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What changed in Healthcare Realty Trust Inc's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Healthcare Realty Trust Inc's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+227 added−246 removedSource: 10-K (2026-02-13) vs 10-K (2025-02-19)

Top changes in Healthcare Realty Trust Inc's 2025 10-K

227 paragraphs added · 246 removed · 188 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

25 edited+4 added−7 removed41 unchanged
Biggest changeThe following table details the Company's owned properties by facility type as of December 31, 2024: December 31, 2024 Dollars and square feet in thousands INVESTMENT SQUARE FEET NUMBER OF PROPERTIES OCCUPANCY 1 Medical office/outpatient 2 $ 10,656,096 31,919 565 87.4 % Inpatient 438,074 934 15 95.3 % Office 426,690 1,357 6 97.4 % 11,520,860 34,210 586 88.0 % Construction in progress 31,978 101 1 Land held for development 52,408 Investments in financing receivables, net 3,4 123,671 160 1 100.0 % Financing lease right-of-use assets 4 77,343 45 1 68.5 % Corporate property 4,450 Total real estate investments 11,810,710 34,516 589 88.0 % Unconsolidated joint ventures 5 473,122 4,030 63 89.8 % Total investments $ 12,283,832 38,546 652 88.2 % 1 The occupancy column represents the percentage of total rentable square feet leased (including month-to-month and holdover leases).
Biggest changeThe following table details the Company's owned properties by facility type as of December 31, 2025: December 31, 2025 Dollars and square feet in thousands INVESTMENT SQUARE FEET NUMBER OF PROPERTIES OCCUPANCY 1 Medical office/outpatient 2 $ 9,306,615 26,690 481 89.6 % Inpatient 406,399 869 14 100.0 % Office 272,967 1,096 4 99.5 % 9,985,981 28,655 499 90.3 % Land held for development 57,535 — — — Investments in financing receivables, net 3,4 123,249 160 1 100.0 % Financing lease right-of-use assets 4 75,083 27 1 80.9 % Corporate property 50,748 109 1 97.0 % Total real estate investments 10,292,596 28,951 502 90.4 % Unconsolidated joint ventures 5 453,607 3,889 61 90.9 % Total investments $ 10,746,203 32,840 563 90.5 % 1 The occupancy column represents the percentage of total rentable square feet leased (including month-to-month and holdover leases), excluding held for sale assets. 2 Includes two real estate properties held in consolidated joint ventures. 3 Investments in financing receivables, net includes an investment of $117.3 million in a single-tenant net lease property in San Diego, CA related to a sale-leaseback transaction. 4 Financing lease right-of-use assets includes a multi-tenant lease property in Columbus, OH related to a sale-leaseback transaction totaling $13.9 million, of which $7.9 million was accounted for as an imputed lease arrangement as required under ASC 842, Leases.
Examples of significant legislation or regulatory action recently proposed, enacted, or in the process of implementation include: • federal legislative proposals that would prohibit payments from federal healthcare programs to healthcare providers that sell assets to REITs or use assets as collateral for loans from REITs; • state legislation and legislative proposals that (i) prohibit licensure of certain healthcare facilities leased from REITs, (ii) require additional government oversight and approval of healthcare provider transactions involving a change in control or sales of assets, including real estate, and (iii) impose public reporting requirements on ownership and control of healthcare provider entities; • the expansion or reduction of, or the decision in some states not to expand, Medicaid benefits and health insurance exchange subsidies established by the Affordable Care Act, whereby individuals and small businesses purchase health insurance with assistance from federal subsidies; • various state legislature proposals for state-funded single-payer health insurance and a limit on allowable rates of reimbursement to healthcare providers; • the implementation of quality control, cost containment, and value-based payment system reforms for Medicaid and Medicare, such as expansion of pay-for-performance criteria, bundled provider payments, accountable care organizations, comparative effectiveness research, and lower payments for hospital readmissions; • ongoing evaluation of and transition toward value-based reimbursement models for Medicare payments to physicians as designated under MACRA; 4 • annual regulatory updates to Medicare policy for healthcare providers that can broadly change reimbursement methodology under budget-neutral guidelines, with the effect of lowering payments for some services and increasing payments for others, having a varying impact, positively or negatively, on providers; • ongoing efforts to equalize Medicare payment rates across different facility-type settings, according to Section 603 of the Bipartisan Budget Act of 2015, which lowered Medicare payment rates, effective January 1, 2017, for services provided in off-campus, provider-based outpatient departments to the same level of rates for physician office settings; • the continued adoption by providers of federal standards for the Medicare Promoting Interoperability Program; • reforms to the physician self-referral laws, commonly referred to as the Stark Law, as adjusted in 2020 in order to promote the transition toward value-based, coordinated care among providers, although clear intent to boost referrals could still yield provider penalties; • consideration of broad reforms to Medicare and Medicaid impacting eligibility and reimbursement; • more stringent regulatory criteria by which federal antitrust agencies evaluate the potential for anti-competitive practices as a result of mergers and acquisitions of health systems and physicians; • state and federal regulations requiring increased scrutiny of healthcare-related transactions, particularly those involving REITs and private equity firms; • regulations requiring the publication of hospital prices for certain services, as well as hospitals’ negotiated rates with insurers for these services; • limits on price increases in pharmaceutical drugs and the cost to Medicare beneficiaries, including the potential for setting prices according to an international standard; and • the prohibition of “surprise billing,” or high payment rates charged to consumers for out-of-network physician services.
Examples of significant legislation or regulatory action recently proposed, enacted, or in the process of implementation include: • federal legislative proposals that would prohibit payments from federal healthcare programs to healthcare providers that sell assets to REITs or use assets as collateral for loans from REITs; • state legislation and legislative proposals that (i) prohibit licensure of certain healthcare facilities leased from REITs, (ii) require additional government oversight and approval of healthcare provider transactions involving a change in control or sales of assets, including real estate, and (iii) impose public reporting requirements on ownership and control of healthcare provider entities; • the expansion or reduction of, or the decision in some states not to expand, Medicaid benefits and health insurance exchange subsidies established by the Affordable Care Act, whereby individuals and small businesses purchase health insurance with assistance from federal subsidies; • various state legislature proposals for state-funded single-payer health insurance and a limit on allowable rates of reimbursement to healthcare providers; • the implementation of quality control, cost containment, and value-based payment system reforms for Medicaid and Medicare, such as expansion of pay-for-performance criteria, bundled provider payments, accountable care organizations, comparative effectiveness research, and lower payments for hospital readmissions; • ongoing evaluation of and transition toward value-based reimbursement models for Medicare payments to physicians as designated under MACRA; • annual regulatory updates to Medicare policy for healthcare providers that can broadly change reimbursement methodology under budget-neutral guidelines, with the effect of lowering payments for some services and increasing payments for others, having a varying impact, positively or negatively, on providers; • ongoing efforts to equalize Medicare payment rates across different facility-type settings, according to Section 603 of the Bipartisan Budget Act of 2015, which lowered Medicare payment rates, effective January 1, 2017, for services provided in off-campus, provider-based outpatient departments to the same level of rates for physician office settings; • the continued adoption by providers of federal standards for the Medicare Promoting Interoperability Program; • reforms to the physician self-referral laws, commonly referred to as the Stark Law, as adjusted in 2020 in order to promote the transition toward value-based, coordinated care among providers, although clear intent to boost referrals could still yield provider penalties; • consideration of broad reforms to Medicare and Medicaid impacting eligibility and reimbursement; 4 • more stringent regulatory criteria by which federal antitrust agencies evaluate the potential for anti-competitive practices as a result of mergers and acquisitions of health systems and physicians; • state and federal regulations requiring increased scrutiny of healthcare-related transactions, particularly those involving REITs and private equity firms; • regulations requiring the publication of hospital prices for certain services, as well as hospitals’ negotiated rates with insurers for these services; • limits on price increases in pharmaceutical drugs and the cost to Medicare beneficiaries, including the potential for setting prices according to an international standard; and • the prohibition of “surprise billing,” or high payment rates charged to consumers for out-of-network physician services.
Operations of the properties owned, developed or managed by the Company are and will continue to be subject to numerous federal, state, and local environmental laws, ordinances and regulations, including those relating to the following: the generation, segregation, handling, packaging and disposal of medical wastes; air quality requirements related to operations of generators, incineration devices, or sterilization equipment; facility siting and construction; 5 disposal of non-medical wastes and ash from incinerators; and underground storage tanks.
Operations of the properties owned, developed or managed by the Company are and will continue to be subject to numerous federal, state, and local environmental laws, ordinances and regulations, including those relating to the following: the generation, segregation, handling, packaging and disposal of medical wastes; air quality requirements related to operations of generators, incineration devices, or sterilization equipment; facility siting and construction; disposal of non-medical wastes and ash from incinerators; and underground storage tanks.
To more effectively track and communicate the Company’s ESG performance, we have adopted various frameworks and methodologies, including participation in the annual GRESB Assessment; reporting disclosures in alignment with the Sustainability Accounting Standards Board; establishing goals and key performance indicators under the Sustainable Development Goals, and we are working toward expanding our climate risk and resiliency strategies in alignment with the Task Force on Climate-Related Disclosure.
To more effectively track and communicate the Company’s ESG performance, we have adopted various frameworks and methodologies, including participation in the annual GRESB Assessment; reporting disclosures in alignment with the Sustainability Accounting Standards Board; establishing goals and key performance indicators under the 6 Sustainable Development Goals, and we are working toward expanding our climate risk and resiliency strategies in alignment with the Task Force on Climate-Related Disclosure.
As we implement our strategy and pursue our objectives, the Company’s actions are guided by our Sustainability Principles and Policies, to ensure continuous improvement and long-term success. Our Sustainability Principles and Policies include: 6 a. Integration : Embed and integrate leading environmental, social and governance practices designed to enhance portfolio performance into the Company’s daily operations. b.
As we implement our strategy and pursue our objectives, the Company’s actions are guided by our Sustainability Principles and Policies, to ensure continuous improvement and long-term success. Our Sustainability Principles and Policies include: a. Integration : Embed and integrate leading environmental, social and governance practices designed to enhance portfolio performance into the Company’s daily operations. b.
While it is the Company’s policy to seek indemnification from tenants relating to environmental liabilities or conditions, even where leases do contain such provisions, there can be no assurance that the tenant will be able to fulfill its indemnification obligations.
While it is the Company’s policy to seek indemnification from tenants relating to environmental liabilities or conditions, even 5 where leases do contain such provisions, there can be no assurance that the tenant will be able to fulfill its indemnification obligations.
Changes from year to year in reimbursement methodology, rates and other regulatory requirements may cause the profitability of providing care to Medicare and Medicaid patients to decline, which could adversely affect tenants' ability to make lease payments to the Company. 3 The Centers for Medicare and Medicaid Services continued to adjust Medicare payment rates in 2024 to implement site-neutral payment policies.
Changes from year to year in reimbursement methodology, rates and other regulatory requirements may cause the profitability of providing care to Medicare and Medicaid patients to decline, which could adversely affect tenants' ability to make lease payments to the Company. The Centers for Medicare and Medicaid Services continued to adjust Medicare payment rates in 2025 to implement site-neutral payment policies.
