fees paid to a decision maker or a service provider as a variable interest; (iii) the effect of fee arrangements on the primary beneficiary determination; (iv) the effect of related parties on the primary beneficiary determination; and (v) certain investment funds. ASU 2015-02 is effective for fiscal years and for interim periods within those fiscal years, beginning after December 15, 2015 with early adoption permitted. We adopted ASU 2015-02 as of January 1, 2016. The adoption had no material impact on our interests in joint venture arrangements. Accordingly, there was no material impact on previous or current reporting periods’ consolidated financial statements.
In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 changes the presentation of debt issuance costs by requiring these costs related to a recognized debt liability to be presented in the consolidated balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU 2015-15 to include the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. ASU 2015-03 and 2015-15 are effective for the fiscal years beginning after December 15, 2015, and requires retrospective application with early adoption permitted. We adopted ASU 2015-03 and 2015-15 as of December 31, 2015. As a result of the adoption, all deferred financing costs, excluding costs related to the unsecured revolving credit facility, were reclassed to debt. Unsecured revolving credit facility costs remain classified as an asset on our consolidated balance sheets and will continue to be amortized over the remaining term. The guidance requires retrospective adoption for all prior periods presented.
In September 2015, the FASB issued ASU 2015-16, Business Combinations - Simplifying the Accounting for Measurement-Period Adjustments. ASU 2015-16 eliminates the requirement that an acquirer in a business combination has to account for measurement-period adjustments retrospectively. Instead, acquirers must recognize measurement-period adjustments during the period in which they determine the amount of the adjustment, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date. ASU 2015-16 is effective for fiscal years beginning after December 15, 2015. We adopted ASU 2015-16 as of January 1, 2016. As a result of the adoption there was no impact in the previous or current reporting periods’ consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 will supersede the existing guidance for lease accounting and states that companies will be required to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. ASU 2016-02 requires qualitative and quantitative disclosures to supplement the amounts recorded in the financial statements so that users can understand the nature of the entity’s leasing activities, including significant judgments and changes in judgments. Within ASU 2016-02 lessor accounting remained fairly unchanged. In adopting ASU 2016-02, companies will be required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. ASU 2016-02 is effective for the fiscal years beginning after December 15, 2018 with early adoption permitted. We do not anticipate early adoption, however, we are evaluating the impact of adopting ASU 2016-02 on our consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Compensation Accounting. ASU 2016-09 includes multiple provisions intended to simplify various aspects of accounting for share-based compensation which includes, but is not limited to, the requirement that excess tax benefits be recorded within the income statement as opposed to additional paid-in-capital and treated as an operating activity within the statement of cash flows. In addition, ASU 2016-09 allows companies to make an accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016 with early adoption permitted. We do not anticipate early adoption, however, we are evaluating the impact of adopting ASU 2016-09 on our consolidated financial statements.
HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
3. Investments in Real Estate
For the
six months ended June 30, 2016
, our investments had an aggregate purchase price of
$435.8 million
. We incurred
$2.1 million
of costs attributable to these investments, which were recorded in acquisition-related expenses in the accompanying condensed consolidated statements of operations. As part of the acquisitions, we assumed mortgage loans with an aggregate fair value of
$19.9 million
and issued
2,620,512
operating partnership units with a market value of
$70.8 million
.
The following investments were determined to be individually not significant, but significant on a collective basis. The actual revenues and earnings since the investment dates as well as the supplementary proforma information assuming these investments occurred as of the beginning of the prior periods, were not material to us. The purchase price allocation for each of our investments are preliminary and subject to change until allocations are finalized, which will be no later than 12 months from the date of acquisition. The preliminary allocations for these investments are set forth below in the aggregate for the
six months ended June 30, 2016
and
2015
(in thousands):
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
2016
|
|
2015
|
Land
|
$
|
53,806
|
|
|
$
|
11,240
|
|
Building and improvements
|
347,729
|
|
|
200,071
|
|
Below market leasehold interests
|
1,404
|
|
|
2,350
|
|
Above market leases
|
3,582
|
|
|
3,279
|
|
In place leases
|
37,768
|
|
|
19,403
|
|
Below market leases
|
(12,066
|
)
|
|
(5,912
|
)
|
Above market leasehold interests
|
(50
|
)
|
|
(6,086
|
)
|
Below market debt
|
487
|
|
|
—
|
|
Net assets acquired
|
432,660
|
|
|
224,345
|
|
Other, net
|
3,183
|
|
|
1,165
|
|
Aggregate purchase price
|
$
|
435,843
|
|
|
$
|
225,510
|
|
The acquired intangible assets and liabilities referenced above had weighted average lives of the following for the
six months ended June 30, 2016
and
2015
(in years):
|
|
|
|
|
|
Six Months Ended June 30,
|
|
2016
|
|
2015
|
Acquired intangible assets
|
9.5
|
|
15.5
|
Acquired intangible liabilities
|
8.8
|
|
47.0
|
4. Dispositions
During the
three months ended June 30, 2016
, we completed a disposition of
four
senior care facilities for an aggregate gross sales price of
$26.5 million
, generating a gain of
$4.2 million
.
HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
5. Intangible Assets and Liabilities
Intangible assets and liabilities consisted of the following as of
June 30, 2016
and
December 31, 2015
(in thousands, except weighted average remaining amortization):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
December 31, 2015
|
|
Balance
|
|
Weighted Average Remaining
Amortization in Years
|
|
Balance
|
|
Weighted Average Remaining
Amortization in Years
|
Assets:
|
|
|
|
|
|
|
|
In place leases
|
$
|
282,494
|
|
|
10.3
|
|
$
|
249,824
|
|
|
11.0
|
Tenant relationships
|
176,996
|
|
|
10.4
|
|
180,925
|
|
|
10.4
|
Above market leases
|
27,475
|
|
|
6.6
|
|
24,974
|
|
|
6.0
|
Below market leasehold interests
|
36,011
|
|
|
62.8
|
|
34,606
|
|
|
63.0
|
|
522,976
|
|
|
|
|
490,329
|
|
|
|
Accumulated amortization
|
(236,864
|
)
|
|
|
|
(219,334
|
)
|
|
|
Total
|
$
|
286,112
|
|
|
16.2
|
|
$
|
270,995
|
|
|
16.6
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
Below market leases
|
$
|
33,700
|
|
|
19.4
|
|
$
|
22,240
|
|
|
27.2
|
Above market leasehold interests
|
11,632
|
|
|
53.4
|
|
11,582
|
|
|
53.7
|
|
45,332
|
|
|
|
|
33,822
|
|
|
|
Accumulated amortization
|
(8,106
|
)
|
|
|
|
(7,211
|
)
|
|
|
Total
|
$
|
37,226
|
|
|
29.3
|
|
$
|
26,611
|
|
|
38.0
|
The following is a summary of the net intangible amortization for the
three and six months ended June 30, 2016
and 2015 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Amortization recorded against rental income related to above or (below) market leases
|
$
|
(20
|
)
|
|
$
|
444
|
|
|
$
|
317
|
|
|
$
|
919
|
|
Rental expense related to above or (below) market leasehold interests
|
107
|
|
|
128
|
|
|
203
|
|
|
233
|
|
Amortization expense related to in place leases and tenant relationships
|
13,450
|
|
|
12,149
|
|
|
24,217
|
|
|
24,105
|
|
6. Receivables and Other Assets
Receivables and other assets consisted of the following as of
June 30, 2016
and
December 31, 2015
(in thousands):
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
December 31, 2015
|
Tenant receivables, net
|
$
|
6,310
|
|
|
$
|
5,820
|
|
Other receivables, net
|
11,679
|
|
|
11,882
|
|
Deferred financing costs, net
|
4,861
|
|
|
5,524
|
|
Deferred leasing costs, net
|
18,920
|
|
|
17,923
|
|
Straight-line rent receivables, net
|
70,048
|
|
|
65,543
|
|
Prepaid expenses, deposits, equipment and other, net
|
34,033
|
|
|
34,584
|
|
Derivative financial instruments - interest rate swaps
|
—
|
|
|
427
|
|
Total
|
$
|
145,851
|
|
|
$
|
141,703
|
|
HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following is a summary of the amortization of deferred leasing costs and financing costs for the
three and six months ended June 30, 2016
and
2015
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Amortization expense related to deferred leasing costs
|
$
|
1,092
|
|
|
$
|
942
|
|
|
$
|
2,144
|
|
|
$
|
1,928
|
|
Interest expense related to deferred financing costs
(1)
|
332
|
|
|
338
|
|
|
663
|
|
|
665
|
|
|
|
|
|
|
|
|
|
(1) For the three and six months ended June 30, 2015, amounts have been adjusted to reflect the retrospective presentation of the early adoption of ASU 2015-03 and 2015-15 as of December 31, 2015.
|
7. Debt
Debt consisted of the following as of
June 30, 2016
and
December 31, 2015
(in thousands):
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
December 31, 2015
|
Unsecured revolving credit facility
|
$
|
261,000
|
|
|
$
|
218,000
|
|
Unsecured term loans
|
455,000
|
|
|
455,000
|
|
Unsecured senior notes
|
600,000
|
|
|
600,000
|
|
Fixed rate mortgages
|
285,223
|
|
|
298,030
|
|
Variable rate mortgages
|
39,376
|
|
|
28,988
|
|
|
1,640,599
|
|
|
1,600,018
|
|
Deferred financing costs, net
|
(7,495
|
)
|
|
(8,411
|
)
|
Discount, net
|
(1,462
|
)
|
|
(911
|
)
|
Total
|
$
|
1,631,642
|
|
|
$
|
1,590,696
|
|
Unsecured Credit Agreement
Unsecured Revolving Credit Facility
On
February 11, 2015
, we executed an amendment to the unsecured revolving credit and term loan facility (the “Unsecured Credit Agreement”) which added an additional lender and increased the amount available under the unsecured revolving credit facility from
$800.0 million
to
$850.0 million
. The other existing terms of the Unsecured Credit Agreement were unchanged. The actual amount of credit available to us is a function of certain loan-to-value and debt service coverage ratios set forth in the unsecured revolving credit facility. The maximum principal amount of the unsecured revolving credit facility may be increased, subject to additional financing being provided by our existing lenders or new lenders being added to the unsecured revolving credit facility. The unsecured revolving credit facility matures on
January 31, 2020
and is guaranteed by HTA.
Borrowings under the unsecured revolving credit facility accrue interest at a rate equal to adjusted
LIBOR
, plus a margin ranging from
0.88%
to
1.55%
per annum based on our credit rating. We also pay a facility fee ranging from
0.13%
to
0.30%
per annum on the aggregate commitments under the unsecured revolving credit facility. As of
June 30, 2016
, the margin associated with our borrowings was
1.05%
per annum and the facility fee was
0.20%
per annum.
Unsecured Term Loan
As of
June 30, 2016
, we had a
$300.0 million
unsecured term loan outstanding that was guaranteed by HTA. Borrowings accrue interest at a rate equal to adjusted
LIBOR
, plus a margin ranging from
0.90%
to
1.80%
per annum based on our credit rating. The margin associated with our borrowings as of
June 30, 2016
was
1.15%
per annum. Including the impact of the interest rate swaps associated with our unsecured term loan, the interest rate was
1.77%
per annum, based on our current credit rating. The unsecured term loan matures on
January 31, 2019
, and includes a
one
-year extension exercisable at the option of the borrower, subject to certain conditions.
HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
$155.0 Million
Unsecured Term Loan
As of
June 30, 2016
,
HTALP
had a
$155.0 million
unsecured term loan outstanding that is guaranteed by HTA. The loan matures on
July 19, 2019
, and the interest rate thereon is equal to LIBOR, plus a margin ranging from
1.55%
to
2.40%
per annum based on our credit rating. The margin associated with our borrowings as of
June 30, 2016
was
1.70%
per annum. We have interest rate swaps in place that fix the interest rate at
2.99%
per annum, based on our current credit rating. The maximum principal amount under this unsecured term loan may be increased by us, subject to such additional financing being provided by our existing lender.
$300.0 Million
Unsecured Senior Notes due 2021
As of
June 30, 2016
,
HTALP
had
$300.0 million
of unsecured senior notes outstanding that are guaranteed by HTA and that mature on
July 15, 2021
. The unsecured senior notes are registered under the Securities Act of 1933, as amended (the “Securities Act”), bear interest at
3.38%
per annum and are payable semi-annually. The unsecured senior notes were offered at
99.21%
of the principal amount thereof, with an effective yield to maturity of
3.50%
per annum.
$300.0 Million
Unsecured Senior Notes due 2023
As of
June 30, 2016
,
HTALP
had
$300.0 million
of unsecured senior notes outstanding that are guaranteed by HTA and that mature on
April 15, 2023
. The unsecured senior notes are registered under the Securities Act, bear interest at
3.70%
per annum and are payable semi-annually. The unsecured senior notes were offered at
99.19%
of the principal amount thereof, with an effective yield to maturity of
3.80%
per annum.
Fixed and Variable Rate Mortgages
As of
June 30, 2016
,
HTALP
and its subsidiaries had fixed and variable rate mortgages with interest rates ranging from
1.95%
to
6.49%
per annum and a weighted average interest rate of
5.27%
per annum. Including the impact of the interest rate swap associated with our variable rate mortgage, the weighted average interest rate was
5.58%
per annum.
Subsequent Events
Subsequent to
June 30, 2016
, through the date this Quarterly Report is filed with the SEC, we issued
$350.0 million
of senior unsecured
10
-year notes, with a coupon of
3.50%
per annum due
August 1, 2026
. We intend to use the net proceeds from the offering to repay a portion of the outstanding indebtedness under our revolving credit and term loan facility and for general corporate purposes, including, without limitation, working capital and investment in real estate.
Future Debt Maturities
The following table summarizes the debt maturities and scheduled principal repayments of our indebtedness as of
June 30, 2016
(in thousands):
|
|
|
|
|
|
Year
|
|
Amount
|
2016
|
|
$
|
30,485
|
|
2017
|
|
117,409
|
|
2018
|
|
15,246
|
|
2019
|
|
465,135
|
|
2020
|
|
310,795
|
|
Thereafter
|
|
701,529
|
|
Total
|
|
$
|
1,640,599
|
|
The above scheduled debt maturities do not include the extension available to us under the Unsecured Credit Agreement as discussed above.
HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Deferred Financing Costs
As of
June 30, 2016
, the future amortization of deferred financing costs is as follows (in thousands):
|
|
|
|
|
|
Year
|
|
Amount
|
2016
|
|
$
|
893
|
|
2017
|
|
1,636
|
|
2018
|
|
1,543
|
|
2019
|
|
1,437
|
|
2020
|
|
889
|
|
Thereafter
|
|
1,097
|
|
Total
|
|
$
|
7,495
|
|
We are required by the terms of our applicable debt agreements to meet various affirmative and negative covenants that we believe are customary for these types of facilities, such as limitations on the incurrence of debt by us and our subsidiaries that own unencumbered assets, limitations on the nature of
HTALP
’s business, and limitations on distributions by
HTALP
and its subsidiaries that own unencumbered assets. Our debt agreements also impose various financial covenants on us, such as a maximum ratio of total indebtedness to total asset value, a minimum ratio of EBITDA to fixed charges, a minimum tangible net worth covenant, a maximum ratio of unsecured indebtedness to unencumbered asset value, rent coverage ratios and a minimum ratio of unencumbered net operating income to unsecured interest expense. As of
June 30, 2016
, we believe that we were in compliance with all such financial covenants and reporting requirements. In addition, certain of our debt agreements include events of default provisions that we believe are customary for these types of facilities, including restricting HTA from making dividend distributions to its stockholders in the event HTA is in default thereunder, except to the extent necessary for HTA to maintain its REIT status.
8. Derivative Financial Instruments
The following table lists the derivative financial instrument assets and (liabilities) held by us as of
June 30, 2016
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notional Amount
|
|
Index
|
|
Rate
|
|
Fair Value
|
|
Instrument
|
|
Maturity
|
$
|
50,000
|
|
|
LIBOR
|
|
1.39
|
%
|
|
$
|
(1,076
|
)
|
|
Swap
|
|
7/17/2019
|
105,000
|
|
|
LIBOR
|
|
1.24
|
|
|
(1,763
|
)
|
|
Swap
|
|
7/17/2019
|
25,685
|
|
|
LIBOR + 1.45%
|
|
4.98
|
|
|
(2,554
|
)
|
|
Swap
|
|
5/1/2020
|
The following table lists the derivative financial instrument assets and (liabilities) held by us as of
December 31, 2015
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notional Amount
|
|
Index
|
|
Rate
|
|
Fair Value
|
|
Instrument
|
|
Maturity
|
$
|
100,000
|
|
|
LIBOR
|
|
0.86
|
%
|
|
$
|
(142
|
)
|
|
Swap
|
|
6/15/2016
|
50,000
|
|
|
LIBOR
|
|
1.39
|
|
|
(71
|
)
|
|
Swap
|
|
7/17/2019
|
105,000
|
|
|
LIBOR
|
|
1.24
|
|
|
427
|
|
|
Swap
|
|
7/17/2019
|
26,092
|
|
|
LIBOR + 1.45%
|
|
4.98
|
|
|
(2,157
|
)
|
|
Swap
|
|
5/1/2020
|
As of
June 30, 2016
and
December 31, 2015
, the gross fair value of our derivative financial instruments was as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
|
|
|
|
Fair Value
|
|
|
|
Fair Value
|
Derivatives Not Designated as Hedging Instruments:
|
|
Balance Sheet
Location
|
|
June 30, 2016
|
|
December 31, 2015
|
|
Balance Sheet
Location
|
|
June 30, 2016
|
|
December 31, 2015
|
Interest rate swaps
|
|
Receivables and other assets
|
|
$
|
—
|
|
|
$
|
427
|
|
|
Derivative financial instruments
|
|
$
|
5,393
|
|
|
$
|
2,370
|
|
HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
There were no derivatives offset in our accompanying condensed consolidated balance sheets as of
June 30, 2016
and
December 31, 2015
. As of
June 30, 2016
and
December 31, 2015
, we had derivatives subject to enforceable master netting arrangements which allowed for net cash settlement with the respective counterparties (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
December 31, 2015
|
|
Gross Amounts
|
|
Amounts Subject to Enforceable Master Netting Arrangements
|
|
Net Amounts
|
|
Gross Amounts
|
|
Amounts Subject to Enforceable Master Netting Arrangements
|
|
Net Amounts
|
Asset derivatives
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
427
|
|
|
$
|
(427
|
)
|
|
$
|
—
|
|
Liability derivatives
|
5,393
|
|
|
—
|
|
|
5,393
|
|
|
2,370
|
|
|
(427
|
)
|
|
1,943
|
|
We have agreements with each of our interest rate swap derivative counterparties which provide that if we default on certain of our unsecured indebtedness, our counterparties could declare us in default on our interest rate swap derivative obligations resulting in an acceleration of the indebtedness. In addition, we are exposed to credit risk in the event of non-performance by our derivative counterparties. We believe we mitigate the credit risk by entering into agreements with credit-worthy counterparties. We record counterparty credit risk valuation adjustments on interest rate swap derivative assets in order to properly reflect the credit quality of the counterparty. In addition, our fair value of interest rate swap derivative liabilities is adjusted to reflect the impact of our credit quality. As of
June 30, 2016
, there have been no termination events or events of default related to our interest rate swaps.
9. Stockholders’ Equity and Partners’ Capital
HTALP
’s partnership agreement provides that it will distribute cash flow from operations and net sale proceeds to its partners in accordance with their overall ownership interests at such times and in such amounts as the general partner determines. Dividend distributions are made such that a holder of
one
partnership unit in
HTALP
will receive distributions from
HTALP
in an amount equal to the dividend distributions paid to the holder of one share of HTA’s common stock. In addition, for each share of common stock issued or redeemed by HTA,
HTALP
issues or redeems a corresponding number of partnership units.
Common Stock Offerings
During the second quarter of
2016
, HTA completed an underwritten public offering of
5,980,000
shares of common stock at a price of
$28.75
per share.
In January 2016, HTA entered into a new equity distribution agreement with respect to its at-the-market (“ATM”) offering program of common stock with an aggregate sales amount of up to
$300.0 million
. During the
six months ended June 30, 2016
, HTA issued and sold
4,418,571
shares of its common stock, at an average price of
$27.82
per share, and
as of June 30, 2016
,
$177.1 million
remained available for issuance under the ATM.
Common Unit Offerings
During the second quarter of
2016
, HTA issued
2,620,512
partnership units in
HTALP
for approximately
$70.8 million
in connection with an acquisition transaction.
Common Stock Dividends
See our accompanying condensed consolidated statements of operations for the dividends declared during the
three and six months ended June 30, 2016
and
2015
. On
August 1, 2016
, HTA declared a quarterly cash dividend of
$0.30
per share to be paid on
October 7, 2016
to stockholders of record of its common stock on
October 3, 2016
.
Incentive Plan
HTA’s Amended and Restated 2006 Incentive Plan (the “Plan”) permits the grant of incentive awards to our employees, officers, non-employee directors and consultants as selected by our Board of Directors. The Plan authorizes the granting of awards in any of the following forms: options; stock appreciation rights; restricted stock; restricted or deferred stock units; performance awards; dividend equivalents; other stock-based awards, including units in
HTALP
; and cash-based awards. Subject to adjustment as provided in the Plan, the aggregate number of awards reserved and available for issuance under the Plan is
5,000,000
. As of
June 30, 2016
, there were
2,111,490
awards available for grant under the Plan.
HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
LTIP Units
Awards under the LTIP consist of Series C units in
HTALP
and were subject to the achievement of certain performance and market conditions in order to vest. O
nce vested, the Series C units were converted into common units of
HTALP
, which may be converted into shares of HTA’s common stock. The LTIP awards were fully expensed in 2013, except for
225,000
units that were forfeited in 2015.
Restricted Common Stock
For the
three and six months ended June 30, 2016
, we recognized compensation expense of
$1.2 million
and
$3.0 million
, respectively. For the
three and six months ended June 30, 2015
, we recognized compensation expense of
$1.2 million
and
$3.1 million
, respectively. Compensation expense for the
three and six months ended June 30, 2016
and
2015
were recorded in general and administrative expenses in the accompanying condensed consolidated statements of operations.
As of
June 30, 2016
, there was
$6.1 million
of unrecognized compensation expense net of estimated forfeitures, which will be recognized over a remaining weighted average period of
1.7
years.
The following is a summary of our restricted common stock activity during the
six months ended June 30, 2016
and
2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
June 30, 2015
|
|
Restricted Common Stock
|
|
Weighted
Average Grant
Date Fair Value
|
|
Restricted Common Stock
|
|
Weighted
Average Grant
Date Fair Value
|
Beginning balance
|
487,850
|
|
|
$
|
23.13
|
|
|
463,050
|
|
|
$
|
20.90
|
|
Granted
|
225,006
|
|
|
27.49
|
|
|
174,948
|
|
|
26.95
|
|
Vested
|
(195,559
|
)
|
|
22.84
|
|
|
(114,529
|
)
|
|
21.89
|
|
Forfeited
|
(22,167
|
)
|
|
26.10
|
|
|
(19,898
|
)
|
|
22.75
|
|
Ending Balance
|
495,130
|
|
|
$
|
25.09
|
|
|
503,571
|
|
|
$
|
22.63
|
|
10. Fair Value of Financial Instruments
Financial Instruments Reported at Fair Value - Recurring
The table below presents our assets and liabilities measured at fair value on a recurring basis as of
June 30, 2016
, aggregated by the applicable level in the fair value hierarchy (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Assets:
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
$
|
—
|
|
|
$
|
5,393
|
|
|
$
|
—
|
|
|
$
|
5,393
|
|
The table below presents our assets and liabilities measured at fair value on a recurring basis as of
December 31, 2015
, aggregated by the applicable level in the fair value hierarchy (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Assets:
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
$
|
—
|
|
|
$
|
427
|
|
|
$
|
—
|
|
|
$
|
427
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
$
|
—
|
|
|
$
|
2,370
|
|
|
$
|
—
|
|
|
$
|
2,370
|
|
HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Financial Instruments Reported at Fair Value - Non-Recurring
As of
June 30, 2016
, there were
no
assets measured at fair value on a non-recurring basis. The table below presents our assets measured at fair value on a non-recurring basis as of
December 31, 2015
, aggregated by the applicable level in the fair value hierarchy (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Assets:
|
|
|
|
|
|
|
|
|
MOB
(1)
|
|
$
|
—
|
|
|
$
|
547
|
|
|
$
|
—
|
|
|
$
|
547
|
|
|
|
|
|
|
|
|
|
|
(1) During the year ended December 31, 2015, we recognized a $0.9 million impairment charge to the carrying value of an MOB. The estimated fair value as of December 31, 2015 was based upon a pending sales agreement pertaining to this MOB.
|
There have been no transfers of assets or liabilities between levels. We will record any such transfers at the end of the reporting period in which a change of event occurs that results in a transfer. Although we have determined that the majority of the inputs used to value our interest rate swap derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with these instruments utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our interest rate swap derivative positions and have determined that the credit valuation adjustments are not significant to their overall valuation. As a result, we have determined that our interest rate swap derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
Financial Instruments Disclosed at Fair Value
We consider the carrying values of cash and cash equivalents, tenant and other receivables, restricted cash and escrow deposits and accounts payable, and accrued liabilities, to approximate fair value for these financial instruments because of the short period of time between origination of the instruments and their expected realization. All of these financial instruments are considered Level 2.
The fair value of debt is estimated using borrowing rates available to us with similar terms and maturities, which is considered a Level 2 input.
As of June 30, 2016
, the fair value of the debt was
$1,687.1 million
compared to the carrying value of
$1,631.6 million
.
As of December 31, 2015
, the fair value of the debt was
$1,619.7 million
compared to the carrying value of
$1,590.7 million
.
11. Per Share Data of HTA
HTA includes unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents as “participating securities” pursuant to the two-class method. The resulting classes are our common stock and restricted stock. For the
three and six months ended June 30, 2016
and
2015
, all of HTA’s earnings were distributed and the calculated earnings per share amount would be the same for all classes.
The following is the reconciliation of the numerator and denominator used in basic and diluted earnings per share of HTA for the
three and six months ended June 30, 2016
and
2015
(in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Numerator:
|
|
|
|
|
|
|
|
Net income
|
$
|
13,516
|
|
|
$
|
9,488
|
|
|
$
|
23,552
|
|
|
$
|
16,430
|
|
Net income attributable to noncontrolling interests
|
(442
|
)
|
|
(196
|
)
|
|
(618
|
)
|
|
(334
|
)
|
Net income attributable to common stockholders
|
$
|
13,074
|
|
|
$
|
9,292
|
|
|
$
|
22,934
|
|
|
$
|
16,096
|
|
Denominator:
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic
|
136,528
|
|
|
125,194
|
|
|
132,932
|
|
|
125,184
|
|
Dilutive shares
|
3,984
|
|
|
1,930
|
|
|
2,944
|
|
|
1,930
|
|
Weighted average shares outstanding - diluted
|
140,512
|
|
|
127,124
|
|
|
135,876
|
|
|
127,114
|
|
Earnings per common share - basic
|
|
|
|
|
|
|
|
Net income attributable to common stockholders
|
$
|
0.10
|
|
|
$
|
0.07
|
|
|
$
|
0.17
|
|
|
$
|
0.13
|
|
Earnings per common share - diluted
|
|
|
|
|
|
|
|
Net income attributable to common stockholders
|
$
|
0.09
|
|
|
$
|
0.07
|
|
|
$
|
0.17
|
|
|
$
|
0.13
|
|
HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
12. Per Unit Data of
HTALP
The following is the reconciliation of the numerator and denominator used in basic and diluted earnings per unit of
HTALP
for the
three and six months ended June 30, 2016
and
2015
(in thousands, except per unit data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Numerator:
|
|
|
|
|
|
|
|
Net income
|
$
|
13,516
|
|
|
$
|
9,488
|
|
|
$
|
23,552
|
|
|
$
|
16,430
|
|
Net loss (income) attributable to noncontrolling interests
|
4
|
|
|
(24
|
)
|
|
(27
|
)
|
|
(57
|
)
|
Net income attributable to common unitholders
|
$
|
13,520
|
|
|
$
|
9,464
|
|
|
$
|
23,525
|
|
|
$
|
16,373
|
|
Denominator:
|
|
|
|
|
|
|
|
Weighted average units outstanding - basic
|
140,512
|
|
|
127,203
|
|
|
135,877
|
|
|
127,266
|
|
Dilutive units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Weighted average units outstanding - diluted
|
140,512
|
|
|
127,203
|
|
|
135,877
|
|
|
127,266
|
|
Earnings per common unit - basic:
|
|
|
|
|
|
|
|
Net income attributable to common unitholders
|
$
|
0.10
|
|
|
$
|
0.07
|
|
|
$
|
0.17
|
|
|
$
|
0.13
|
|
Earnings per common unit - diluted:
|
|
|
|
|
|
|
|
Net income attributable to common unitholders
|
$
|
0.10
|
|
|
$
|
0.07
|
|
|
$
|
0.17
|
|
|
$
|
0.13
|
|
13. Supplemental Cash Flow Information
The following is the supplemental cash flow information for the
six months ended June 30, 2016
and
2015
(in thousands):
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
2016
|
|
2015
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
Interest paid
|
$
|
26,749
|
|
|
$
|
26,684
|
|
Income taxes paid
|
788
|
|
|
541
|
|
|
|
|
|
Supplemental Disclosure of Noncash Investing and Financing Activities:
|
|
|
|
Accrued capital expenditures
|
$
|
2,961
|
|
|
$
|
2,839
|
|
Note receivable included in the consideration of a disposition
|
3,000
|
|
|
—
|
|
Debt assumed in connection with an acquisition
|
20,376
|
|
|
—
|
|
Issuance of operating partnership units in connection with an acquisition
|
70,754
|
|
|
—
|
|
Redeemable noncontrolling interest assumed in connection with an acquisition
|
5,231
|
|
|
—
|
|
Dividend distributions declared, but not paid
|
41,770
|
|
|
36,307
|
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The use of the words “we,” “us” or “our” refers to HTA and
HTALP
, collectively.
The following discussion should be read in conjunction with our condensed consolidated financial statements and notes appearing elsewhere in this Quarterly Report, as well as with the audited consolidated financial statements, accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2015 Annual Report on Form 10-K. Such condensed consolidated financial statements and information have been prepared to reflect HTA’s and
HTALP
’s financial position as of
June 30, 2016
and December 31,
2015
, together with results of operations and cash flows for the
three and six months ended June 30, 2016
and
2015
.
The information set forth below is intended to provide readers with an understanding of our financial condition, changes in financial condition and results of operations.
|
|
•
|
Forward-Looking Statements;
|
|
|
•
|
Critical Accounting Policies;
|
|
|
•
|
Recently Issued or Adopted Accounting Pronouncements;
|
|
|
•
|
Factors Which May Influence Results of Operations;
|
|
|
•
|
Non-GAAP Financial Measures;
|
|
|
•
|
Liquidity and Capital Resources;
|
|
|
•
|
Commitments and Contingencies;
|
|
|
•
|
Debt Service Requirements;
|
|
|
•
|
Off-Balance Sheet Arrangements; and
|
Forward-Looking Statements
Certain statements contained in this Quarterly Report constitute forward-looking statements within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”)). Such statements include, in particular, statements about our plans, strategies, prospects and estimates regarding future MOB market performance. Additionally, such statements are subject to certain risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ materially and in adverse ways from those projected or anticipated. Therefore, such statements are not intended to be a guarantee of our performance in future periods. Forward-looking statements are generally identifiable by the use of such terms as “expect,” “project,” “may,” “should,” “could,” “would,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “opinion,” “predict,” “potential,” “pro forma” or the negative of such terms and other comparable terminology. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this Quarterly Report is filed with the SEC. We cannot guarantee the accuracy of any such forward-looking statements contained in this Quarterly Report, and we do not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
Any such forward-looking statements reflect our current views about future events, are subject to unknown risks, uncertainties, and other factors, and are based on a number of assumptions involving judgments with respect to, among other things, future economic, competitive and market conditions, all of which are difficult or impossible to predict accurately. To the extent that our assumptions differ from actual results, our ability to meet such forward-looking statements, including our ability to generate positive cash flow from operations, provide dividends to stockholders and maintain the value of our real estate properties, may be significantly hindered. Factors that might impair our ability to meet such forward-looking statements include, without limitation, those discussed in Part I, Item 1A - Risk Factors in our 2015 Annual Report on Form 10-K, which is incorporated herein.