More information regarding the Company’s Sustainability Principles and Policies and ESG performance can be found in the Company’s 2024 Corporate Responsibility Report on its website ( www.healthcarerealty.com ).
More information regarding the Company’s Sustainability Principles and Policies and ESG performance can be found in the Company’s 2025 Corporate Responsibility Report on its website ( www.healthcarerealty.com ).
Additional information regarding employee and community engagement is available in the 2024 Corporate Responsibility Report, which is posted on the Company's website ( www.healthcarerealty.com ).
Additional information regarding employee and community engagement is available in the 2025 Corporate Responsibility Report, which is posted on the Company's website ( www.healthcarerealty.com ).
The Company’s real estate property investments by geographic area are detailed in Note 3 to the Consolidated Financial Statements.
The Company’s real estate property investments by geographic area are detailed in Note 2 to the Consolidated Financial Statements.
Human Capital Resources We believe our employees are a critical component to the achievement of our business objectives and recognition as a trusted owner and operator of medical office properties. As of December 31, 2024, the Company employed 550 people.
Human Capital Resources We believe our employees are a critical component to the achievement of our business objectives and recognition as a trusted owner and operator of medical office properties. As of December 31, 2025, the Company employed 539 people.
Item 1. Business Healthcare Realty Trust Incorporated is a self-managed and self-administered real estate investment trust (“REIT”) that owns, leases, manages, acquires, finances, develops and redevelops income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. The Company operates so as to qualify as a REIT for federal income tax purposes.
Item 1. Business Healthcare Realty Trust Incorporated is a self-managed and self-administered real estate investment trust (“REIT”) that owns, leases, manages, acquires, finances, develops and redevelops income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States.
Real Estate Properties The Company had gross investments of approximately $11.8 billion in 589 consolidated real estate properties, construction in progress, redevelopments, financing receivables, financing lease right-of-use assets, land held for development and corporate property as of December 31, 2024.
Real Estate Properties The Company had gross investments of approximately $10.3 billion in 502 consolidated real estate properties, construction in progress, redevelopments, financing receivables, financing lease right-of-use assets, land held for development and corporate property as of December 31, 2025, excluding held for sale assets.
The Company had a weighted average ownership interest of approximately 31% in 63 real estate properties held in unconsolidated joint ventures as of December 31, 2024. The Company provided leasing and property management services to 92% of its portfolio nationwide as of December 31, 2024.
The Company had a weighted average ownership interest of approximately 30% in 61 real estate properties, excluding held for sale assets, held in unconsolidated joint ventures as of December 31, 2025. The Company provided leasing and property management services to approximately 93% of its portfolio nationwide as of December 31, 2025.
Legislative Developments Taxation of Dividends The Tax Cuts and Jobs Act of 2017 (“TCJA”) generally allows a deduction for individuals equal to 20% of certain income from pass-through entities, including ordinary dividends distributed by a REIT (excluding capital gain dividends and qualified dividend income).
The Company cannot predict the degree to which any such changes may affect the economic performance of the Company's tenants or, indirectly, the Company. 3 Legislative Developments Taxation of Dividends The Tax Cuts and Jobs Act of 2017 (“TCJA”) generally allows a deduction for individuals equal to 20% of certain income from pass-through entities, including ordinary dividends distributed by a REIT (excluding capital gain dividends and qualified dividend income).
The Company seeks to reduce financial and operational risk by owning properties in high-growth markets with a broad tenant mix that includes over 30 physician specialties, as well as surgery, imaging, cancer, and diagnostic centers. 2 2024 Investment Activity In 2024, the Company completed no property acquisitions.
The Company seeks to reduce financial and operational risk by owning properties in high-growth markets with a broad tenant mix that includes over 30 physician specialties, as well as surgery, imaging, cancer, and diagnostic centers. 2025 Investment Activity The Company disposed of 70 properties in 2025 for sales prices totaling approximately $1.1 billion.
The business of acquiring and developing new healthcare facilities is highly competitive and is subject to price, construction and operating costs, and other competitive pressures. Some of the Company's competitors may have lower costs of capital. The financial performance of all of the Company’s properties is subject to competition from similar properties.
Some of the Company's competitors may have lower costs of capital. The financial performance of all of the Company’s properties is subject to competition from similar properties.
The remaining $7.4 million was accounted for as a financing arrangement and is included in investments in financing receivables, net. 5 Represents the Company's equity investment in unconsolidated joint ventures. Square feet have not been adjusted by the Company's ownership percentage. Financial Concentrations The Company’s real estate portfolio is leased to a diverse tenant base.
The remaining $6.0 million was accounted for as a financing arrangement and is included in investments in financing receivables, net. 5 Represents the Company's equity investment in unconsolidated joint ventures. Square feet have not been adjusted by the Company's ownership percentage. Square feet, number of properties, and occupancy excludes two properties that are classified as held for sale.
Expiring Leases As of December 31, 2024, the weighted average remaining years to expiration pursuant to the Company’s leases was approximately 4.2 years, with expirations through 2052. The table below details the Company’s lease expirations as of December 31, 2024, excluding the Company's unconsolidated joint ventures, financing receivables, assets held for sale and right-of-use assets.
The table below details the Company’s lease expirations as of December 31, 2025, excluding the Company's unconsolidated joint ventures, financing receivables, assets held for sale and right-of-use assets.
Many of the provisions of this act, such as the 20% deduction mentioned above, will expire at the end of 2025, unless extended by legislative action. Healthcare Each year, legislative proposals for health policy are introduced in Congress and state legislatures, and regulatory changes are proposed and enacted by government agencies.
Healthcare Each year, legislative proposals for health policy are introduced in Congress and state legislatures, and regulatory changes are proposed and enacted by government agencies.
The weighted average capitalization rate for these sales was 6.6%. The Company calculates the capitalization rate for dispositions as the in-place cash net operating income divided by the sales price. In 2024, the Company funded $150.6 million toward development and redevelopment of properties.
These transactions yielded net cash proceeds of approximately $1.0 billion, net of approximately $77.6 million of closing costs and related adjustments, and $11.8 million in Company financed notes. The weighted average capitalization rate for these sales was 6.7%. The Company calculates the capitalization rate for dispositions as the in-place cash net operating income divided by the sales price.
For the year ended December 31, 2024, the Company did not have any tenants that accounted for 10% or more of the Company’s consolidated revenues. See Note 3 to the Consolidated Financial Statements for additional information regarding the Company's gross investments by geographic market.
Financial Concentrations The Company’s real estate portfolio is leased to a diverse tenant base. For the year ended December 31, 2025, the Company did not have any tenants that accounted for 10% or more of the Company’s consolidated revenues.
See the Company's discussion regarding the 2024 joint venture and disposition activity in Note 5 to the Consolidated Financial Statements and development activity in Note 15 to the Consolidated Financial Statements. Also, please refer to the Company's discussion in "Trends and Matters Impacting Operating Results" as part of Item 7.
Also, please refer to the Company's discussion in "Trends and Matters Impacting Operating Results" as part of Item 7. 2 Management's Discussion and Analysis of Financial Condition and Results of Operations included in Part II of this report.
Management's Discussion and Analysis of Financial Condition and Results of Operations included in Part II of this report. Competition The Company competes for the acquisition and development of real estate properties with private investors, healthcare providers, other REITs, real estate partnerships and financial institutions, among others.
Competition The Company competes for the acquisition and development of real estate properties with private investors, healthcare providers, other REITs, real estate partnerships and financial institutions, among others. The business of acquiring and developing new healthcare facilities is highly competitive and is subject to price, construction and operating costs, and other competitive pressures.
EXPIRATION YEAR NUMBER OF LEASES LEASED SQUARE FEET PERCENTAGE OF LEASED SQUARE FEET 2025 (1) 1,418 5,264,353 17.5 % 2026 1,029 3,947,479 13.1 % 2027 1,071 4,553,597 15.1 % 2028 814 3,400,507 11.3 % 2029 804 3,548,010 11.8 % 2030 351 2,213,933 7.4 % 2031 315 1,606,677 5.3 % 2032 290 1,891,102 6.3 % 2033 179 765,997 2.5 % 2034 197 1,109,560 3.7 % Thereafter 197 1,803,299 6.0 % 6,665 30,104,514 100.0 % 1 Includes 109 leases totaling 257,954 square feet that expired prior to December 31, 2024, and were on month-to-month terms.
EXPIRATION YEAR NUMBER OF LEASES LEASED SQUARE FEET PERCENTAGE OF LEASED SQUARE FEET 2026 (1) 1,155 3,885,553 14.9 % 2027 949 4,363,442 16.8 % 2028 906 3,463,342 13.3 % 2029 683 3,060,019 11.8 % 2030 634 3,021,085 11.6 % 2031 329 1,663,709 6.4 % 2032 301 1,969,215 7.6 % 2033 190 751,017 2.9 % 2034 190 1,061,192 4.1 % 2035 206 1,274,194 4.9 % Thereafter 187 1,475,890 5.7 % 5,730 25,988,658 100.0 % 1 Includes 85 leases totaling 238,548 square feet that expired prior to December 31, 2025, and were on month-to-month terms.
Removed
On July 20, 2022, pursuant to that certain Agreement and Plan of Merger dated as of February 28, 2022, by and among Healthcare Realty Trust Incorporated, a Maryland corporation (now known as HRTI, LLC, a Maryland limited liability company) (“Legacy HR”), Healthcare Trust of America, Inc., a Maryland corporation (now known as Healthcare Realty Trust Incorporated) (“Legacy HTA”), Healthcare Trust of America Holdings, LP, a Delaware limited partnership (now known as Healthcare Realty Holdings, L.P.) (the “OP”), and HR Acquisition 2, LLC, a Maryland limited liability company (“Merger Sub”), Merger Sub merged with and into Legacy HR, with Legacy HR continuing as the surviving entity and a wholly-owned subsidiary of Legacy HTA (the “Merger”).
Added
All references in this report to "Healthcare Realty," the "Company," "we," "us," or "our" mean Healthcare Realty Trust Incorporated together with its consolidated subsidiaries, including Healthcare Realty Holdings, L.P., or operating partnership (the "OP"). The Company operates so as to qualify as a REIT for federal income tax purposes.
Removed
The combined company operates under the name “Healthcare Realty Trust Incorporated” and its shares of class A common stock, $0.01 par value per share, trade on the New York Stock Exchange under the ticker symbol “HR”.
Added
See Note 2 to the Consolidated Financial Statements for additional information regarding the Company's gross investments by geographic market. 1 Expiring Leases As of December 31, 2025, the weighted average remaining years to expiration pursuant to the Company’s leases was approximately 4.4 years, with expirations through 2052.
Removed
For purposes of this Annual Report on Form 10-K, references to “Healthcare Realty Trust”, the “Company”, “we”, “us”, and “our” are to Legacy HTA after giving effect to the Merger and, unless the context requires otherwise, to its consolidated subsidiaries, including the OP. Additionally, any references to the “Company” for periods prior to the Merger are to Legacy HR.
Added
In 2025, the Company funded $136.6 million toward development and redevelopment of properties. See the Company's discussion regarding the 2025 joint venture and disposition activity in Note 4 to the Consolidated Financial Statements and development activity in Note 14 to the Consolidated Financial Statements.
Removed
There were three properties excluded from the table above that were classified as held for sale as of December 31, 2024. 2 Includes two real estate properties held in consolidated joint ventures. 1 3 Investments in financing receivables, net includes an investment of $116.3 million in a single-tenant net lease property in San Diego, CA related to a sale-leaseback transaction. 4 Financing lease right-of-use assets includes a multi-tenant lease property in Columbus, OH related to a sale-leaseback transaction totaling $15.6 million, of which $8.2 million was accounted for as an imputed lease arrangement as required under ASC 842, Leases.
Added
Many provisions of this act, such as the 20% deduction mentioned above, that were set to expire at the end of 2025 have been permanently extended as a result of the passing of the One Big Beautiful Bill Act of 2025 (“OBBBA”) that was signed into law on July 4, 2025.
Removed
In 2024, the Company's investment in unconsolidated joint ventures increased by $172.7 million, as a result of the Company's contribution of medical outpatient properties to two joint ventures in which it holds a 20% interest.
Removed
The Company disposed of 67 properties in 2024 for sales prices totaling $1.5 billion, including 30 properties contributed into two unconsolidated joint ventures in which the Company maintains a non-controlling interest. These transactions yielded net cash proceeds of $1.2 billion, net of $67.3 million of closing costs and related adjustments and $172.7 million of retained joint venture interests.
Removed
The Company cannot predict the degree to which any such changes may affect the economic performance of the Company's tenants or, indirectly, the Company.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

53 edited+9 added−13 removed137 unchanged
Biggest changeThese swap agreements involve risks, such as the risk that counterparties may fail to honor their obligations under these arrangements. In addition, these arrangements may not be effective in reducing the Company’s exposure to changes in interest rates.
Biggest changeThe Company's swap agreements may not effectively reduce its exposure to changes in interest rates. The Company enters into swap agreements from time to time to manage some of its exposure to interest rate volatility. These swap agreements involve risks, such as the risk that counterparties may fail to honor their obligations under these arrangements.
These risks, as well as the risks described in Item 1 under the headings “Competition,” “Government Regulation,” “Legislative Developments,” and “Environmental Matters,” and in Item 7 under the heading “Disclosure Regarding Forward-Looking Statements,” should be carefully considered before making an investment decision regarding the 7 Company.
These risks, as well as the risks described in Item 1 under the headings “Competition,” “Government Regulation,” “Legislative Developments,” and “Environmental Matters,” and in Item 7 under the heading “Disclosure Regarding Forward-Looking Statements,” should be carefully considered before making an investment decision regarding the Company.
This may be the result of various factors, including, but not limited to: changes in the economy; the availability and cost of capital at favorable rates; increases in property taxes, utilities and other operating expenses; changes to facility-related healthcare regulations; changes in interest rates; competition for quality assets; negative developments in the operating results or financial condition of the Company's tenants, including, but not limited to, their ability to pay rent; the Company's ability to reposition or sell facilities with profitable results; the Company's ability to re-lease space at similar rates as vacancies occur; the Company's ability to timely reinvest proceeds from the sale of assets at similar yields; government regulations affecting tenants' Medicare and Medicaid reimbursement rates and operational requirements; unanticipated difficulties and/or expenditures relating to future acquisitions and developments; changes in rules or practices governing the Company's financial reporting; and other financial, legal and operational matters.
This may be the result of various factors, including, but not limited to: changes in the economy; the availability and cost of capital at favorable rates; increases in property taxes, utilities and other operating expenses; changes to facility-related healthcare regulations; changes in interest rates; competition for quality assets; negative developments in the operating results or financial condition of the Company's tenants, including, but not limited to, their ability to pay rent; the Company's ability to reposition or sell facilities with profitable results; the Company's ability to re-lease space at similar rates as vacancies occur; the Company's ability to timely reinvest proceeds from the sale of assets at similar yields; government regulations affecting tenants' Medicare and Medicaid reimbursement 7 rates and operational requirements; unanticipated difficulties and/or expenditures relating to future acquisitions and developments; changes in rules or practices governing the Company's financial reporting; and other financial, legal and operational matters.
The healthcare service industry may be affected by the following: • transition to value-based care and reimbursement of providers; • competition among healthcare providers; • consolidation among healthcare providers, health insurers, hospitals and health systems; • a rise in government-funded health insurance coverage; • pressure on providers' operating profit margins from lower reimbursement rates, lower admissions growth, and higher expense growth; • availability of capital; • credit downgrades; • liability insurance expense; • rising pharmaceutical drug expense; • regulatory and government reimbursement uncertainty related to the Medicare and Medicaid programs; • a trend toward government regulation of pharmaceutical pricing; 18 • government regulation of hospitals' and health insurers' pricing transparency; • federal court decisions on cases challenging the legality of the Affordable Care Act, in whole or in part; • site-neutral rate-setting for Medicare services across different care settings; • disruption in patient volume and revenue from pandemics, such as COVID-19; • trends in the method of delivery of healthcare services, such as telehealth; • heightened health information technology security standards and the meaningful use of electronic health records by healthcare providers; • potential tax law changes affecting providers; and • state and federal regulations that provide for heightened scrutiny of healthcare transactions involving REITs and private equity firms.
The healthcare service industry may be affected by the following: • transition to value-based care and reimbursement of providers; • competition among healthcare providers; • consolidation among healthcare providers, health insurers, hospitals and health systems; • a rise in government-funded health insurance coverage; • pressure on providers' operating profit margins from lower reimbursement rates, lower admissions growth, and higher expense growth; • availability of capital; • credit downgrades; • liability insurance expense; 17 • rising pharmaceutical drug expense; • regulatory and government reimbursement uncertainty related to the Medicare and Medicaid programs; • a trend toward government regulation of pharmaceutical pricing; • government regulation of hospitals' and health insurers' pricing transparency; • federal court decisions on cases challenging the legality of the Affordable Care Act, in whole or in part; • site-neutral rate-setting for Medicare services across different care settings; • disruption in patient volume and revenue from pandemics, such as COVID-19; • trends in the method of delivery of healthcare services, such as telehealth; • heightened health information technology security standards and the meaningful use of electronic health records by healthcare providers; • potential tax law changes affecting providers; and • state and federal regulations that provide for heightened scrutiny of healthcare transactions involving REITs and private equity firms.
Although we believe that any amount received by us in exchange for our stock would qualify for the exemption under Section 1032 of the Internal Revenue Code, because it is not entirely clear whether a forward equity agreement qualifies as a "securities futures contract," the U.S. federal income tax treatment of any cash settlement payment we receive is uncertain.
Although we believe that any amount received by us in exchange for our stock would qualify for the exemption under Section 1032 of the Internal 16 Revenue Code, because it is not entirely clear whether a forward equity agreement qualifies as a "securities futures contract," the U.S. federal income tax treatment of any cash settlement payment we receive is uncertain.
This may negatively affect, among other things, the Company’s ability to sell properties on favorable terms, execute its operating strategy, repay debt, or pay dividends. The Company is subject to risks associated with the development and redevelopment of properties . The Company expects development and redevelopment of properties will continue to be a key component of its growth plans.
This may negatively affect, among other things, the Company’s ability to sell properties on favorable terms, execute its operating strategy, repay debt, or pay dividends. 9 The Company is subject to risks associated with the development and redevelopment of properties . The Company expects development and redevelopment of properties will continue to be a key component of its growth plans.
Although a safe harbor to the characterization of the sale of real property by a REIT as a prohibited transaction is available, there can be no assurance that the Company can comply in all cases with the safe harbor or that it will avoid owning property that may be characterized as held primarily for sale to customers in the ordinary course of business.
Although a safe harbor to the characterization of the sale of real property by a REIT as a prohibited transaction is available, there can be no assurance that the Company can comply in all cases with the safe harbor or that it will avoid owning property that may be characterized as held primarily for sale to customers in the ordinary course of 20 business.
Stockholders of the Company do not have a contractual or other legal right to dividends that have not been authorized by the Board of Directors. Pandemics, and measures intended to prevent their spread or mitigate their severity could have a material adverse effect on the Company's business, results of operations, cash flows and financial condition .
Stockholders of the Company do not have a contractual or other legal right to dividends that have not been authorized by the Board of Directors. 13 Pandemics and measures intended to prevent their spread or mitigate their severity could have a material adverse effect on the Company's business, results of operations, cash flows and financial condition .
In the event that these relief provisions were not available, we could lose our REIT status under the Internal Revenue Code. In case of our bankruptcy or insolvency, any forward equity agreements will automatically terminate, and the Company would not receive the expected proceeds from any forward sale of shares of its common stock.
In the event that these relief provisions were not available, we could lose our REIT status under the Internal Revenue Code. In the event of our bankruptcy or insolvency, any forward equity agreements will automatically terminate, and the Company would not receive the expected proceeds from any forward sale of shares of its common stock.
The Company's credit ratings could be downgraded. If the Company's credit ratings are downgraded or other negative action is taken, the Company could be required, among other things, to pay additional interest and fees on borrowings under the Unsecured Credit Facility. Increases in interest rates could have a material adverse effect on the Company's cost of capital.
The Company's credit ratings could be downgraded. If 15 the Company's credit ratings are downgraded or other negative action is taken, the Company could be required, among other things, to pay additional interest and fees on borrowings under the Unsecured Credit Facility. Increases in interest rates could have a material adverse effect on the Company's cost of capital.
Further, the Company may be required to make significant capital expenditures to renovate or reconfigure space or make significant leasing concessions to attract new tenants. 9 Certain of the Company’s properties are special purpose healthcare facilities and may not be easily adaptable to other uses . Some of the Company’s properties are specialized medical facilities.
Further, the Company may be required to make significant capital expenditures to renovate or reconfigure space or make significant leasing concessions to attract new tenants. Certain of the Company’s properties are special purpose healthcare facilities and may not be easily adaptable to other uses . Some of the Company’s properties are specialized medical facilities.
In addition, the deterioration of economic conditions, including supply chain constraints, that could result from another 14 pandemic may ultimately decrease occupancy levels and average rent per square foot across the Company's portfolio as tenants reduce or defer their spending.
In addition, the deterioration of economic conditions, including supply chain constraints, that could result from another pandemic may ultimately decrease occupancy levels and average rent per square foot across the Company's portfolio as tenants reduce or defer their spending.
Any such refinancing could also impose tighter financial 15 ratios and other covenants that restrict the Company's ability to take actions that could otherwise be in its best interest, such as funding new development activity, making opportunistic acquisitions, or paying dividends.
Any such refinancing could also impose tighter financial ratios and other covenants that restrict the Company's ability to take actions that could otherwise be in its best interest, such as funding new development activity, making opportunistic acquisitions, or paying dividends.
The Company may, however, enter into additional contractual arrangements with contributors of property under which it would agree to repurchase a contributor’s units for shares of the Company's common stock or cash, at the option of the contributor, at set times.
The Company may, however, enter into additional contractual 12 arrangements with contributors of property under which it would agree to repurchase a contributor’s units for shares of the Company's common stock or cash, at the option of the contributor, at set times.
The federal income tax rules that affect REITs are constantly under review by persons involved in the legislative process, the IRS and the U.S. Treasury Department, which results in statutory changes as well as frequent 21 revisions to regulations and interpretations.