Forward-looking statements express expectations of future events. All forward-looking statements are inherently uncertain as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties that could cause actual events or results to differ materially from those projected. Due to these inherent uncertainties, our stockholders are urged not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date made. In addition, we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to projections over time, except as required by law.
These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning us and our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.
Executive Summary
HTA is one of the largest publicly-traded REITs focused on MOBs in the U.S. based on the GLA of its MOBs. HTA conducts substantially all of its operations through HTALP. We invest in MOBs that will serve the future of healthcare delivery; primarily located on health system campuses, are around university medical centers, or are in core community outpatient locations. We also focus on our key markets that have certain demographic and macro-economic trends and where we can utilize our institutional property management and leasing platform to generate strong tenant relationships and operating cost efficiencies. Our primary objective is to maximize stockholder value with disciplined growth through strategic investments that provide an attractive risk-adjusted return for our stockholders by consistently increasing our cash flow. In pursuing this objective, we: (i) seek internal growth through proactive asset management, leasing and property management oversight; (ii) target accretive acquisitions of MOBs in markets with attractive demographics that complement our existing portfolio; and (iii) actively manage our balance sheet to maintain flexibility with conservative leverage.
Since 2006, we have invested
$4.0 billion
to create a portfolio of MOBs and other healthcare assets consisting of approximately
17.0 million
square feet of GLA throughout the U.S. As of
June 30, 2016
, approximately
97%
of our portfolio, based on GLA, was located on the campuses of, or aligned with, nationally or regionally recognized healthcare systems. Our portfolio is diversified geographically across
31
states, with no state having more than
13%
of our total GLA as of
June 30, 2016
. We are concentrated in 20 to 25 key markets that are experiencing higher economic and demographic trends, on average, that we expect will drive demand for MOBs. Approximately
91%
of our portfolio, based on GLA, is located in top 75 metropolitan statistical areas (“MSAs”) including concentrations in: Albany, Atlanta, Austin, Boston, Charleston, Columbus, Dallas, Denver, Greenville, Hartford/New Haven, Honolulu, Houston, Indianapolis, Miami, Orlando, Phoenix, Pittsburgh, Raleigh, Tampa and White Plains.
Company Highlights
Portfolio Operating Performance
|
|
•
|
For the
three months ended June 30, 2016
, our total revenue increased
14.0%
, or
$13.9 million
, to
$113.2 million
, compared to the
three months ended June 30, 2015
. For the
six months ended June 30, 2016
, our total revenue increased
11.5%
, or
$22.7 million
, to
$220.5 million
, compared to the
six months ended June 30, 2015
.
|
|
|
•
|
For the
three months ended June 30, 2016
, net income attributable to common stockholders was
$0.09
per diluted share, or
$13.1 million
, compared to
$0.07
per diluted share, or
$9.3 million
, for the
three months ended June 30, 2015
. For the
six months ended June 30, 2016
, net income attributable to common stockholders was
$0.17
per diluted share, or
$22.9 million
, compared to
$0.13
per diluted share, or
$16.1 million
, for the
six months ended June 30, 2015
.
|
|
|
•
|
For the
three months ended June 30, 2016
, HTA’s FFO was
$0.38
per diluted share, or
$53.3 million
, consistent to the
three months ended June 30, 2015
. For the
six months ended June 30, 2016
, HTA’s FFO was
$0.74
per diluted share, or
$100.7 million
, an increase of
$0.02
per diluted share, or
2.8%
, compared to the
six months ended June 30, 2015
.
|
|
|
•
|
For the
three months ended June 30, 2016
, HTA’s Normalized FFO was
$0.40
per diluted share, or
$56.5 million
, an increase of
$0.02
per diluted share, or
5.3%
, compared to the
three months ended June 30, 2015
. For the
six months ended June 30, 2016
, HTA’s Normalized FFO was
$0.80
per diluted share, or
$108.6 million
, an increase of
$0.05
per diluted share, or
6.7%
, compared to the
six months ended June 30, 2015
.
|
|
|
•
|
For additional information on FFO and Normalized FFO, see “FFO and Normalized FFO” below, which includes a reconciliation to net income attributable to common stockholders/unitholders and an explanation of why we present this non-GAAP financial measure.
|
|
|
•
|
For the
three months ended June 30, 2016
, our Net Operating Income (“NOI”) increased
11.6%
, or
$8.1 million
, to
$78.2 million
, compared to the
three months ended June 30, 2015
. For the
six months ended June 30, 2016
, our NOI increased
10.3%
, or
$14.2 million
, to
$152.1 million
, compared to the
six months ended June 30, 2015
.
|
|
|
•
|
For the
three months ended June 30, 2016
, our Same-Property Cash NOI increased
3.1%
, or
$1.9 million
, to
$65.2 million
, compared to the
three months ended June 30, 2015
. For the
six months ended June 30, 2016
, our Same-Property Cash NOI increased
3.1%
, or
$3.9 million
, to
$129.0 million
, compared to the
six months ended June 30, 2015
.
|
|
|
•
|
For additional information on NOI and Same-Property Cash NOI, see “NOI, Cash NOI and Same-Property Cash NOI” below, which includes a reconciliation to net income and an explanation of why we present these non-GAAP financial measures.
|
Internal Growth through Proactive Asset Management Leasing and Property Management
|
|
•
|
As of
June 30, 2016
, our leased rate (includes leases which have been executed, but which have not yet commenced) was
92.2%
by GLA and our occupancy rate was
91.6%
by GLA.
|
|
|
•
|
We entered into new and renewal leases on approximately
528,000
and
783,000
square feet of GLA, or
3.1%
and
4.6%
of our portfolio, during the
three and six months ended June 30, 2016
, respectively.
|
|
|
•
|
Tenant retention for the Same-Property portfolio was
87%
and
85%
for the quarter and year to date, respectively, which we believe is indicative of our commitment to maintaining buildings in desirable locations and fostering strong tenant relationships. Tenant retention is defined as the sum of the total leased GLA of tenants that renewed a lease during the period over the total GLA of leases that renewed or expired during the period.
|
|
|
•
|
As of
June 30, 2016
, our in-house property management and leasing platform operated approximately
15.7 million
square feet of GLA, or
92%
of our total portfolio.
|
Key Market Focused Strategy and Investments
We believe we have been one of the most active investors in the medical office sector over the last ten years and have developed a strong presence across 20 to 25 key markets. In each of these markets we have established a strong asset management and leasing platform that has allowed us to develop valuable relationships with health systems, physician practices, universities, and regional development firms that have led to investment and leasing opportunities. Our local platforms have also enabled us to focus on generating cost efficiencies as we gain scale across individual markets and regions.
|
|
•
|
As of
June 30, 2016
, we had approximately 700,000 to 1.0 million square feet of GLA in each of our top ten markets. We expect to establish this scale across 20 to 25 key markets as our portfolio expands.
|
|
|
•
|
Our key markets represent top MSAs with strong growth metrics in jobs and population, low unemployment and mature healthcare infrastructures.
|
|
|
•
|
Our investment strategy includes the alignment with key healthcare systems, hospitals and leading academic medical universities.
|
|
|
•
|
Over the last several years, our investments have been focused in our key markets, with the majority of our investments also being located either on the campuses of, or aligned with, nationally and regionally recognized healthcare systems.
|
|
|
•
|
During the
six months ended June 30, 2016
, we acquired investments totaling
$435.8 million
located in our key markets of Charleston, Columbus, Dallas and Houston, and strategically expanded our presence into three new markets of Birmingham, Alabama; Hartford/New Haven, Connecticut; and Portland, Oregon.
|
|
|
•
|
During the
three months ended June 30, 2016
, we completed a disposition of four senior care facilities located in Texas for an aggregate gross sales price of
$26.5 million
, generating a gain of
$4.2 million
.
|
Financial Strategy and Balance Sheet Flexibility
|
|
•
|
As of
June 30, 2016
, we had total leverage of
26.2%
measured as debt to capitalization. Total liquidity was
$591.6 million
, including cash and cash equivalents of
$8.1 million
and
$583.5 million
available on our unsecured revolving credit facility (includes the impact of
$5.5 million
of outstanding letters of credit) as of
June 30, 2016
.
|
|
|
•
|
In January 2016, we entered into a new equity distribution agreement with respect to our ATM with an aggregate sales amount of up to $300.0 million. During the
six months ended June 30, 2016
, we issued
$365.6 million
of equity comprised of
$171.9 million
from the sale of common stock in an underwritten public offering at an average price of
$28.75
per share,
$70.8 million
from the issuance of Class A Partnership Units of HTALP in connection with an acquisition transaction, and
$122.9 million
from the sale of common stock under the ATM at an average price of
$27.82
per share.
|
|
|
•
|
In July 2016, we issued $350.0 million of senior unsecured 10-year notes, with a coupon of 3.50% per annum.
|
Critical Accounting Policies
The complete list of our critical accounting policies was disclosed in our 2015 Annual Report on Form 10-K. There have been no material changes to our critical accounting policies as disclosed herein.
Recently Issued or Adopted Accounting Pronouncements
See
Note 2 - Summary of Significant Accounting Policies
to our accompanying condensed consolidated financial statements for a discussion of recently issued or adopted accounting pronouncements.
Factors Which May Influence Results of Operations
We are not aware of any material trends or uncertainties, other than national economic conditions affecting real estate generally and the risk factors previously listed in Part I, Item 1A - Risk Factors, in our 2015 Annual Report on Form 10-K that may reasonably be expected to have a material impact, favorable or unfavorable, on revenues or income from the investment, management and operation of our properties.
Rental Income
The amount of rental income generated by our properties depends principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space and space that will become available from unscheduled lease terminations at the then applicable rental rates. Negative trends in one or more of these factors could adversely affect our rental income in future periods.
Investment Activity
During the
six months ended June 30, 2016
, we had investments with an aggregate purchase price of
$435.8 million
and a disposition with a gross sales price of
$26.5 million
. During the
six months ended June 30, 2015
, we had investments with an aggregate purchase price of
$225.5 million
and no dispositions. The amount of any future acquisitions or dispositions could have a significant impact on our results of operations in future periods.
Results of Operations
Comparison of the
Three and Six Months Ended June 30, 2016
and
2015
As of
June 30, 2016
, we owned and operated approximately
17.0 million
square feet of GLA, with a
92.2%
leased rate (includes leases which have been executed, but which have not yet commenced) and a
91.6%
occupancy rate. As of
June 30, 2015
, we owned and operated approximately
15.4 million
square feet of GLA, with a
91.7%
leased rate (includes leases which have been executed, but which have not yet commenced) and a
91.1%
occupancy rate. All explanations are applicable to both HTA and
HTALP
unless otherwise noted.
Rental Income
For the
three and six months ended June 30, 2016
and
2015
, rental income was comprised of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Contractual rental income
|
$
|
109,765
|
|
|
$
|
96,039
|
|
|
$
|
213,577
|
|
|
$
|
191,282
|
|
Straight-line rent and amortization of above/below market leases
|
2,131
|
|
|
2,085
|
|
|
4,204
|
|
|
4,216
|
|
Other operating revenue
|
1,248
|
|
|
1,119
|
|
|
2,613
|
|
|
2,197
|
|
Total
|
$
|
113,144
|
|
|
$
|
99,243
|
|
|
$
|
220,394
|
|
|
$
|
197,695
|
|
Contractual rental income, which includes expense reimbursements, increased
$13.7 million
for the
three months ended June 30, 2016
, compared to the
three months ended June 30, 2015
. This increase was primarily due to
$14.2 million
of additional contractual rental income from our
2015
and
2016
acquisitions (including properties owned in both periods) and contractual rent increases, partially offset by a decrease in contractual rent as a result of buildings we sold during 2015 and 2016. For the
three months ended June 30, 2016
, we entered into new and renewal leases of approximately
528,000
square feet of GLA. The new and renewal leases commenced at an average starting annual base rent of
$21.50
per square foot of GLA. Expiring leases had an average ending annual base rent that was
$21.70
per square foot of GLA. Lease rates can vary across markets, and lease rates that are considered above or below current market rent may change over time. Leases that expired in
2016
had rents that we believed were generally at market rates. Generally, leasing concessions vary depending on lease type and term. For the
three months ended June 30, 2016
, new leases had tenant improvements, leasing commissions and tenant concessions of
$17.36
,
$3.45
and
$2.93
per square foot of GLA, respectively, compared to
$27.96
,
$2.02
and
$4.55
per square foot of GLA, respectively, for the
three months ended June 30, 2015
. The average term for new leases executed was 5.1 years and
7.3 years
for the
three months ended June 30, 2016
and
2015
, respectively. Renewal leases had tenant improvements, leasing commissions and tenant concessions of
$4.67
,
$1.44
and
$0.78
per square foot of GLA, respectively, for the
three months ended June 30, 2016
, compared to
$6.71
,
$0.99
and
$1.83
per square foot of GLA, respectively, for the
three months ended June 30, 2015
. The average term for renewal leases executed was
5.4 years
and
6.8 years
for the
three months ended June 30, 2016
and
2015
, respectively.
Contractual rental income, which includes expense reimbursements, increased
$22.3 million
for the
six months ended June 30, 2016
, compared to the
six months ended June 30, 2015
. This increase was primarily due to
$24.3 million
of additional contractual rental income from our
2015
and
2016
acquisitions (including properties owned in both periods) and contractual rent increases, partially offset by a decrease in contractual rent as a result of buildings we sold during 2015 and 2016. For the
six months ended June 30, 2016
, we entered into new and renewal leases of approximately
783,000
square feet of GLA. The new and renewal leases commenced at an average starting annual base rent of
$21.78
per square foot of GLA. Expiring leases had an average ending annual base rent that was
$21.81
per square foot of GLA. Lease rates can vary across markets, and lease rates that are considered above or below current market rent may change over time. Leases that expired in
2016
had rents that we believed were generally at market rates. Generally, leasing concessions vary depending on lease type and term. For the
six months ended June 30, 2016
, new leases had tenant improvements, leasing commissions and tenant concessions of
$21.70
,
$3.84
and
$3.98
per square foot of GLA, respectively, compared to
$25.06
,
$3.23
and
$5.16
per square foot of GLA, respectively, for the
six months ended June 30, 2015
. The average term for new leases executed was 5.4
years
and
7.3 years
for the
six months ended June 30, 2015
and
2015
, respectively. Renewal leases had tenant improvements, leasing commissions and tenant concessions of
$5.09
,
$1.32
and
$0.87
per square foot of GLA, respectively, for the
six months ended June 30, 2016
, compared to
$5.52
,
$0.94
and
$1.34
per square foot of GLA, respectively, for the
six months ended June 30, 2015
. The average term for renewal leases executed was
4.9 years
and
6.0 years
for the
six months ended June 30, 2016
and
2015
, respectively.
Rental Expenses
For the
three months ended June 30, 2016
and
2015
, rental expenses attributable to our properties were
$35.1 million
and
$29.2 million
, respectively. For the
six months ended June 30, 2016
and
2015
, rental expenses attributable to our properties were
$68.4 million
and
$59.9 million
, respectively. These increases in rental expenses were primarily due to
$7.1 million
and
$12.1 million
of additional rental expenses associated with our
2015
and
2016
acquisitions for the
three and six months ended June 30, 2016
, respectively, partially offset by improved operating efficiencies and a decrease in rental expenses as a result of the buildings we sold during
2015
and
2016
.
General and Administrative Expenses
For the
three months ended June 30, 2016
and
2015
, general and administrative expenses were
$6.8 million
and
$6.2 million
, respectively. For the
six months ended June 30, 2016
and
2015
, general and administrative expenses were
$13.6 million
and
$12.8 million
, respectively. General and administrative expenses include such costs as salaries, corporate overhead and professional fees, among other items.
Acquisition-Related Expenses
For the
three months ended June 30, 2016
and
2015
, acquisition-related expenses were
$2.1 million
and
$1.1 million
, respectively. For the
six months ended June 30, 2016
and
2015
, acquisition-related expenses were
$3.9 million
and
$2.5 million
, respectively. These increases in acquisition-related expenses were primarily due to increased acquisition activity during
2016
.
Depreciation and Amortization Expense
For the
three months ended June 30, 2016
and
2015
, depreciation and amortization expense was
$44.7 million
and
$38.1 million
, respectively. For the
six months ended June 30, 2016
and
2015
, depreciation and amortization expense was
$82.6 million
and
$74.7 million
, respectively. These increases in depreciation and amortization expense were primarily due to the increase in the size of our portfolio.
Interest Expense and Net Change in Fair Value of Derivative Financial Instruments
Interest expense excluding the impact of the net change in fair value of derivative financial instruments decreased by
$0.3 million
during the
three months ended June 30, 2016
, compared to the
three months ended June 30, 2015
. This decrease was primarily due to the change in our debt composition from the payoff of fixed rate mortgage loans using our variable rate unsecured revolving credit facility which has a lower interest rate. During the
three months ended June 30, 2016
, the fair market value of our derivatives decreased
$0.7 million
, compared to a net increase of
$1.3 million
during the
three months ended June 30, 2015
.
Interest expense excluding the impact of the net change in fair value of derivative financial instruments increased by
$83,000
during the
six months ended June 30, 2016
, compared to the
six months ended June 30, 2015
. This increase was primarily due to the change in our debt composition from the payoff of fixed rate mortgage loans using our variable rate unsecured revolving credit facility which has a lower interest rate, partially offset by net borrowings we had on our Unsecured Credit Agreement. During the
six months ended June 30, 2016
, the fair market value of our derivatives decreased
$3.5 million
, compared to a net decrease of
$0.7 million
during the
six months ended June 30, 2015
.
To achieve our objectives, we borrow at both fixed and variable rates. We also enter into derivative financial instruments, such as interest rate swaps, in order to mitigate our interest rate risk on a related financial instrument. We do not enter into derivative or interest rate transactions for speculative purposes. Derivatives not designated as hedges are not speculative and are used to manage our exposure to interest rate movements.
Gain on Sales of Real Estate
For the
three and six months ended June 30, 2016
, we realized a gain of
$4.2 million
from the disposition of four senior care facilities. We did not sell any properties during the
three and six months ended June 30, 2015
.
NOI and Same-Property Cash NOI
NOI increased
$8.1 million
to
$78.2 million
for the
three months ended June 30, 2016
, compared to the
three months ended June 30, 2015
. NOI increased
$14.2 million
to
$152.1 million
for the
six months ended June 30, 2016
, compared to the
six months ended June 30, 2015
. These increases were primarily due to
$8.7 million
and
$14.9 million
of additional NOI from our
2015
and
2016
acquisitions for the
three and six months ended June 30, 2016
, respectively, partially offset by a decrease in NOI as a result of the buildings we sold during
2015
and
2016
and a reduction in straight-line rent from properties we owned more than a year.
Same-Property Cash NOI increased
$1.9 million
to
$65.2 million
for the
three months ended June 30, 2016
, compared to the
three months ended June 30, 2015
. Same-Property Cash NOI increased
$3.9 million
to
$129.0 million
for the
six months ended June 30, 2016
, compared to the
six months ended June 30, 2015
. These increases were primarily the result of rent escalations, an increase in average occupancy and improved operating efficiencies.
Non-GAAP Financial Measures
FFO and Normalized FFO
We compute FFO in accordance with the current standards established by the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as net income or loss attributable to common stockholders/unitholders (computed in accordance with GAAP), excluding gains or losses from sales of real estate property and impairment write-downs of depreciable assets, plus depreciation and amortization related to investments in real estate, and after adjustments for unconsolidated partnerships and joint ventures. We present this non-GAAP financial measure because we consider it an important supplemental measure of our operating performance and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs. Historical cost accounting assumes that the value of real estate assets diminishes ratably over time. Since real estate values have historically risen or fallen based on market conditions, many industry investors have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Because FFO excludes depreciation and amortization unique to real estate, among other items, it provides a perspective not immediately apparent from net income or loss attributable to common stockholders/unitholders.
We also compute Normalized FFO, which excludes from FFO: (i) acquisition-related expenses; (ii) gain or loss on change in fair value of derivative financial instruments; (iii) gain or loss on extinguishment of debt; (iv) noncontrolling income or loss from partnership units included in diluted shares (only applicable to HTA); and (v) other normalizing items, which include items that are unusual and infrequent in nature. We present this non-GAAP financial measure because it allows for the comparison of our operating performance to other REITs and between periods on a consistent basis. Our methodology for calculating Normalized FFO may be different from the methods utilized by other REITs and, accordingly, may not be comparable to other REITs. Normalized FFO should not be considered as an alternative to net income or loss attributable to common stockholders/unitholders (computed in accordance with GAAP) as an indicator of our financial performance, nor is it indicative of cash available to fund cash needs. Normalized FFO should be reviewed in connection with other GAAP measurements.
The amounts included in the calculation of FFO and Normalized FFO are generally the same for
HTALP
and HTA, except for net income or loss attributable to common stockholders/unitholders, noncontrolling income or loss from partnership units included in diluted shares (only applicable to HTA) and the weighted average shares of HTA common stock or
HTALP
partnership units outstanding.
The following is the reconciliation of HTA’s FFO and Normalized FFO to net income attributable to common stockholders for the
three and six months ended June 30, 2016
and
2015
(in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net income attributable to common stockholders
|
$
|
13,074
|
|
|
$
|
9,292
|
|
|
$
|
22,934
|
|
|
$
|
16,096
|
|
Depreciation and amortization expense related to investments in real estate
|
44,411
|
|
|
37,752
|
|
|
81,932
|
|
|
74,032
|
|
Gain on sale of real estate, net
|
(4,212
|
)
|
|
—
|
|
|
(4,212
|
)
|
|
—
|
|
Impairment
|
—
|
|
|
1,655
|
|
|
—
|
|
|
1,655
|
|
FFO attributable to common stockholders
|
$
|
53,273
|
|
|
$
|
48,699
|
|
|
$
|
100,654
|
|
|
$
|
91,783
|
|
Acquisition-related expenses
|
2,062
|
|
|
1,101
|
|
|
3,875
|
|
|
2,458
|
|
Loss (gain) on change in fair value of derivative financial instruments, net
|
658
|
|
|
(1,314
|
)
|
|
3,450
|
|
|
696
|
|
Loss (gain) on extinguishment of debt, net
|
22
|
|
|
(121
|
)
|
|
22
|
|
|
(121
|
)
|
Noncontrolling income from partnership units included in diluted shares
|
446
|
|
|
172
|
|
|
591
|
|
|
277
|
|
Other normalizing items, net
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
89
|
|
Normalized FFO attributable to common stockholders
|
$
|
56,461
|
|
|
$
|
48,537
|
|
|
$
|
108,576
|
|
|
$
|
95,182
|
|
|
|
|
|
|
|
|
|
Net income attributable to common stockholders per diluted share
|
$
|
0.09
|
|
|
$
|
0.07
|
|
|
$
|
0.17
|
|
|
$
|
0.13
|
|
FFO adjustments per diluted share, net
|
0.29
|
|
|
0.31
|
|
|
0.57
|
|
|
0.59
|
|
FFO attributable to common stockholders per diluted share
|
$
|
0.38
|
|
|
$
|
0.38
|
|
|
$
|
0.74
|
|
|
$
|
0.72
|
|
Normalized FFO adjustments per diluted share, net
|
0.02
|
|
|
0.00
|
|
|
0.06
|
|
|
0.03
|
|
Normalized FFO attributable to common stockholders per diluted share
|
$
|
0.40
|
|
|
$
|
0.38
|
|
|
$
|
0.80
|
|
|
$
|
0.75
|
|
|
|
|
|
|
|
|
|
Weighted average diluted common shares outstanding
|
140,512
|
|
|
127,124
|
|
|
135,876
|
|
|
127,114
|
|
The following is the reconciliation of
HTALP
’s FFO and Normalized FFO to net income attributable to common unitholders for the
three and six months ended June 30, 2016
and
2015
(in thousands, except per unit data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net income attributable to common unitholders
|
$
|
13,520
|
|
|
$
|
9,464
|
|
|
$
|
23,525
|
|
|
$
|
16,373
|
|
Depreciation and amortization expense related to investments in real estate
|
44,411
|
|
|
37,752
|
|
|
81,932
|
|
|
74,032
|
|
Gain on sale of real estate, net
|
(4,212
|
)
|
|
—
|
|
|
(4,212
|
)
|
|
—
|
|
Impairment
|
—
|
|
|
1,655
|
|
|
—
|
|
|
1,655
|
|
FFO attributable to common unitholders
|
$
|
53,719
|
|
|
$
|
48,871
|
|
|
$
|
101,245
|
|
|
$
|
92,060
|
|
Acquisition-related expenses
|
2,062
|
|
|
1,101
|
|
|
3,875
|
|
|
2,458
|
|
Loss (gain) on change in fair value of derivative financial instruments, net
|
658
|
|
|
(1,314
|
)
|
|
3,450
|
|
|
696
|
|
Loss (gain) on extinguishment of debt, net
|
22
|
|
|
(121
|
)
|
|
22
|
|
|
(121
|
)
|
Other normalizing items, net
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
89
|
|
Normalized FFO attributable to common unitholders
|
$
|
56,461
|
|
|
$
|
48,537
|
|
|
$
|
108,576
|
|
|
$
|
95,182
|
|
|
|
|
|
|
|
|
|
Net income attributable to common unitholders per diluted unit
|
$
|
0.10
|
|
|
$
|
0.07
|
|
|
$
|
0.17
|
|
|
$
|
0.13
|
|
FFO adjustments per diluted unit, net
|
0.28
|
|
|
0.31
|
|
|
0.58
|
|
|
0.59
|
|
FFO attributable to common unitholders per diluted unit
|
$
|
0.38
|
|
|
$
|
0.38
|
|
|
$
|
0.75
|
|
|
$
|
0.72
|
|
Normalized FFO adjustments per diluted unit, net
|
0.02
|
|
|
0.00
|
|
|
0.05
|
|
|
0.03
|
|
Normalized FFO attributable to common unitholders per diluted unit
|
$
|
0.40
|
|
|
$
|
0.38
|
|
|
$
|
0.80
|
|
|
$
|
0.75
|
|
|
|
|
|
|
|
|
|
Weighted average diluted common units outstanding
|
140,512
|
|
|
127,203
|
|
|
135,877
|
|
|
127,266
|
|
NOI, Cash NOI and Same-Property Cash NOI
NOI is a non-GAAP financial measure that is defined as net income or loss (computed in accordance with GAAP) before: (i) general and administrative expenses; (ii) acquisition-related expenses; (iii) depreciation and amortization expense; (iv) impairment; (v) interest expense and net change in fair value of derivative financial instruments; (vi) gain or loss on sales of real estate; (vii) gain or loss on extinguishment of debt; and (viii) other income or expense. We believe that NOI provides an accurate measure of the operating performance of our operating assets because NOI excludes certain items that are not associated with the management of our properties. Additionally, we believe that NOI is a widely accepted measure of comparative operating performance of REITs. However, our use of the term NOI may not be comparable to that of other REITs as they may have different methodologies for computing this amount. NOI should not be considered as an alternative to net income or loss (computed in accordance with GAAP) as an indicator of our financial performance. NOI should be reviewed in connection with other GAAP measurements.
Cash NOI is a non-GAAP financial measure which excludes from NO
I: (i) straight-line rent adjustments; (ii) amortization of below and above market leases/leasehold interests; and (iii) lease termination fees. Contractual base rent, contractual rent increases, contractual rent concessions and changes in occupancy or lease rates upon commencement and expiration of leases are a primary driver of our revenue performance. We believe that Cash NOI, which removes the impact of straight-line rent adjustments, provides another measurement of the operating performance of our operating assets. Additionally, we believe that Cash NOI is a widely accepted measure of comparative operating performance of REITs. However, our use of the term Cash NOI may not be comparable to that of other REITs as they may have different methodologies for computing
this amount. Cash NOI should not be considered as an alternative to net income or loss (computed in accordance with GAAP) as an indicator of our financial performance. Cash NOI should be reviewed in connection with other GAAP measurements.
To facilitate the comparison of Cash NOI between periods, we calculate comparable amounts for a subset of our owned properties referred to as “Same-Property”. Same-Property Cash NOI excludes properties which have not been owned and operated by us during the entire span of all periods presented, excluding properties intended for disposition in the near term, notes receivable interest income and certain non-routine items. Same-Property Cash NOI should not be considered as an alternative to net income or loss (computed in accordance with GAAP) as an indicator of our financial performance. Same-Property Cash NOI should be reviewed in connection with other GAAP measurements.
The following is the reconciliation of HTA’s and
HTALP
’s NOI, Cash NOI and Same-Property Cash NOI to net income for the
three and six months ended June 30, 2016
and
2015
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net income
|
$
|
13,516
|
|
|
$
|
9,488
|
|
|
$
|
23,552
|
|
|
$
|
16,430
|
|
General and administrative expenses
|
6,813
|
|
|
6,224
|
|
|
13,586
|
|
|
12,799
|
|
Acquisition-related expenses
|
2,062
|
|
|
1,101
|
|
|
3,875
|
|
|
2,458
|
|
Depreciation and amortization expense
|
44,738
|
|
|
38,066
|
|
|
82,566
|
|
|
74,661
|
|
Impairment
|
—
|
|
|
1,655
|
|
|
—
|
|
|
1,655
|
|
Interest expense and net change in fair value of derivative financial instruments
|
15,306
|
|
|
13,665
|
|
|
32,871
|
|
|
30,034
|
|
Gain on sale of real estate, net
|
(4,212
|
)
|
|
—
|
|
|
(4,212
|
)
|
|
—
|
|
Loss (gain) on extinguishment of debt, net
|
22
|
|
|
(121
|
)
|
|
22
|
|
|
(121
|
)
|
Other income
|
(72
|
)
|
|
(4
|
)
|
|
(125
|
)
|
|
(19
|
)
|
NOI
|
$
|
78,173
|
|
|
$
|
70,074
|
|
|
$
|
152,135
|
|
|
$
|
137,897
|
|
Straight-line rent adjustments, net
|
(1,024
|
)
|
|
(2,066
|
)
|
|
(2,475
|
)
|
|
(4,085
|
)
|
Amortization of below and above market leases/leasehold interests, net
|
87
|
|
|
572
|
|
|
520
|
|
|
1,152
|
|
Lease termination fees
|
(10
|
)
|
|
—
|
|
|
(26
|
)
|
|
(11
|
)
|
Cash NOI
|
$
|
77,226
|
|
|
$
|
68,580
|
|
|
$
|
150,154
|
|
|
$
|
134,953
|
|
Non Same-Property Cash NOI
|
(11,977
|
)
|
|
(5,270
|
)
|
|
(21,123
|
)
|
|
(9,775
|
)
|
Same-Property Cash NOI
(1)
|
$
|
65,249
|
|
|
$
|
63,310
|
|
|
$
|
129,031
|
|
|
$
|
125,178
|
|
|
|
|
|
|
|
|
|
(1) Same-Property includes 280 and 278 buildings for the three and six months ended June 30, 2016 and 2015.
|
Liquidity and Capital Resources
Our primary sources of cash include: (i) cash flow from operations; (ii) borrowings under our unsecured revolving credit facility; (iii) net proceeds from the issuances of debt and equity securities; and (iv) proceeds from the dispositions of non-core buildings or buildings located outside our key markets. During the next 12 months our primary uses of cash are expected to include: (i) the funding of acquisitions of MOBs and other facilities that serve the healthcare industry; (ii) capital expenditures; (iii) the payment of operating expenses; (iv) debt service payments, including principal payments; and (v) the payment of dividends to our stockholders. We anticipate cash flow from operations, restricted cash and reserve accounts and our unsecured revolving credit facility, if needed, will be sufficient to fund our operating expenses, capital expenditures and dividends to stockholders. Investments and maturing indebtedness may require funds from the issuance of debt and/or equity securities or proceeds from sales of real estate.