The federal income tax rules that affect REITs are constantly under review by persons involved in the legislative process, the IRS and the U.S. Treasury Department, which results in statutory changes as well as frequent revisions to regulations and interpretations.
Under Section 1032 of the Internal Revenue Code, generally, no gains and losses are recognized by a corporation in dealing in its own shares, including pursuant to a "securities futures contract" (as defined in the Internal Revenue Code, by reference to the Exchange Act).
Under Section 1032 of the Internal Revenue Code, generally, no gains and losses are recognized by a corporation in dealing with its own shares, including pursuant to a "securities futures contract" (as defined in the Internal Revenue Code, by reference to the Exchange Act).
If the contributor required the Company to repurchase units for cash pursuant to such a provision, it would limit the Company's liquidity and, thus, 13 its ability to use cash to make other investments, satisfy other obligations or make distributions to stockholders.
If the contributor required the Company to repurchase units for cash pursuant to such a provision, it would limit the Company's liquidity and, thus, its ability to use cash to make other investments, satisfy other obligations or make distributions to stockholders.
Qualifying as a REIT involves highly technical and complex provisions of the Internal Revenue Code. Qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code for which only limited judicial and administrative authorities exist. Even a technical or inadvertent violation could jeopardize the Company’s REIT qualification.
Qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code for which only limited judicial and administrative authorities exist. Even a technical or inadvertent violation could jeopardize the Company’s REIT qualification.
In addition, certain provisions of the MGCL applicable to the Company may have the effect of inhibiting or deterring a third party from making a proposal to acquire the Company or of delaying or preventing a change of control under circumstances that otherwise could provide Company stockholders with the opportunity to realize a premium over the then-prevailing market price of such shares, including: • provisions under Subtitle 8 of Title 3 of the MGCL that permit the Board of Directors, without stockholders’ approval and regardless of what is currently provided in the Company's Articles of Incorporation or bylaws, to implement certain takeover defenses; 20 • “business combination” provisions that, subject to limitations, prohibit certain business combinations, asset transfers and equity security issuances or reclassifications between the Company and an “interested stockholder” (defined generally as any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the Company's outstanding voting stock or an affiliate or associate of the Company who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the Company's then outstanding stock) or an affiliate of an interested stockholder for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter may impose supermajority voting requirements unless certain minimum price conditions are satisfied; and • “control share” provisions that provide that holders of “control shares” of the Company (defined as shares which, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) have no voting rights except to the extent approved by Company stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
In addition, under these circumstances, the Company has the right to redeem such stock. 19 In addition, certain provisions of the MGCL applicable to the Company may have the effect of inhibiting or deterring a third party from making a proposal to acquire the Company or of delaying or preventing a change of control under circumstances that otherwise could provide Company stockholders with the opportunity to realize a premium over the then-prevailing market price of such shares, including: • provisions under Subtitle 8 of Title 3 of the MGCL that permit the Board of Directors, without stockholders’ approval and regardless of what is currently provided in the Company's Articles of Incorporation or bylaws, to implement certain takeover defenses; • “business combination” provisions that, subject to limitations, prohibit certain business combinations, asset transfers and equity security issuances or reclassifications between the Company and an “interested stockholder” (defined generally as any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the Company's outstanding voting stock or an affiliate or associate of the Company who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the Company's then outstanding stock) or an affiliate of an interested stockholder for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter may impose supermajority voting requirements unless certain minimum price conditions are satisfied; and • “control share” provisions that provide that holders of “control shares” of the Company (defined as shares which, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) have no voting rights except to the extent approved by Company stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
Most of the Company’s properties on or adjacent to hospital campuses are largely dependent on the viability of the health system’s campus where they are located, whether or not the hospital or health system is a tenant in such properties.
Most of the Company’s properties on or adjacent to hospital campuses are largely dependent on the viability of the health system’s campus where they are located, whether or not the hospital or health system is a tenant in such 10 properties.
The Company’s continued qualification as a REIT will depend on the Company’s satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other 19 requirements on a continuing basis.
The Company’s continued qualification as a REIT will depend on the Company’s satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis.
The weighted average remaining term of the Company's ground leases is approximately 63.6 years, including renewal options. The Company’s ground lease agreements with hospitals and health systems typically contain restrictions that limit building occupancy to physicians on the medical staff of an affiliated hospital and prohibit tenants from providing services that compete with the services provided by the affiliated hospital.
The weighted average remaining term of the Company's ground leases is approximately 60.6 years, including renewal options. The Company’s ground lease agreements with hospitals and health systems typically contain restrictions that limit building occupancy to physicians on the medical staff of an affiliated hospital and prohibit tenants from providing services that compete with the services provided by the affiliated hospital.
The Company owns 31 properties in California, representing 7.1% of its total revenue. From time to time, proposals have been made to reduce the beneficial impact of Proposition 13 , particularly with respect to commercial property, which would include medical office buildings.
The Company owns 31 properties in California, representing 9.1% of its total revenue. From time to time, proposals have been made to reduce the beneficial impact of Proposition 13 , particularly with respect to commercial property, which would include medical office buildings.
These tax liabilities would reduce the Company’s cash flow and could adversely affect the value of the Company’s common stock. For more specific information on state income taxes paid, see Note 16 to the Consolidated Financial Statements.
These tax liabilities would reduce the Company’s cash flow and could adversely affect the value of the Company’s common stock. For more specific information on state income taxes paid, see Note 15 to the Consolidated Financial Statements.
These conditions could adversely affect the Company’s revenues and could increase allowances for losses and result in impairment charges, which could decrease net income attributable to common stockholders and equity and reduce cash flows from operations. The Company's results of operations have been and will continue to be impacted negatively by the Steward Health and Prospect Medical bankruptcies .
These conditions could adversely affect the Company’s revenues and could increase allowances for losses and result in impairment charges, which could decrease net income attributable to common stockholders and equity and reduce cash flows from operations. The Company's results of operations have been and will continue to be impacted negatively by the Prospect Medical bankruptcy .
The Company has approximately $1.5 billion of combined debt maturities in 2025 and 2026. A high level of indebtedness would require the Company to dedicate a substantial portion of its cash flows from operations to service debt, thereby reducing the funds available to implement the Company's business strategy and to make distributions to stockholders.
The Company has approximately $1.3 billion of combined debt maturities in 2026 and 2027. A high level of indebtedness would require the Company to dedicate a substantial portion of its cash flows from operations to service debt, thereby reducing the funds available to implement the Company's business strategy and to make distributions to stockholders.
Covenants under the Fourth Amended and Restated Revolving Credit and Term Loan Agreement dated as of July 20, 2022, among Healthcare Realty Trust, the OP, and Wells Fargo Bank, National Association, as Administrative Agent, and the other lenders that are party thereto, as amended ("Unsecured Credit Facility"), and the indentures governing the OP's senior notes permit the Company to incur substantial, additional debt, and the Company may borrow additional funds, which may include secured borrowings or additional instances of notes by the OP that are fully guaranteed by Healthcare Realty Trust.
Covenants under the Fifth Amended and Restated Revolving Credit and Term Loan Agreement dated as of July 25, 2025, among Healthcare Realty Trust, the OP, and Wells Fargo Bank, National Association, as Administrative Agent, and the other lenders that are party thereto, as amended ("Unsecured Credit Facility"), and the indentures governing the OP's senior notes permit the Company to incur substantial, additional debt, and the Company may borrow additional funds, which may include secured borrowings or additional instances of notes by the OP that are fully guaranteed by Healthcare Realty Trust.
As of December 31, 2024, the Company had weighted average annual fixed rent escalators of 2.82% with its wholly-owned and consolidated properties. The Company’s real estate investments are illiquid and the Company may not be able to sell properties strategically targeted for disposition .
As of December 31, 2025, the Company had weighted average annual fixed rent escalators of 2.93% with its wholly-owned and consolidated properties. The Company’s real estate investments are illiquid and the Company may not be able to sell properties strategically targeted for disposition .
The Company is subject to certain risks associated with the development and redevelopment of properties including the following: • The construction of properties generally requires various government and other approvals that may not be received when expected, or at all, which could delay or preclude commencement of construction; • The development, construction or expansion of healthcare facilities in certain states may require a certificate of need approval prior to commencing such projects or allowing tenants to occupy and operate on the property; • Opportunities that the Company pursued but later abandoned could result in the expensing of pursuit costs, which could impact the Company’s consolidated results of operations; • Construction costs could exceed original estimates, which could impact the building’s profitability to the Company; • Operating expenses could be higher than forecasted; • Time required to initiate and complete the construction of a property and to lease up a completed property may be greater than originally anticipated, thereby adversely affecting the Company’s cash flow and liquidity; • Occupancy rates and rents of a completed development or redevelopment property may not be sufficient to make the property profitable to the Company; and • Favorable capital sources to fund the Company’s development and redevelopment activities may not be available when needed. 10 The Company may make material acquisitions and undertake developments and redevelopments that may involve the expenditure of significant funds and may not perform in accordance with management’s expectations .
The Company is subject to certain risks associated with the development and redevelopment of properties including the following: • The construction of properties generally requires various government and other approvals that may not be received when expected, or at all, which could delay or preclude commencement of construction; • The development, construction or expansion of healthcare facilities in certain states may require a certificate of need approval prior to commencing such projects or allowing tenants to occupy and operate on the property; • Opportunities that the Company pursued but later abandoned could result in the expensing of pursuit costs, which could impact the Company’s consolidated results of operations; • Construction costs could exceed original estimates, which could impact the building’s profitability to the Company; • Operating expenses could be higher than forecasted; • Time required to initiate and complete the construction of a property and to lease up a completed property may be greater than originally anticipated, thereby adversely affecting the Company’s cash flow and liquidity; • Occupancy rates and rents of a completed development or redevelopment property may not be sufficient to make the property profitable to the Company; and • Favorable capital sources to fund the Company’s development and redevelopment activities may not be available when needed.
During 2024, the Federal Reserve mainly kept interest rates constant and in the latter part of the year actually decreased rates by a total of 100 basis points with the easing of inflation. However, if inflation climbs again, the Federal Reserve may again raise interest rates.
During 2025, the Federal Reserve mainly kept interest rates constant and in the latter part of the year actually decreased rates by a total of 75 basis points with the easing of inflation. However, if inflation climbs again, the Federal Reserve may again raise interest rates.
As a ground lessee, the Company is also exposed to the risk of reversion of the property upon expiration of the ground lease term, or an earlier breach by the Company of the ground lease, which may have a material adverse effect on the Company’s consolidated financial condition and results of operations. 11 The Company may experience uninsured or underinsured losses .
As a ground lessee, the Company is also exposed to the risk of reversion of the property upon expiration of the ground lease term, or an earlier breach by the Company of the ground lease, which may have a material adverse effect on the Company’s consolidated financial condition and results of operations.
A high level of indebtedness could also: • limit the Company’s ability to adjust rapidly to changing market conditions in the event of a downturn in general economic conditions or in the real estate and/or healthcare industries; • impair the Company’s ability to obtain additional debt financing or require potentially dilutive equity to fund obligations and carry out its business strategy; and • result in a downgrade of the rating of the Company’s debt securities by one or more rating agencies, which would increase the costs of borrowing under the Unsecured Credit Facility and the cost of issuance of new debt securities, among other things.
A high level of indebtedness could also: • limit the Company’s ability to adjust rapidly to changing market conditions in the event of a downturn in general economic conditions or in the real estate and/or healthcare industries; • impair the Company’s ability to obtain additional debt financing or require potentially dilutive equity to fund obligations and carry out its business strategy; and • result in a downgrade of the rating of the Company’s debt securities by one or more rating agencies, which would increase the costs of borrowing under the Unsecured Credit Facility and the cost of issuance of new debt securities, among other things. 14 In addition, from time to time, the Company secures mortgage financing or assumes mortgages to partially fund its investments.
The Company carries comprehensive liability insurance and property insurance covering its owned and managed properties. A portion of the property insurance is provided by a wholly-owned captive insurance company. In addition, tenants under single-tenant leases are required to carry property insurance covering the Company’s interest in the buildings.
The Company may experience uninsured or underinsured losses . The Company carries comprehensive liability insurance and property insurance covering its owned and managed properties. A portion of the property insurance is provided by a wholly-owned captive insurance company. In addition, tenants under single-tenant leases are required to carry property insurance covering the Company’s interest in the buildings.
These ground leases contain provisions that may limit the Company’s ability to lease, sell, or finance these properties . As of December 31, 2024, the Company had 215 properties that were held under ground leases, representing an aggregate gross investment of approximately $5.0 billion.
These ground leases contain provisions that may limit the Company’s ability to lease, sell, or finance these properties . As of December 31, 2025, the Company had 168 properties that were held under ground leases, representing an aggregate gross investment of approximately $4.2 billion.
In that case, we may be able to rely upon the relief provisions under the Internal Revenue Code in order to avoid the loss of our REIT status. 17 Even if the relief provisions apply, we will be subject to a 100% tax on the greater of (i) the excess of 75% of our gross income (excluding gross income from prohibited transactions) over the amount of such income attributable to sources that qualify under the 75% test or (ii) the excess of 95% of our gross income (excluding gross income from prohibited transactions) over the amount of such gross income attributable to sources that qualify under the 95% test, multiplied in either case by a fraction intended to reflect our profitability.
Even if the relief provisions apply, we will be subject to a 100% tax on the greater of (i) the excess of 75% of our gross income (excluding gross income from prohibited transactions) over the amount of such income attributable to sources that qualify under the 75% test or (ii) the excess of 95% of our gross income (excluding gross income from prohibited transactions) over the amount of such gross income attributable to sources that qualify under the 95% test, multiplied in either case by a fraction intended to reflect our profitability.
Any increases in interest rates will increase interest costs on any new debt and existing variable rate debt. Such increases in the cost of capital could adversely impact our ability to 16 finance operations, acquire and develop properties, and refinance existing debt.
Any increases in interest rates will increase interest costs on any new debt and existing variable rate debt. Such increases in the cost of capital could adversely impact our ability to finance operations, acquire and develop properties, and refinance existing debt. Additionally, increased interest rates may also result in less liquid property markets, limiting our ability to sell existing assets.
As of December 31, 2024, the Company had investment concentrations of greater than 5% of its total investments in the Dallas, TX (8.5%), Houston, TX (5.4%), and Seattle, WA (5.2%) markets.
As of December 31, 2025, the Company had investment concentrations of greater than 5% of its total investments in the Dallas, TX (9.5%), Seattle, WA (6.1%), Houston, TX (6.0%), and Charlotte, NC (5.4%) markets.
Risks relating to government regulations The Company's property taxes could increase due to reassessment or property tax rate changes. Real property taxes on the Company's properties may increase as its properties are reassessed by taxing authorities or as property tax rates change.
Risks relating to government regulations The Company's property taxes could increase due to reassessment or property tax rate changes. Real property taxes on the Company's properties may increase as its properties are reassessed by taxing authorities or as property tax rates change. In addition, the Company could incur significant costs associated with an appeal of any of these assessments.
The exercise of these purchase options exposes the Company to reinvestment risk and a reduction in investment return. Certain properties subject to purchase options may be purchased at rates of return above the rates of return the Company expects to achieve with new investments.
Certain properties subject to purchase options may be purchased at rates of return above the rates of return the Company expects to achieve with new investments.
See Note 11 to the Consolidated Financial Statements for additional information on the Company's interest rate swaps. The Company has entered into joint venture agreements that limit its flexibility with respect to jointly owned properties and expects to enter into additional such agreements in the future.
The Company has entered into joint venture agreements that limit its flexibility with respect to jointly owned properties and expects to enter into additional such agreements in the future.
The Company had approximately $111.4 million, or 0.94%, of real estate property investments that were subject to purchase options held by lessees that were exercisable as of December 31, 2024. Other properties have purchase options that will become exercisable after 2024. Properties with purchase options exercisable in 2024 produced aggregate net operating income of approximately $10.6 million in 2024.
The Company had approximately $55.7 million, or 0.54%, of real estate property investments that were subject to purchase options held by lessees that were exercisable as of December 31, 2025. Other properties have purchase 8 options that will become exercisable after 2025.
In addition, changes in federal and state legislation and regulation on climate change could result in increased capital expenditures to improve energy efficiency of our existing properties and could require the Company to spend more on development and redevelopment properties without a corresponding increase in revenue. 12 The Company faces risks associated with security breaches through cyber attacks, cyber intrusions, or otherwise, as well as other significant disruptions of its information technology networks and related systems .
In addition, changes in federal and state legislation and regulation on climate change could result in increased capital expenditures to improve energy efficiency of our 11 existing properties and could require the Company to spend more on development and redevelopment properties without a corresponding increase in revenue.
The Company regularly pursues potential transactions to acquire, develop or redevelop real estate assets. Future acquisitions could require the Company to issue equity securities, incur debt or other contingent liabilities or amortize expenses related to other intangible assets, any of which could adversely impact the Company’s consolidated financial condition or results of operations.
Future acquisitions could require the Company to issue equity securities, incur debt or other contingent liabilities or amortize expenses related to other intangible assets, any of which could adversely impact the Company’s consolidated financial condition or results of operations. In addition, equity or debt financing required for such acquisitions may not be available at favorable times or rates.
If any refinancing is done at higher interest rates, the increased interest expense could adversely affect the Company's financial condition and results of operations.
The Company may not be able to repay, refinance, or extend any or all of our debt at maturity or upon any acceleration. If any refinancing is done at higher interest rates, the increased interest expense could adversely affect the Company's financial condition and results of operations.
When the Company uses forward-starting interest rate swaps, there is a risk that it will not complete the long-term borrowing against which the swap is intended to hedge. If such events occur, the Company’s consolidated financial condition and results of operations may be adversely affected.
In addition, these arrangements may not be effective in reducing the Company’s exposure to changes in interest rates. When the Company uses forward-starting interest rate swaps, there is a risk that it will not complete the long-term borrowing against which the swap is intended to hedge.
The Company incurred impairment charges of $249.9 million in 2024, associated with completed or planned disposition activity. Additionally, the Company recorded a goodwill impairment of $250.5 million in 2024. The Company may determine in future periods that an impairment has occurred in the value of one or more of its real estate properties or other assets.
The Company incurred impairment charges of $361.1 million in 2025, related to completed or planned dispositions, changes in holding periods or changes in property use. The Company may determine in future periods that an impairment has occurred in the value of one or more of its real estate properties or other assets.
Most recently, an initiative qualified for California’s November 2020 statewide ballot that would generally limit Proposition 13’s protections to residential real estate. If this initiative had passed, it would have ended the beneficial effect of Proposition 13 for the Company's properties, and property tax expense could have increase substantially, adversely affecting the Company's cash flow from operations and net income.
If such an initiative passed, it could end or reduce the beneficial effect of Proposition 13 for the Company's properties, and property tax expense could have increase substantially, adversely affecting the Company's cash flow from operations and net income.
In addition, from time to time, the Company secures mortgage financing or assumes mortgages to partially fund its investments. If the Company is unable to meet its mortgage payments, then the encumbered properties could be foreclosed upon or transferred to the mortgagee with a consequent loss of income and asset value.
If the Company is unable to meet its mortgage payments, then the encumbered properties could be foreclosed upon or transferred to the mortgagee with a consequent loss of income and asset value. A foreclosure on one or more of the Company's properties could have a material adverse effect on the Company’s consolidated financial condition and results of operations.
Third parties may seek recovery from real property owners or operators for personal injury or property damage associated with exposure to released hazardous substances. The cost of defending against claims of liability, of complying with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims could adversely affect the Company's financial condition and results of operations.
The cost of defending against claims of liability, of complying with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims could adversely affect the Company's financial condition and results of operations. 18 Qualifying as a REIT involves highly technical and complex provisions of the Internal Revenue Code.
As of December 31, 2024, the Company had investments of $473.1 million in unconsolidated joint ventures with unrelated third parties comprised of 63 properties and seven parking garages. In addition, the Company had investments of $97.6 million in two consolidated joint ventures with developments that were completed in the fourth quarter of 2024.
As of December 31, 2025, the Company had investments of $453.6 million in unconsolidated joint ventures with unrelated third parties comprised of 61 properties, excluding held for sale properties, and seven parking garages. The Company may acquire, develop, or redevelop additional properties in joint ventures with unrelated third parties.
Risks relating to our capital structure and financings The Company has incurred significant debt obligations and may incur additional debt and increase leverage in the future. As of December 31, 2024, the Company had approximately $ 4.9 billion of outstanding indebtedness excluding discounts, premiums and debt issuance costs.
As of December 31, 2025, the Company had approximately $4.1 billion of outstanding indebtedness excluding discounts, premiums and debt issuance costs.
Rising labor costs, increased competition for talent, and a tight labor market may make it difficult for the Company to hire skilled and unskilled employees to meet staffing needs. The Company's former Chief Executive Officer departed the Company in the second half of 2024. The Company's board of directors is currently conducting a search for a chief executive officer.
Rising labor costs, increased competition for talent, and a tight labor market may make it difficult for the Company to hire skilled and unskilled employees to meet staffing needs. Risks relating to our capital structure and financings The Company has incurred significant debt obligations and may incur additional debt and increase leverage in the future.
While this initiative did not pass, the Company cannot predict whether other changes to Proposition 13 may be proposed or adopted in the future. Trends in the healthcare service industry may negatively affect the demand for the Company’s properties, lease revenues and the values of its investments.
Trends in the healthcare service industry, including the impact of the One Big Beautiful Bill Act passed during 2025 that is subject of ongoing analysis, may negatively affect the demand for the Company’s properties, lease revenues and the values of its investments.
Removed
As previously disclosed, on May 6, 2024, Steward Health announced that it had filed petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas.
Added
As previously disclosed, Prospect Medical Holdings (“Prospect”) filed petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in January of 2025. Prospect leased approximately 80,912 square feet of space from the Company. In October 2025, a subsidiary of Hartford HealthCare (“Hartford Health”) was selected as the successful bidder for the Prospect assets associated with the Company’s Prospect leases.
Removed
Prior to the bankruptcy filing, Steward leased approximately 593,000 square feet of space from the Company, accounting for approximately 2.0% of the Company’s rental revenue. Leases for six buildings in Massachusetts totaling approximately 244,000 square feet were assumed in connection with the sale of Steward’s Massachusetts hospitals on or about September 30, 2024.