As of
June 30, 2016
, we had liquidity of
$591.6 million
, including
$583.5 million
available under our unsecured revolving credit facility (includes the impact of
$5.5 million
of outstanding letters of credit) and
$8.1 million
of cash and cash equivalents.
As of
June 30, 2016
,
$177.1 million
was available for issuance under our $300.0 million ATM program. In addition, we had unencumbered properties with a gross book value of
$3.4 billion
. The unencumbered properties may be used as collateral to secure additional financings in future periods or to refinance our current debt as it becomes due. Our ability to raise funds from future debt and equity issuances is dependent on our investment grade credit ratings, general economic and market conditions and our operating performance.
When we acquire a property, we prepare a capital plan that contemplates the estimated capital needs of that investment. In addition to operating expenses, capital needs may also include costs of refurbishment, tenant improvements or other major capital expenditures. The capital plan for each investment will be adjusted through ongoing, regular reviews of our portfolio or as necessary to respond to unanticipated additional capital needs. As of
June 30, 2016
, we estimate that our expenditures for capital improvements for the remainder of 2016 will range from
$15 million
to
$20 million
depending on leasing activity. As of
June 30, 2016
, we had
$9.5 million
of restricted cash and reserve accounts for such capital expenditures. We cannot provide assurance, however, that we will not exceed these estimated expenditure levels.
If we experience lower occupancy levels, reduced rental rates, reduced revenues as a result of asset sales, or increased capital expenditures and leasing costs compared to historical levels due to competitive market conditions for new and renewal leases, the effect would be a reduction of net cash provided by operating activities. If such a reduction of net cash provided by operating activities is realized, we may have a cash flow deficit in subsequent periods. Our estimate of net cash available is based on various assumptions which are difficult to predict, including the levels of our leasing activity and related leasing costs. Any changes in these assumptions could impact our financial results and our ability to fund working capital and unanticipated cash needs.
Cash Flows
The following is a summary of our cash flows for the
six months ended June 30, 2016
and
2015
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2016
|
|
2015
|
|
Change
|
Cash and cash equivalents - beginning of period
|
$
|
13,070
|
|
|
$
|
10,413
|
|
|
$
|
2,657
|
|
Net cash provided by operating activities
|
96,400
|
|
|
87,166
|
|
|
9,234
|
|
Net cash used in investing activities
|
(335,644
|
)
|
|
(232,926
|
)
|
|
(102,718
|
)
|
Net cash provided by financing activities
|
234,322
|
|
|
151,924
|
|
|
82,398
|
|
Cash and cash equivalents - end of period
|
$
|
8,148
|
|
|
$
|
16,577
|
|
|
$
|
(8,429
|
)
|
Net cash provided by operating activities increased in
2016
primarily due to the impact of our 2015 and 2016 acquisitions, contractual rent increases and improved operating efficiencies, partially offset by our
2015
and 2016 dispositions. We anticipate cash flows from operating activities to increase as a result of the above items and continued leasing activity in our existing portfolio.
For the
six months ended June 30, 2016
, net cash used in investing activities primarily related to the investment in real estate of
$336.8 million
and capital expenditures of
$21.8 million
, partially offset by proceeds from the sale of real estate of
$23.4 million
. For the
six months ended June 30, 2015
, net cash used in investing activities primarily related to the investment in real estate of
$224.3 million
and capital expenditures of
$13.1 million
. We anticipate cash flows used in investing activities to increase as we continue to acquire more properties.
For the
six months ended June 30, 2016
, net cash provided by financing activities primarily related to the net proceeds of shares of common stock issued of
$293.0 million
and net borrowings of
$43.0 million
on our Unsecured Credit Agreement, partially offset by dividends paid to holders of our common stock of
$76.0 million
. For the
six months ended June 30, 2015
, net cash provided by financing activities primarily related to net borrowings of
$294.0 million
on our Unsecured Credit Agreement, partially offset by dividends paid to holders of our common stock of
$72.6 million
and payments on our mortgage and term loans of
$67.2 million
.
Dividends
The amount of dividends HTA pays to its stockholders is determined by its Board of Directors, in its sole discretion, and is dependent on a number of factors, including funds available, our financial condition, capital expenditure requirements and annual dividend distribution requirements needed to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended. HTA has paid monthly or quarterly dividends since February
2007
, and if our investments produce sufficient cash flow, we expect to continue to pay dividends to our stockholders. Because our cash available for dividend distributions in any year may be less than
90%
of our taxable income for the year, we may obtain the necessary funds through borrowings, issuing new securities or selling assets to pay out enough of our taxable income to satisfy our dividend distribution requirement. HTA’s organizational documents do not establish a limit on dividends that may constitute a return of capital for federal income tax purposes. The dividend HTA pays to its stockholders is equal to the distributions received from
HTALP
in accordance with the terms of
HTALP
’s partnership agreement. It is HTA’s intention to continue to pay dividends. However, HTA’s Board of Directors may reduce our dividend rate and HTA cannot guarantee the timing and amount of dividends that it may pay in the future, if any.
For the
six months ended June 30, 2016
, HTA paid cash dividends of
$76.0 million
. In July 2016, HTA paid cash dividends of
$40.6 million
for the quarter ended
June 30, 2016
. On
August 1, 2016
, HTA declared a quarterly cash dividend of
$0.30
per share to be paid on
October 7, 2016
to stockholders of record of its common stock on
October 3, 2016
.
Financing
We have historically maintained a low leveraged balance sheet and intend to continue to maintain this structure over the long run. However, our total leverage may fluctuate on a short term basis as we execute our business strategy. As of
June 30, 2016
, our leverage ratio of debt to capitalization was
26.2%
.
As of
June 30, 2016
, we had debt outstanding of
$1.6 billion
and the weighted average interest rate was
3.25%
per annum, inclusive of the impact of our interest rate swaps. The following is a summary of our unsecured and secured debt. See
Note 7 - Debt
to our accompanying condensed consolidated financial statements for a further discussion of our debt.
Unsecured Revolving Credit Facility
As of
June 30, 2016
,
$583.5 million
was available on our unsecured revolving credit facility. Our unsecured revolving credit facility matures in
January 2020
. In February 2015, we executed an amendment to the Unsecured Credit Agreement which added an additional lender and increased the amount available under the unsecured revolving credit facility by
$50.0 million
to
$850.0 million
. The other existing terms of the Unsecured Credit Agreement were unchanged.
Unsecured Term Loans
As of
June 30, 2016
, we had
$455.0 million
of unsecured term loans outstanding, comprised of a
$300.0 million
term loan under our Unsecured Credit Agreement and a
$155.0 million
term loan, both maturing in 2019. The
$300.0 million
term loan includes a one-year extension exercisable at the option of the borrower, subject to certain conditions.
Unsecured Senior Notes
As of
June 30, 2016
, we had
$300.0 million
of unsecured senior notes that mature in
July 2021
, and
$300.0 million
of unsecured senior notes that mature in
April 2023
.
Mortgage Loans
During the
six months ended June 30, 2016
, we made payments of
$22.8 million
on our mortgage loans and have
$30.5 million
of principal payments due on current outstanding indebtedness during the remainder of 2016.
Commitments and Contingencies
There have been no material changes from the commitments and contingencies disclosed in our 2015 Annual Report on Form 10-K.
Debt Service Requirements
We are required by the terms of our applicable loan agreements to meet certain financial covenants, such as minimum net worth and liquidity, and reporting requirements, among others. As of
June 30, 2016
, we believe that we were in compliance with all such covenants and we are not aware of any covenants that we are reasonably likely not to satisfy.
Off-Balance Sheet Arrangements
As of and during the
six months ended June 30, 2016
, we had no off-balance sheet arrangements.
Inflation
We are exposed to inflation risk as income from future long-term leases is the primary source of our cash flows from operations. There are provisions in the majority of our tenant leases that protect us from the impact of normal inflation. These provisions include rent escalations, reimbursement billings for operating expense pass-through charges and real estate tax and insurance reimbursements on a per square foot allowance. However, due to the long-term nature of our leases, among other factors, the leases may not reset frequently enough to cover inflation.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There were no material changes in the information regarding market risk that was provided in our 2015 Annual Report on Form 10-K. The table below presents, as of
June 30, 2016
, the principal amounts of our fixed and variable debt and the weighted average interest rates, excluding the impact of interest rate swaps, by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes (in thousands, except interest rates):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected Maturity Date
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
Thereafter
|
|
Total
|
Fixed rate debt
|
$
|
30,014
|
|
|
$
|
116,422
|
|
|
$
|
14,196
|
|
|
$
|
9,016
|
|
|
$
|
22,672
|
|
|
$
|
692,903
|
|
|
$
|
885,223
|
|
Weighted average interest rate on fixed rate debt (per annum)
|
6.02
|
%
|
|
5.92
|
%
|
|
6.17
|
%
|
|
5.52
|
%
|
|
6.1
|
%
|
|
3.76
|
%
|
|
4.23
|
%
|
Variable rate debt
|
$
|
471
|
|
|
$
|
987
|
|
|
$
|
1,050
|
|
|
$
|
456,119
|
|
|
$
|
288,123
|
|
|
$
|
8,626
|
|
|
$
|
755,376
|
|
Weighted average interest rate on variable rate debt based on forward rates in effect as of June 30, 2016 (per annum)
|
2.37
|
%
|
|
2.43
|
%
|
|
2.52
|
%
|
|
2.29
|
%
|
|
1.82
|
%
|
|
2.82
|
%
|
|
1.75
|
%
|
As of
June 30, 2016
, we had
$1.6 billion
fixed and variable rate debt with interest rates ranging from
1.55%
to
6.49%
per annum and a weighted average interest rate of
3.09%
per annum, excluding the impact of interest rate swaps. We had
$885.2 million
(excluding net premium/discount and deferred financing costs) of fixed rate debt with a weighted average interest rate of
4.23%
per annum and
$755.4 million
(excluding net premium/discount and deferred financing costs) of variable rate debt with a weighted average interest rate of
1.75%
per annum as of
June 30, 2016
, excluding the impact of interest rate swaps.
As of
June 30, 2016
, the fair value of our fixed rate debt was
$924.8 million
and the fair value of our variable rate debt was
$762.3 million
based upon prevailing market rates as of
June 30, 2016
.
As of
June 30, 2016
, we had interest rate swaps outstanding that effectively fix
$180.7 million
of our variable rate debt. Including the impact of these interest rate swaps, the effective rate on our variable rate and total debt is
2.10%
and
3.25%
per annum, respectively.
In addition to changes in interest rates, the value of our future properties is subject to fluctuations based on changes in local and regional economic conditions and changes in the creditworthiness of tenants, which may affect our ability to refinance our debt if necessary.
Item 4. Controls and Procedures
Healthcare Trust of America, Inc.
HTA’s management is responsible for establishing and maintaining disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to HTA’s management, including HTA’s Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer and principal accounting officer), to allow timely decisions regarding required disclosure.
As of
June 30, 2016
, an evaluation was conducted by HTA under the supervision and with the participation of its management, including HTA’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, HTA’s Chief Executive Officer and the Chief Financial Officer concluded that HTA’s disclosure controls and procedures were effective.
There were no changes in HTA’s internal control over financial reporting that occurred during the quarter ended
June 30, 2016
that have materially affected, or are reasonably believed to be likely to materially affect, HTA’s internal control over financial reporting.
August 2, 2016
Healthcare Trust of America Holdings, LP
HTALP
’s management is responsible for establishing and maintaining disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to
HTALP
’s management, including HTA’s Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer and principal accounting officer), to allow timely decisions regarding required disclosure.
As of
June 30, 2016
, an evaluation was conducted by
HTALP
under the supervision and with the participation of its management, including HTA’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, HTA’s Chief Executive Officer and the Chief Financial Officer, on behalf of HTA in its capacity as general partner of
HTALP
, concluded that
HTALP
’s disclosure controls and procedures were effective.
There were no changes in
HTALP
’s internal control over financial reporting that occurred during the quarter ended
June 30, 2016
that have materially affected, or are reasonably believed to be likely to materially affect,
HTALP
’s internal control over financial reporting.
August 2, 2016
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are subject to claims and litigation arising in the ordinary course of business. We do not believe any liability from any reasonably foreseeable disposition of such claims and litigation, individually or in the aggregate, would have a material adverse effect on our accompanying condensed consolidated financial statements.
Item 1A. Risk Factors
There have been no material changes from the risk factors previously disclosed in our 2015 Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
During the
three months ended June 30, 2016
, HTA repurchased shares of its common stock as follows:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
Total Number of
Shares Purchased
(1) (2)
|
|
Average Price
Paid per Share
(1) (2)
|
|
Total Number of
Shares Purchased
as Part of
Publicly Announced
Plan or Program
|
|
Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
|
April 1, 2016 to April 30, 2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
May 1, 2016 to May 31, 2016
|
|
4,543
|
|
|
30.54
|
|
|
—
|
|
|
—
|
|
June 1, 2016 to June 30, 2016
|
|
7,847
|
|
|
31.39
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
(1) Purchases mainly represent shares withheld to satisfy withholding obligations on the vesting of restricted shares. The price paid per share was the then closing price of our common stock on the NYSE.
|
(2) For each share of common stock redeemed by HTA, HTALP redeems a corresponding number of units in the operating partnership. Therefore, the units in the operating partnership repurchased by HTALP are the same as the shares of common stock repurchased by HTA as shown above.
|
Item 6. Exhibits
The exhibits listed on the Exhibit Index (following the signatures section of this Quarterly Report) are included, and incorporated by reference, in this Quarterly Report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
Healthcare Trust of America, Inc.
|
|
|
|
|
By:
|
/s/ Scott D. Peters
|
|
Chief Executive Officer, President and Chairman
|
|
Scott D. Peters
|
|
(Principal Executive Officer)
|
Date:
|
August 2, 2016
|
|
|
|
|
|
|
By:
|
/s/ Robert A. Milligan
|
|
Chief Financial Officer
|
|
Robert A. Milligan
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
Date:
|
August 2, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Healthcare Trust of America Holdings, LP
|
|
|
|
|
By:
|
Healthcare Trust of America, Inc.,
|
|
its General Partner
|
|
|
|
|
|
|
By:
|
/s/ Scott D. Peters
|
|
Chief Executive Officer, President and Chairman
|
|
Scott D. Peters
|
|
(Principal Executive Officer)
|
Date:
|
August 2, 2016
|
|
|
|
|
|
|
By:
|
/s/ Robert A. Milligan
|
|
Chief Financial Officer
|
|
Robert A. Milligan
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
Date:
|
August 2, 2016
|
|
|
EXHIBIT INDEX
The following exhibits are included, or incorporated by reference, in this Quarterly Report for the quarter ended
June 30, 2016
(and are numbered in accordance with Item 601 of Regulation S-K).
|
|
|
10.1*†
|
Amended and Restated Employment Agreement between Healthcare Trust of America, Inc. and Scott D. Peters, effective July 8, 2016.
|
10.2*†
|
Amended and Restated Employment Agreement between Healthcare Trust of America, Inc. and Robert A. Milligan, effective July 8, 2016.
|
10.3*†
|
Amended and Restated Employment Agreement between Healthcare Trust of America, Inc. and Mark D. Engstrom, effective July 8, 2016.
|
10.4*†
|
Amended and Restated Employment Agreement between Healthcare Trust of America, Inc. and Amanda L. Houghton, effective July 8, 2016.
|
31.1*
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Healthcare Trust of America, Inc.
|
31.2*
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Healthcare Trust of America, Inc.
|
31.3*
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Healthcare Trust of America Holdings, LP.
|
31.4*
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Healthcare Trust of America Holdings, LP.
|
32.1**
|
Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002 for Healthcare Trust of America Inc.
|
32.2**
|
Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002 for Healthcare Trust of America, Inc.
|
32.3**
|
Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002 for Healthcare Trust of America Holdings, LP.
|
32.4**
|
Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002 for Healthcare Trust of America Holdings, LP.
|
101.INS*
|
XBRL Instance Document.
|
101.SCH*
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
†
|
Compensatory plan or arrangement.
|
Exhibit 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(Scott D. Peters)
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “
Agreement
”) is entered into and effective as of July 8, 2016 (the “
Effective Date
”), by and between Healthcare Trust of America, Inc., a Maryland corporation (the “
Company
”), and Scott D. Peters (the “
Executive
”).
WHEREAS, the parties had previously entered into that certain employment agreement dated as of January 3, 2013, and amended as of December 3, 2014 (the “
Existing Agreement
”) which set forth the employment arrangement of the Executive with the Company.
WHEREAS, the parties hereto wish to supersede and replace the Existing Agreement and enter into the arrangements set forth herein with respect to the terms and conditions of the Executive’s continued employment with the Company from and after the Effective Date.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1
EMPLOYMENT AGREEMENT
This Agreement shall supersede and replace the Existing Agreement as of the Effective Date, which shall be of no further force and effect as of the Effective Date. On the terms and conditions set forth in this Agreement, the Company agrees to employ the Executive, and the Executive agrees to be employed by the Company, for the Employment Period set forth in
Section 2
and in the positions and with the duties set forth in
Section 3
. Terms used herein with initial capitalization are defined in
Section 11
.
SECTION 2
EMPLOYMENT PERIOD
Unless earlier terminated pursuant to
Section 7
hereof, the term of this Agreement and the Executive’s employment hereunder shall begin as of the Effective Date and shall conclude on the fourth (4th) anniversary of the Effective Date (the “
Expiration Date
”). The period of the Executive’s employment under this Agreement is herein referred to as the “
Employment Period
.” For purposes of clarity, as provided in
Section 8.7
hereof, a termination of the Executive’s employment upon or following the Expiration Date shall not constitute either a termination of the Executive’s employment by the Company without “Cause” or grounds for a termination by the Executive for “Good Reason” for purposes of this Agreement. If the Company intends to make an offer to renew this Agreement for any period beyond the Expiration Date, the Company shall use reasonable efforts to provide the Executive notice of such intention at least ninety (90) days before the Expiration Date;
provided
,
however
, that in no event shall the Company be legally obligated to provide such notice and neither the provision of such notice nor any failure to provide such notice shall create any implied obligation to renew this Agreement.
SECTION 3
POSITION AND DUTIES; BOARD SERVICE
3.1
Position and Duties
. The Executive shall serve as President and Chief Executive Officer of the Company during the Employment Period. As President and Chief Executive Officer of the Company, the Executive shall render executive, policy and other management services to the Company of the type customarily performed by persons serving in a similar capacity and as reasonably determined by the Board with regard to the Executive’s status
and position within the Company. The Company shall provide the Executive with all necessary authority and resources to discharge the Executive’s responsibilities under laws and regulations applicable to the Company and the Executive.
3.2
Nomination for Election to the Board
. Provided that the Executive is in compliance with the material terms of this Agreement, the Board shall nominate the Executive to serve on the Board every year during the Employment Period, and the Executive shall serve on the Board as the Chairman of the Board;
provided
,
however
, that the Executive’s service on the Board shall be subject to election by the Company’s stockholders.
3.3
Reporting
. The Executive shall report directly to the Board. The Executive shall not be required to take direction from or report to any other person.
3.4
Commitment; Outside Interests
. The Executive shall devote the Executive’s good faith efforts and full business time to the performance of the Executive’s duties hereunder and the advancement of the business and affairs of the Company during the Employment Period. It is understood that the Executive may, consistent with the other provisions of this Agreement, pursue other outside interests, including, but not limited to, devoting time to (A) serving on corporate, civic or charitable boards or committees, (B) delivering lectures, fulfilling speaking engagements or teaching at educational institutions, and (C) managing the Executive’s personal investments, so long as such activities do not interfere with the performance of Executive’s responsibilities as President and Chief Executive Officer of the Company in accordance with this Agreement.
SECTION 4
PLACE OF PERFORMANCE
During the Employment Period, the Executive’s primary place of employment and work location shall be Scottsdale, Arizona (except as the Executive and the Board shall otherwise mutually agree in writing), except for reasonable travel on Company business and as otherwise consented to by the Executive, in the Executive’s sole discretion.
SECTION 5
COMPENSATION
5.1
Base Salary
. During the Employment Period, the Company shall pay to the Executive an annual base salary (the “
Base Salary
”), which initially shall be $900,000.00. The Base Salary shall be reviewed by the Compensation Committee of the Board (the “
Compensation Committee
”) no less frequently than annually and may be increased (but not decreased) at the discretion of the Compensation Committee. If the Executive’s Base Salary is increased, the increased amount shall be the Base Salary for the remainder of the Employment Period. The Base Salary shall be payable semi-monthly or in such other installments as shall be consistent with the Company’s payroll procedures in effect from time to time.
5.2
Annual Bonus
. During the Employment Period, the Executive shall be eligible to earn an annual performance bonus in an amount determined in the sole discretion of the Compensation Committee for each year, with a target of 200% of the Base Salary (the “
Target Bonus
”). It is the intention of the parties hereto that the Company shall establish bonus parameters for the Executive with respect to each fiscal year of the Employment Period. The Executive acknowledges and agrees that the Executive’s annual bonus is not guaranteed at any level but, rather, it is to be determined solely by the Compensation Committee, in its sole discretion. The Compensation Committee shall establish the performance goals and objectives on which the Executive’s annual bonus shall be based.
5.3
Equity Compensation
.
(a)
Prior Grants
. The Executive has previously received equity incentive awards from the Company that are outstanding as of the Effective Date (the “
Prior Grants
”). The Prior Grants shall vest in the time and manner set forth in the documents evidencing such Prior Grants. The Prior Grants were made pursuant to, and shall remain subject to, the terms and conditions of the Company’s Amended and Restated 2006 Incentive Plan (the “
Plan
”), as in effect on the dates of such Prior Grants, and the applicable award agreement.
(b)
New Restricted Stock Grant
. Subject to the approval of the Compensation Committee and the conditions and restrictions herein, within thirty (30) days after the Effective Date, the Company shall grant to the Executive an award of 150,000 restricted shares of the Company’s Common Stock (the “
New Grant
”). The New Grant shall vest as to one-fourth of the shares subject to the New Grant on January 1, 2017 (the “
Initial Vesting Date
”) and as to an additional one-fourth of such shares on each of the next three (3) anniversaries of the Initial Vesting Date. The New Grant shall be made pursuant to, and, except as expressly set forth herein, shall be subject to the terms and conditions of, the Plan and the Company’s standard form of Restricted Stock Agreement.
(c)
Future Equity Grants
. The Executive shall continue to be eligible for equity incentive grants under the Plan, with the type, amount and terms of any such grants to be determined by the Compensation Committee in its sole discretion;
provided
,
however
, that the Executive’s annual equity incentive opportunity for each year during the Employment Period (subject to pro-ration for any partial year during the Employment Period) shall have a target value of 300% of the Base Salary.
5.4
Benefits
. During the Employment Period, the Executive shall be entitled to all employee benefits and perquisites made available to senior executives of the Company, including, without limitation, group medical, dental, vision, life insurance, long-term disability insurance, retirement, pension, 401(k) savings plans and/or prescription drug plan coverage, subject to the condition that the Executive is eligible for participation in any such plans. The Company shall pay 100% of the premium cost of the Company’s health insurance coverage provided to the Executive (and the Executive’s dependents, if applicable) by the Company from time to time. Nothing contained in this Agreement shall prevent the Company from terminating plans, changing carriers or effecting modifications in employee benefits coverage for the Executive as long as such modifications affect all similarly situated senior executives of the Company.
5.5
Vacation; Holidays
. During the Employment Period, the Executive shall be entitled to all public holidays observed by the Company and vacation days in accordance with the applicable vacation policies for senior executives of the Company, which vacation days shall be taken at a reasonable time or times. The Executive shall be entitled to five (5) weeks vacation per year in accordance with the general policies of the Company and subject to applicable law;
provided
,
however
, that accrual of vacation time is capped at a maximum of five (5) weeks and no more than one (1) week of any unused vacation may carry over from calendar year to calendar year.
5.6
Directors and Officers Insurance and Indemnification
. The Company shall maintain insurance to insure the Executive against claims arising out of an alleged wrongful act by the Executive while acting as a director or officer of the Company or one of its subsidiaries. The Company shall further indemnify and exculpate the Executive from money damages incurred as a result of claims arising out of an alleged wrongful act by the Executive while acting as an officer, director or employee of the Company, or of its subsidiaries, to the fullest extent permitted under applicable law, subject to the terms of the Amended and Restated Indemnification Agreement between the Company and Executive dated as of December 20, 2010, as such agreement may be amended from time to time.
5.7
Withholding Taxes and Other Deductions
. To the extent required by law, the Company shall withhold from any payments due to the Executive under this Agreement any applicable federal, state or local taxes and such other deductions as are prescribed by law or authorized by the Executive. The Executive may, subject to prior approval by the Compensation Committee, elect that any withholding required upon any taxable event in connection with an award granted under the Plan be satisfied, in whole or in part, by withholding from any shares otherwise delivered or deliverable in respect of the award a number of shares having a Fair Market Value (as defined in the Plan) on the date of withholding equal to the minimum amount (and not any greater amount) required to be withheld for tax purposes, all in accordance with such procedures as the Compensation Committee establishes. All such elections shall be subject to any restrictions or limitations that the Compensation Committee, in its sole discretion, deems appropriate.
5.8
Nonqualified Deferred Compensation Plan
. The Company may, at the discretion of the Board, establish a nonqualified deferred compensation plan for the Executive. Under such plan, the Executive may defer payment of certain portions of the Executive’s compensation (including, without limitation, Base Salary and bonuses) specified by the Executive, which is otherwise payable to the Executive, in accordance with the terms established by the Company and the requirements of Section 409A of the Code.
5.9
Relocation Allowance
. In the event that the Executive and the Board mutually agree in writing to any relocation of the Company during the Employment Period, the Company shall pay the Executive a reasonable relocation allowance as the Company and the Executive shall mutually determine.
SECTION 6
EXPENSES
During the Employment Period, the Executive is expected and is authorized, subject to the business expense policies as determined by the Company, to incur reasonable expenses in the performance of the Executive’s duties hereunder, including the costs of entertainment, travel, and similar business expenses. During the Employment Period, the Company shall promptly reimburse the Executive for all such expenses upon periodic presentation by the Executive of an accounting of such expenses on terms applicable to senior executives of the Company.
SECTION 7
TERMINATION OF EMPLOYMENT
7.1
Notice of Termination
. Any termination of the Executive’s employment by the Company or by the Executive shall be communicated by written Notice of Termination to the other party hereto in accordance with
Section 11
. For purposes of this Agreement, a “
Notice of Termination
” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon, if any, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employment Period under the provision so indicated. Termination of the Employment Period shall take effect on the Date of Termination (as defined in
Section 11.14
hereof). Prior to the Expiration Date, the Employment Period may be terminated under the following circumstances only:
7.2
Death
. The Executive’s employment shall terminate immediately upon the Executive’s death.
7.3
By the Company
. The Company may terminate the Executive’s employment:
(a) if the Executive shall have been unable to perform, in the opinion of a competent physician selected by the Board (provided that Executive shall also be able to select a physician and an independent review in the event there is a dispute), any or all of the Executive’s material duties hereunder, either with or without reasonable accommodation, by reason of illness, physical or mental disability or other similar incapacity, which inability shall continue for more than three consecutive months, or any six months in a twelve-month period (a “
Disability
”); or
(b) with or without Cause (as defined in
Section 11.14
hereof).
7.4
By the Executive
. The Executive may terminate the Executive’s employment at any time for Good Reason or without Good Reason (as defined in
Section 11.14
hereof).
7.5
Return of Information
. The Executive agrees to deliver to the Company at the termination of the Executive’s employment, or at any other time so demanded by the Company, all records, files, software, software code, memoranda, reports, price lists, customer lists, drawings, plans, sketches, documents, technical information, contracts, sales or marketing materials, personnel information, financial information (including budgets), business and strategic plans, and the like (together with all copies of such documents and things) relating to the business of the Company and its Affiliates and their predecessors which the Executive may then possess or have under the Executive’s control.
SECTION 8
COMPENSATION UPON TERMINATION
The Executive’s employment must be terminated during the Employment Period in order for the Executive to receive any payment or other benefit under this
Section 8
.
8.1
Death
. If the Executive’s employment terminates during the Employment Period as a result of the Executive’s death, the Company shall pay to the Executive’s estate, or as may be directed by the legal representatives of such estate, within thirty (30) days following the Date of Termination, any accrued but unpaid Base Salary through the Date of Termination. All other unpaid amounts, if any, which the Executive has accrued and is entitled to as of the Date of Termination in connection with any fringe benefits or under any bonus or incentive compensation plan or program of the Company pursuant to
Section 5
shall be paid in accordance with the terms of such arrangements. In addition, if the Employment Period terminates as a result of the Executive’s death, then all equity-based awards granted by the Company that are outstanding and unvested on the Date of Termination shall become fully vested on the Date of Termination. The Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan and any life insurance, death in service or other equivalent policy for the benefit of the Executive).
8.2
Disability
. If the Company terminates the Executive’s employment during the Employment Period because of the Executive’s Disability, the Company shall pay to the Executive within thirty (30) days following the Date of Termination any accrued but unpaid Base Salary through the Date of Termination. All other unpaid amounts, if any, which the Executive has accrued and is entitled to as of the Date of Termination in connection with any fringe benefits or under any bonus or incentive compensation plan or program of the Company pursuant to
Section 5
shall be paid in accordance with the terms of such arrangements. In addition, if the Company terminates the Executive’s employment during the Employment Period because of the Executive’s Disability, then all equity-based awards granted by the Company that are outstanding and unvested on the Date of Termination shall become fully vested on the Date of Termination, and the Executive shall be entitled to the COBRA payments provided under
Section 8.6(b)
. Except as otherwise set forth herein, the Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan and any disability or other medical insurance policy for the benefit of the Executive).
8.3
By the Company for Cause; By the Executive Without Good Reason
. If the Company terminates the Executive’s employment during the Employment Period for Cause or if the Executive terminates the Executive’s employment during the Employment Period without Good Reason, the Company shall pay to the Executive within thirty (30) days following the Date of Termination any accrued but unpaid Base Salary through the Date of Termination. All other unpaid amounts, if any, which the Executive has accrued and is entitled to as of the Date of Termination in connection with any fringe benefits or under any bonus or incentive compensation plan or program of the Company pursuant to
Section 5
shall be paid in accordance with the terms of such arrangements. Other than as set forth in this
Section 8.3
or otherwise set forth herein, the Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan).
8.4
By the Company Without Cause; By the Executive for Good Reason
. If the Company terminates the Executive’s employment during the Employment Period other than for Cause, Disability or death, or the Executive terminates the Executive’s employment during the Employment Period for Good Reason, the Company shall pay to the Executive within thirty (30) days following the Date of Termination any accrued but unpaid Base Salary through the Date of Termination. All other unpaid amounts, if any, which the Executive has accrued and is entitled to as of the Date of Termination in connection with any fringe benefits or under any bonus or incentive compensation plan or program of the Company pursuant to
Section 5
shall be paid in accordance with the terms of such arrangements. In addition, if such termination of the Executive’s employment occurs prior to the Expiration Date, the Executive shall be entitled to the Separation Benefits as defined in
Section 8.6
, upon the conditions set forth therein. The Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan).
8.5
General Release
. The Executive shall execute a customary general release in a form reasonably satisfactory to the Company in furtherance of this Agreement and as a condition to the receipt of any Separation Benefits (the “
Release
”). Nothing in this
Section 8
shall be deemed to operate or shall operate as a release, settlement or discharge of any liability of the Executive to the Company or others for any action or omission by the Executive, including, without limitation, any actions which formed, or could have formed, the basis for termination of the Executive’s employment for Cause.
8.6
Separation Benefits
. For purposes of this Agreement, “
Separation Benefits
” shall mean:
(a) payment by the Company to the Executive of:
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(1)
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the product of (x) the Executive’s Target Bonus for the year in which the Date of Termination occurs, and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365; and
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(2)
|
a severance benefit, in the amount equal to three (3) times the sum of (i) the Executive’s Base Salary at the rate in effect on the Date of Termination and (ii) the Executive’s Target Bonus for the fiscal year in which the Date of Termination occurs.
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Subject to
Section 11.13
hereof, the cash payments provided in
Section 8.6(a)
above shall be made by the Company in a lump sum on the sixtieth (60th) day following the Date of Termination.
(b) if the Executive elects to continue participation in any group medical, dental, vision and/or prescription drug plan benefits to which the Executive and/or the Executive’s eligible dependents would be entitled under Section 4980B (“
COBRA
”) of the Internal Revenue Code of 1986, as amended (the “
Code
”), then the Company shall pay or reimburse any applicable premium under COBRA for participation in such plans for a period of eighteen (18) months beginning on the Date of Termination, subject to the condition that the Executive remains eligible for participation in such plans; and
(c) all equity-based awards granted by the Company that are outstanding and unvested on the Date of Termination shall become fully vested on the Date of Termination.
Notwithstanding any other provisions herein to the contrary, the Executive’s receipt of the Separation Benefits shall be subject to and conditioned upon Executive’s compliance with the terms and conditions of
Section 9
of this Agreement and the Executive having executed, within forty-five (45) days after the Date of Termination, the Release and such Release having not been revoked within any revocation period provided by applicable law.
8.7
Termination Upon Expiration of the Employment Period
. If the Executive’s employment terminates upon or following the Expiration Date, the Company shall pay to the Executive within thirty (30) days following the Date of Termination any accrued but unpaid Base Salary through the Date of Termination, and all other unpaid amounts, if any, which the Executive has accrued and is entitled to as of the Date of Termination in connection with any fringe benefits or under any bonus or incentive compensation plan or program of the Company pursuant to
Section 5
shall be paid in accordance with the terms of such arrangements. Except as otherwise set forth herein, the Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan).
8.8
Non-Compete Payment for Time Period
. Upon the termination of the Executive’s employment for any reason other than the Executive’s death or a termination by the Company for Cause (whether such termination is by the Company or the Executive and whether such termination occurs before or after the Expiration Date), if the Company elects that the Executive shall be subject to the non-competition covenant following the Date of Termination as provided in
Section 9.2
, the Company shall pay to the Executive, in consideration for such covenant, an amount equal to seventy-five percent (75%) of the sum of (i) the Executive’s Base Salary at the rate in effect on the Date of Termination and (ii) the annual incentive bonus paid by the Company to the Executive for the fiscal year immediately preceding the fiscal year in which the Date of Termination occurs (the “
Non-Compete Payment
”);
provided
,
however
, that in the case of a termination of the Executive’s employment that occurs on or after the Expiration Date, the Company shall be required to provide the Executive written notice not less than twelve (12) months before the Expiration Date that it will require the Executive to comply with such non-competition covenant (and, if the Company does not timely provide such notice to the Executive prior to such a termination of the Executive’s employment by the Company, the Executive will not be subject to the non-competition covenant in
Section 9.2
). The Non-Compete Payment shall be paid to the Executive in a series of monthly installments over the applicable period in which the non-competition covenant applies. In the event the Executive breaches the non-competition covenant provided in
Section 9.2
or any
other provision of
Section 9
, the Executive shall not be entitled to receive any portion of the Non-Compete Payment (and the Executive shall be required to repay to the Company in full any portion of the Non-Compete Payment paid to the Executive prior to such breach). For purposes of clarity, the Company may elect that the Executive will not be subject to the non-competition covenant set forth in
Section 9.2
, in which case the Executive will not be entitled to any portion of the Non-Compete Payment provided in
Section 8.8
;
provided
,
however
, that the Company must make such election and notify the Executive no later than ten (10) days after the Date of Termination. If the Company elects that the Executive will be subject to this non-competition covenant, such covenant will apply for the entire Time Period following the Date of Termination.
8.9
Supplemental Non-Compete
. In addition to the non-competition covenant provided in
Section 9.2
, the Executive agrees that if the Executive’s employment with the Company terminates for any reason (other than termination by the Company for Cause or as a result of the Executive’s death), whether such termination is by the Company or the Executive and whether such termination occurs before or after the Expiration Date, the Executive shall not be employed by or
provide services to any Non-Compete Entity (as defined in
Section 9.2
) at any time during the period commencing on the date of such termination of the Executive’s employment and continuing through the date that is two (2) years after such termination date;
provided
,
however
, that the Company may at any time in the Company’s sole di
scretion provide for a shorter (but not a longer) period (such period, the “
Supplemental Non-Compete Period
”). During the Supplemental Non-Compete Period, all equity-based awards granted by the Company that are outstanding and unvested on the date of such termination of the Executive’s employment shall remain outstanding and continue to vest on their scheduled vesting dates during the Supplemental Non-Compete Period, with vesting subject in each case to the Executive’s continued compliance with the Executive’s obligations under this
Section 8.9
and the Executive’s other obligations under
Section 9
through the applicable vesting date and, to the extent such awards are outstanding and unvested on the last day of the Supplemental Non-Compete Period, shall become fully vested at the end of such period (or, if for any reason the Executive’s obligations under this
Section 8.9
do not apply following the date of such termination of the Executive’s employment, such awards shall become fully vested on the date of such termination). For avoidance of doubt, if the Executive breaches the Executive’s obligations under this
Section 8.9
, the Executive shall not be entitled to any further vesting of the Executive’s equity-based awards under this
Section 8.9
, and any then-unvested awards shall be forfeited to the Company without payment. Upon any vesting of the awards during or at the conclusion of the Supplemental Non-Compete Period pursuant to this
Section 8.9
, the Executive may elect to have any tax withholding obligations arising in connection with such vesting event be satisfied by a withholding of shares by the Company as contemplated by
Section 5.7
, and in the event it is determined that any such shares that may vest pursuant to this
Section 8.9
shall be treated as taxable income to the Executive before their scheduled vesting date, the Company shall cancel the required amount of remaining unvested shares (applied on a pro-rata basis across the applicable vesting installments) in order to satisfy any withholding tax obligations for the Executive, and such shares shall no longer be held by or subject to forfeiture by the Executive. Except as otherwise set forth herein, the Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan).
SECTION 9
RESTRICTIVE COVENANTS
9.1
Protection of Confidential Information
. The Executive hereby agrees that, during the Executive’s employment with the Company and thereafter, the Executive shall not, directly or indirectly, disclose or make available to any person, firm, corporation, association or other entity for any reason or purpose whatsoever, any Confidential Information (as defined below). The Executive further agrees that, upon the Date of Termination, all Confidential Information in the Executive’s possession that is in written or other tangible form shall be returned to the Company and shall not be retained by the Executive or furnished to any third party. Notwithstanding the foregoing, this Section 9 shall not apply to Confidential Information that (i) was publicly known at the time of disclosure to the Executive, (ii) becomes publicly known or available thereafter other than by any means in violation of this Agreement or any other duty owed to the Company by the Executive, (iii) is lawfully disclosed to the Executive by a third party, or (iv) is required to be disclosed by law or by any court, arbitrator or administrative or legislative body with actual or apparent jurisdiction to order the Executive to disclose or make accessible any information.
As used in this Agreement, “
Confidential Information
” means, without limitation, any non-public confidential or proprietary information disclosed to Executive or known by the Executive as a consequence of or through the Executive's relationship with the Company, in any form, including electronic media. Confidential Information also includes, but is not limited to, the Company's business plans and financial information, marketing plans, and business opportunities. Nothing herein shall limit in any way any obligation the Executive may have relating to Confidential Information under any other agreement with the Company.
The Executive recognizes that because the Executive’s work for the Company will bring the Executive into contact with confidential and proprietary information of the Company, the restrictions of this Section 9 are required for the reasonable protection of the Company and its investments and for the Company’s reliance on and confidence in the Executive.
9.2
Non-Competition
. If the Executive’s employment terminates for any reason other than a termination by the Company for Cause or due to the Executive’s death, the Executive agrees that, for the duration of the Time Limit and within the Geographical Limit (each as defined below) and, in the event of a termination of the Executive’s employment by the Company without Cause, subject to the notice requirement set forth in
Section 8.8
in the case of a termination on or after the Expiration Date, the Executive shall not, either directly or indirectly, or in any individual or representative capacity, be employed by or otherwise provide services to any publicly traded or non-traded REIT in the medical office building sector, including, without limitation (a) Physicians Realty Trust Inc. Northstar Securities, LLC, HCP Inc., Healthcare Realty Trust Incorporated, Welltower, Inc., Ventas Inc., Duke Realty Corp., Griffin-American Healthcare REIT, or American Realty Capital Healthcare Trust, (b) any Affiliates of any of the foregoing entities, or (c) any successors or assigns of any of the foregoing entities (a “
Non-Compete Entity
”).
The term “
Geographical Limit
” herein shall mean the United States. In the event a court of competent jurisdiction determines the geographic area as set forth herein is too broad, the parties agree to narrow such restriction to the geographic areas of the United States wherein the Company owns assets at the time of such determination. In the event a court of competent jurisdiction determines the geographic area as set forth herein is too broad, the parties hereto agree to narrow such restriction to the state in which the Executive’s primary resident office is situated. In the event a court of competent jurisdiction determines the geographic area as set forth herein is too broad, the parties hereto agree to narrow such restriction to the County in the state in which the Executive’s primary resident office is situated.
9.3
Non-Solicitation of Customers, Vendors and Others
. The Executive agrees, for the duration of the Time Limit that the Executive, either directly or indirectly, or in any individual or representative capacity, shall not request or solicit any of the Company’s investors, prospective investors, shareholders, health care institution relationships, tenants, targeted prospective tenants, brokers, dealers, agents or vendors to withdraw, curtail, cancel, or decrease the level of their business with and/or referrals to the Company or request that they do business with or provide referrals to any third party in competition with the Company.
9.4
Non-Solicitation of the Company’s Employees
. The Executive agrees, for the duration of the Time Limit that the Executive, either directly or indirectly, or in any individual or representative capacity, shall not request or solicit, or assist any third party in requesting or soliciting, any of the Company’s employees to terminate his/her employment with the Company or to accept employment with any third party in competition with the Company. Nothing herein shall prevent the Executive, directly or indirectly through the use of agents, employees or other representatives, from placing general advertisements in any widely-distributed media (such as newspapers and Internet postings) for employment directed at the public at large (as opposed to directed specifically at the Company’s employees) that have the effect of inducing or influencing any of the Company’s employees to terminate his/her employment with the Company.
9.5.
Time Limit
. The term “
Time Limit
” shall mean during the Executive’s employment with the Company and continuing for one (1) year after the date of termination of any such employment for any reason (regardless whether such termination occurs before or after the Expiration Date). In the event of a violation of any of the covenants contained in this
Section 9
, the Time Limit shall be extended by a period of time equal to that period beginning when the activities constituting the violation commenced, and ending when those activities terminated.
9.6.
Reasonableness of Limitations; Severability
. The Executive hereby acknowledges and agrees that the covenants and obligations made and undertaken in this
Section 9
are fair and reasonable in all respects, including, without limitation, with respect to duration, geographic area and scope of activity, and do not (and shall not) prevent the Executive from earning a livelihood. In the event that one or more of the provisions of the covenants made and undertaken in this
Section 9
is held invalid, void or unenforceable by any court of competent jurisdiction, such invalidity, voidness or unenforceability shall not render invalid, void or unenforceable any other part or provision of this Agreement. Further, if any of the provisions of the covenants made and undertaken in this
Section 9
are found to be invalid or unenforceable by a court or competent jurisdiction, such provisions shall be severed, modified or redefined by consideration of the reasonable concerns and needs of the Company such that the intent of the parties in agreeing to the provisions of this Agreement shall not be impaired and the provision in question shall be enforceable to the fullest extent permitted by applicable laws.
9.7.
Enforcement of Agreement
. The parties hereto agree that a violation by the Executive of any part of this
Section 9
shall cause irreparable damage to the Company which cannot be easily and fairly quantified. For that reason, the Executive agrees that the Company shall be entitled, as a matter of right, to seek an injunction from any court of competent jurisdiction, without the necessity of posting bond, restraining any further violation of this
Section 9
. This remedy shall be in addition to any other rights and remedies the Company may have pursuant to this Agreement, or law, including, specifically, the recovery of monetary damages, whether compensatory or punitive.
9.8
Survival
. This
Section 9
shall survive termination of this Agreement for any reason.
SECTION 10
SECTION 4999 OF THE CODE
10.1
Payments; Excise Tax
. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “
Payment
”) would be subject to the excise tax imposed by Section 4999 of the Code (the “
Excise Tax
”), then, prior to the making of any Payment to the Executive, a calculation shall be made comparing (i) the net benefit to the Executive of the Payment after payment of the Excise Tax, to (ii) the net benefit to the Executive if the Payment had been limited to the extent necessary to avoid being subject to the Excise Tax. If the amount calculated under (i) above is less than the amount calculated under (ii) above, then the Payment shall be limited to the extent necessary to avoid being subject to the Excise Tax (the “
Reduced Amount
”). The reduction of the Payments due hereunder, if applicable, shall be made by first reducing cash Payments and then, to the extent necessary, reducing those Payments having the next highest ratio of Parachute Value to actual present value of such Payments as of the date of the change of control, as determined by the Determination Firm (as defined in
Section 10(b)
below). For purposes of this
Section 10
, present value shall be determined in accordance with Section 280G(d)(4) of the Code. For purposes of this
Section 10
, the “
Parachute Value
” of a Payment means the present value as of the date of the change of control of the portion of such Payment
that constitutes a “parachute payment” under Section 280G(b)(2) of the Code, as determined by the Determination Firm for purposes of determining whether and to what extent the Excise Tax shall apply to such Payment.
10.2
Determination Firm; Underpayment
. The determination of whether an Excise Tax would be imposed, the amount of such Excise Tax, and the calculation of the amounts referred to
Section 10(a)(i)
and
(ii)
above shall be made by an independent, nationally recognized accounting firm or compensation consulting firm mutually acceptable to the Company and the Executive (the “
Determination Firm
”) which shall provide detailed supporting calculations. Any determination by the Determination Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Determination Firm hereunder, it is possible that Payments which the Executive was entitled to, but did not receive pursuant to
Section 10(a)
, could have been made without the imposition of the Excise Tax (“
Underpayment
”). In such event, the Determination Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive but no later than March 15 of the year after the year in which the Underpayment is determined to exist, which is when the legally binding right to such Underpayment arises.
10.3
Repeal
. In the event that the provisions of Code Section 280G and 4999 or any successor provisions are repealed without succession, this
Section 10
shall be of no further force or effect.
SECTION 11
MISCELLANEOUS
11.1
Notices
. All notices, demands, requests or other communications required or permitted to be given or made hereunder shall be in writing and shall be delivered by overnight courier, telecopied or mailed by first class registered or certified mail, postage prepaid, addressed as follows:
(a) If to the Company:
Healthcare Trust of America, Inc.
The Promenade, Suite 320
16435 North Scottsdale Road
Scottsdale, AZ 85254
Fax: (480) 991-0755
Attention: Board of Directors
With a copy to:
O’Melveny & Myers LLP
Two Embarcadero Center
28
th
Floor
San Francisco, CA 94111-3823
Fax: (415) 984-8701
Attention: Peter T. Healy, Esq.
(b) If to the Executive:
Scott D. Peters
c/o The Promenade, Suite 320
16435 North Scottsdale Road
Scottsdale, AZ 85254
Fax: (480) 991-0755
or at the address on the books and records of the Company at the time of such notice, or to such other address as may be designated by either party in a notice to the other. Each notice, demand, request or other communication that shall
be given or made in the manner described above shall be deemed sufficiently given or made for all purposes three days after it is deposited in the U.S. mail, postage prepaid, or at such time as it is delivered to the addressee (with the return receipt, the delivery receipt, the answer back or the affidavit of messenger being deemed conclusive evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation.
11.2
Severability
. The invalidity or unenforceability of any one or more provisions of this Agreement shall not affect the validity or enforceability of the other provisions of this Agreement, which shall remain in full force and effect.
11.3
Survival
. It is the express intention and agreement of the parties hereto that the provisions of
Sections 8
and
9
shall survive the termination of employment of the Executive. In addition, all obligations of the Company to make payments hereunder shall survive any termination of this Agreement on the terms and conditions set forth herein.
11.4
Assignment
. The rights and obligations of the parties hereto shall not be assignable or delegable, except that (i) in the event of the Executive’s death, the personal representative or legatees or distributees of the Executive’s estate, as the case may be, shall have the right to receive any amount owing and unpaid to the Executive hereunder, and (ii) the rights and obligations of the Company hereunder shall be assignable and delegable in connection with any merger, consolidation or sale of all or substantially all of the assets of the Company and any similar event with respect to any successor corporation. Notwithstanding anything herein to the contrary, the rights and obligations of the Company hereunder shall inure to the benefit of, and shall be binding upon, any successor to the Company or its business by merger or otherwise, whether or not there is an express assignment, delegation or assumption of such rights and obligations.
11.5
Dispute Resolution
. In the event that any dispute or disagreement arises between the parties in connection with any provision of this Agreement, the parties shall first submit such disagreements to mediation, which mediation shall occur in the County in the state in which the Executive’s primary resident office is situated. Either party may commence mediation by providing to Judicial Arbitration and Mediation Services, Inc. (“
JAMS
”) and the other party hereto a written request for mediation, setting forth the subject of the dispute and the relief requested. The parties hereto shall cooperate with JAMS and with one another in selecting a mediator from JAMS panel of neutrals, within thirty (30) days after the commencement of the mediation, and in scheduling the mediation proceedings. The parties hereto shall share equally in the costs of mediation. All offers, promises, conduct and statements, whether oral or written, made in the course of the mediation by any of the parties, their agents, employees, experts and attorneys, and by the mediator or any JAMS employees, are confidential, privileged and inadmissible for any purpose, including impeachment, in any proceeding involving the parties, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the mediation. Either party may commence a legal action with respect to the matters submitted to mediation at any time following the initial mediation session or forty-five (45) days after the date of filing the written request for mediation, whichever occurs first.
11.6
Binding Effect
. Subject to any provisions hereof restricting assignment, this Agreement shall be binding upon the parties hereto and shall inure to the benefit of the parties and their respective heirs, devisees, executors, administrators, legal representatives, successors and assigns.
11.7
Amendment; Waiver
. This Agreement shall not be amended, altered or modified except by an instrument in writing duly executed by the parties hereto. No waiver by either of the parties hereto of a breach of or a default under any of the provisions of this Agreement shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature. The failure of either of the parties hereto, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder shall not be construed as a waiver of any such provisions, rights or privileges hereunder, or a waiver of any subsequent breach or default of a similar nature.
11.8
Headings
. Section and subsection headings contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof.
11.9
Governing Law
. This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the state in which the Executive’s primary resident office is situated (but not including the choice of law rules thereof). The parties hereto further agree that the sole and exclusive forum for litigating any disputes arising under the terms of this Agreement shall be a court of competent jurisdiction in the state in which the Executive’s primary resident office is situated (but not including the choice of law rules thereof).
11.10
Integrated Agreement
. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof. There have been no offers or inducements regarding the making of this Agreement except as set forth herein.
11.11
Counterparts
. This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which shall be deemed to constitute one and the same instrument.
11.12
Legal Expenses
. The Company shall pay or reimburse the Executive during the Employment Period for reasonable attorneys’ fees incurred by the Executive in connection with the negotiation of this Agreement. Any such reimbursement shall be made no later than thirty (30) days after the Executive delivers the applicable invoice to the Company.
11.13
Provisions Regarding Code Section 409A
.
(a) This Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements Section 409A of the Code and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder (and any applicable transition relief under Section 409A of the Code).
(b) Notwithstanding anything in this Agreement to the contrary, to the extent that any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code (
“
Non-Exempt Deferred Compensation
”
) would otherwise be payable or distributable hereunder by reason of the Executive’s termination of employment, such Non-Exempt Deferred Compensation shall not be payable or distributable to the Executive by reason of such circumstance unless the circumstances giving rise to such termination of employment meet any description or definition of “separation from service” in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definitions). If this provision prevents the payment or distribution of any Non-Exempt Deferred Compensation, such payment or distribution shall be made on the date, if any, on which an event occurs that constitutes a Section 409A-compliant “separation from service,” or such later date as may be required by
Section 11.13(c)
below.
(c) Notwithstanding anything in this Agreement to the contrary, if any amount or benefit that would constitute Non-Exempt Deferred Compensation would otherwise be payable or distributable under this Agreement by reason of the Executive’s separation from service during a period in which the Executive is a “specified employee” (as defined in Section 409A of the Code and applicable regulations), then payment or commencement of such Non-Exempt Deferred Compensation shall be delayed until the earlier of (i) thirty (30) days following the Executive’s death, or (ii) the first day of the seventh month following the Executive’s separation from service.
(d) Whenever in this Agreement a payment or benefit is conditioned on the Executive’s execution of a release of claims, such release must be executed and all revocation periods shall have expired within 60 days after the Date of Termination; failing which such payment or benefit shall be forfeited.
(e) If the Executive (or the Executive’s spouse or eligible dependents) is entitled to be paid or reimbursed for any taxable expenses under this Agreement, including, but not limited to, those expenses provided in
Sections 5, 6
and
11
, and such payments or reimbursements are includible in the Executive’s federal gross taxable income, the amount of such expenses reimbursable in any one calendar year shall not affect the amount reimbursable in any other calendar year, and the reimbursement of an eligible expense must be made no later than December 31 of the year after the year in which the expense was incurred. No right of the Executive to reimbursement of expenses under this Agreement,
including, but not limited to, those provided in
Sections 5
and
6
, shall be subject to liquidation or exchange for another benefit.
11.14
Definitions
.
“
Affiliate
” means any entity from time to time designated by the Board and any other entity directly or indirectly controlling or controlled by or under common control with the Company. For purposes of this definition: “control” means the power to direct the management and policies of such entity, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“
Asset Sale
” means the sale or other disposition of all or substantially all of the Company’s assets for cash or other consideration, unless such Asset Sale is a Non-Qualifying Transaction (as defined herein).
“
Board
” means the Board of Directors of the Company.
“
Cause
” means: (i) the Executive’s conviction of or entering into a plea of guilty or no contest to a felony or a crime involving moral turpitude, (ii) the intentional commission of any other act or omission involving dishonesty or fraud that is materially injurious to the Company or any of its Affiliates, as reasonably determined by the Board, or (iii) the Executive’s substantial and repeated failure to perform duties of the office(s) held by the Executive, as reasonably directed by the Board, if such failure is not cured within thirty (30) days after the Executive receives written notice thereof from the Board.
“
Code
” means the Internal Revenue Code of 1986, as amended.
“
Corporate Transaction
” means the consummation of a merger, consolidation, statutory share exchange, stock purchase or similar form of corporate transaction involving the Company that provides the Company’s stockholders with a combination of cash and/or securities of a company that are traded on a National Securities Exchange, unless such Corporate Transaction is a Non-Qualifying Transaction (as defined herein).
“
Date of Termination
” means: (i) if the Executive’s employment is terminated by the Executive’s death, the date of the Executive’s death; (ii) if the Executive’s employment is terminated because of the Executive’s Disability, thirty (30) days after Notice of Termination, provided that the Executive shall not have returned to the performance of the Executive’s duties on a full-time basis during such thirty (30) day period; (iii) if the Executive’s employment is terminated by the Company for Cause, the date specified in the Notice of Termination; (iv) if the Executive’s employment is terminated during the Employment Period, either by the Company or the Executive, for any other reason, the date specified in the Notice of Termination; or (v) if the Executive’s employment is terminated by reason of expiration of the Employment Period by its terms, the date on which the Employment Period expires by its terms.
“
Good Reason
” means, in the absence of the written consent of the Executive: (i) a material diminution in the Executive’s authority, duties or responsibilities, as contemplated by
Section 3
of this Agreement (including removal from the position of Chief Executive Officer and President of the Company or, in the event of a Corporate Transaction or an Asset Sale, not being appointed to serve as Chief Executive Officer and President of the entity that, as a result of such Corporate Transaction or Asset Sale, owns the Company or all or substantially all of the Company’s assets or stock directly or through one or more subsidiaries); (ii) a material diminution in the Executive’s Base Salary; (iii) a material change in the geographic location at which Executive must perform services, which for purposes of this Agreement shall mean the Company’s requiring the Executive to be based at any office or location more than thirty-five (35) miles from that identified in
Section 4
of this Agreement; (iv) a requirement that the Executive report to a corporate officer or employee instead of reporting directly to the Board; (v) in connection with or following a Corporate Transaction or Asset Sale, the failure of the entity that, as a result of such Corporate Transaction or Asset Sale, owns the Company or all or substantially all of the Company’s assets or stock directly or through one or more subsidiaries, to maintain an equity incentive plan that provides substantially comparable equity incentives to participants (including, without limitation, the Executive) as the Company’s equity incentive plan in effect immediately prior to such Corporate Transaction or Asset Sale; or (vi) any other action or inaction that constitutes a material breach by the Company of this Agreement, including, without limitation, any failure by the Company to comply with and satisfy
Section 11.4
of this
Agreement. Notwithstanding the foregoing, (A) the Executive shall notify the Company in writing of any event or condition claimed to constitute Good Reason under this paragraph within ninety (90) days of the initial existence of such event or condition, (B) the Company shall have thirty (30) days after receipt of such notice from the Executive to cure such initial event or condition, and (C) the Executive must separate from service with the Company within six (6) months following the initial existence of such event or condition.
“
National Securities Exchange
” means (i) the New York Stock Exchange, NYSE Amex Equities, or the Global Market or the Global Select Market of the NASDAQ Stock Market (or any successor to such entities), or (ii) a national securities exchange (or tier or segment thereof) that has listing standards that the Securities and Exchange Commission has determined by rule are substantially similar to the listing standards applicable to securities described in Section 18(b)(1)(A) of the Securities Act.
“
Non-Qualifying Transaction
” means, with respect to a Corporate Transaction or an Asset Sale, immediately following such Corporate Transaction or Asset Sale: (A) all or substantially all of the individuals and entities who were the “beneficial owners” (as defined in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934), respectively, of the outstanding Company Common Stock and the Company’s then outstanding securities eligible to vote for the election of directors (the “
Company Voting Securities
”) immediately prior to such Corporate Transaction or Asset Sale, beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Corporate Transaction or Asset Sale (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets or stock either directly or through one or more subsidiaries, the “
Surviving Entity
”) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction or Asset Sale, of the outstanding Company Common Stock and the outstanding Company Voting Securities, as the case may be, and (B) no person (other than (x) the Company or any subsidiary, (y) the Surviving Entity or its ultimate parent entity, or (z) any employee benefit plan (or related trust) sponsored or maintained by any of the foregoing) is the “beneficial owner,” directly or indirectly, of 50% or more of the total common stock or 50% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Surviving Entity, and (C) at least a majority of the members of the board of directors of the Surviving Entity were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Corporate Transaction or Asset Sale. For purposes of this definition, “Incumbent Directors” means, during any consecutive 12-month period, individuals who, at the beginning of such period, constitute the Board.
[
Signatures on Following Page
]
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or have caused this Agreement to be duly executed on their behalf, as of the Effective Date.
“COMPANY”
HEALTHCARE TRUST OF AMERICA, INC.
,
a Maryland corporation
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By:
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/s/ Robert A. Milligan
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Name:
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Robert A. Milligan
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Title:
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Chief Financial Officer, Secretary and Treasurer
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“EXECUTIVE”
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/s/ Scott D. Peters
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Scott D. Peters
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Exhibit 10.2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(Robert A. Milligan)
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “
Agreement
”) is entered into and effective as of July 8, 2016 (the “
Effective Date
”), by and between Healthcare Trust of America, Inc., a Maryland corporation (the “
Company
”), and Robert A. Milligan (the “
Executive
”).
WHEREAS, the parties had previously entered into that certain employment agreement dated August 22, 2014 (the “
Existing Agreement
”) which set forth the employment arrangement of the Executive with the Company.
WHEREAS, the parties hereto wish to supersede and replace the Existing Agreement and enter into the arrangements set forth herein with respect to the terms and conditions of the Executive’s continued employment with the Company from and after the Effective Date.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1
EMPLOYMENT AGREEMENT
This Agreement shall supersede and replace the Existing Agreement, as of the Effective Date, which shall be of no further force and effect as of the Effective Date. Subject to the terms and conditions set forth in this Agreement, the Company agrees to employ the Executive, and the Executive agrees to be employed by the Company, for the Employment Period set forth in
Section 2
and in the positions and with the duties set forth in
Section 3
. Terms used herein with initial capitalization are defined in
Section 11
.
SECTION 2
EMPLOYMENT PERIOD
Unless earlier terminated pursuant to
Section 7
hereof, the term of this Agreement and the Executive’s employment hereunder shall begin as of the Effective Date and shall conclude on the fourth (4
th
) anniversary of the Effective Date (the “
Expiration Date
”). The period of the Executive’s employment under this Agreement is herein referred to as the “
Employment Period
.” For purposes of clarity, as provided in
Section 8.7
hereof, a termination of the Executive’s employment upon or following the Expiration Date shall not constitute either a termination of the Executive’s employment by the Company without “Cause” or grounds for a termination by the Executive for “Good Reason” for purposes of this Agreement. If the Company intends to make an offer to renew this Agreement for any period beyond the Expiration Date, the Company shall use reasonable efforts to provide the Executive notice of such intention at least ninety (90) days before the Expiration Date;
provided
,
however
, that in no event shall the Company be legally obligated to provide such notice and neither the provision of such notice nor any failure to provide such notice shall create any implied obligation to renew this Agreement.
SECTION 3
POSITION AND DUTIES
3.1
Position and Duties
. The Executive shall serve as Chief Financial Officer, Treasurer, and Secretary of the Company during the Employment Period. The title of the Executive can be reasonably adjusted by the Company during the Employment Period. The Executive shall render management services to the Company as reasonably determined by the Board or the Chief Executive Officer of the Company (the “
CEO
”). The Company shall provide the Executive with necessary authority and reasonable resources to discharge the Executive’s responsibilities under laws and regulations applicable to the Company and the Executive.
3.2
Reporting
. The Executive shall report directly to the CEO. The Executive shall not be required to take direction from or report to any other person unless otherwise directed by the Board or the CEO. The Executive shall devote the Executive’s best efforts and full business time to the performance of the Executive’s duties hereunder and the advancement of the business and affairs of the Company during the Employment Period. The Executive may, consistent with the other provisions of this Agreement and subject to the pre-approval of the CEO, pursue other limited outside interests, including, but not limited to, devoting time to (A) serving on corporate, civic or charitable boards or committees, (B) delivering lectures, fulfilling speaking engagements or teaching at educational institutions, and (C) managing the Executive’s personal investments, so long as such activities do not interfere with the full time performance of the Executive’s responsibilities in accordance with this Agreement.
SECTION 4
PLACE OF PERFORMANCE; TRAVEL OBLIGATIONS
During the Employment Period, the Executive’s primary resident office at the Company shall be Scottsdale, Arizona, except that prior to a Corporate Transaction or Asset Sale, the CEO may relocate the Executive to any one of the Company’s regional or other offices upon not less than sixty (60) days prior written notice to the Executive (a “
Relocation
”). The Executive acknowledges and agrees that the Executive shall have substantial travel obligations in connection with the performance of the Executive’s duties under this Agreement, including, without limitation, regular travel responsibilities to the Company’s regional offices, meetings with institutional investors and bankers, and as otherwise requested by the CEO, and that such travel obligations are an important and integral part of the Executive’s duties hereunder.
SECTION 5
COMPENSATION
5.1
Base Salary
. During the Employment Period, the Company shall pay to the Executive an annual base salary (the “
Base Salary
”), which initially shall be Four Hundred Thousand Dollars ($400,000). The Base Salary shall be reviewed by the Compensation Committee of the Board (the “
Compensation Committee
”) no less frequently than annually and may be increased or decreased at any time during the Employment Period at the sole discretion of the Compensation Committee. The Base Salary shall be payable semi-monthly or in such other installments as shall be consistent with the Company’s payroll procedures in effect from time to time.