Added
The Company signed direct leases with Hartford Heath totaling 65,477 square feet effective January 1, 2026 and retained certain sublet in additional spaces. There is no assurance that the Company will be able to timely relet the remaining Prospect leased space that was not assumed by Hartford Health.
Removed
In October 2024, the Company received $2.2 million for prior rent owed under these assumed leases. Leases for approximately 349,000 square feet in buildings in Florida and Massachusetts were rejected by Steward.
Added
Owning real estate and indirect interests in real estate is subject to inherent risks .
Removed
The total annual revenue associated with the rejected leases was approximately $13.0 million. 8 The Company will pursue claims for outstanding rent of approximately $2.3 million against Steward in the bankruptcy court.
Added
Properties with purchase options exercisable in 2025 produced aggregate net operating income of approximatel y $7.2 million in 2025. The exercise of these purchase options exposes the Company to reinvestment risk and a reduction in investment return.
Removed
However, there can be no assurance that the Company will recover unpaid rent from Steward be able to timely relet space related to rejected leases at similar rental rates, or otherwise offset lost revenue from Steward Health. On January 11, 2025, Prospect Medical Holdings filed petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S.
Added
The Company may make material acquisitions and undertake developments and redevelopments that may involve the expenditure of significant funds and may not perform in accordance with management’s expectations . The Company regularly pursues potential transactions to acquire, develop or redevelop real estate assets.
Removed
Bankruptcy Court for the Northern District of Texas. Prospect leases approximately 80,912 square feet of space from the Company, accounting for approximately $2.9 million of annual rental revenue. The Company moved to cash basis accounting for these leases and recorded a revenue reduction of $0.7 million in the fourth quarter.
Added
The Company faces risks associated with security breaches through cyber attacks, cyber intrusions, or otherwise, as well as other significant disruptions of its information technology networks and related systems .
Removed
There can be no assurance that the Company will recover unpaid rent from Prospect or be able to timely relet space related to any rejected leases. Owning real estate and indirect interests in real estate is subject to inherent risks .
Added
If such events occur, the Company’s consolidated financial condition and results of operations may be adversely affected. See Note 10 to the Consolidated Financial Statements for additional information on the Company's interest rate swaps.
Removed
In addition, equity or debt financing required for such acquisitions may not be available at favorable times or rates.
Added
In that case, we may be able to rely upon the relief provisions under the Internal Revenue Code in order to avoid the loss of our REIT status.
Removed
While the board is actively engaged in the process and is utilizing a reputable national search firm, there can be no assurances as to the timing of the appointment of a CEO. Uncertainty concerning the appointment of a CEO could affect the Company's stock performance and its ability to attract, retain, and motivate key personnel needed to execute operational priorities.
Added
Third parties may seek recovery from real property owners or operators for personal injury or property damage associated with exposure to released hazardous substances.
Removed
A foreclosure on one or more of the Company's properties could have a material adverse effect on the Company’s consolidated financial condition and results of operations. The Company may not be able to repay, refinance, or extend any or all of our debt at maturity or upon any acceleration.
Removed
Additionally, increased interest rates may also result in less liquid property markets, limiting our ability to sell existing assets. The Company's swap agreements may not effectively reduce its exposure to changes in interest rates. The Company enters into swap agreements from time to time to manage some of its exposure to interest rate volatility.
Removed
The Company may acquire, develop, or redevelop additional properties in joint ventures with unrelated third parties.
Removed
In addition, under these circumstances, the Company has the right to redeem such stock.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+0 added−1 removed7 unchanged
Biggest changeHe has expanded the Company's cybersecurity program over the last several years resulting in a robust enterprise security posture focused on preventing cybersecurity incidents, while simultaneously increasing the Company's system resilience in an effort to minimize the business impact if an incident should occur. 22 The Company also engages with third parties on an as-needed basis to advise and assist in managing cybersecurity risks.
Biggest changeThe Company also engages with third parties on an as-needed basis to advise and assist in managing cybersecurity risks.
The Audit Committee reports to the full Board of Directors quarterly regarding cybersecurity. Management of the Company plays an integral role in assessing and managing risks from cybersecurity threats. The Company has a dedicated technology services department, led by the Company’s Chief Technology Officer.
The Audit Committee reports to the full Board of Directors quarterly regarding cybersecurity. Management of the Company plays an integral role in assessing and managing risks from cybersecurity threats. The Company has a dedicated technology services department, led by the Company’s head of technology.
The Audit Committee is briefed regularly on cybersecurity matters, including meeting with the Company’s Chief Technology Officer at least annually and receiving a memorandum quarterly regarding cybersecurity. In addition, the Audit Committee discusses cybersecurity with other members of management and the internal audit staff at each quarterly meeting.
The Audit Committee is briefed regularly on cybersecurity matters, including meeting with the Company’s head of technology at least annually and receiving a memorandum quarterly regarding cybersecurity. In addition, the Audit Committee discusses cybersecurity with other members of management and the internal audit staff at each quarterly meeting.
Although the Company’s Executive Vice President and Chief Administrative Officer and the members of its legal department do not have a technology services background, we believe that the Company’s Chief Technology Officer and technology services team possess the requisite background and experience to effectively manage the Company’s cybersecurity needs.
In addition, as discussed in more detail below, any cybersecurity incident is reported to the Company’s legal department. 21 Although the Company’s Executive Vice President and Chief Operating Officer and the members of its legal department do not have a technology services background, we believe that the Company’s head of technology and technology services team possess the requisite background and experience to effectively manage the Company’s cybersecurity needs.
The Company’s Chief Technology Officer reports to the Company’s Executive Vice President and Chief Administrative Officer. In addition, as discussed in more detail below, any cybersecurity incident is reported to the Company’s legal department.
The Company’s head of technology reports to the Company’s Executive Vice President and Chief Operating Officer.
Removed
The Company's Chief Technology Officer has extensive information technology and program management experience from service in the government and private and public Fortune 100 companies.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties In addition to the properties described in Item 1. “Business,” in Note 3 to the Consolidated Financial Statements, and in Schedule III of Item 15 of this Annual Report on Form 10-K, the Company leases office space from unrelated third parties from time to time.
Biggest changeItem 2. Properties In addition to the properties described in Item 1. “Business,” in Note 2 to the Consolidated Financial Statements, and in Schedule III of Item 15 of this Annual Report on Form 10-K, the Company leases office space from unrelated third parties from time to time.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePLAN CATEGORY NUMBER OF SECURITIES TO BE ISSUED upon exercise of outstanding options, warrants, and rights WEIGHTED AVERAGE EXERCISE PRICE of outstanding options, warrants, and rights NUMBER OF SECURITIES REMAINING AVAILABLE for future issuance under equity compensation plans (excluding securities reflected in the first column) Equity compensation plans approved by security holders — — 6,140,496 Equity compensation plans not approved by security holders — — — Total — — 6,140,496 Issuer Purchases of Equity Securities During the year ended December 31, 2024, the Company withheld and canceled shares of Company common stock to satisfy employee tax withholding obligations payable upon the vesting of non-vested shares, as follows: PERIOD TOTAL NUMBER OF SHARES PURCHASED AVERAGE PRICE PAID per share TOTAL NUMBER OF SHARES purchased as part of publicly announced plans or programs MAXIMUM NUMBER OF SHARES that may yet be purchased under the plans or programs February 1 - February 28 8,228 $ 16.31 — — October 1 - October 31 93,965 17.16 December 1 - December 31 383,016 18.14 — — Total 485,209 $ 17.92 Authorization to Repurchase Common Stock During 2024, the Company repurchased shares of its common stock under repurchase authorizations as follows: PERIOD TOTAL NUMBER OF SHARES PURCHASED (1) (2) AVERAGE PRICE PAID per share TOTAL NUMBER OF SHARES purchased as part of publicly announced plans or programs (2) MAXIMUM NUMBER (or Approximate DOLLAR VALUE) OF SHARES that may yet be purchased under the plans or programs (1) Prior Authorizations April 1 - April 30 2,966,764 $ 14.07 2,966,764 May 1 - May 31 7,536,692 15.94 7,536,692 June 1 - June 30 6,738,781 16.44 6,738,781 July 1 - July 31 1,296,985 16.82 1,296,985 August 1 - August 31 3,055,197 17.56 3,055,197 September 1 - September 30 4,140,669 17.97 4,140,669 October 1 - October 31 1,380,000 17.54 1,380,000 October 29, 2024 Authorized Shares $ 300,000,000 November 1 - November 30 1,554,958 17.22 1,554,958 273,224,084 December 1 - December 31 2,124,204 17.07 2,124,204 236,957,114 Total 30,794,250 $ 16.56 30,794,250 $ 236,957,114 1 On May 31, 2023, the Company's Board of Directors authorized the repurchase of up to $500.0 million of outstanding shares of the Company's common stock either in the open market or through privately negotiated transactions, subject to market conditions, regulatory constraints, and other customary conditions.
Biggest changePLAN CATEGORY NUMBER OF SECURITIES TO BE ISSUED upon exercise of outstanding options, warrants, and rights WEIGHTED AVERAGE EXERCISE PRICE of outstanding options, warrants, and rights NUMBER OF SECURITIES REMAINING AVAILABLE for future issuance under equity compensation plans (excluding securities reflected in the first column) Equity compensation plans approved by security holders — — 3,979,387 Equity compensation plans not approved by security holders — — — Total — — 3,979,387 Issuer Purchases of Equity Securities During the year ended December 31, 2025, the Company withheld and canceled shares of Company common stock to satisfy employee tax withholding obligations payable upon the vesting of non-vested shares, as follows: PERIOD TOTAL NUMBER OF SHARES PURCHASED AVERAGE PRICE PAID per share TOTAL NUMBER OF SHARES purchased as part of publicly announced plans or programs MAXIMUM NUMBER (or Approximate DOLLAR VALUE) OF SHARES that may yet be purchased under the plans or programs January 1 - January 31 4,029 $ 16.27 — 236,957,114 February 1 - February 28 9,034 16.56 — 236,957,114 March 1 - March 31 — — — 236,957,114 April 1 - April 30 18,877 15.83 — 236,957,114 May 1 - May 31 4,535 14.50 — 236,957,114 June 1 - June 30 49,441 15.48 — 236,957,114 July 1 - July 31 30,479 15.81 — 236,957,114 August 1 - August 31 96,164 16.67 — 236,957,114 September 1 - September 30 — — — 236,957,114 October 1 - October 31 952 17.68 — 500,000,000 November 1 - November 30 — — — 500,000,000 December 1 - December 31 20,985 17.19 — 500,000,000 Total 234,496 $ 16.24 Authorization to Repurchase Common Stock On October 28, 2025, the Company's Board of Directors authorized the repurchase of up to $500.0 million of outstanding shares of the Company's common stock, superseding the previous $300.0 million stock repurchase authorization.
The Company’s ability to pay dividends is dependent upon its ability to generate funds from operations and cash flows, and to make accretive new investments. 23 Equity Compensation Plan Information The following table provides information as of December 31, 2024, about the Company’s common stock that may be issued as restricted stock and upon the exercise of options, warrants and rights under the Company’s existing compensation plans, including the Amended and Restated 2006 Incentive Plan.