5.2
Annual Bonus
. During the Employment Period, the Executive shall be eligible to earn an annual performance bonus in an amount determined in the sole discretion of the Compensation Committee for each year, with a target of 100% of the Base Salary (the “
Target Bonus
”). It is the intention of the parties hereto that the Company shall establish bonus parameters for the Executive with respect to each fiscal year of the Employment Period. The Executive acknowledges and agrees that the Executive’s annual bonus is not guaranteed at any level; rather, it is to be determined by the Compensation Committee, in its sole discretion, taking into account the recommendations of the CEO. The Compensation Committee shall establish the performance goals and objectives on which the Executive’s annual bonus shall be based.
5.3
Equity Compensation
.
(a)
Prior Grants
. The Executive has previously received equity incentive awards from the Company that are outstanding as of the Effective Date (the “
Prior Grants
”). The Prior Grants shall vest in the time and manner set forth in the documents evidencing such Prior Grants. The Prior Grants were made pursuant to, and shall remain subject to, the terms and conditions of the Company’s Amended and Restated 2006 Incentive Plan (the “
Plan
”), as in effect on the dates of such Prior Grants, and the applicable award agreement. The Executive shall continue to be eligible for equity incentive grants under the Plan, with the type, amount and terms of any such grants to be determined by the Compensation Committee in its sole discretion.
(b)
New Restricted Stock Grant
. Subject to the approval of the Compensation Committee and the conditions and restrictions herein, within thirty (30) days after the Effective Date, the Company shall grant to the Executive an award of restricted shares of the Company’s Common Stock (the “
New Grant
”). The New Grant shall cover a number of shares determined by dividing (i) $400,000 by (ii) the closing price per share of the Company’s Common Stock on the date prior to the date of grant. The New Grant shall vest as to all of the shares subject to the New Grant in one installment on the fourth (4
th
) anniversary of the Effective Date. The New Grant shall be made pursuant to, and, except as expressly set forth herein, shall be subject to the terms and conditions of, the Plan and the Company’s standard form of Restricted Stock Agreement.
5.4
Benefits
. During the Employment Period, the Executive shall be entitled to all employee benefits made available to senior executives of the Company generally, including, without limitation, group medical, dental, vision, life insurance, long-term disability insurance, retirement, pension, 401(k) savings plans and/or prescription drug plan coverage, subject to the condition that the Executive is eligible for participation in any such plans. The Company shall pay 100% of the premium cost of the Company’s health insurance coverage provided to the Executive (and the Executive’s dependents, if applicable) by the Company from time to time. Nothing contained in this Agreement shall prevent the Company from terminating plans, changing carriers or effecting modifications in employee benefits coverage for the Executive as long as such modifications affect all similarly situated senior executives of the Company.
5.5
Vacation; Holidays
. During the Employment Period, the Executive shall be entitled to all public holidays observed by the Company and vacation days in accordance with the applicable vacation policies for senior executives of the Company, which vacation days shall be taken at a reasonable time or times. The Executive shall be entitled to four (4) weeks vacation per year in accordance with the general policies of the Company and subject to applicable law; provided, however, that accrual of vacation time is capped at a maximum of four (4) weeks and no more than one (1) week of any unused vacation may carry over from calendar year to calendar year.
5.6
Directors and Officers Insurance and Indemnification
. The Company shall maintain insurance to insure the Executive against claims arising out of an alleged wrongful act by the Executive while acting in good faith as an officer of the Company or any one of its subsidiaries. The Company shall further indemnify and exculpate the Executive from money damages incurred as a result of claims arising out of an alleged wrongful act by the Executive while acting in good faith as an officer or employee of the Company, or any one of its subsidiaries, to the fullest extent permitted under applicable law, subject to the terms of the Indemnification Agreement between the Company and the Executive dated as of March 1, 2013, as such agreement may be amended from time to time.
5.7
Withholding Taxes and Other Deductions
. To the extent required by law, the Company shall withhold from any payments due to the Executive under this Agreement any applicable federal, state or local taxes and such other deductions as are prescribed by law or authorized by the Executive. The Executive may, subject to prior approval by the Compensation Committee, elect that any withholding required upon any taxable event in connection with an award granted under the Plan be satisfied, in whole or in part, by withholding from any shares otherwise delivered or deliverable in respect of the award a number of shares having a Fair Market Value (as defined in the Plan) on the date of withholding equal to the minimum amount (and not any greater amount) required to be withheld for tax purposes, all in accordance with such procedures as the Compensation Committee establishes. All such elections shall be subject to any restrictions or limitations that the Compensation Committee, in its sole discretion, deems appropriate.
5.8
Performance Bonus
. During the third quarter of the Company’s 2016 fiscal year, the Company shall pay the Executive a performance bonus in the amount of One Hundred Thousand Dollars ($100,000).
SECTION 6
EXPENSES
During the Employment Period, the Executive is expected and is authorized, subject to the business expense policies as determined by the Company, to incur reasonable expenses in the performance of the Executive’s duties hereunder, including the costs of entertainment, travel, and similar business expenses. During the Employment Period, the Company shall promptly reimburse the Executive for all such expenses upon periodic presentation by the Executive of an accounting of such expenses on terms applicable to senior executives of the Company. During the Employment Period, the Executive shall be entitled to upgrade to “First Class” airfare for all flights over three (3) hours in duration.
SECTION 7
TERMINATION OF EMPLOYMENT
7.1
Notice of Termination
. Any termination of the Executive’s employment by the Company or by the Executive shall be communicated by written Notice of Termination to the other party hereto in accordance with
Section 11
. For purposes of this Agreement, a “
Notice of Termination
” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon, if any, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employment Period under the provision so indicated. Termination of the Employment Period shall take effect on the Date of Termination (as defined in
Section 11.13
hereof). The Employment Period may be terminated under the following circumstances:
7.2
Death
. The Executive’s employment shall terminate immediately upon the Executive’s death.
7.3
By the Company
. The Company may terminate the Executive’s employment:
(i) if the Executive shall have been unable to perform, in the opinion of a competent physician selected by the Board, any or all of the Executive’s duties hereunder, either with or without reasonable accommodation, by reason of illness, physical or mental disability or other similar incapacity, which inability shall continue for more than three consecutive months, or any six months in a twelve-month period (a “
Disability
”); or
(ii) with or without Cause (as defined in
Section 11.13
hereof).
7.4
By the Executive
. The Executive may terminate the Executive’s employment at any time for Good Reason or without Good Reason (as defined in
Section 11.13
hereof).
7.5
Return of Information
. The Executive agrees to deliver to the Company at the termination of the Executive’s employment, or at any other time so demanded by the Company, all records, files, software, software code, memoranda, reports, price lists, customer lists, drawings, plans, sketches, documents, technical information, contracts, sales or marketing materials, personnel information, financial information (including budgets), business and strategic plans, and the like (together with all copies of such documents and things) relating to the business of the Company and its Affiliates and their predecessors which the Executive may then possess or have under the Executive’s control.
SECTION 8
COMPENSATION UPON TERMINATION
The Executive’s employment must be terminated during the Employment Period in order for the Executive to receive any payment or other benefit under this
Section 8
.
8.1
Death
. If the Executive’s employment terminates during the Employment Period as a result of the Executive’s death, the Company shall pay to the Executive’s estate, or as may be directed by the legal representatives of such estate, within thirty (30) days following the Date of Termination, any accrued but unpaid Base Salary through the Date of Termination, and all equity-based awards granted by the Company that are outstanding and unvested on the Date of Termination shall become fully vested on the Date of Termination. All other unpaid amounts, if any, which the Executive has accrued and is entitled to as of the Date of Termination in connection with any fringe benefits or
under any bonus or incentive compensation plan or program of the Company pursuant to
Section 5
shall be paid in accordance with the terms of such arrangements. The Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan and any life insurance, death in service or other equivalent policy for the benefit of the Executive).
8.2
Disability
. If the Company terminates the Executive’s employment during the Employment Period because of the Executive’s Disability, the Company shall pay to the Executive within thirty (30) days following the Date of Termination any accrued but unpaid Base Salary through the Date of Termination. All other unpaid amounts, if any, which the Executive has accrued and is entitled to as of the Date of Termination in connection with any fringe benefits or under any bonus or incentive compensation plan or program of the Company pursuant to
Section 5
shall be paid in accordance with the terms of such arrangements. In addition, if the Company terminates the Executive’s employment during the Employment Period because of the Executive’s Disability, then all equity-based awards granted by the Company that are outstanding and unvested on the Date of Termination shall become fully vested on the Date of Termination, and the Executive shall be entitled to the COBRA benefit provided under
Section 8.6(b)
. The Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan and any disability or other medical insurance policy for the benefit of the Executive).
8.3
By the Company for Cause; By the Executive Without Good Reason
. If the Company terminates the Executive’s employment during the Employment Period for Cause or if the Executive terminates the Executive’s employment during the Employment Period without Good Reason, the Company shall pay to the Executive within thirty (30) days following the Date of Termination any accrued but unpaid Base Salary through the Date of Termination. All other unpaid amounts, if any, which the Executive has accrued and is entitled to as of the Date of Termination in connection with any fringe benefits or under any bonus or incentive compensation plan or program of the Company pursuant to
Section 5
shall be paid in accordance with the terms of such arrangements. The Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan).
8.4
By the Company Without Cause; By the Executive for Good Reason
. If the Company terminates the Executive’s employment during the Employment Period other than for Cause, Disability or death, or the Executive terminates the Executive’s employment during the Employment Period for Good Reason, the Company shall pay to the Executive within thirty (30) days following the Date of Termination any accrued but unpaid Base Salary through the Date of Termination. All other unpaid amounts, if any, which the Executive has accrued and is entitled to as of the Date of Termination in connection with any fringe benefits or under any bonus or incentive compensation plan or program of the Company pursuant to
Section 5
shall be paid in accordance with the terms of such arrangements. In addition, if such termination of the Executive’s employment occurs prior to the Expiration Date, the Executive shall be entitled to the Separation Benefits (as defined in
Section 8.6
upon the conditions set forth therein). The Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan).
8.5
General Release
. The Executive shall execute a customary general release in a form satisfactory to the Company in furtherance of this Agreement and as a condition to the receipt of any Separation Benefits (the “
Release
”). Nothing in this
Section 8
shall be deemed to operate or shall operate as a release, settlement or discharge of any liability of the Executive to the Company or others for any action or omission by the Executive, including, without limitation, any actions which formed, or could have formed, the basis for termination of the Executive’s employment for Cause.
8.6
Separation Benefits
. For purposes of this Agreement, “
Separation Benefits
” shall mean:
(a) payment by the Company to the Executive of:
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(1)
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the product of (x) the Executive’s Target Bonus for the year in which the Date of Termination occurs, and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365; and
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(2)
|
a severance benefit, in the amount equal to two (2) times the Executive’s Base Salary at the rate in effect on the Date of Termination.
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Subject to
Section 11.12
hereof, the cash payments provided in
Section 8.6(a)
above shall be made by the Company in a lump sum on the sixtieth (60
th
) day following the Date of Termination.
(b) if the Executive elects to continue participation in any group medical, dental, vision and/or prescription drug plan benefits to which the Executive and/or the Executive’s eligible dependents would be entitled under Section 4980B (“
COBRA
”), of the Internal Revenue Code of 1986, as amended (the “
Code
”), then the Company shall pay to the Executive (or reimburse the Executive for) any applicable premium under COBRA for participation in such plans for a period of six (6) months beginning on the Date of Termination, subject to the condition that the Executive remains eligible for participation in such plans; and
(c) all equity-based awards granted by the Company that are outstanding and unvested on the Date of Termination shall become fully vested on the Date of Termination.
Notwithstanding any other provisions herein to the contrary, the Executive’s receipt of the Separation Benefits shall be subject to and conditioned upon Executive’s compliance with the terms and conditions of
Section 9
of this Agreement and the Executive having executed, within forty-five (45) days after the Date of Termination, the Release and such Release having not been revoked within any revocation period provided by applicable law.
8.7
Termination Upon Expiration of the Employment Period
. If the Executive’s employment terminates upon or following the Expiration Date, the Company shall pay to the Executive within thirty (30) days following the Date of Termination any accrued but unpaid Base Salary through the Date of Termination, and all other unpaid amounts, if any, which the Executive has accrued and is entitled to as of the Date of Termination in connection with any fringe benefits or under any bonus or incentive compensation plan or program of the Company pursuant to
Section 5
shall be paid in accordance with the terms of such arrangements. The Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan).
8.8
Non-Compete Payment for Time Period
. Upon the termination of the Executive’s employment for any reason other than the Executive’s death (whether such termination is by the Company or the Executive and whether such termination occurs before or after the Expiration Date), if the Company elects that the Executive shall be subject to the non-competition covenant following the Date of Termination as provided in
Section 9.2
, the Company shall pay to the Executive, in consideration for such covenant, an amount equal to sixty percent (60%) of the sum of (i) the Executive’s Base Salary at the rate in effect on the Date of Termination and (ii) the annual incentive bonus paid by the Company to the Executive for the fiscal year immediately preceding the fiscal year in which the Date of Termination occurs (the “
Non-Compete Payment
”);
provided
,
however
, that in the case of a termination of the Executive’s employment that occurs on or after the Expiration Date, the Company shall be required to provide the Executive written notice not less than twelve (12) months before the Expiration Date that it will require the Executive to comply with such non-competition covenant (and, if the Company does not timely provide such notice to the Executive prior to such a termination of the Executive’s employment by the Company, the Executive will not be subject to the non-competition covenant in
Section 9.2
). The Non-Compete Payment shall be paid to the Executive in a series of monthly installments over the applicable period in which the non-competition covenant applies. In the event the Executive breaches the non-competition covenant provided in
Section 9.2
or any other provision of
Section 9
, the Executive shall not be entitled to receive any portion of the Non-Compete Payment (and the Executive shall be required to repay to the Company in full any portion of the Non-Compete Payment paid to the Executive prior to such breach). For purposes of clarity, the Company may elect that the Executive will not be subject to the non-competition covenant set forth in
Section 9.2
, in which case the Executive will not be entitled to any portion of the Non-Compete Payment provided in
Section 8.8
;
provided
,
however
, that the Company must make such election and notify the Executive no later than ten (10) days after the Date of Termination. If the Company elects that the Executive will be subject to this non-competition covenant, such covenant will apply for the entire Time Period following the Date of Termination.
8.9
Supplemental Non-Compete
. In addition to the non-competition covenant provided in
Section 9.2
, the Executive agrees that if the Executive’s employment with the Company terminates for any reason at any time on or after the Expiration Date (other than a termination by the Company for Cause or as a result of the Executive’s death),
the Executive shall not be employed by or provide services to any Non-Compete Entity (as defined in
Section 9.2
) at any time during the period commencing on the date of such termination of the Executive’s employment and continuing through the date that is two (2) years after such termination date;
provided
,
however
, that the Company may at any time in the Company’s sole discretion provide for a shorter (but not a longer) period (such period, the “
Supplemental Non-Compete Period
”). During the Supplemental Non-Compete Period, all equity-based awards granted by the Company that are outstanding and unvested on the date of such termination of the Executive’s employment shall remain outstanding and, notwithstanding any provision of the applicable award agreement or other award documentation to the contrary, shall be scheduled to vest on the last day of the Supplemental Non-Compete Period (without regard to whether the original scheduled vesting date was before or after the last day of the Supplemental Non-Compete Period), with vesting subject in each case to the Executive’s continued compliance with the Executive’s obligations under this
Section 8.9
and the Executive’s other obligations under
Section 9
through the last day of the Supplemental Non-Compete Period (or, if for any reason the Executive’s obligations under this
Section 8.9
do not apply following the date of such termination of the Executive’s employment, such awards shall become fully vested on the date of such termination). For avoidance of doubt, if the Executive breaches the Executive’s obligations under this
Section 8.9
, the Executive shall not be entitled to any vesting of the Executive’s equity-based awards under this
Section 8.9
, and any then-unvested awards shall be forfeited to the Company without payment. Upon any vesting of the awards at the conclusion of the Supplemental Non-Compete Period pursuant to this
Section 8.9
, the Executive may elect to have any tax withholding obligations arising in connection with such vesting event be satisfied by a withholding of shares by the Company as contemplated by
Section 5.7
, and in the event it is determined that any such shares that may vest pursuant to this
Section 8.9
shall be treated as taxable income to the Executive before their scheduled vesting date, the Company shall cancel the required amount of remaining unvested shares (applied on a pro-rata basis across the applicable vesting installments) in order to satisfy any withholding tax obligations for the Executive, and such shares shall no longer be held by or subject to forfeiture by the Executive. Except as otherwise set forth herein, the Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan).
SECTION 9
COVENANTS
9.1
Protection of Confidential Information
. The Executive hereby agrees that, during the Executive’s employment with the Company and thereafter, the Executive shall not, directly or indirectly, disclose or make available to any person, firm, corporation, association or other entity for any reason or purpose whatsoever, any Confidential Information (as defined below). The Executive further agrees that, upon the Date of Termination, all Confidential Information in the Executive’s possession that is in written or other tangible form shall be returned to the Company and shall not be retained by the Executive or furnished to any third party. Notwithstanding the foregoing, this
Section 9
shall not apply to Confidential Information that (i) was publicly known at the time of disclosure to the Executive, (ii) becomes publicly known or available thereafter other than by any means in violation of this Agreement or any other duty owed to the Company by the Executive, (iii) is lawfully disclosed to the Executive by a third party, or (iv) is required to be disclosed by law or by any court, arbitrator or administrative or legislative body with actual or apparent jurisdiction to order the Executive to disclose or make accessible any information.
As used in this Agreement, “
Confidential Information
” means, without limitation, any non-public confidential or proprietary information disclosed to Executive or known by the Executive as a consequence of or through the Executive's relationship with the Company, in any form, including electronic media. Confidential Information also includes, but is not limited to, the Company's business plans and financial information, marketing plans, and business opportunities. Nothing herein shall limit in any way any obligation the Executive may have relating to Confidential Information under any other agreement with the Company.
The Executive recognizes that because the Executive’s work for the Company will bring the Executive into contact with confidential and proprietary information of the Company, the restrictions of this
Section 9
are required for the reasonable protection of the Company and its investments and for the Company’s reliance on and confidence in the Executive.
9.2
Non-Competition
. If the Executive’s employment terminates for any reason other than due to the Executive’s death, the Executive agrees that, for the duration of the Time Limit and within the Geographical Limit (each as defined below) and, in the event of a termination of the Executive’s employment by the Company without
Cause, subject to the notice requirement set forth in
Section 8.8
in the case of a termination on or after the Expiration Date, the Executive shall not, either directly or indirectly, or in any individual or representative capacity, be employed by or otherwise provide services to any publicly traded or non-traded REIT in the medical office building sector, including, without limitation (a) Physicians Realty Trust Inc. Northstar Securities, LLC, HCP Inc., Healthcare Realty Trust Incorporated, Welltower, Inc., Ventas Inc., Duke Realty Corp., Griffin-American Healthcare REIT, or American Realty Capital Healthcare Trust, (b) any other company, entity or institution whose portfolio includes medical office buildings, (c) any Affiliates of any of the foregoing entities, or (d) any successors or assigns of any of the foregoing entities (a “
Non-Compete Entity
”).
The term “
Geographical Limit
” herein shall mean the United States. In the event a court of competent jurisdiction determines the geographic area as set forth herein is too broad, the parties agree to narrow such restriction to the geographic areas of the United States wherein the Company owns assets at the time of such determination. In the event a court of competent jurisdiction determines the geographic area as set forth herein is too broad, the parties agree to narrow such restriction to the state in which the Executive’s primary resident office is situated. In the event a court of competent jurisdiction determines the geographic area as set forth herein is too broad, the parties agree to narrow such restriction to the County in the state in which the Executive’s primary resident office is situated.
9.3
Non-Solicitation of Customers, Vendors and Others
. The Executive agrees, for the duration of the Time Limit that the Executive, either directly or indirectly, or in any individual or representative capacity, shall not request or solicit any of the Company’s investors, targeted prospective investors, shareholders, health care institution relationships, tenants, targeted prospective tenants, business contacts, brokers, dealers, agents, customers or vendors to withdraw, curtail, cancel, or decrease the level of their business with and/or referrals to the Company or request that they do business with or provide referrals to any third party in competition with the Company.
9.4
Non-Solicitation of the Company’s Employees
. The Executive agrees, for the duration of the Time Limit that the Executive, either directly or indirectly, or in any individual or representative capacity, shall not request or solicit, or assist any third party in requesting or soliciting, any of the Company’s employees to terminate the Executive’s employment with the Company or to accept employment with any third party in competition with the Company. Nothing herein shall prevent the Executive, directly or indirectly through the use of agents, employees or other representatives, from placing general advertisements in any widely-distributed media (such as newspapers and Internet postings) for employment directed at the public at large (as opposed to directed specifically at the Company’s employees) that have the effect of inducing or influencing any of the Company’s employees to terminate the Executive’s employment with the Company.
9.5
Time Limit
. The term “
Time Limit
” shall mean during the Executive’s employment with the Company and continuing for one (1) year after the date of termination of any such employment for any reason (regardless whether such termination occurs before or after the Expiration Date). In the event of a violation of any of the covenants contained in this
Section 9
, the Time Limit shall be extended by a period of time equal to that period beginning when the activities constituting the violation commenced, and ending when those activities terminated.
9.6
Reasonableness of Limitations; Severability
. The Executive hereby acknowledges and agrees that the covenants and obligations made and undertaken in this
Section 9
are fair and reasonable in all respects, including, without limitation, with respect to duration, geographic area and scope of activity, and do not (and shall not) prevent the Executive from earning a livelihood. In the event that one or more of the provisions of the covenants made and undertaken in this
Section 9
is held invalid, void or unenforceable by any court of competent jurisdiction, such invalidity, voidness or unenforceability shall not render invalid, void or unenforceable any other part or provision of this Agreement. Further, if any of the provisions of the covenants made and undertaken in this
Section 9
are found to be invalid or unenforceable by a court or competent jurisdiction, such provisions shall be severed, modified or redefined by consideration of the reasonable concerns and needs of the Company such that the intent of the parties in agreeing to the provisions of this Agreement shall not be impaired and the provision in question shall be enforceable to the fullest extent permitted by applicable laws.
9.7.
Enforcement of Agreement
. The parties agree that a violation by the Executive of any part of this
Section 9
shall cause irreparable damage to the Company which cannot be easily and fairly quantified. For that reason, the Executive agrees that the Company shall be entitled, as a matter of right, to an injunction from any court of competent
jurisdiction, without the necessity of posting bond, restraining any further violation of this
Section 9
. This remedy shall be in addition to any other rights and remedies the Company may have pursuant to this Agreement or law, including, specifically, the recovery of monetary damages, whether compensatory or punitive.
9.8
Survival
. This
Section 9
shall survive termination of this Agreement for any reason.
SECTION 10
SECTION 4999 OF THE CODE
10.1
Payments; Excise Tax
. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “
Payment
”) would be subject to the excise tax imposed by Section 4999 of the Code (the “
Excise Tax
”), then, prior to the making of any Payment to the Executive, a calculation shall be made comparing (i) the net benefit to the Executive of the Payment after payment of the Excise Tax, to (ii) the net benefit to the Executive if the Payment had been limited to the extent necessary to avoid being subject to the Excise Tax. If the amount calculated under (i) above is less than the amount calculated under (ii) above, then the Payment shall be limited to the extent necessary to avoid being subject to the Excise Tax (the “
Reduced Amount
”). The reduction of the Payments due hereunder, if applicable, shall be made by first reducing cash Payments and then, to the extent necessary, reducing those Payments having the next highest ratio of Parachute Value to actual present value of such Payments as of the date of the change of control, as determined by the Determination Firm (as defined in
Section 10(b)
below). For purposes of this
Section 10
, present value shall be determined in accordance with Section 280G(d)(4) of the Code. For purposes of this
Section 10
, the “
Parachute Value
” of a Payment means the present value as of the date of the change of control of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2) of the Code, as determined by the Determination Firm for purposes of determining whether and to what extent the Excise Tax shall apply to such Payment.
10.2
Determination Firm; Underpayment
. The determination of whether an Excise Tax would be imposed, the amount of such Excise Tax, and the calculation of the amounts referred to
Section 10(a)(i)
and
(ii)
above shall be made by an independent, nationally recognized accounting firm or compensation consulting firm mutually acceptable to the Company and the Executive (the “
Determination Firm
”) which shall provide detailed supporting calculations. Any determination by the Determination Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Determination Firm hereunder, it is possible that Payments which the Executive was entitled to, but did not receive pursuant to
Section 10(a)
, could have been made without the imposition of the Excise Tax (“
Underpayment
”). In such event, the Determination Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive but no later than March 15 of the year after the year in which the Underpayment is determined to exist, which is when the legally binding right to such Underpayment arises.
10.3
Repeal
. In the event that the provisions of Code Section 280G and 4999 or any successor provisions are repealed without succession, this
Section 10
shall be of no further force or effect.
SECTION 11
MISCELLANEOUS
11.1
Notices
. All notices, demands, requests or other communications required or permitted to be given or made hereunder shall be in writing and shall be delivered by overnight courier, telecopied or mailed by first class registered or certified mail, postage prepaid, addressed as follows:
(a) If to the Company:
Healthcare Trust of America, Inc.
The Promenade, Suite 320
16435 North Scottsdale Road
Scottsdale, AZ 85254
Fax: (480) 991-0755
Attention: Chief Executive Officer
With a copy to:
O’Melveny & Myers LLP
Two Embarcadero Center
28
th
Floor
San Francisco, CA 94111
Fax: (415) 984-8701
Attention: Peter T. Healy, Esq.
(b) If to the Executive:
Robert A. Milligan
c/o Healthcare Trust of America, Inc.
The Promenade, Suite 320
16435 North Scottsdale Road
Scottsdale, AZ 85254
Fax: (480) 991-0755
at the address on the books and records of the Company at the time of such notice, or to such other address as may be designated by either party in a notice to the other. Each notice, demand, request or other communication that shall be given or made in the manner described above shall be deemed sufficiently given or made for all purposes three (3) days after it is deposited in the U.S. mail, postage prepaid, or at such time as it is delivered to the addressee (with the return receipt, the delivery receipt, the answer back or the affidavit of messenger being deemed conclusive evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation.
11.2
Severability
. The invalidity or unenforceability of any one or more provisions of this Agreement shall not affect the validity or enforceability of the other provisions of this Agreement, which shall remain in full force and effect.
11.3
Survival
. It is the express intention and agreement of the parties hereto that the provisions of
Sections 8
and
9
shall survive the termination of employment of the Executive. In addition, all obligations of the Company to make payments hereunder shall survive any termination of this Agreement on the terms and conditions set forth herein.
11.4
Assignment
. The rights and obligations of the parties to this Agreement shall not be assignable or delegable, except that (i) in the event of the Executive’s death, the personal representative or legatees or distributees of the Executive’s estate, as the case may be, shall have the right to receive any amount owing and unpaid to the Executive hereunder, and (ii) the rights and obligations of the Company hereunder shall be assignable and delegable in connection with any merger, consolidation or sale of all or substantially all of the assets of the Company and any similar event with respect to any successor corporation. Notwithstanding anything herein to the contrary, the rights and obligations of the Company hereunder shall inure to the benefit of, and shall be binding upon, any successor to the Company or its business by merger or otherwise, whether or not there is an express assignment, delegation or assumption of such rights and obligations.
11.5
Dispute Resolution
. In the event that any dispute or disagreement arises between the parties in connection with any provision of this Agreement, the parties shall first submit such disagreements to mediation, which mediation shall occur in the County in the state in which the Executive’s primary resident office is situated. Either party may commence mediation by providing to Judicial Arbitration and Mediation Services, Inc. (“
JAMS
”) and the other party a written request for mediation, setting forth the subject of the dispute and the relief requested. The parties shall cooperate with JAMS and with one another in selecting a mediator from JAMS panel of neutrals, within thirty (30) days after the commencement of the mediation, and in scheduling the mediation proceedings. The parties shall share equally in the costs of mediation. All offers, promises, conduct and statements, whether oral or written, made in the course of the mediation by any of the parties, their agents, employees, experts and attorneys, and by the mediator
or any JAMS employees, are confidential, privileged and inadmissible for any purpose, including impeachment, in any proceeding involving the parties, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the mediation. Either party may commence a legal action with respect to the matters submitted to mediation at any time following the initial mediation session or forty-five (45) days after the date of filing the written request for mediation, whichever occurs first.
11.6
Binding Effect
. Subject to any provisions hereof restricting assignment, this Agreement shall be binding upon the parties hereto and shall inure to the benefit of the parties and their respective heirs, devisees, executors, administrators, legal representatives, successors and assigns.
11.7
Amendment; Waiver
. This Agreement shall not be amended, altered or modified except by an instrument in writing duly executed by the parties hereto. No waiver by either of the parties hereto of a breach of or a default under any of the provisions of this Agreement shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature. The failure of either of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder shall not be construed as a waiver of any such provisions, rights or privileges hereunder, or a waiver of any subsequent breach or default of a similar nature.
11.8
Headings
. Section and subsection headings contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof.
11.9
Governing Law
. This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the state in which the Executive’s primary resident office is situated (but not including the choice of law rules thereof). The parties further agree that the sole and exclusive forum for litigating any disputes arising under the terms of this Agreement shall be a court of competent jurisdiction in the state in which the Executive’s primary resident office is situated.
11.10
Integrated Agreement
. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof. There have been no offers or inducements regarding the making of this Agreement except as set out herein.
11.11
Counterparts
. This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which shall be deemed to constitute one and the same instrument.
11.12
Provisions Regarding Code Section 409A
.
(a) This Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements Section 409A of the Code and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder (and any applicable transition relief under Section 409A of the Code).
(b) Notwithstanding anything in this Agreement to the contrary, to the extent that any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code (“
Non-Exempt Deferred Compensation
”) would otherwise be payable or distributable hereunder by reason of the Executive’s termination of employment, such Non-Exempt Deferred Compensation shall not be payable or distributable to the Executive by reason of such circumstance unless the circumstances giving rise to such termination of employment meet any description or definition of “separation from service” in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definitions). If this provision prevents the payment or distribution of any Non-Exempt Deferred Compensation, such payment or distribution shall be made on the date, if any, on which an event occurs that constitutes a Section 409A-compliant “separation from service,” or such later date as may be required by
Section 11.12(c)
below.
(c) Notwithstanding anything in this Agreement to the contrary, if any amount or benefit that would constitute Non-Exempt Deferred Compensation would otherwise be payable or distributable under this Agreement by reason of the Executive’s separation from service during a period in which the Executive is a “specified employee” (as
defined in Section 409A of the Code and applicable regulations), then payment or commencement of such Non-Exempt Deferred Compensation shall be delayed until the earlier of (i) thirty (30) days following the Executive’s death, or (ii) the first day of the seventh month following the Executive’s separation from service.
(d) Whenever in this Agreement a payment or benefit is conditioned on the Executive’s execution of a release of claims, such release must be executed and all revocation periods shall have expired within sixty (60) days after the Date of Termination; failing which such payment or benefit shall be forfeited.
(e) If the Executive (or the Executive’s spouse or eligible dependents) is entitled to be paid or reimbursed for any taxable expenses under this Agreement, including, but not limited to, those expenses provided in
Sections 5
,
6
and
11
, and such payments or reimbursements are includible in the Executive’s federal gross taxable income, the amount of such expenses reimbursable in any one calendar year shall not affect the amount reimbursable in any other calendar year, and the reimbursement of an eligible expense must be made no later than December 31 of the year after the year in which the expense was incurred. No right of the Executive to reimbursement of expenses under this Agreement, including, but not limited to, those provided in
Sections 5
and
6
, shall be subject to liquidation or exchange for another benefit.