The Company’s ability to pay dividends is dependent upon its ability to generate funds from operations and cash flows, and to make accretive new investments. 22 Equity Compensation Plan Information The following table provides information as of December 31, 2025, about the Company’s common stock that may be issued as restricted stock and upon the exercise of options, warrants and rights under the Company’s existing compensation plans, including the Amended and Restated 2006 Incentive Plan.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Shares of the Company’s common stock are traded on the New York Stock Exchange under the symbol “HR.” As of December 31, 2024, there were 2,009 stockholders of record. Future dividends will be declared and paid at the discretion of the Board of Directors.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Shares of the Company’s common stock are traded on the New York Stock Exchange under the symbol “HR.” As of December 31, 2025, there were 1,863 stockholders of record. Future dividends will be declared and paid at the discretion of the Board of Directors.
The comparison assumes $100 was invested on December 31, 2019, in the Company's common stock and in each of the indexes and assumes reinvestment of dividends, as applicable. The Company's data for periods prior to the closing of the Merger is the stock performance of Legacy HR.
The comparison assumes $100 was invested on December 31, 2020, in the Company's common stock and in each of the indexes and assumes reinvestment of dividends, as applicable.
As of December 31, 2024, the Company was authorized to repurchase an additional $237.0 million of the Company's common stock. 24 Stock Performance Graph The following graph provides a comparison of the Company's cumulative total shareholder return with the Russell 3000 Index and cumulative total returns of FTSE NAREIT All Equity REITs Index for the period from December 31, 2019 through December 31, 2024.
Subsequent Activity In January 2026, the Company repurchased 2.9 million shares of its common stock at an average price of $17.27 per share for a total of $50.0 million resulting in $450.0 million of authorized share repurchases remaining. 23 Stock Performance Graph The following graph provides a comparison of the Company's cumulative total shareholder return with the Russell 3000 Index and cumulative total returns of FTSE NAREIT All Equity REITs Index for the period from December 31, 2020 through December 31, 2025.
On October 29, 2024, the Company's Board of Directors authorized the repurchase of up to $300.0 million of outstanding shares of the Company's common stock, superseding the previous stock repurchase authorization. The stock repurchase authorization expires on October 28, 2025, and the Company may suspend or terminate repurchases at any time without prior notice.
The stock repurchase authorization expires on October 27, 2026, and the Company may suspend or terminate repurchases at any time without prior notice. Under the Maryland General Corporation Law, outstanding shares of common stock acquired by a corporation become authorized but unissued shares, which may be re-issued.
Removed
On April 30, 2024, the Company's Board of Directors authorized the repurchase of up to $500.0 million of outstanding shares of the Company's common stock, superseding the previous stock repurchase authorization.
Added
As of December 31, 2025, the Company had $500.0 million remaining under its current share repurchase authorization.
Removed
The Company is not obligated under this authorization to repurchase any specific number of shares. 2 Repurchases of common stock in April 2024 were made under the May 31, 2023 $500.0 million stock repurchase authorization. May 2024 through October 2024 were repurchased under the April 30, 2024 $500.0 million stock repurchase authorization.
Added
The Company's data for periods prior to July 20, 2022, is the stock performance of Healthcare Realty Trust Incorporated (now known as HRTI, LLC) ("Legacy HR"), which merged into Healthcare Trust of America, Inc. (now known as Healthcare Realty Trust Incorporated)(the "Merger").
Removed
November and December 2024 repurchases were repurchased under the October 29, 2024 $300.0 million stock repurchase authorization.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

93 edited+24 added−34 removed95 unchanged
Biggest changeYEAR ENDED DECEMBER 31, Amounts in thousands, except per share data 2024 2023 2022 Net (loss) income attributable to common stockholders $ (654,485) $ (278,261) $ 40,897 Net (loss) income attributable to common stockholders per diluted share 1 $ (1.81) $ (0.74) $ 0.15 Gain on sales of real estate assets (104,684) (77,546) (270,271) Impairment of real estate properties 249,909 149,717 54,427 Real estate depreciation and amortization 690,988 738,526 459,211 Non-controlling loss from operating partnership units (9,149) (3,426) (5) Unconsolidated JV depreciation and amortization 20,678 18,116 12,722 FFO adjustments $ 847,742 $ 825,387 $ 256,084 FFO adjustments per common share - diluted $ 2.29 $ 2.15 $ 1.01 FFO attributable to common stockholders $ 193,257 $ 547,126 $ 296,981 FFO attributable to common stockholders per common share - diluted $ 0.52 $ 1.43 $ 1.17 — Transaction costs 3,122 2,026 3,229 Merger-related costs 2 — (1,952) 103,380 Lease intangible amortization (2,054) 860 1,028 Non-routine legal costs/forfeited earnest money received 1,077 175 771 Debt financing costs 237 (62) 3,145 Restructuring and severance-related charges 29,852 1,445 — Credit losses and gains (losses) on other assets, net 3 59,707 8,599 — Impairment of goodwill 250,530 — — Merger-related fair value of debt instruments 40,667 42,885 21,248 Unconsolidated JV normalizing items 4 390 389 330 Normalized FFO adjustments $ 383,528 $ 54,365 $ 133,131 Normalized FFO adjustments per common share - diluted $ 1.04 $ 0.14 $ 0.52 Normalized FFO attributable to common stockholders $ 576,785 $ 601,491 $ 430,112 Normalized FFO attributable to common stockholders per common share - diluted $ 1.56 $ 1.57 $ 1.69 Non-real estate depreciation and amortization 1,478 2,566 2,217 Non-cash interest amortization, net 5 5,101 4,968 5,129 Rent reserves, net 714 3,163 516 Straight-line rent, net (27,254) (32,592) (20,124) Stock-based compensation 14,036 13,791 14,294 Unconsolidated JV non-cash items 6 (923) (1,034) (1,206) Normalized FFO adjusted for non-cash items $ 569,937 $ 592,353 $ 430,938 2nd generation tenant improvements (69,445) (66,081) (33,620) Leasing commissions paid (47,450) (36,391) (22,929) Building capital (33,934) (49,343) (48,913) FAD $ 419,108 $ 440,538 $ 325,476 FFO weighted average common shares outstanding - diluted 7 369,767 383,381 254,622 1 Potential common shares are not included in diluted earnings per share when a loss exists as the effect would be antidilutive. 2 Includes costs incurred related to the Merger.
Biggest changeYEAR ENDED DECEMBER 31, Amounts in thousands, except per share data 2025 2024 2023 Net loss attributable to common stockholders $ (246,071) $ (654,485) $ (278,261) Net loss attributable to common stockholders per diluted share 1 $ (0.71) $ (1.81) $ (0.74) Gain on sales of real estate assets (235,389) (104,684) (77,546) Impairment of real estate properties 361,090 249,909 149,717 Real estate depreciation and amortization 586,146 690,988 738,526 Non-controlling loss from operating partnership units (3,497) (9,149) (3,426) Unconsolidated JV depreciation, amortization and impairment 27,769 20,678 18,116 FFO adjustments $ 736,119 $ 847,742 $ 825,387 FFO adjustments per common share - diluted $ 2.08 $ 2.29 $ 2.15 FFO attributable to common stockholders $ 490,048 $ 193,257 $ 547,126 FFO attributable to common stockholders per common share - diluted $ 1.38 $ 0.52 $ 1.43 Transaction costs 2,029 3,122 2,026 Merger-related costs — — (1,952) Lease intangible amortization (1,350) (2,054) 860 Non-routine tax and legal matters (118) 1,077 175 Debt financing costs 2 5,107 237 (62) Restructuring and severance-related charges 26,318 29,852 1,445 Credit losses and gains (losses) on other assets, net 3 3,508 59,707 8,599 Impairment of goodwill — 250,530 — Merger-related fair value of debt instruments 42,593 40,667 42,885 Unconsolidated JV normalizing items 4 811 390 389 Normalized FFO adjustments $ 78,898 $ 383,528 $ 54,365 Normalized FFO adjustments per common share - diluted $ 0.22 $ 1.04 $ 0.14 Normalized FFO attributable to common stockholders $ 568,946 $ 576,785 $ 601,491 Normalized FFO attributable to common stockholders per common share - diluted $ 1.61 $ 1.56 $ 1.57 Non-real estate depreciation and other amortization, net 6,114 1,478 2,566 Non-cash interest amortization, net 5 5,126 5,101 4,968 Rent reserves, net 952 714 3,163 Straight-line rent, net (29,392) (27,254) (32,592) Stock-based compensation 13,609 14,036 13,791 Unconsolidated JV non-cash items 6 (1,420) (923) (1,034) Normalized FFO adjusted for non-cash items $ 563,935 $ 569,937 $ 592,353 2nd generation tenant improvements (47,438) (69,445) (66,081) Leasing commissions paid (31,664) (47,450) (36,391) Building capital (36,531) (33,934) (49,343) FAD $ 448,302 $ 419,108 $ 440,538 FFO weighted average common shares outstanding - diluted 7 354,454 369,767 383,381 1 Potential common shares are not included in diluted earnings per share when a loss exists as the effect would be antidilutive. 2 For the year ended December 31, 2025, includes loss on debt extinguishment, loss on derivatives, and legal fees related to the Unsecured Credit Facility, which replaced the Company's prior credit facility. 3 For the year ended December 31, 2025, includes $1.6 million credit loss reserves on two mortgage note receivables and a $1.9 million loss on other assets included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations.
Indirect costs are capitalized during construction and on the unoccupied space in a property for up to one year after the property is ready for its intended use. Capitalized interest is calculated using the weighted average interest rate of the Company's unsecured debt or the interest rate on project specific debt, if applicable.
Indirect costs are capitalized during construction and on the unoccupied space in a property for up to one year after the space is ready for its intended use. Capitalized interest is calculated using the weighted average interest rate of the Company's unsecured debt or the interest rate on project specific debt, if applicable.
These ground leases contain provisions that may limit the Company’s ability to lease, sell, or finance these properties; • The Company may experience uninsured or underinsured losses; • Damage from catastrophic weather and other natural events, whether caused by climate change or otherwise, could result in losses to the Company; 26 • The Company faces risks associated with security breaches through cyber attacks, cyber intrusions, or otherwise, as well as other significant disruptions of its information technology networks and related systems; • The Company has structured and may in the future structure acquisitions of property in exchange for limited partnership units of the OP on terms that could limit its liquidity or flexibility; • Healthcare Realty Trust is a holding company with no direct operations and, as such, it relies on funds received from the OP to pay liabilities, and the interests of its stockholders will be structurally subordinated to all liabilities and obligations of the OP and its subsidiaries • The Company cannot assure you that it will be able to continue paying dividends at or above the rates previously paid; • Pandemics, and measures intended to prevent their spread or mitigate their severity could have a material adverse effect on the Company's business, results of operations, cash flows and financial condition; and • The Company's success depends, in part, on its ability to attract and retain talented employees.