11.13
Definitions
“
Affiliate
” means any entity from time to time designated by the Board and any other entity directly or indirectly controlling or controlled by or under common control with the Company. For purposes of this definition: “control” means the power to direct the management and policies of such entity, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“
Asset Sale
” means the sale or other disposition of all or substantially all of the Company’s assets for cash or other consideration, unless such Asset Sale is a Non-Qualifying Transaction (as defined herein).
“
Board
” means the board of directors of the Company.
“
Cause
” means: (i) the Executive’s conviction of or entering into a plea of guilty or no contest to a felony or a crime involving moral turpitude; (ii) the intentional commission of any other act or omission involving dishonesty or fraud that is materially injurious to the Company or any of its Affiliates, as reasonably determined by the Board; (iii) the Executive’s substantial and repeated failure to perform duties of the office(s) held by the Executive, as reasonably directed by the CEO, if such failure is not cured within ten (10) days after the Executive receives written notice thereof from the Company; (iv) gross negligence or willful misconduct in the performance of the Executive’s duties which materially injures the Company or its reputation; (v) the Executive’s willful breach of the material covenants of this Agreement; or (vi) the Executive’s failure to complete a Relocation in a timely manner if requested pursuant to
Section 4
, or to satisfy the Executive’s substantial travel obligations, in each case as set forth in
Section 4
, in furtherance of satisfying the Executive’s duties under this Agreement.
“
Code
” means the Internal Revenue Code of 1986, as amended.
“
Corporate Transaction
” means the consummation of a merger, consolidation, statutory share exchange, stock purchase or similar form of corporate transaction involving the Company that provides the Company’s stockholders with a combination of cash and/or securities of a company that are traded on a National Securities Exchange, unless such Corporate Transaction is a Non-Qualifying Transaction (as defined herein).
“
Date of Termination
” means: (i) if the Executive’s employment is terminated by the Executive’s death, the date of the Executive’s death; (ii) if the Executive’s employment is terminated because of the Executive’s Disability, thirty (30) days after the Notice of Termination, provided that the Executive shall not have returned to the performance of the Executive’s duties on a full-time basis during such thirty (30) day period; (iii) if the Executive’s employment is terminated by the Company for Cause, the date specified in the Notice of Termination; (iv) if the Executive’s employment is terminated during the Employment Period, either by the Company or the Executive, for any other reason, the date specified in the Notice of Termination; or (v) if the Executive’s employment is terminated by reason of expiration of the Employment Period by its terms, the date on which the Employment Period expires by its terms.
“
Good Reason
” means, in the absence of the written consent of the Executive: (i) a material diminution in the Executive’s authority, duties or responsibilities, as contemplated by
Section 3
of this Agreement (including removal from the position of Chief Financial Officer of the Company or, in the event of a Corporate Transaction or an Asset Sale, not being appointed to serve as Chief Financial Officer of the entity that, as a result of such Corporate Transaction or Asset Sale, owns the Company or all or substantially all of the Company’s assets or stock directly or through one or more subsidiaries); (ii) except in connection with a material decrease in the business of the Company, a diminution in the Executive’s Base Salary in excess of thirty percent (30%); (iii) in connection with or following a Corporate Transaction or Asset Sale, a material change in the geographic location at which the Executive must perform services, which for purposes of this Agreement shall mean the Company’s requiring the Executive to be based at any office or location more than thirty-five (35) miles from the Executive’s primary work location immediately prior to such relocation; (iv) in connection with or following a Corporate Transaction or Asset Sale, the failure of the entity that, as a result of such Corporate Transaction or Asset Sale, owns the Company or all or substantially all of the Company’s assets or stock directly or through one or more subsidiaries, to maintain an equity incentive plan that provides substantially comparable equity incentives to participants (including, without limitation, the Executive) as the Company’s equity incentive plan in effect immediately prior to such Corporate Transaction or Asset Sale; or (v) any other action or inaction that constitutes a material breach by the Company of this Agreement, including, without limitation, any failure by the Company to comply with and satisfy
Section 11.4
of this Agreement. Notwithstanding the foregoing, (A) the Executive shall notify the Company in writing of any event or condition claimed to constitute Good Reason under this paragraph within thirty (30) days of the initial existence of such event or condition, (B) the Company shall have thirty (30) days after receipt of such notice from the Executive to cure such initial event or condition, and (C) the Executive must separate from service with the Company within ninety (90) days following the initial existence of such event or condition.
“
National Securities Exchange
” means (i) the New York Stock Exchange, NYSE Amex Equities, or the Global Market or the Global Select Market of the NASDAQ Stock Market (or any successor to such entities), or (ii) a national securities exchange (or tier or segment thereof) that has listing standards that the Securities and Exchange Commission has determined by rule are substantially similar to the listing standards applicable to securities described in Section 18(b)(1)(A) of the Securities Act.
“
Non-Qualifying Transaction
” means, with respect to a Corporate Transaction or an Asset Sale, immediately following such Corporate Transaction or Asset Sale: (A) all or substantially all of the individuals and entities who were the “beneficial owners” (as defined in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934), respectively, of the outstanding Company Common Stock and the Company’s then outstanding securities eligible to vote for the election of directors (the “
Company Voting Securities
”) immediately prior to such Corporate Transaction or Asset Sale, beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Corporate Transaction or Asset Sale (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets or stock either directly or through one or more subsidiaries, the “
Surviving Entity
”) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction or Asset Sale, of the outstanding Company Common Stock and the outstanding Company Voting Securities, as the case may be, and (B) no person (other than (x) the Company or any subsidiary, (y) the Surviving Entity or its ultimate parent entity, or (z) any employee benefit plan (or related trust) sponsored or maintained by any of the foregoing) is the “beneficial owner,” directly or indirectly, of 50% or more of the total common stock or 50% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Surviving Entity, and (C) at least a majority of the members of the board of directors of the Surviving Entity were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Corporate Transaction or Asset Sale. For purposes of this definition, “Incumbent Directors” means, during any consecutive 12-month period, individuals who, at the beginning of such period, constitute the Board.
[
Signatures on Following Page
]
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or have caused this Agreement to be duly executed on their behalf, as of the Effective Date.
“COMPANY”
HEALTHCARE TRUST OF AMERICA, INC.,
A Maryland corporation
|
|
|
By:
|
/s/ Scott D. Peters
|
|
|
Name:
|
Scott D. Peters
|
Title:
|
Chief Executive Officer, President and Chairman
|
“EXECUTIVE”
|
|
/s/ Robert A. Milligan
|
|
Robert A. Milligan
|
Exhibit 10.3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(Mark Engstrom)
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “
Agreement
”) is entered into and effective as of July 8, 2016 (the “
Effective Date
”), by and between Healthcare Trust of America, Inc., a Maryland corporation (the “
Company
”), and Mark D. Engstrom (the “
Executive
”).
WHEREAS, the parties had previously entered into that certain employment agreement dated as of January 1, 2013 and amended as of September 30, 2015 (the “
Existing Agreement
”) which set forth the employment arrangement of the Executive with the Company.
WHEREAS, the parties hereto wish to supersede and replace the Existing Agreement and enter into the arrangements set forth herein with respect to the terms and conditions of the Executive’s continued employment with the Company from and after the Effective Date.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1
EMPLOYMENT AGREEMENT
This Agreement shall supersede and replace the Existing Agreement as of the Effective Date, which shall be of no further force and effect as of the Effective Date. Subject to the terms and conditions set forth in this Agreement, the Company agrees to employ the Executive, and the Executive agrees to be employed by the Company, for the Employment Period set forth in
Section 2
and in the positions and with the duties set forth in
Section 3
. Terms used herein with initial capitalization are defined in
Section 11
.
SECTION 2
EMPLOYMENT PERIOD
Unless earlier terminated pursuant to
Section 7
hereof, the term of this Agreement and the Executive’s employment hereunder shall begin as of the Effective Date and shall conclude on the third (3
rd
) anniversary of the Effective Date (the “
Expiration Date
”). The period of the Executive’s employment under this Agreement is herein referred to as the “
Employment Period
.” For purposes of clarity, as provided in
Section 8.7
hereof, a termination of the Executive’s employment upon or following the Expiration Date shall not constitute either a termination of the Executive’s employment by the Company without “Cause” or grounds for a termination by the Executive for “Good Reason” for purposes of this Agreement. If the Company intends to make an offer to renew this Agreement for any period beyond the Expiration Date, the Company shall use reasonable efforts to provide the Executive notice of such intention at least ninety (90) days before the Expiration Date;
provided
,
however
, that in no event shall the Company be legally obligated to provide such notice and neither the provision of such notice nor any failure to provide such notice shall create any implied obligation to renew this Agreement.
SECTION 3
POSITION AND DUTIES
3.1
Position and Duties
. The Executive shall serve as an Executive Vice President—Acquisitions of the Company during the Employment Period. The title of the Executive can be reasonably adjusted by the Company during the Employment Period. The Executive shall render management services to the Company as reasonably determined by the Chief Executive Officer of the Company (the “
CEO
”). The Company shall provide the Executive with necessary authority and reasonable resources to discharge the Executive’s responsibilities under laws and regulations applicable
to the Company and the Executive. Notwithstanding the foregoing, the Company, in the Company’s sole discretion, shall have the right to employ one or more executives at the Company with the title of “Executive Vice President — Acquisitions” or a similar title, and such executive or executives may render to the Company the same or a similar type of service as the Company contemplates on the Effective Date that the Executive would be rendering to the Company during the Employment Period.
3.2
Reporting
. The Executive shall report directly to the CEO. The Executive shall not be required to take direction from or report to any other person unless otherwise directed by the CEO. The Executive shall devote the Executive’s best efforts and full business time to the performance of the Executive’s duties hereunder and the advancement of the business and affairs of the Company during the Employment Period. The Executive may, consistent with the other provisions of this Agreement and subject to pre-approval of the CEO, pursue other limited outside interests, including, but not limited to, devoting time to (A) serving on corporate, civic or charitable boards or committees, (B) delivering lectures, fulfilling speaking engagements or teaching at educational institutions, and (C) managing the Executive’s personal investments, so long as such activities do not interfere with the full time performance of Executive’s responsibilities in accordance with this Agreement.
3.3
Regional Offices and Other Duties
. The Executive shall be obligated to (a) regularly participate in in-person meetings (i) with the CEO and the other executive officers of the Company at various offices of the Company throughout the United States, (ii) with the Company’s acquisition team at each office of the Company throughout the United States, and (iii) with the Company’s acquisition prospects, health care institutions, and developers, in each case throughout the United States, and (b) travel on Company business throughout the United States approximately fifty percent (50%) of the time during the Employment Period (the “
Executive’s Travel Responsibilities
”).
SECTION 4
PLACE OF PERFORMANCE; TRAVEL OBLIGATIONS
During the Employment Period, the Executive’s primary resident office at the Company shall be Scottsdale, Arizona except (a) the CEO may relocate the Executive to any one of the Company’s regional or other offices upon not less than sixty (60) days prior written notice to the Executive (a “
Relocation
”), and (b) as may otherwise be applicable in the event of an Asset Sale or Corporate Transaction, as defined in
Section 11.13
. The Executive acknowledges and agrees that the Executive shall have substantial and extensive travel obligations in connection with the performance of the Executive’s duties under this Agreement, including, without limitation, the Executive’s Travel Responsibilities as set forth in
Section 3.3
, and as otherwise requested by the CEO, and that such travel obligations, including, without limitation, the Executive’s Travel Responsibilities, are an important and integral part of the Executive’s duties hereunder.
SECTION 5
COMPENSATION
5.1
Base Salary
. During the Employment Period, the Company shall pay to the Executive an annual base salary (the “
Base Salary
”), which initially shall be Three Hundred Seventy-Five Thousand Dollars ($375,000). The Base Salary shall be reviewed by the Compensation Committee of the Board (the “
Compensation Committee
”) no less frequently than annually and may be increased or decreased at any time during the Employment Period at the sole discretion of the Compensation Committee. The Base Salary shall be payable semi-monthly or in such other installments as shall be consistent with the Company’s payroll procedures in effect from time to time.
5.2
Bonus
. During the Employment Period, the Executive shall be eligible to earn an annual performance bonus in an amount determined at the sole discretion of the Compensation Committee for each year, with a target of 100% of the Base Salary (the “
Target Bonus
”). It is the intention of the parties hereto that the Company shall establish bonus parameters for the Executive with respect to each fiscal year of the Employment Period. The Executive acknowledges and agrees that the Executive’s annual bonus is not guaranteed at any level; rather, it is to be determined by the Compensation Committee, in its sole discretion, taking into account the recommendations of the CEO. The Compensation Committee shall establish the performance goals and objectives on which the Executive’s annual bonus shall be based.
5.3
Equity Compensation
. The Executive has previously received equity incentive awards from the Company that are outstanding as of the Effective Date (the “
Prior Grants
”). The Prior Grants shall vest in the time and manner set forth in the documents evidencing such Prior Grants. The Prior Grants were made pursuant to, and shall remain subject to, the terms and conditions of the Company’s Amended and Restated 2006 Incentive Plan (the “
Plan
”), as in effect on the dates of such Prior Grants, and the applicable award agreement. The Executive shall continue to be eligible for equity incentive grants under the Plan, with the type, amount and terms of any such grants to be determined by the Compensation Committee in its sole discretion.
5.4
Benefits
. During the Employment Period, the Executive shall be entitled to all employee benefits made available to senior executives of the Company generally, including, without limitation, group medical, dental, vision, life insurance, long-term disability insurance, retirement, pension, 401(k) savings plans and/or prescription drug plan coverage, subject to the condition that the Executive is eligible for participation in any such plans. The Company shall pay 100% of the premium cost of the Company’s health insurance coverage provided to the Executive (and the Executive’s dependents, if applicable) by the Company from time to time. Nothing contained in this Agreement shall prevent the Company from terminating plans, changing carriers or effecting modifications in employee benefits coverage for the Executive as long as such modifications affect all similarly situated senior executives of the Company.
5.5
Vacation; Holidays
. During the Employment Period, the Executive shall be entitled to all public holidays observed by the Company and vacation days in accordance with the applicable vacation policies for senior executives of the Company, which vacation days shall be taken at a reasonable time or times. The Executive shall be entitled to four (4) weeks vacation per year in accordance with the general policies of the Company and subject to applicable law;
provided
,
however
, that accrual of vacation time is capped at a maximum of four (4) weeks and no more than one (1) week of any unused vacation may carry over from calendar year to calendar year.
5.6
Directors and Officers Insurance and Indemnification
. The Company shall maintain insurance to insure the Executive against claims arising out of an alleged wrongful act by the Executive while acting in good faith as an officer of the Company or one of its subsidiaries. The Company shall further indemnify and exculpate the Executive from money damages incurred as a result of claims arising out of an alleged wrongful act by the Executive while acting in good faith as an officer or employee of the Company, or of its subsidiaries, to the fullest extent permitted under applicable law, subject to the terms of the Indemnification Agreement between the Company and the Executive dated as of December 20, 2010, as such agreement may be amended from time to time.
5.7
Withholding Taxes and Other Deductions
. To the extent required by law, the Company shall withhold from any payments due to the Executive under this Agreement any applicable federal, state or local taxes and such other deductions as are prescribed by law or authorized by the Executive. The Executive may, subject to prior approval by the Compensation Committee, elect that any withholding required upon any taxable event in connection with an award granted under the Plan be satisfied, in whole or in part, by withholding from any shares otherwise delivered or deliverable in respect of the award a number of shares having a Fair Market Value (as defined in the Plan) on the date of withholding equal to the minimum amount (and not any greater amount) required to be withheld for tax purposes, all in accordance with such procedures as the Compensation Committee establishes. All such elections shall be subject to any restrictions or limitations that the Compensation Committee, in its sole discretion, deems appropriate.
5.8
Relocation Allowance
. In the event of any Relocation of the Executive pursuant to
Section 4
, the Company shall pay the Executive a relocation allowance as the Company shall determine.
SECTION 6
EXPENSES
During the Employment Period, the Executive is expected and is authorized, subject to the business expense policies as determined by the Company, to incur reasonable expenses in the performance of the Executive’s duties hereunder, including the costs of entertainment, travel, and similar business expenses. During the Employment Period, the Company shall promptly reimburse the Executive for all such expenses upon periodic presentation by the Executive of an accounting of such expenses on terms applicable to senior executives of the Company. During the Employment Period, the Executive shall be entitled to upgrade to “First Class” airfare for all flights over three (3) hours in duration.
SECTION 7
TERMINATION OF EMPLOYMENT
7.1
Notice of Termination
. Any termination of the Executive’s employment by the Company or by the Executive shall be communicated by written Notice of Termination to the other party hereto in accordance with
Section 11
. For purposes of this Agreement, a “
Notice of Termination
” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon, if any, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employment Period under the provision so indicated. Termination of the Employment Period shall take effect on the Date of Termination (as defined in
Section 11.13
hereof). The Employment Period may be terminated under the following circumstances:
7.2
Death
. The Executive’s employment shall terminate immediately upon the Executive’s death.
7.3
By the Company
. The Company may terminate the Executive’s employment:
(i) if the Executive shall have been unable to perform, in the opinion of a competent physician selected by the Board, any or all of the Executive’s duties hereunder, either with or without reasonable accommodation, by reason of illness, physical or mental disability or other similar incapacity, which inability shall continue for more than three consecutive months, or any six months in a twelve-month period (a “
Disability
”); or
(ii) with or without Cause (as defined in
Section 11.13
hereof).
7.4
By the Executive
. The Executive may terminate the Executive’s employment at any time for Good Reason or without Good Reason (as defined in
Section 11.13
hereof).
7.5
Return of Information
. The Executive agrees to deliver to the Company at the termination of the Executive’s employment, or at any other time so demanded by the Company, all records, files, software, software code, memoranda, reports, price lists, customer lists, drawings, plans, sketches, documents, technical information, contracts, sales or marketing materials, personnel information, financial information (including budgets), business and strategic plans and the like (together with all copies of such documents and things) relating to the business of the Company and its Affiliates and their predecessors which the Executive may then possess or have under the Executive’s control.
SECTION 8
COMPENSATION UPON TERMINATION
The Executive’s employment must be terminated during the Employment Period in order for the Executive to receive any payment or other benefit under this
Section 8
.
8.1
Death
. If the Executive’s employment terminates during the Employment Period as a result of the Executive’s death, the Company shall pay to the Executive’s estate, or as may be directed by the legal representatives of such estate, within thirty (30) days following the Date of Termination, any accrued but unpaid Base Salary through the Date of Termination, and all equity-based awards granted by the Company that are outstanding and unvested on the Date of Termination shall become fully vested on the Date of Termination. All other unpaid amounts, if any, which the Executive has accrued and is entitled to as of the Date of Termination in connection with any fringe benefits or under any bonus or incentive compensation plan or program of the Company pursuant to
Section 5
shall be paid in accordance with the terms of such arrangements. The Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan and any life insurance, death in service or other equivalent policy for the benefit of the Executive).
8.2
Disability
. If the Company terminates the Executive’s employment during the Employment Period because of the Executive’s Disability, the Company shall pay to the Executive within thirty (30) days following the Date of Termination any accrued but unpaid Base Salary through the Date of Termination. All other unpaid amounts, if any, which the Executive has accrued and is entitled to as of the Date of Termination in connection with any fringe
benefits or under any bonus or incentive compensation plan or program of the Company pursuant to
Section 5
shall be paid in accordance with the terms of such arrangements. In addition, if the Company terminates the Executive’s employment during the Employment Period because of the Executive’s Disability, then all equity-based awards granted by the Company that are outstanding and unvested on the Date of Termination shall become fully vested on the Date of Termination, and the Executive shall be entitled to the COBRA benefit provided under
Section 8.6(b)
. The Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan and any disability or other medical insurance policy for the benefit of the Executive).
8.3
By the Company for Cause; By the Executive Without Good Reason
. If the Company terminates the Executive’s employment during the Employment Period for Cause or if the Executive terminates the Executive’s employment during the Employment Period without Good Reason, the Company shall pay to the Executive within thirty (30) days following the Date of Termination any accrued but unpaid Base Salary through the Date of Termination. All other unpaid amounts, if any, which the Executive has accrued and is entitled to as of the Date of Termination in connection with any fringe benefits or under any bonus or incentive compensation plan or program of the Company pursuant to
Section 5
shall be paid in accordance with the terms of such arrangements. The Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan).
8.4
By the Company Without Cause; By the Executive for Good Reason
. If the Company terminates the Executive’s employment during the Employment Period other than for Cause, Disability or death, or the Executive terminates the Executive’s employment during the Employment Period for Good Reason, the Company shall pay to the Executive within thirty (30) days following the Date of Termination any accrued but unpaid Base Salary through the Date of Termination. All other unpaid amounts, if any, which the Executive has accrued and is entitled to as of the Date of Termination in connection with any fringe benefits or under any bonus or incentive compensation plan or program of the Company pursuant to
Section 5
shall be paid in accordance with the terms of such arrangements. In addition, if such termination of the Executive’s employment occurs prior to the Expiration Date, the Executive shall be entitled to the Separation Benefits (as defined in
Section 8.6
on the conditions set forth therein). The Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan).
8.5
General Release
. The Executive shall execute a customary general release in a form satisfactory to the Company in furtherance of this Agreement and as a condition to the receipt of any Separation Benefits (the “
Release
”). Nothing in this
Section 8
shall be deemed to operate or shall operate as a release, settlement or discharge of any liability of the Executive to the Company or others for any action or omission by the Executive, including, without limitation, any actions which formed, or could have formed, the basis for termination of the Executive’s employment for Cause.
8.6
Separation Benefits
. For purposes of this Agreement, “
Separation Benefits
” shall mean:
(a) payment by the Company to the Executive of:
|
|
(1)
|
the product of (x) the Executive’s Target Bonus for the year in which the Date of Termination occurs, and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365; and
|
|
|
(2)
|
a severance benefit, in the amount equal to two (2) times the Executive’s Base Salary at the rate in effect on the Date of Termination
|
Subject to
Section 11.12
hereof, the cash payments provided in
Section 8.6(a)
above shall be made by the Company in a lump sum on the sixtieth (60
th
) day following the Date of Termination.
(b) if the Executive elects to continue participation in any group medical, dental, vision and/or prescription drug plan benefits to which the Executive and/or the Executive’s eligible dependents would be entitled under Section 4980B (“
COBRA
”), of the Internal Revenue Code of 1986, as amended (the “
Code
”), then the Company shall pay to
the Executive (or reimburse the Executive for) any applicable premium under COBRA for participation in such plans for a period of six (6) months beginning on the Date of Termination, subject to the condition that the Executive remains eligible for participation in such plans; and
(c) all equity-based awards granted by the Company that are outstanding and unvested on the Date of Termination shall become fully vested on the Date of Termination.
Notwithstanding any other provisions herein to the contrary, the Executive’s receipt of the Separation Benefits shall be subject to and conditioned upon Executive’s compliance with the terms and conditions of
Section 9
of this Agreement and the Executive having executed, within forty-five (45) days after the Date of Termination, the Release and such Release having not been revoked within any revocation period provided by applicable law.
8.7
Termination Upon Expiration of the Employment Period
. If the Executive’s employment terminates upon or following the Expiration Date, the Company shall pay to the Executive within thirty (30) days following the Date of Termination any accrued but unpaid Base Salary through the Date of Termination, and all other unpaid amounts, if any, which the Executive has accrued and is entitled to as of the Date of Termination in connection with any fringe benefits or under any bonus or incentive compensation plan or program of the Company pursuant to
Section 5
shall be paid in accordance with the terms of such arrangements. The Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan).
8.8
Non-Compete Payment for Time Period
. Upon the termination of the Executive’s employment for any reason other than the Executive’s death (whether such termination is by the Company or the Executive and whether such termination occurs before or after the Expiration Date), if the Company elects that the Executive shall be subject to the non-competition covenant following the Date of Termination as provided in
Section 9.2
, the Company shall pay to the Executive, in consideration for such covenant, an amount equal to sixty percent (60%) of the sum of (i) the Executive’s Base Salary at the rate in effect on the Date of Termination and (ii) the annual incentive bonus paid by the Company to the Executive for the fiscal year immediately preceding the fiscal year in which the Date of Termination occurs (the “
Non-Compete Payment
”);
provided
,
however
, that in the case of a termination of the Executive’s employment that occurs on or after the Expiration Date, the Company shall be required to provide the Executive written notice not less than three (3) months before the Expiration Date that it will require the Executive to comply with such non-competition covenant (and, if the Company does not timely provide such notice to the Executive prior to such a termination of the Executive’s employment by the Company, the Executive will not be subject to the non-competition covenant in
Section 9.2
); and
provided
,
further
, that the Company may elect to reduce the number of months following the Date of Termination in the Time Period as applied to the non-competition covenant in
Section 9.2
, in which case (or if for any other reason such non-competition covenant does not apply following the Date of Termination) the Non-Compete Payment shall be reduced by multiplying such amount by a fraction, the numerator of which shall be the number of whole months following the Date of Termination in which such non-competition covenant applies, and the denominator of which shall be twelve (12). For the avoidance of doubt, the Company may elect to reduce to zero the number of months in the Time Period following the Date of Termination in which such non-competition covenant shall apply, in which case the Company shall not be required to make any Non-Compete Payment. The Non-Compete Payment shall be paid to the Executive in a series of monthly installments over the applicable period in which the non-competition covenant applies. In the event the Executive breaches the non-competition covenant provided in
Section 9.2
or any other provision of
Section 9
, the Executive shall not be entitled to receive any portion of the Non-Compete Payment (and the Executive shall be required to repay to the Company in full any portion of the Non-Compete Payment paid to the Executive prior to such breach).
8.9
Supplemental Non-Compete
. In addition to the non-competition covenant provided in
Section 9.2
, the Executive agrees that if the Executive’s employment with the Company terminates for any reason at any time on or after the Expiration Date (other than a termination by the Company for Cause or as a result of the Executive’s death), the Executive shall not be employed by or provide services to any Non-Compete Entity (as defined in
Section 9.2
) at any time during the period commencing on the date of such termination of the Executive’s employment and continuing through the date that is two (2) years after such termination date;
provided
,
however
, that the Company may at any time in the Company’s sole discretion provide for a shorter (but not a longer) period (such period, the “
Supplemental Non-Compete Period
”). During the Supplemental Non-Compete Period, all equity-based awards granted by the
Company that are outstanding and unvested on the date of such termination of the Executive’s employment shall remain outstanding and, notwithstanding any provision of the applicable award agreement or other award documentation to the contrary, shall be scheduled to vest on the last day of the Supplemental Non-Compete Period (without regard to whether the original scheduled vesting date was before or after the last day of the Supplemental Non-Compete Period), with vesting subject in each case to the Executive’s continued compliance with the Executive’s obligations under this
Section 8.9
and the Executive’s other obligations under
Section 9
through the last day of the Supplemental Non-Compete Period (or, if for any reason the Executive’s obligations under this
Section 8.9
do not apply following the date of such termination of the Executive’s employment, such awards shall become fully vested on the date of such termination). For avoidance of doubt, if the Executive breaches the Executive’s obligations under this
Section 8.9
, the Executive shall not be entitled to any vesting of the Executive’s equity-based awards under this
Section 8.9
, and any then-unvested awards shall be forfeited to the Company without payment. Upon any vesting of the awards at the conclusion of the Supplemental Non-Compete Period pursuant to this
Section 8.9
, the Executive may elect to have any tax withholding obligations arising in connection with such vesting event be satisfied by a withholding of shares by the Company as contemplated by
Section 5.7
, and in the event it is determined that any such shares that may vest pursuant to this
Section 8.9
shall be treated as taxable income to the Executive before their scheduled vesting date, the Company shall cancel the required amount of remaining unvested shares (applied on a pro-rata basis across the applicable vesting installments) in order to satisfy any withholding tax obligations for the Executive, and such shares shall no longer be held by or subject to forfeiture by the Executive. Except as otherwise set forth herein, the Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan).
SECTION 9
COVENANTS
9.1
Protection of Confidential Information
. The Executive hereby agrees that, during the Executive’s employment with the Company and thereafter, the Executive shall not, directly or indirectly, disclose or make available to any person, firm, corporation, association or other entity for any reason or purpose whatsoever, any Confidential Information (as defined below). The Executive further agrees that, upon the Date of Termination, all Confidential Information in the Executive’s possession that is in written or other tangible form shall be returned to the Company and shall not be retained by the Executive or furnished to any third party. Notwithstanding the foregoing, this
Section 9
shall not apply to Confidential Information that (i) was publicly known at the time of disclosure to the Executive, (ii) becomes publicly known or available thereafter other than by any means in violation of this Agreement or any other duty owed to the Company by the Executive, (iii) is lawfully disclosed to the Executive by a third party, or (iv) is required to be disclosed by law or by any court, arbitrator or administrative or legislative body with actual or apparent jurisdiction to order the Executive to disclose or make accessible any information.
As used in this Agreement, “
Confidential Information
” means, without limitation, any non-public confidential or proprietary information disclosed to Executive or known by the Executive as a consequence of or through the Executive's relationship with the Company, in any form, including electronic media. Confidential Information also includes, but is not limited to, the Company's business plans and financial information, marketing plans, and business opportunities. Nothing herein shall limit in any way any obligation the Executive may have relating to Confidential Information under any other agreement with the Company.
The Executive recognizes that because the Executive’s work for the Company will bring the Executive into contact with confidential and proprietary information of the Company, the restrictions of this
Section 9
are required for the reasonable protection of the Company and its investments and for the Company’s reliance on and confidence in the Executive.
9.2
Non-Competition
. If the Executive’s employment terminates for any reason other than due to the Executive’s death, the Executive agrees that, for the duration of the Time Limit and within the Geographical Limit (each as defined below) and, in the event of a termination of the Executive’s employment by the Company without Cause, subject to the notice requirement set forth in
Section 8.8
in the case of a termination on or after the Expiration Date, the Executive shall not, either directly or indirectly or in any individual or representative capacity, promote, sell or otherwise provide products or services that are competitive with those of the Company, including, without limitation, products or services relating to the acquisition, leasing, operation or management of medical office buildings or
healthcare-related facilities or similar assets (an entity that provides such products or services, a “
Non-Compete Entity
”), in a capacity that involves the execution of job duties or responsibilities that are the same as or similar to the job duties and responsibilities that the Executive executed on behalf of the Company (and, for the avoidance of doubt, including, without limitation, the provision of products or services to (a) Physicians Realty Trust Inc. Northstar Securities, LLC, HCP Inc., Healthcare Realty Trust Incorporated, Welltower, Inc., Ventas Inc., Duke Realty Corp., Griffin-American Healthcare REIT, or American Realty Capital Healthcare Trust, (b) any other company, entity or institution whose portfolio includes medical office buildings, (c) any Affiliates of any of the foregoing entities, or (d) any successors or assigns of any of the foregoing entities).
The term “
Geographical Limit
” herein shall mean the United States. In the event a court of competent jurisdiction determines the geographic area as set forth herein is too broad, the parties agree to narrow such restriction to the geographic areas of the United States wherein the Company owns assets at the time of such determination. In the event a court of competent jurisdiction determines the geographic area as set forth herein is too broad, the parties agree to narrow such restriction to the state of Arizona. In the event a court of competent jurisdiction determines the geographic area as set forth herein is too broad, the parties agree to narrow such restriction to Maricopa County, Arizona.
9.3
Non-Solicitation of Customers, Vendors and Others
. The Executive agrees, for the duration of the Time Limit that the Executive, either directly or indirectly, or in any individual or representative capacity, shall not request or solicit any of the Company’s investors, prospective investors, shareholders, health care institution relationships, tenants, targeted prospective tenants, clients, business contacts, brokers, dealers, agents, customers or vendors to withdraw, curtail, cancel, or decrease the level of their business with and/or referrals to the Company or request that they do business with or provide referrals to any third party in competition with the Company.
9.4
Non-Solicitation of the Company’s Employees
. The Executive agrees, for the duration of the Time Limit that the Executive, either directly or indirectly, or in any individual or representative capacity, shall not request or solicit, or assist any third party in requesting or soliciting, any of the Company’s employees to terminate the Executive’s employment with the Company or to accept employment with any third party in competition with the Company. Nothing herein shall prevent the Executive, directly or indirectly through the use of agents, employees or other representatives, from placing general advertisements in any widely-distributed media (such as newspapers and Internet postings) for employment directed at the public at large (as opposed to directed specifically at the Company’s employees) that have the effect of inducing or influencing any of the Company’s employees to terminate the Executive’s employment with the Company.
9.5
Time Limit
. The term “
Time Limit
” shall mean during the Executive’s employment with the Company and continuing for one (1) year after the date of termination of any such employment for any reason (regardless whether such termination occurs before or after the Expiration Date), subject to the Company’s ability to reduce the Time Limit, as set forth in
Section 8.8
, as applied to the non-competition covenant in
Section 9.2
. In the event of a violation of any of the covenants contained in this
Section 9
, the Time Limit shall be extended by a period of time equal to that period beginning when the activities constituting the violation commenced, and ending when those activities terminated.
9.6
Reasonableness of Limitations; Severability
. The Executive hereby acknowledges and agrees that the covenants and obligations made and undertaken in this
Section 9
are fair and reasonable in all respects, including, without limitation, with respect to duration, geographic area and scope of activity, and do not (and shall not) prevent the Executive from earning a livelihood. In the event that one or more of the provisions of the covenants made and undertaken in this
Section 9
is held invalid, void or unenforceable by any court of competent jurisdiction, such invalidity, voidness or unenforceability shall not render invalid, void or unenforceable any other part or provision of this Agreement. Further, if any of the provisions of the covenants made and undertaken in this
Section 9
are found to be invalid or unenforceable by a court or competent jurisdiction, such provisions shall be severed, modified or redefined by consideration of the reasonable concerns and needs of the Company such that the intent of the parties in agreeing to the provisions of this Agreement shall not be impaired and the provision in question shall be enforceable to the fullest extent permitted by applicable laws.
9.7.
Enforcement of Agreement
. The parties agree that a violation by the Executive of any part of this
Section 9
shall cause irreparable damage to the Company which cannot be easily and fairly quantified. For that reason, the Executive agrees that the Company shall be entitled, as a matter of right, to an injunction from any court of competent jurisdiction, without the necessity of posting bond, restraining any further violation of this
Section 9
. This remedy shall be in addition to any other rights and remedies the Company may have pursuant to this Agreement or law, including, specifically, the recovery of monetary damages, whether compensatory or punitive.
9.8
Survival
. This
Section 9
shall survive termination of this Agreement for any reason.
SECTION 10
SECTION 4999 OF THE CODE
10.1
Payments; Excise Tax
. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “
Payment
”) would be subject to the excise tax imposed by Section 4999 of the Code (the “
Excise Tax
”), then, prior to the making of any Payment to the Executive, a calculation shall be made comparing (i) the net benefit to the Executive of the Payment after payment of the Excise Tax, to (ii) the net benefit to the Executive if the Payment had been limited to the extent necessary to avoid being subject to the Excise Tax. If the amount calculated under (i) above is less than the amount calculated under (ii) above, then the Payment shall be limited to the extent necessary to avoid being subject to the Excise Tax (the “
Reduced Amount
”). The reduction of the Payments due hereunder, if applicable, shall be made by first reducing cash Payments and then, to the extent necessary, reducing those Payments having the next highest ratio of Parachute Value to actual present value of such Payments as of the date of the change of control, as determined by the Determination Firm (as defined in
Section 10(b)
below). For purposes of this
Section 10
, present value shall be determined in accordance with Section 280G(d)(4) of the Code. For purposes of this
Section 10
, the “
Parachute Value
” of a Payment means the present value as of the date of the change of control of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2) of the Code, as determined by the Determination Firm for purposes of determining whether and to what extent the Excise Tax shall apply to such Payment.
10.2
Determination Firm; Underpayment
. The determination of whether an Excise Tax would be imposed, the amount of such Excise Tax, and the calculation of the amounts referred to
Section 10(a)(i)
and
(ii)
above shall be made by an independent, nationally recognized accounting firm or compensation consulting firm mutually acceptable to the Company and the Executive (the “
Determination Firm
”) which shall provide detailed supporting calculations. Any determination by the Determination Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Determination Firm hereunder, it is possible that Payments which the Executive was entitled to, but did not receive pursuant to
Section 10(a)
, could have been made without the imposition of the Excise Tax (“
Underpayment
”). In such event, the Determination Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive but no later than March 15 of the year after the year in which the Underpayment is determined to exist, which is when the legally binding right to such Underpayment arises.
10.3
Repeal
. In the event that the provisions of Code Section 280G and 4999 or any successor provisions are repealed without succession, this
Section 10
shall be of no further force or effect.
SECTION 11
MISCELLANEOUS
11.1
Notices
. All notices, demands, requests or other communications required or permitted to be given or made hereunder shall be in writing and shall be delivered by overnight courier, telecopied or mailed by first class registered or certified mail, postage prepaid, addressed as follows:
(a) If to the Company:
Healthcare Trust of America, Inc.
The Promenade, Suite 320
16435 North Scottsdale Road
Scottsdale, AZ 85254
Fax: (480) 991-0755
Attention: Chief Executive Officer
With a copy to:
O’Melveny & Myers LLP
Two Embarcadero Center
28
th
Floor
San Francisco, CA 94111
Fax: (415) 984-8701
Attention: Peter T. Healy, Esq.
(b) If to the Executive:
Mark Engstrom
The Promenade, Suite 320
16435 North Scottsdale Road
Scottsdale, AZ 85254
Fax: (480) 991-0755
at the address on the books and records of the Company at the time of such notice, or to such other address as may be designated by either party in a notice to the other. Each notice, demand, request or other communication that shall be given or made in the manner described above shall be deemed sufficiently given or made for all purposes three (3) days after it is deposited in the U.S. mail, postage prepaid, or at such time as it is delivered to the addressee (with the return receipt, the delivery receipt, the answer back or the affidavit of messenger being deemed conclusive evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation.
11.2
Severability
. The invalidity or unenforceability of any one or more provisions of this Agreement shall not affect the validity or enforceability of the other provisions of this Agreement, which shall remain in full force and effect.
11.3
Survival
. It is the express intention and agreement of the parties hereto that the provisions of
Sections 8
and
9
shall survive the termination of employment of the Executive. In addition, all obligations of the Company to make payments hereunder shall survive any termination of this Agreement on the terms and conditions set forth herein.
11.4
Assignment
. The rights and obligations of the parties to this Agreement shall not be assignable or delegable, except that (i) in the event of the Executive’s death, the personal representative or legatees or distributees of the Executive’s estate, as the case may be, shall have the right to receive any amount owing and unpaid to the Executive hereunder, and (ii) the rights and obligations of the Company hereunder shall be assignable and delegable in connection with any merger, consolidation or sale of all or substantially all of the assets of the Company and any similar event with respect to any successor corporation. Notwithstanding anything herein to the contrary, the rights and obligations of the Company hereunder shall inure to the benefit of, and shall be binding upon, any successor to the Company or its business by merger or otherwise, whether or not there is an express assignment, delegation or assumption of such rights and obligations.
11.5
Dispute Resolution
. In the event that any dispute or disagreement arises between the parties in connection with any provision of this Agreement, the parties shall first submit such disagreements to mediation, which mediation shall occur in Scottsdale, Arizona. Either party may commence mediation by providing to Judicial Arbitration and Mediation Services, Inc. (“
JAMS
”) and the other party a written request for mediation, setting forth the subject of the dispute and the relief requested. The parties shall cooperate with JAMS and with one another in selecting a mediator
from JAMS panel of neutrals, within thirty (30) days after the commencement of the mediation, and in scheduling the mediation proceedings. The parties shall share equally in the costs of mediation. All offers, promises, conduct and statements, whether oral or written, made in the course of the mediation by any of the parties, their agents, employees, experts and attorneys, and by the mediator or any JAMS employees, are confidential, privileged and inadmissible for any purpose, including impeachment, in any proceeding involving the parties, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the mediation. Either party may commence a legal action with respect to the matters submitted to mediation at any time following the initial mediation session or forty-five (45) days after the date of filing the written request for mediation, whichever occurs first.
11.6
Binding Effect
. Subject to any provisions hereof restricting assignment, this Agreement shall be binding upon the parties hereto and shall inure to the benefit of the parties and their respective heirs, devisees, executors, administrators, legal representatives, successors and assigns.
11.7
Amendment; Waiver
. This Agreement shall not be amended, altered or modified except by an instrument in writing duly executed by the parties hereto. No waiver by either of the parties hereto of a breach of or a default under any of the provisions of this Agreement shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature. The failure of either of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder shall not be construed as a waiver of any such provisions, rights or privileges hereunder, or a waiver of any subsequent breach or default of a similar nature.
11.8
Headings
. Section and subsection headings contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof.
11.9
Governing Law
. This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the state in which the Executive’s primary resident office is situated (but not including the choice of law rules thereof). The parties further agree that the sole and exclusive forum for litigating any disputes arising under the terms of this Agreement shall be a court of competent jurisdiction in the state in which the Executive’s primary resident office is situated.
11.10
Integrated Agreement
. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof. There have been no offers or inducements regarding the making of this Agreement except as set out herein.
11.11
Counterparts
. This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which shall be deemed to constitute one and the same instrument.
11.12
Provisions Regarding Code Section 409A
.
(a) This Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements Section 409A of the Code and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder (and any applicable transition relief under Section 409A of the Code).
(b) Notwithstanding anything in this Agreement to the contrary, to the extent that any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code (
“
Non-Exempt Deferred Compensation
”
) would otherwise be payable or distributable hereunder by reason of the Executive’s termination of employment, such Non-Exempt Deferred Compensation shall not be payable or distributable to the Executive by reason of such circumstance unless the circumstances giving rise to such termination of employment meet any description or definition of “separation from service” in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definitions). If this provision prevents the payment or distribution of any Non-Exempt Deferred Compensation, such payment or distribution shall be made
on the date, if any, on which an event occurs that constitutes a Section 409A-compliant “separation from service,” or such later date as may be required by
Section 11.12(c)
below.
(c) Notwithstanding anything in this Agreement to the contrary, if any amount or benefit that would constitute Non-Exempt Deferred Compensation would otherwise be payable or distributable under this Agreement by reason of the Executive’s separation from service during a period in which the Executive is a “specified employee” (as defined in Section 409A of the Code and applicable regulations), then payment or commencement of such Non-Exempt Deferred Compensation shall be delayed until the earlier of (i) thirty (30) days following the Executive’s death, or (ii) the first day of the seventh month following the Executive’s separation from service.
(d) Whenever in this Agreement a payment or benefit is conditioned on the Executive’s execution of a release of claims, such release must be executed and all revocation periods shall have expired within sixty (60) days after the Date of Termination; failing which such payment or benefit shall be forfeited.
(e) If the Executive (or the Executive’s spouse or eligible dependents) is entitled to be paid or reimbursed for any taxable expenses under this Agreement, including, but not limited to, those expenses provided in
Sections 5
,
6
and
11
, and such payments or reimbursements are includible in the Executive’s federal gross taxable income, the amount of such expenses reimbursable in any one calendar year shall not affect the amount reimbursable in any other calendar year, and the reimbursement of an eligible expense must be made no later than December 31 of the year after the year in which the expense was incurred. No right of the Executive to reimbursement of expenses under this Agreement, including, but not limited to, those provided in
Sections 5
and
6
, shall be subject to liquidation or exchange for another benefit.
11.13
Definitions
“
Affiliate
” means any entity from time to time designated by the Board and any other entity directly or indirectly controlling or controlled by or under common control with the Company. For purposes of this definition: “control” means the power to direct the management and policies of such entity, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“
Asset Sale
” means the sale or other disposition of all or substantially all of the Company’s assets for cash or other consideration, unless such Asset Sale is a Non-Qualifying Transaction (as defined herein).
“
Board
” means the board of directors of the Company.
“
Cause
” means: (i) the Executive’s conviction of or entering into a plea of guilty or no contest to a felony or a crime involving moral turpitude; (ii) the Executive’s intentional commission of any other act or omission involving dishonesty or fraud that is materially injurious to the Company or any of its Affiliates, as reasonably determined by the Board; (iii) the Executive’s substantial and repeated failure to perform duties of the office(s) held by the Executive, as reasonably directed by the CEO, if such failure is not cured within ten (10) days after the Executive receives written notice thereof from the Company; (iv) gross negligence or willful misconduct in the performance of the Executive’s duties which materially injures the Company or its reputation; (v) the Executive’s willful breach of the material covenants of this Agreement; (vi) the Executive’s failure to complete a Relocation if requested pursuant to
Section 4
, or to satisfy the Executive’s substantial travel obligations on behalf of the Company, including, without limitation, the Executive’s Travel Responsibilities as set forth in
Sections 3.3
and
4
, in furtherance of satisfying the Executive’s duties under this Agreement; or (vii) the Executive’s failure to achieve performance goals established for the Executive in the Company’s annual business plan as approved by the Board, such goals may be adjusted by the Compensation Committee in its discretion from time to time upon written notice to the Executive, taking into account the recommendations of the CEO, upward or downward to reflect market conditions, market opportunities and any other changes in circumstances as the Compensation Committee may determine to be appropriate.
“
Code
” means the Internal Revenue Code of 1986, as amended.
“
Corporate Transaction
” means the consummation of a merger, consolidation, statutory share exchange, stock purchase or similar form of corporate transaction involving the Company that provides the Company’s stockholders with a combination of cash and/or securities of a company that are traded on a National Securities Exchange, unless such Corporate Transaction is a Non-Qualifying Transaction (as defined herein).
“
Date of Termination
” means: (i) if the Executive’s employment is terminated by the Executive’s death, the date of the Executive’s death; (ii) if the Executive’s employment is terminated because of the Executive’s Disability, thirty (30) days after Notice of Termination, provided that the Executive shall not have returned to the performance of the Executive’s duties on a full-time basis during such thirty (30) day period; (iii) if the Executive’s employment is terminated by the Company for Cause, the date specified in the Notice of Termination; (iv) if the Executive’s employment is terminated during the Employment Period, either by the Company or the Executive, for any other reason, the date specified in the Notice of Termination; or (v) if the Executive’s employment is terminated by reason of expiration of the Employment Period by its terms, the date on which the Employment Period expires by its terms.
“
Good Reason
” means, in the absence of the written consent of the Executive: (i) except in connection with a material decrease in the business of the Company, a diminution in the Executive’s Base Salary in excess of thirty percent (30%), or (ii) any other action or inaction that constitutes a material breach by the Company of this Agreement, including, without limitation, any failure by the Company to comply with and satisfy
Section 11.4
of this Agreement;
provided
,
however
, that the Executive expressly acknowledges and agrees that the Company shall have the right to hire one or more executives during the Employment Period with the title of “Executive Vice President” or “Executive Vice President - Acquisitions” or a similar title (including individuals who report directly to the CEO) and that the hiring of any such executive or executives shall not constitute a breach by the Company of this Agreement or otherwise provide grounds for a Good Reason termination hereunder by the Executive. Notwithstanding the foregoing, (A) the Executive shall notify the Company in writing of any event or condition claimed to constitute Good Reason under this paragraph within thirty (30) days of the initial existence of such event or condition, (B) the Company shall have thirty (30) days after receipt of such notice from the Executive to cure such initial event or condition, and (C) the Executive must separate from service with the Company within ninety (90) days following the initial existence of such event or condition.
“
National Securities Exchange
” means (i) the New York Stock Exchange, NYSE Amex Equities, or the Global Market or the Global Select Market of the NASDAQ Stock Market (or any successor to such entities), or (ii) a national securities exchange (or tier or segment thereof) that has listing standards that the Securities and Exchange Commission has determined by rule are substantially similar to the listing standards applicable to securities described in Section 18(b)(1)(A) of the Securities Act.
“
Non-Qualifying Transaction
” means, with respect to a Corporate Transaction or an Asset Sale, immediately following such Corporate Transaction or Asset Sale: (A) all or substantially all of the individuals and entities who were the “beneficial owners” (as defined in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934), respectively, of the outstanding Company Common Stock and the Company’s then outstanding securities eligible to vote for the election of directors (the “
Company Voting Securities
”) immediately prior to such Corporate Transaction or Asset Sale, beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Corporate Transaction or Asset Sale (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets or stock either directly or through one or more subsidiaries, the “
Surviving Entity
”) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction or Asset Sale, of the outstanding Company Common Stock and the outstanding Company Voting Securities, as the case may be, and (B) no person (other than (x) the Company or any subsidiary, (y) the Surviving Entity or its ultimate parent entity, or (z) any employee benefit plan (or related trust) sponsored or maintained by any of the foregoing) is the “beneficial owner,” directly or indirectly, of 50% or more of the total common stock or 50% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Surviving Entity, and (C) at least a majority of the members of the board of directors of the Surviving Entity were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Corporate Transaction or Asset Sale. For purposes of this definition, “Incumbent Directors” means, during any consecutive 12-month period, individuals who, at the beginning of such period, constitute the Board.
[
Signatures on Following Page
]
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or have caused this Agreement to be duly executed on their behalf, as of the Effective Date.
“COMPANY”
HEALTHCARE TRUST OF AMERICA, INC.,
A Maryland corporation
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By:
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/s/ Scott D. Peters
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Name:
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Scott D. Peters
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Title:
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Chief Executive Officer, President and Chairman
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“EXECUTIVE”
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/s/ Mark D. Engstrom
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Mark D. Engstrom
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Exhibit 10.4
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(Amanda Houghton)
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “
Agreement
”) is entered into and effective as of July 8, 2016 (the “
Effective Date
”), by and between Healthcare Trust of America, Inc., a Maryland corporation (the “
Company
”), and Amanda L. Houghton (the “
Executive
”).
WHEREAS, the parties had previously entered into that certain employment agreement dated as of January 1, 2013 and amended as of September 30, 2015 (the “
Existing Agreement
”) which set forth the employment arrangement of the Executive with the Company.
WHEREAS, the parties hereto wish to supersede and replace the Existing Agreement and enter into the arrangements set forth herein with respect to the terms and conditions of the Executive’s continued employment with the Company from and after the Effective Date.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1
EMPLOYMENT AGREEMENT
This Agreement shall supersede and replace the Existing Agreement as of the Effective Date, which shall be of no further force and effect as of the Effective Date. Subject to the terms and conditions set forth in this Agreement, the Company agrees to employ the Executive, and the Executive agrees to be employed by the Company, for the Employment Period set forth in
Section 2
and in the positions and with the duties set forth in
Section 3
. Terms used herein with initial capitalization are defined in
Section 11
.
SECTION 2
EMPLOYMENT PERIOD
Unless earlier terminated pursuant to
Section 7
hereof, the term of this Agreement and the Executive’s employment hereunder shall begin as of the Effective Date and shall conclude on the second (2
nd
) anniversary of the Effective Date (the “
Expiration Date
”). The period of the Executive’s employment under this Agreement is herein referred to as the “
Employment Period
.” For purposes of clarity, as provided in
Section 8.7
hereof, a termination of the Executive’s employment upon or following the Expiration Date shall not constitute either a termination of the Executive’s employment by the Company without “Cause” or grounds for a termination by the Executive for “Good Reason” for purposes of this Agreement. If the Company intends to make an offer to renew this Agreement for any period beyond the Expiration Date, the Company shall use reasonable efforts to provide the Executive notice of such intention at least ninety (90) days before the Expiration Date;
provided
,
however
, that in no event shall the Company be legally obligated to provide such notice and neither the provision of such notice nor any failure to provide such notice shall create any implied obligation to renew this Agreement.
SECTION 3
POSITION AND DUTIES
3.1
Position and Duties
. The Executive shall serve as an Executive Vice President — Asset Management of the Company during the Employment Period. The title of the Executive can be reasonably adjusted by the Company during the Employment Period. The Executive shall render management services to the Company as reasonably determined by the Chief Executive Officer of the Company (the “
CEO
”). The Company shall provide the Executive with necessary authority and reasonable resources to discharge the Executive’s responsibilities under laws and
regulations applicable to the Company and the Executive. Notwithstanding the foregoing, the Company, in the Company’s sole discretion, shall have the right to employ one or more executives at the Company with the title of “Executive Vice President — Asset Management” or a similar title, and such executive or executives may render to the Company the same or a similar type of service as the Company contemplates on the Effective Date that the Executive would be rendering to the Company during the Employment Period.
3.2
Reporting
. The Executive shall report directly to the CEO. The Executive shall not be required to take direction from or report to any other person unless otherwise directed by the CEO. The Executive shall devote the Executive’s best efforts and full business time to the performance of the Executive’s duties hereunder and the advancement of the business and affairs of the Company during the Employment Period. The Executive may, consistent with the other provisions of this Agreement and subject to pre-approval of the CEO, pursue other limited outside interests, including, but not limited to, devoting time to (A) serving on corporate, civic or charitable boards or committees, (B) delivering lectures, fulfilling speaking engagements or teaching at educational institutions, and (C) managing the Executive’s personal investments, so long as such activities do not interfere with the full time performance of Executive’s responsibilities in accordance with this Agreement.
3.3
Regional Offices and Other Duties
. The Executive shall be obligated to (a) regularly participate in in-person meetings (i) with the CEO and the other executive officers of the Company at various offices of the Company throughout the United States, (ii) with the Company’s asset management and leasing team at each office of the Company throughout the United States, and (iii) with the Company’s tenants, prospective tenants, health care institutions, and joint venture prospects, in each case throughout the United States, and (b) travel on Company business throughout the United States approximately thirty-five percent (35%) of the time during the Employment Period (the “
Executive’s Travel Responsibilities
”).
SECTION 4
PLACE OF PERFORMANCE; TRAVEL OBLIGATIONS
During the Employment Period, subject to
Section 3.3
, the Executive’s primary resident office at the Company shall be the Company’s office in Scottsdale, Arizona, except as may otherwise be applicable in the event of an Asset Sale or Corporate Transaction, as defined in
Section 11.13
. The Executive acknowledges and agrees that the Executive shall have substantial and extensive travel obligations in connection with the performance of the Executive’s duties under this Agreement, including, without limitation, the Executive’s Travel Responsibilities as set forth in
Section 3.3
, and as otherwise requested by the CEO, and that such travel obligations, including, without limitation, the Executive’s Travel Responsibilities, are an important and integral part of the Executive’s duties hereunder.
SECTION 5
COMPENSATION
5.1
Base Salary
. During the Employment Period, the Company shall pay to the Executive an annual base salary (the “
Base Salary
”), which initially shall be Three Hundred Thousand Dollars ($300,000). The Base Salary shall be reviewed by the Compensation Committee of the Board (the “
Compensation Committee
”) no less frequently than annually and may be increased or decreased at any time during the Employment Period at the sole discretion of the Compensation Committee. The Base Salary shall be payable semi-monthly or in such other installments as shall be consistent with the Company’s payroll procedures in effect from time to time.
5.2
Bonus
. During the Employment Period, the Executive shall be eligible to earn an annual performance bonus in an amount determined in the sole discretion of the Compensation Committee for each year, with a target of 100% of the Base Salary (the “
Target Bonus
”). It is the intention of the parties hereto that the Company shall establish bonus parameters for the Executive with respect to each fiscal year of the Employment Period. The Executive acknowledges and agrees that the Executive’s annual bonus is not guaranteed at any level; rather, it is to be determined by the Compensation Committee, in its sole discretion, taking into account the recommendations of the CEO. The Compensation Committee shall establish the performance goals and objectives on which the Executive’s annual bonus shall be based.
5.3
Equity Compensation
. The Executive has previously received equity incentive awards from the Company that are outstanding as of the Effective Date (the “
Prior Grants
”). The Prior Grants shall vest in the time and manner set forth in the documents evidencing such Prior Grants. The Prior Grants were made pursuant to, and shall remain subject to, the terms and conditions of the Company’s Amended and Restated 2006 Incentive Plan (the “
Plan
”), as in effect on the dates of such Prior Grants, and the applicable award agreement. The Executive shall continue to be eligible for equity incentive grants under the Plan, with the type, amount and terms of any such grants to be determined by the Compensation Committee in its sole discretion.
5.4
Benefits
. During the Employment Period, the Executive shall be entitled to all employee benefits made available to senior executives of the Company generally, including, without limitation, group medical, dental, vision, life insurance, long-term disability insurance, retirement, pension, 401(k) savings plans and/or prescription drug plan coverage, subject to the condition that the Executive is eligible for participation in any such plans. The Company shall pay 100% of the premium cost of the Company’s health insurance coverage provided to the Executive (and the Executive’s dependents, if applicable) by the Company from time to time. Nothing contained in this Agreement shall prevent the Company from terminating plans, changing carriers or effecting modifications in employee benefits coverage for the Executive as long as such modifications affect all similarly situated senior executives of the Company.
5.5
Vacation; Holidays
. During the Employment Period, the Executive shall be entitled to all public holidays observed by the Company and vacation days in accordance with the applicable vacation policies for senior executives of the Company, which vacation days shall be taken at a reasonable time or times. The Executive shall be entitled to four (4) weeks vacation per year in accordance with the general policies of the Company and subject to applicable law;
provided
,
however
, that accrual of vacation time is capped at a maximum of four (4) weeks and no more than one (1) week of any unused vacation may carry over from calendar year to calendar year.
5.6
Directors and Officers Insurance and Indemnification
. The Company shall maintain insurance to insure the Executive against claims arising out of an alleged wrongful act by the Executive while acting in good faith as an officer of the Company or one of its subsidiaries. The Company shall further indemnify and exculpate the Executive from money damages incurred as a result of claims arising out of an alleged wrongful act by the Executive while acting in good faith as an officer or employee of the Company, or of its subsidiaries, to the fullest extent permitted under applicable law, subject to the terms of the Indemnification Agreement between the Company and the Executive dated as of December 20, 2010, as such agreement may be amended from time to time.
5.7
Withholding Taxes and Other Deductions
. To the extent required by law, the Company shall withhold from any payments due to the Executive under this Agreement any applicable federal, state or local taxes and such other deductions as are prescribed by law or authorized by the Executive. The Executive may, subject to prior approval by the Compensation Committee, elect that any withholding required upon any taxable event in connection with an award granted under the Plan be satisfied, in whole or in part, by withholding from any shares otherwise delivered or deliverable in respect of the award a number of shares having a Fair Market Value (as defined in the Plan) on the date of withholding equal to the minimum amount (and not any greater amount) required to be withheld for tax purposes, all in accordance with such procedures as the Compensation Committee establishes. All such elections shall be subject to any restrictions or limitations that the Compensation Committee, in its sole discretion, deems appropriate.
SECTION 6
EXPENSES
During the Employment Period, the Executive is expected and is authorized, subject to the business expense policies as determined by the Company, to incur reasonable expenses in the performance of the Executive’s duties hereunder, including the costs of entertainment, travel, and similar business expenses. During the Employment Period, the Company shall promptly reimburse the Executive for all such expenses upon periodic presentation by the Executive of an accounting of such expenses on terms applicable to senior executives of the Company. During the Employment Period, the Executive shall be entitled to upgrade to “First Class” airfare for all flights over three (3) hours in duration.
SECTION 7
TERMINATION OF EMPLOYMENT
7.1
Notice of Termination
. Any termination of the Executive’s employment by the Company or by the Executive shall be communicated by written Notice of Termination to the other party hereto in accordance with
Section 11
. For purposes of this Agreement, a “
Notice of Termination
” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon, if any, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employment Period under the provision so indicated. Termination of the Employment Period shall take effect on the Date of Termination (as defined in
Section 11.13
hereof). The Employment Period may be terminated under the following circumstances:
7.2
Death
. The Executive’s employment shall terminate immediately upon the Executive’s death.
7.3
By the Company
. The Company may terminate the Executive’s employment:
(i) if the Executive shall have been unable to perform, in the opinion of a competent physician selected by the Board, any or all of the Executive’s duties hereunder, either with or without reasonable accommodation, by reason of illness, physical or mental disability or other similar incapacity, which inability shall continue for more than three consecutive months, or any six months in a twelve-month period (a “
Disability
”); or
(ii) with or without Cause (as defined in
Section 11.13
hereof).
7.4
By the Executive
. The Executive may terminate the Executive’s employment at any time for Good Reason or without Good Reason (as defined in
Section 11.13
hereof).
7.5
Return of Information
. The Executive agrees to deliver to the Company at the termination of the Executive’s employment, or at any other time so demanded by the Company, all records, files, software, software code, memoranda, reports, price lists, customer lists, drawings, plans, sketches, documents, technical information, contracts, sales or marketing materials, personnel information, financial information (including budgets), business and strategic plans and the like (together with all copies of such documents and things) relating to the business of the Company and its Affiliates and their predecessors which the Executive may then possess or have under the Executive’s control.
SECTION 8
COMPENSATION UPON TERMINATION
The Executive’s employment must be terminated during the Employment Period in order for the Executive to receive any payment or other benefit under this
Section 8
.
8.1
Death
. If the Executive’s employment terminates during the Employment Period as a result of the Executive’s death, the Company shall pay to the Executive’s estate, or as may be directed by the legal representatives of such estate, within thirty (30) days following the Date of Termination, any accrued but unpaid Base Salary through the Date of Termination, and all equity-based awards granted by the Company that are outstanding and unvested on the Date of Termination shall become fully vested on the Date of Termination. All other unpaid amounts, if any, which the Executive has accrued and is entitled to as of the Date of Termination in connection with any fringe benefits or under any bonus or incentive compensation plan or program of the Company pursuant to
Section 5
shall be paid in accordance with the terms of such arrangements. The Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan and any life insurance, death in service or other equivalent policy for the benefit of the Executive).
8.2
Disability
. If the Company terminates the Executive’s employment during the Employment Period because of the Executive’s Disability, the Company shall pay to the Executive within thirty (30) days following the Date of Termination any accrued but unpaid Base Salary through the Date of Termination. All other unpaid amounts, if any, which the Executive has accrued and is entitled to as of the Date of Termination in connection with any fringe
benefits or under any bonus or incentive compensation plan or program of the Company pursuant to
Section 5
shall be paid in accordance with the terms of such arrangements. In addition, if the Company terminates the Executive’s employment during the Employment Period because of the Executive’s Disability, then all equity-based awards granted by the Company that are outstanding and unvested on the Date of Termination shall become fully vested on the Date of Termination, and the Executive shall be entitled to the COBRA benefit provided under
Section 8.6(b)
. The Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan and any disability or other medical insurance policy for the benefit of the Executive).
8.3
By the Company for Cause; By the Executive Without Good Reason
. If the Company terminates the Executive’s employment during the Employment Period for Cause or if the Executive terminates the Executive’s employment during the Employment Period without Good Reason, the Company shall pay to the Executive within thirty (30) days following the Date of Termination any accrued but unpaid Base Salary through the Date of Termination. All other unpaid amounts, if any, which the Executive has accrued and is entitled to as of the Date of Termination in connection with any fringe benefits or under any bonus or incentive compensation plan or program of the Company pursuant to
Section 5
shall be paid in accordance with the terms of such arrangements. The Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan).
8.4
By the Company Without Cause; By the Executive for Good Reason
. If the Company terminates the Executive’s employment during the Employment Period other than for Cause, Disability or death, or the Executive terminates the Executive’s employment during the Employment Period for Good Reason, the Company shall pay to the Executive within thirty (30) days following the Date of Termination any accrued but unpaid Base Salary through the Date of Termination. All other unpaid amounts, if any, which the Executive has accrued and is entitled to as of the Date of Termination in connection with any fringe benefits or under any bonus or incentive compensation plan or program of the Company pursuant to
Section 5
shall be paid in accordance with the terms of such arrangements. In addition, if such termination of the Executive’s employment occurs prior to the Expiration Date, the Executive shall be entitled to the Separation Benefits (as defined in
Section 8.6
upon the conditions set forth therein). The Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan).
8.5
General Release
. The Executive shall execute a customary general release in a form satisfactory to the Company in furtherance of this Agreement and as a condition to the receipt of any Separation Benefits (the “
Release
”). Nothing in this
Section 8
shall be deemed to operate or shall operate as a release, settlement or discharge of any liability of the Executive to the Company or others for any action or omission by the Executive, including, without limitation, any actions which formed, or could have formed, the basis for termination of the Executive’s employment for Cause.
8.6
Separation Benefits
. For purposes of this Agreement, “
Separation Benefits
” shall mean:
(a) payment by the Company to the Executive of:
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(1)
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the product of (x) the Executive’s Target Bonus for the year in which the Date of Termination occurs, and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365; and
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(2)
|
a severance benefit, in the amount equal to two (2) times the Executive’s Base Salary at the rate in effect on the Date of Termination.
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Subject to
Section 11.12
hereof, the cash payments provided in
Section 8.6(a)
above shall be made by the Company in a lump sum on the sixtieth (60
th
) day following the Date of Termination.
(b) if the Executive elects to continue participation in any group medical, dental, vision and/or prescription drug plan benefits to which the Executive and/or the Executive’s eligible dependents would be entitled under Section 4980B (“
COBRA
”), of the Internal Revenue Code of 1986, as amended (the “
Code
”), then the Company shall pay to
the Executive (or reimburse the Executive for) any applicable premium under COBRA for participation in such plans for a period of six (6) months beginning on the Date of Termination, subject to the condition that the Executive remains eligible for participation in such plans; and
(c) all equity-based awards granted by the Company that are outstanding and unvested on the Date of Termination shall become fully vested on the Date of Termination.
Notwithstanding any other provisions herein to the contrary, the Executive’s receipt of the Separation Benefits shall be subject to and conditioned upon Executive’s compliance with the terms and conditions of
Section 9
of this Agreement and the Executive having executed, within forty-five (45) days after the Date of Termination, the Release and such Release having not been revoked within any revocation period provided by applicable law.
8.7
Termination Upon Expiration of the Employment Period
. If the Executive’s employment terminates upon or following the Expiration Date, the Company shall pay to the Executive within thirty (30) days following the Date of Termination any accrued but unpaid Base Salary through the Date of Termination, and all other unpaid amounts, if any, which the Executive has accrued and is entitled to as of the Date of Termination in connection with any fringe benefits or under any bonus or incentive compensation plan or program of the Company pursuant to
Section 5
shall be paid in accordance with the terms of such arrangements. The Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan).
8.8
Non-Compete Payment for Time Period
. Upon the termination of the Executive’s employment for any reason other than the Executive’s death (whether such termination is by the Company or the Executive and whether such termination occurs before or after the Expiration Date), if the Company elects that the Executive shall be subject to the non-competition covenant following the Date of Termination as provided in
Section 9.2
, the Company shall pay to the Executive, in consideration for such covenant, an amount equal to sixty percent (60%) of the sum of (i) the Executive’s Base Salary at the rate in effect on the Date of Termination and (ii) the annual incentive bonus paid by the Company to the Executive for the fiscal year immediately preceding the fiscal year in which the Date of Termination occurs (the “
Non-Compete Payment
”);
provided
,
however
, that in the case of a termination of the Executive’s employment that occurs on or after the Expiration Date, the Company shall be required to provide the Executive written notice not less than three (3) months before the Expiration Date that it will require the Executive to comply with such non-competition covenant (and, if the Company does not timely provide such notice to the Executive prior to such a termination of the Executive’s employment by the Company, the Executive will not be subject to the non-competition covenant in
Section 9.2
); and
provided
,
further
, that the Company may elect to reduce the number of months following the Date of Termination in the Time Period as applied to the non-competition covenant in
Section 9.2
, in which case (or if for any other reason such non-competition covenant does not apply following the Date of Termination) the Non-Compete Payment shall be reduced by multiplying such amount by a fraction, the numerator of which shall be the number of whole months following the Date of Termination in which such non-competition covenant applies, and the denominator of which shall be twelve (12). For the avoidance of doubt, the Company may elect to reduce to zero the number of months in the Time Period following the Date of Termination in which such non-competition covenant shall apply, in which case the Company shall not be required to make any Non-Compete Payment. The Non-Compete Payment shall be paid to the Executive in a series of monthly installments over the applicable period in which the non-competition covenant applies. In the event the Executive breaches the non-competition covenant provided in
Section 9.2
or any other provision of
Section 9
, the Executive shall not be entitled to receive any portion of the Non-Compete Payment (and the Executive shall be required to repay to the Company in full any portion of the Non-Compete Payment paid to the Executive prior to such breach).
8.9
Supplemental Non-Compete
. In addition to the non-competition covenant provided in
Section 9.2
, the Executive agrees that if the Executive’s employment with the Company terminates for any reason at any time on or after the Expiration Date (other than a termination by the Company for Cause or as a result of the Executive’s death), the Executive shall not be employed by or provide services to any Non-Compete Entity (as defined in
Section 9.2
) at any time during the period commencing on the date of such termination of the Executive’s employment and continuing through the date that is two (2) years after such termination date;
provided
,
however
, that the Company may at any time in the Company’s sole discretion provide for a shorter (but not a longer) period (such period, the “
Supplemental Non-Compete Period
”). During the Supplemental Non-Compete Period, all equity-based awards granted by the
Company that are outstanding and unvested on the date of such termination of the Executive’s employment shall remain outstanding and, notwithstanding any provision of the applicable award agreement or other award documentation to the contrary, shall be scheduled to vest on the last day of the Supplemental Non-Compete Period (without regard to whether the original scheduled vesting date was before or after the last day of the Supplemental Non-Compete Period), with vesting subject in each case to the Executive’s continued compliance with the Executive’s obligations under this
Section 8.9
and the Executive’s other obligations under
Section 9
through the last day of the Supplemental Non-Compete Period (or, if for any reason the Executive’s obligations under this
Section 8.9
do not apply following the date of such termination of the Executive’s employment, such awards shall become fully vested on the date of such termination). For avoidance of doubt, if the Executive breaches the Executive’s obligations under this
Section 8.9
, the Executive shall not be entitled to any vesting of the Executive’s equity-based awards under this
Section 8.9
, and any then-unvested awards shall be forfeited to the Company without payment. Upon any vesting of the awards at the conclusion of the Supplemental Non-Compete Period pursuant to this
Section 8.9
, the Executive may elect to have any tax withholding obligations arising in connection with such vesting event be satisfied by a withholding of shares by the Company as contemplated by
Section 5.7
, and in the event it is determined that any such shares that may vest pursuant to this
Section 8.9
shall be treated as taxable income to the Executive before their scheduled vesting date, the Company shall cancel the required amount of remaining unvested shares (applied on a pro-rata basis across the applicable vesting installments) in order to satisfy any withholding tax obligations for the Executive, and such shares shall no longer be held by or subject to forfeiture by the Executive. Except as otherwise set forth herein, the Company shall have no further obligations to the Executive under this Agreement or otherwise (other than pursuant to any employee benefit plan).
SECTION 9
COVENANTS
9.1
Protection of Confidential Information
. The Executive hereby agrees that, during the Executive’s employment with the Company and thereafter, the Executive shall not, directly or indirectly, disclose or make available to any person, firm, corporation, association or other entity for any reason or purpose whatsoever, any Confidential Information (as defined below). The Executive further agrees that, upon the Date of Termination, all Confidential Information in the Executive’s possession that is in written or other tangible form shall be returned to the Company and shall not be retained by the Executive or furnished to any third party. Notwithstanding the foregoing, this Section 9 shall not apply to Confidential Information that (i) was publicly known at the time of disclosure to the Executive, (ii) becomes publicly known or available thereafter other than by any means in violation of this Agreement or any other duty owed to the Company by the Executive, (iii) is lawfully disclosed to the Executive by a third party, or (iv) is required to be disclosed by law or by any court, arbitrator or administrative or legislative body with actual or apparent jurisdiction to order the Executive to disclose or make accessible any information.
As used in this Agreement, “
Confidential Information
” means, without limitation, any non-public confidential or proprietary information disclosed to Executive or known by the Executive as a consequence of or through the Executive's relationship with the Company, in any form, including electronic media. Confidential Information also includes, but is not limited to, the Company's business plans and financial information, marketing plans, and business opportunities. Nothing herein shall limit in any way any obligation the Executive may have relating to Confidential Information under any other agreement with the Company.
The Executive recognizes that because the Executive’s work for the Company will bring the Executive into contact with confidential and proprietary information of the Company, the restrictions of this Section 9 are required for the reasonable protection of the Company and its investments and for the Company’s reliance on and confidence in the Executive.
9.2
Non-Competition
. If the Executive’s employment terminates for any reason other than due to the Executive’s death, the Executive agrees that, for the duration of the Time Limit and within the Geographical Limit (each as defined below) and, in the event of a termination of the Executive’s employment by the Company without Cause, subject to the notice requirement set forth in
Section 8.8
in the case of a termination on or after the Expiration Date, the Executive shall not, either directly or indirectly or in any individual or representative capacity, promote, sell or otherwise provide products or services that are competitive with those of the Company, including, without limitation, products or services relating to the acquisition, leasing, operation or management of medical office buildings or
healthcare-related facilities or similar assets (an entity that provides such products or services, a “
Non-Compete Entity
”), in a capacity that involves the execution of job duties or responsibilities that are the same as or similar to the job duties and responsibilities that the Executive executed on behalf of the Company (and, for the avoidance of doubt, including, without limitation, the provision of products or services to (a) Physicians Realty Trust Inc. Northstar Securities, LLC, HCP Inc., Healthcare Realty Trust Incorporated, Welltower, Inc., Ventas Inc., Duke Realty Corp., Griffin-American Healthcare REIT, or American Realty Capital Healthcare Trust, (b) any other company, entity or institution whose portfolio includes medical office buildings, (c) any Affiliates of any of the foregoing entities, or (d) any successors or assigns of any of the foregoing entities).
The term “
Geographical Limit
” herein shall mean the United States. In the event a court of competent jurisdiction determines the geographic area as set forth herein is too broad, the parties agree to narrow such restriction to the geographic areas of the United States wherein the Company owns assets at the time of such determination. In the event a court of competent jurisdiction determines the geographic area as set forth herein is too broad, the parties agree to narrow such restriction to the state of Arizona. In the event a court of competent jurisdiction determines the geographic area as set forth herein is too broad, the parties agree to narrow such restriction to Maricopa County, Arizona.
9.3
Non-Solicitation of Customers, Vendors and Others
. The Executive agrees, for the duration of the Time Limit that the Executive, either directly or indirectly, or in any individual or representative capacity, shall not request or solicit any of the Company’s investors, prospective investors, shareholders, health care institution relationships, tenants, targeted prospective tenants, clients, business contacts, brokers, dealers, agents, customers or vendors to withdraw, curtail, cancel, or decrease the level of their business with and/or referrals to the Company or request that they do business with or provide referrals to any third party in competition with the Company.
9.4
Non-Solicitation of the Company’s Employees
. The Executive agrees, for the duration of the Time Limit that the Executive, either directly or indirectly, or in any individual or representative capacity, shall not request or solicit, or assist any third party in requesting or soliciting, any of the Company’s employees to terminate the Executive’s employment with the Company or to accept employment with any third party in competition with the Company. Nothing herein shall prevent the Executive, directly or indirectly through the use of agents, employees or other representatives, from placing general advertisements in any widely-distributed media (such as newspapers and Internet postings) for employment directed at the public at large (as opposed to directed specifically at the Company’s employees) that have the effect of inducing or influencing any of the Company’s employees to terminate the Executive’s employment with the Company.
9.5
Time Limit
. The term “
Time Limit
” shall mean during the Executive’s employment with the Company and continuing for one (1) year after the date of termination of any such employment for any reason (regardless whether such termination occurs before or after the Expiration Date), subject to the Company’s ability to reduce the Time Limit, as set forth in
Section 8.8
, as applied to the non-competition covenant in
Section 9.2
. In the event of a violation of any of the covenants contained in this
Section 9
, the Time Limit shall be extended by a period of time equal to that period beginning when the activities constituting the violation commenced, and ending when those activities terminated.
9.6
Reasonableness of Limitations; Severability
. The Executive hereby acknowledges and agrees that the covenants and obligations made and undertaken in this
Section 9
are fair and reasonable in all respects, including, without limitation, with respect to duration, geographic area and scope of activity, and do not (and shall not) prevent the Executive from earning a livelihood. In the event that one or more of the provisions of the covenants made and undertaken in this
Section 9
is held invalid, void or unenforceable by any court of competent jurisdiction, such invalidity, voidness or unenforceability shall not render invalid, void or unenforceable any other part or provision of this Agreement. Further, if any of the provisions of the covenants made and undertaken in this
Section 9
are found to be invalid or unenforceable by a court or competent jurisdiction, such provisions shall be severed, modified or redefined by consideration of the reasonable concerns and needs of the Company such that the intent of the parties in agreeing to the provisions of this Agreement shall not be impaired and the provision in question shall be enforceable to the fullest extent permitted by applicable laws.
9.7.
Enforcement of Agreement
. The parties agree that a violation by the Executive of any part of this
Section 9
shall cause irreparable damage to the Company which cannot be easily and fairly quantified. For that reason, the Executive agrees that the Company shall be entitled, as a matter of right, to an injunction from any court of competent jurisdiction, without the necessity of posting bond, restraining any further violation of this
Section 9
. This remedy shall be in addition to any other rights and remedies the Company may have pursuant to this Agreement or law, including, specifically, the recovery of monetary damages, whether compensatory or punitive.
9.8
Survival
. This
Section 9
shall survive termination of this Agreement for any reason.
SECTION 10
SECTION 4999 OF THE CODE
10.1
Payments; Excise Tax
. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “
Payment
”) would be subject to the excise tax imposed by Section 4999 of the Code (the “
Excise Tax
”), then, prior to the making of any Payment to the Executive, a calculation shall be made comparing (i) the net benefit to the Executive of the Payment after payment of the Excise Tax, to (ii) the net benefit to the Executive if the Payment had been limited to the extent necessary to avoid being subject to the Excise Tax. If the amount calculated under (i) above is less than the amount calculated under (ii) above, then the Payment shall be limited to the extent necessary to avoid being subject to the Excise Tax (the “
Reduced Amount
”). The reduction of the Payments due hereunder, if applicable, shall be made by first reducing cash Payments and then, to the extent necessary, reducing those Payments having the next highest ratio of Parachute Value to actual present value of such Payments as of the date of the change of control, as determined by the Determination Firm (as defined in
Section 10(b)
below). For purposes of this
Section 10
, present value shall be determined in accordance with Section 280G(d)(4) of the Code. For purposes of this
Section 10
, the “
Parachute Value
” of a Payment means the present value as of the date of the change of control of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2) of the Code, as determined by the Determination Firm for purposes of determining whether and to what extent the Excise Tax shall apply to such Payment.
10.2
Determination Firm; Underpayment
. The determination of whether an Excise Tax would be imposed, the amount of such Excise Tax, and the calculation of the amounts referred to
Section 10(a)(i)
and
(ii)
above shall be made by an independent, nationally recognized accounting firm or compensation consulting firm mutually acceptable to the Company and the Executive (the “
Determination Firm
”) which shall provide detailed supporting calculations. Any determination by the Determination Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Determination Firm hereunder, it is possible that Payments which the Executive was entitled to, but did not receive pursuant to
Section 10(a)
, could have been made without the imposition of the Excise Tax (“
Underpayment
”). In such event, the Determination Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive but no later than March 15 of the year after the year in which the Underpayment is determined to exist, which is when the legally binding right to such Underpayment arises.
10.3
Repeal
. In the event that the provisions of Code Section 280G and 4999 or any successor provisions are repealed without succession, this
Section 10
shall be of no further force or effect.
SECTION 11
MISCELLANEOUS
11.1
Notices
. All notices, demands, requests or other communications required or permitted to be given or made hereunder shall be in writing and shall be delivered by overnight courier, telecopied or mailed by first class registered or certified mail, postage prepaid, addressed as follows:
(a) If to the Company:
Healthcare Trust of America, Inc.
The Promenade, Suite 320
16435 North Scottsdale Road
Scottsdale, AZ 85254
Fax: (480) 991-0755
Attention: Chief Executive Officer
With a copy to:
O’Melveny & Myers LLP
Two Embarcadero Center
28
th
Floor
San Francisco, CA 94111
Fax: (415) 984-8701
Attention: Peter T. Healy, Esq.
(b) If to the Executive:
Amanda Houghton
The Promenade, Suite 320
16435 North Scottsdale Road
Scottsdale, AZ 85254
Fax: (480) 991-0755
at the address on the books and records of the Company at the time of such notice, or to such other address as may be designated by either party in a notice to the other. Each notice, demand, request or other communication that shall be given or made in the manner described above shall be deemed sufficiently given or made for all purposes three (3) days after it is deposited in the U.S. mail, postage prepaid, or at such time as it is delivered to the addressee (with the return receipt, the delivery receipt, the answer back or the affidavit of messenger being deemed conclusive evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation.
11.2
Severability
. The invalidity or unenforceability of any one or more provisions of this Agreement shall not affect the validity or enforceability of the other provisions of this Agreement, which shall remain in full force and effect.
11.3
Survival
. It is the express intention and agreement of the parties hereto that the provisions of
Sections 8
and
9
shall survive the termination of employment of the Executive. In addition, all obligations of the Company to make payments hereunder shall survive any termination of this Agreement on the terms and conditions set forth herein.
11.4
Assignment
. The rights and obligations of the parties to this Agreement shall not be assignable or delegable, except that (i) in the event of the Executive’s death, the personal representative or legatees or distributees of the Executive’s estate, as the case may be, shall have the right to receive any amount owing and unpaid to the Executive hereunder, and (ii) the rights and obligations of the Company hereunder shall be assignable and delegable in connection with any merger, consolidation or sale of all or substantially all of the assets of the Company and any similar event with respect to any successor corporation. Notwithstanding anything herein to the contrary, the rights and obligations of the Company hereunder shall inure to the benefit of, and shall be binding upon, any successor to the Company or its business by merger or otherwise, whether or not there is an express assignment, delegation or assumption of such rights and obligations.
11.5
Dispute Resolution
. In the event that any dispute or disagreement arises between the parties in connection with any provision of this Agreement, the parties shall first submit such disagreements to mediation, which mediation shall occur in Scottsdale, Arizona. Either party may commence mediation by providing to Judicial Arbitration
and Mediation Services, Inc. (“
JAMS
”) and the other party a written request for mediation, setting forth the subject of the dispute and the relief requested. The parties shall cooperate with JAMS and with one another in selecting a mediator from JAMS panel of neutrals, within thirty (30) days after the commencement of the mediation, and in scheduling the mediation proceedings. The parties shall share equally in the costs of mediation. All offers, promises, conduct and statements, whether oral or written, made in the course of the mediation by any of the parties, their agents, employees, experts and attorneys, and by the mediator or any JAMS employees, are confidential, privileged and inadmissible for any purpose, including impeachment, in any proceeding involving the parties, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the mediation. Either party may commence a legal action with respect to the matters submitted to mediation at any time following the initial mediation session or forty-five (45) days after the date of filing the written request for mediation, whichever occurs first.
11.6
Binding Effect
. Subject to any provisions hereof restricting assignment, this Agreement shall be binding upon the parties hereto and shall inure to the benefit of the parties and their respective heirs, devisees, executors, administrators, legal representatives, successors and assigns.
11.7
Amendment; Waiver
. This Agreement shall not be amended, altered or modified except by an instrument in writing duly executed by the parties hereto. No waiver by either of the parties hereto of a breach of or a default under any of the provisions of this Agreement shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature. The failure of either of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder shall not be construed as a waiver of any such provisions, rights or privileges hereunder, or a waiver of any subsequent breach or default of a similar nature.
11.8
Headings
. Section and subsection headings contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof.
11.9
Governing Law
. This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State of Arizona (but not including the choice of law rules thereof). The parties further agree that the sole and exclusive forum for litigating any disputes arising under the terms of this Agreement shall be a court of competent jurisdiction in the State of Arizona.
11.10
Integrated Agreement
. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof. There have been no offers or inducements regarding the making of this Agreement except as set out herein.
11.11
Counterparts
. This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which shall be deemed to constitute one and the same instrument.
11.12
Provisions Regarding Code Section 409A
.
(a) This Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements Section 409A of the Code and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder (and any applicable transition relief under Section 409A of the Code).
(b) Notwithstanding anything in this Agreement to the contrary, to the extent that any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code (
“
Non-Exempt Deferred Compensation
”
) would otherwise be payable or distributable hereunder by reason of the Executive’s termination of employment, such Non-Exempt Deferred Compensation shall not be payable or distributable to the Executive by reason of such circumstance unless the circumstances giving rise to such termination of employment meet any description or definition of “separation from service” in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definitions). If this provision prevents
the payment or distribution of any Non-Exempt Deferred Compensation, such payment or distribution shall be made on the date, if any, on which an event occurs that constitutes a Section 409A-compliant “separation from service,” or such later date as may be required by
Section 11.12(c)
below.
(c) Notwithstanding anything in this Agreement to the contrary, if any amount or benefit that would constitute Non-Exempt Deferred Compensation would otherwise be payable or distributable under this Agreement by reason of the Executive’s separation from service during a period in which the Executive is a “specified employee” (as defined in Section 409A of the Code and applicable regulations), then payment or commencement of such Non-Exempt Deferred Compensation shall be delayed until the earlier of (i) thirty (30) days following the Executive’s death, or (ii) the first day of the seventh month following the Executive’s separation from service.
(d) Whenever in this Agreement a payment or benefit is conditioned on the Executive’s execution of a release of claims, such release must be executed and all revocation periods shall have expired within sixty (60) days after the Date of Termination; failing which such payment or benefit shall be forfeited.
(e) If the Executive (or the Executive’s spouse or eligible dependents) is entitled to be paid or reimbursed for any taxable expenses under this Agreement, including, but not limited to, those expenses provided in
Sections 5
,
6
and
11
, and such payments or reimbursements are includible in the Executive’s federal gross taxable income, the amount of such expenses reimbursable in any one calendar year shall not affect the amount reimbursable in any other calendar year, and the reimbursement of an eligible expense must be made no later than December 31 of the year after the year in which the expense was incurred. No right of the Executive to reimbursement of expenses under this Agreement, including, but not limited to, those provided in
Sections 5
and
6
, shall be subject to liquidation or exchange for another benefit.
11.13
Definitions
“
Affiliate
” means any entity from time to time designated by the Board and any other entity directly or indirectly controlling or controlled by or under common control with the Company. For purposes of this definition: “control” means the power to direct the management and policies of such entity, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“
Asset Sale
” means the sale or other disposition of all or substantially all of the Company’s assets for cash or other consideration, unless such Asset Sale is a Non-Qualifying Transaction (as defined herein).
“
Board
” means the board of directors of the Company.
“
Cause
” means: (i) the Executive’s conviction of or entering into a plea of guilty or no contest to a felony or a crime involving moral turpitude; (ii) the Executive’s intentional commission of any other act or omission involving dishonesty or fraud that is materially injurious to the Company or any of its Affiliates, as reasonably determined by the Board; (iii) the Executive’s substantial and repeated failure to perform duties of the office(s) held by the Executive, as reasonably directed by the CEO, if such failure is not cured within ten (10) days after the Executive receives written notice thereof from the Company; (iv) gross negligence or willful misconduct in the performance of the Executive’s duties which materially injures the Company or its reputation; (v) the Executive’s willful breach of the material covenants of this Agreement; (vi) the Executive’s failure to satisfy the Executive’s substantial travel obligations on behalf of the Company, including, without limitation, the Executive’s Travel Responsibilities as set forth in
Sections 3.3
and
4
, or to participate in in-person meetings as set forth in
Section 3.3
, in each case in furtherance of satisfying the Executive’s duties under this Agreement; or (vii) the Executive’s failure to achieve performance goals established for the Executive in the Company’s annual business plan as approved by the Board, such goals may be adjusted by the Compensation Committee in its discretion from time to time upon written notice to the Executive, taking into account the recommendations of the CEO, upward or downward to reflect market conditions, market opportunities and any other changes in circumstances as the Compensation Committee may determine to be appropriate.
“
Code
” means the Internal Revenue Code of 1986, as amended.
“
Corporate Transaction
” means the consummation of a merger, consolidation, statutory share exchange, stock purchase or similar form of corporate transaction involving the Company that provides the Company’s stockholders with a combination of cash and/or securities of a company that are traded on a National Securities Exchange, unless such Corporate Transaction is a Non-Qualifying Transaction (as defined herein).
“
Date of Termination
” means: (i) if the Executive’s employment is terminated by the Executive’s death, the date of the Executive’s death; (ii) if the Executive’s employment is terminated because of the Executive’s Disability, thirty (30) days after Notice of Termination, provided that the Executive shall not have returned to the performance of the Executive’s duties on a full-time basis during such thirty (30) day period; (iii) if the Executive’s employment is terminated by the Company for Cause, the date specified in the Notice of Termination; (iv) if the Executive’s employment is terminated during the Employment Period, either by the Company or the Executive, for any other reason, the date specified in the Notice of Termination; or (v) if the Executive’s employment is terminated by reason of expiration of the Employment Period by its terms, the date on which the Employment Period expires by its terms.
“
Good Reason
” means, in the absence of the written consent of the Executive: (i) except in connection with a material decrease in the business of the Company, a diminution in the Executive’s Base Salary in excess of thirty percent (30%), or (ii) any other action or inaction that constitutes a material breach by the Company of this Agreement, including, without limitation, any failure by the Company to comply with and satisfy
Section 11.4
of this Agreement;
provided
,
however
, that the Executive expressly acknowledges and agrees that the Company shall have the right to hire one or more executives during the Employment Period with the title of “Executive Vice President” or “Executive Vice President - Asset Management” or a similar title (including individuals who report directly to the CEO) and that the hiring of any such executive or executives shall not constitute a breach by the Company of this Agreement or otherwise provide grounds for a Good Reason termination hereunder by the Executive. Notwithstanding the foregoing, (A) the Executive shall notify the Company in writing of any event or condition claimed to constitute Good Reason under this paragraph within thirty (30) days of the initial existence of such event or condition, (B) the Company shall have thirty (30) days after receipt of such notice from the Executive to cure such initial event or condition, and (C) the Executive must separate from service with the Company within ninety (90) days following the initial existence of such event or condition.
“
National Securities Exchange
” means (i) the New York Stock Exchange, NYSE Amex Equities, or the Global Market or the Global Select Market of the NASDAQ Stock Market (or any successor to such entities), or (ii) a national securities exchange (or tier or segment thereof) that has listing standards that the Securities and Exchange Commission has determined by rule are substantially similar to the listing standards applicable to securities described in Section 18(b)(1)(A) of the Securities Act.
“
Non-Qualifying Transaction
” means, with respect to a Corporate Transaction or an Asset Sale, immediately following such Corporate Transaction or Asset Sale: (A) all or substantially all of the individuals and entities who were the “beneficial owners” (as defined in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934), respectively, of the outstanding Company Common Stock and the Company’s then outstanding securities eligible to vote for the election of directors (the “
Company Voting Securities
”) immediately prior to such Corporate Transaction or Asset Sale, beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Corporate Transaction or Asset Sale (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets or stock either directly or through one or more subsidiaries, the “
Surviving Entity
”) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction or Asset Sale, of the outstanding Company Common Stock and the outstanding Company Voting Securities, as the case may be, and (B) no person (other than (x) the Company or any subsidiary, (y) the Surviving Entity or its ultimate parent entity, or (z) any employee benefit plan (or related trust) sponsored or maintained by any of the foregoing) is the “beneficial owner,” directly or indirectly, of 50% or more of the total common stock or 50% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Surviving Entity, and (C) at least a majority of the members of the board of directors of the Surviving Entity were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Corporate Transaction or Asset Sale. For purposes
of this definition, “Incumbent Directors” means, during any consecutive 12-month period, individuals who, at the beginning of such period, constitute the Board.
[
Signatures on Following Page
]
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or have caused this Agreement to be duly executed on their behalf, as of the Effective Date.
“COMPANY”
HEALTHCARE TRUST OF AMERICA, INC.,
A Maryland corporation
|
|
|
By:
|
/s/ Scott D. Peters
|
|
|
Name:
|
Scott D. Peters
|
Title:
|
Chief Executive Officer, President and Chairman
|
“EXECUTIVE”
|
|
/s/ Amanda L. Houghton
|
|
Amanda L. Houghton
|
Exhibit 31.1
CERTIFICATION
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Scott D. Peters, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Healthcare Trust of America, Inc.;
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.
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By:
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/s/ Scott D. Peters
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Scott D. Peters
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Chief Executive Officer, President and Chairman
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Date:
August 2, 2016
Exhibit 31.2
CERTIFICATION
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Robert A. Milligan, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Healthcare Trust of America, Inc.;
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.
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By:
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/s/ Robert A. Milligan
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Robert A. Milligan
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Chief Financial Officer
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Date:
August 2, 2016
Exhibit 31.3
CERTIFICATION
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Scott D. Peters, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Healthcare Trust of America Holdings, LP;
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.
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By:
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/s/ Scott D. Peters
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Scott D. Peters
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Chief Executive Officer, President and Chairman of Healthcare Trust of America, Inc., general partner of Healthcare Trust of America Holdings, LP
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Date:
August 2, 2016
Exhibit 31.4
CERTIFICATION
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Robert A. Milligan, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Healthcare Trust of America Holdings, LP;
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.
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By:
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/s/ Robert A. Milligan
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Robert A. Milligan
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Chief Financial Officer of Healthcare Trust of America, Inc., general partner of Healthcare Trust of America Holdings, LP
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Date:
August 2, 2016
Exhibit 32.1
CERTIFICATION
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of Healthcare Trust of America, Inc., or the Company, for the quarter ended
June 30, 2016
, as filed with the Securities and Exchange Commission on the date hereof, or the Report, I, Scott D. Peters, Chief Executive Officer, President and Chairman of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(i) the Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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By:
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/s/ Scott D. Peters
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Scott D. Peters
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Chief Executive Officer, President and Chairman
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Date:
August 2, 2016
A signed original of this written statement required by Section 906 has been provided to Healthcare Trust of America, Inc. and will be retained by Healthcare Trust of America, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of Healthcare Trust of America, Inc., or the Company, for the quarter ended
June 30, 2016
, as filed with the Securities and Exchange Commission on the date hereof, or the Report, I, Robert A. Milligan, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(i) the Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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By:
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/s/ Robert A. Milligan
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Robert A. Milligan
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Chief Financial Officer
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Date:
August 2, 2016
A signed original of this written statement required by Section 906 has been provided to Healthcare Trust of America, Inc. and will be retained by Healthcare Trust of America, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.3
CERTIFICATION
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of Healthcare Trust of America Holdings, LP, or the Company, for the quarter ended
June 30, 2016
, as filed with the Securities and Exchange Commission on the date hereof, or the Report, I, Scott D. Peters, Chief Executive Officer, President and Chairman of Healthcare Trust of America, Inc., general partner of Healthcare Trust of America Holdings, LP, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(i) the Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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By:
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/s/ Scott D. Peters
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Scott D. Peters
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Chief Executive Officer, President and Chairman of Healthcare Trust of America, Inc., general partner of Healthcare Trust of America Holdings, LP
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Date:
August 2, 2016
A signed original of this written statement required by Section 906 has been provided to Healthcare Trust of America, Inc. and will be retained by Healthcare Trust of America, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.4
CERTIFICATION
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of Healthcare Trust of America Holdings, LP, or the Company, for the quarter ended
June 30, 2016
, as filed with the Securities and Exchange Commission on the date hereof, or the Report, I, Robert A. Milligan, Chief Financial Officer of Healthcare Trust of America, Inc., general partner of Healthcare Trust of America Holdings, LP, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(i) the Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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By:
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/s/ Robert A. Milligan
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Robert A. Milligan
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Chief Financial Officer of Healthcare Trust of America, Inc., general partner of Healthcare Trust of America Holdings, LP
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Date:
August 2, 2016
A signed original of this written statement required by Section 906 has been provided to Healthcare Trust of America, Inc. and will be retained by Healthcare Trust of America, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.