These ground leases contain provisions that may limit the Company’s ability to lease, sell, or finance these properties; • The Company may experience uninsured or underinsured losses; • Damage from catastrophic weather and other natural events, whether caused by climate change or otherwise, could result in losses to the Company; 25 • The Company faces risks associated with security breaches through cyber attacks, cyber intrusions, or otherwise, as well as other significant disruptions of its information technology networks and related systems; • The Company has structured and may in the future structure acquisitions of property in exchange for limited partnership units of the OP on terms that could limit its liquidity or flexibility; • Healthcare Realty Trust is a holding company with no direct operations and, as such, it relies on funds received from the OP to pay liabilities, and the interests of its stockholders will be structurally subordinated to all liabilities and obligations of the OP and its subsidiaries • The Company cannot assure you that it will be able to continue paying dividends at or above the rates previously paid; • Pandemics and measures intended to prevent their spread or mitigate their severity could have a material adverse effect on the Company's business, results of operations, cash flows and financial condition; and • The Company's success depends, in part, on its ability to attract and retain talented employees.
Risks relating to our capital structure and financings • The Company has incurred significant debt obligations and may incur additional debt and increase leverage in the future; • Covenants in the Company’s debt instruments limit its operational flexibility, and a breach of these covenants could materially affect the Company’s consolidated financial condition and results of operations; • If lenders under the Unsecured Credit Facility fail to meet their funding commitments, the Company’s operations and consolidated financial position would be negatively impacted; • The unavailability of equity and debt capital, volatility in the credit markets, increases in interest rates, or changes in the Company’s debt ratings could have an adverse effect on the Company’s ability to meet its debt payments, make dividend payments to stockholders or engage in acquisition and development activity; • Increases in interest rates could have a material adverse effect on the Company's cost of capital; • The Company's swap agreements may not effectively reduce its exposure to changes in interest rates; • The Company has entered into joint venture agreements that limit its flexibility with respect to jointly owned properties and expects to enter into additional such agreements in the future; • The U.S. federal income tax treatment of the cash that the Company might receive from cash settlement of a forward equity agreement is unclear and could jeopardize the Company's ability to meet the REIT qualification requirements; and • In case of our bankruptcy or insolvency, any forward equity agreements will automatically terminate, and the Company would not receive the expected proceeds from any forward sale of shares of its common stock.
Risks relating to our capital structure and financings • The Company has incurred significant debt obligations and may incur additional debt and increase leverage in the future; • Covenants in the Company’s debt instruments limit its operational flexibility, and a breach of these covenants could materially affect the Company’s consolidated financial condition and results of operations; • If lenders under the Unsecured Credit Facility fail to meet their funding commitments, the Company’s operations and consolidated financial position would be negatively impacted; • The unavailability of equity and debt capital, volatility in the credit markets, increases in interest rates, or changes in the Company’s debt ratings could have an adverse effect on the Company’s ability to meet its debt payments, make dividend payments to stockholders or engage in acquisition and development activity; • Increases in interest rates could have a material adverse effect on the Company's cost of capital; • The Company's swap agreements may not effectively reduce its exposure to changes in interest rates; • The Company has entered into joint venture agreements that limit its flexibility with respect to jointly owned properties and expects to enter into additional such agreements in the future; • The U.S. federal income tax treatment of the cash that the Company might receive from cash settlement of a forward equity agreement is unclear and could jeopardize the Company's ability to meet the REIT qualification requirements; and • In the event of our bankruptcy or insolvency, any forward equity agreements will automatically terminate, and the Company would not receive the expected proceeds from any forward sale of shares of its common stock.
Such risks and uncertainties as more fully discussed in Item 1A “Risk Factors” of this report and in other reports filed by the Company with the SEC from time to time include, among other things, the following: Risks relating to our business and operations • The Company's expected results may not be achieved; • The Company’s revenues depend on the ability of its tenants under its leases to generate sufficient income from their operations to make rental payments to the Company; • The Company's results of operations have been and will continue to be impacted negatively by the Steward Health and Prospect Medical bankruptcies; • Owning real estate and indirect interests in real estate is subject to inherent risks; • The Company may incur impairment charges on its real estate properties or other assets; • The Company has properties subject to purchase options that expose it to reinvestment risk and reduction in expected investment returns; • If the Company is unable to promptly re-let its properties, if the rates upon such re-letting are significantly lower than the previous rates or if the Company is required to undertake significant expenditures or make significant leasing concessions to attract new tenants, then the Company’s business, consolidated financial condition and results of operations would be adversely affected; • Certain of the Company’s properties are special purpose healthcare facilities and may not be easily adaptable to other uses; • The Company has, and in the future may have more, exposure to fixed rent escalators, which could lag behind inflation and the growth in operating expenses such as real estate taxes, utilities, insurance, and maintenance expense; • The Company’s real estate investments are illiquid and the Company may not be able to sell properties strategically targeted for disposition; • The Company is subject to risks associated with the development and redevelopment of properties; • The Company may make material acquisitions and undertake developments and redevelopments that may involve the expenditure of significant funds and may not perform in accordance with management’s expectations; • The Company is exposed to risks associated with geographic concentration; • Many of the Company’s leases are dependent on the viability of associated health systems.
Such risks and uncertainties as more fully discussed in Item 1A “Risk Factors” of this report and in other reports filed by the Company with the SEC from time to time include, among other things, the following: Risks relating to our business and operations • The Company's expected results may not be achieved; • The Company’s revenues depend on the ability of its tenants under its leases to generate sufficient income from their operations to make rental payments to the Company; • The Company's results of operations have been and will continue to be impacted negatively by the Prospect Medical bankruptcy; • Owning real estate and indirect interests in real estate is subject to inherent risks; • The Company may incur impairment charges on its real estate properties or other assets; • The Company has properties subject to purchase options that expose it to reinvestment risk and reduction in expected investment returns; • If the Company is unable to promptly re-let its properties, if the rates upon such re-letting are significantly lower than the previous rates or if the Company is required to undertake significant expenditures or make significant leasing concessions to attract new tenants, then the Company’s business, consolidated financial condition and results of operations would be adversely affected; • Certain of the Company’s properties are special purpose healthcare facilities and may not be easily adaptable to other uses; • The Company has, and in the future may have more exposure to fixed rent escalators, which could lag behind inflation and the growth in operating expenses such as real estate taxes, utilities, insurance, and maintenance expense; • The Company’s real estate investments are illiquid and the Company may not be able to sell properties strategically targeted for disposition; • The Company is subject to risks associated with the development and redevelopment of properties; • The Company may make material acquisitions and undertake developments and redevelopments that may involve the expenditure of significant funds and may not perform in accordance with management’s expectations; • The Company is exposed to risks associated with geographic concentration; • Many of the Company’s leases are dependent on the viability of associated health systems.
Accordingly, as permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, the Company has excluded the summarized financial information for the OP because the assets, liabilities, and results of operations of the OP are not materially different than the corresponding amounts in the Company's Consolidated Financial Statements and management believes such summarized financial information would be repetitive and would not provide incremental value to investors.
Accordingly, as permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, the Company has excluded the summarized financial information for the OP because the assets, liabilities, and results of operations of the OP are not materially 31 different than the corresponding amounts in the Company's Consolidated Financial Statements and management believes such summarized financial information would be repetitive and would not provide incremental value to investors.
Impairment of Goodwill During the first quarter of 2024, the Company determined that the carrying value of its single reporting unit exceeded estimated fair value and therefore recorded a $250.5 million full impairment of its goodwill, which is recorded as a non-cash charge in “Impairment of goodwill” in the consolidated statements of operations.
During the first quarter of 2024, the Company determined that the carrying value of its single reporting unit exceeded estimated fair value and therefore recorded a $250.5 million full impairment of its goodwill, which is recorded as a non-cash charge in “Impairment of goodwill” in the consolidated 38 statements of operations.
To the extent additional investments are not funded by these sources, the 28 Company will fund its investment activity generally through equity or debt issuances either in the public or private markets, asset sales and joint venture contributions or through proceeds from the Unsecured Credit Facility.
To the extent additional investments are not funded by these sources, the Company will fund its investment activity generally through equity or debt issuances either in the public or private markets, asset sales and joint venture contributions or through proceeds from the Unsecured Credit Facility.
However, there can be no assurance that the Company's ability to increase rents or recover operating expenses will keep pace with inflation. The Company's leases have a weighted average lease term remaining of approximately 4.2 years.
However, there can be no assurance that the Company's ability to increase rents or recover operating expenses will keep pace with inflation. The Company's leases have a weighted average lease term remaining of approximately 4.4 years.
FAD is presented by adding to Normalized FFO non-real estate depreciation and amortization, deferred financing fees amortization, share-based compensation expense 40 and provision for bad debts, net; and subtracting straight-line rent income, net of expense, and maintenance capital expenditures, including second generation tenant improvements, capital expenditures and leasing commissions paid.
FAD is presented by adding to Normalized FFO non-real estate depreciation and amortization, deferred financing fees amortization, share-based compensation expense and provision for bad debts, net; and subtracting straight-line rent income, net of expense, and maintenance capital 39 expenditures, including second generation tenant improvements, capital expenditures and leasing commissions paid.
Any recently acquired property will be included in the same store pool once the Company has owned the property for eight full quarters. Newly-developed or redeveloped properties will be included in the same store pool eight full quarters after substantial completion. The following table reflects the Company's Same Store Cash NOI for the years ended December 31, 2024 and 2023.
Any recently acquired property will be included in the same store pool once the Company has owned the property for eight full quarters. Newly-developed or redeveloped properties will be included in the same store pool eight full quarters after substantial completion. The following table reflects the Company's Same Store Cash NOI for the years ended December 31, 2025 and 2024.
When a derivative instrument is initiated, the Company will assess its intended use of the derivative instrument and may elect a hedging relationship and apply hedge accounting. As required by the accounting literature, the Company will formally document the hedging relationship for all derivative instruments prior to or contemporaneous with entering into the derivative instrument. 48
When a derivative instrument is initiated, the Company will assess its intended use of the derivative instrument and may elect a hedging relationship and apply hedge accounting. As required by the accounting literature, the Company will formally document the hedging relationship for all derivative instruments prior to or contemporaneous with entering into the derivative instrument. 47
As of December 31, 2024, with the exception of one finance lease, all of the Company's leases, where the Company is the lessor, are classified as operating leases. Operating leases are recognized on the straight-line basis over the term of the related lease, including periods where a tenant is provided a rent concession.
As of December 31, 2025, with the exception of one finance lease, all of the Company's leases, where the Company is the lessor, are classified as operating leases. Operating leases are recognized on the straight-line basis over the term of the related lease, including periods where a tenant is provided a rent concession.
As a percentage of cash net operating income, 2024 and 2023 capital expenditures were 4.1% and 5.8%, respectively. For a reconciliation of cash net operating income, see "Same Store Cash NOI" in the "Non-GAAP Financial Measures and Key Performance Indicators" section as part of Item 7.
As a percentage of cash net operating income, 2025 and 2024 capital expenditures were 4.8% and 4.1%, respectively. For a reconciliation of cash net operating income, see "Same Store Cash NOI" in the "Non-GAAP Financial Measures and Key Performance Indicators" section as part of Item 7.
The Company seeks to reduce financial and operational risk by owning properties in high-growth markets with a broad tenant mix that includes over 30 physician specialties, as well as surgery, imaging, cancer, and diagnostic centers. As described in Item 1.
The Company seeks to reduce financial and operational risk by owning properties in high-growth markets with a broad tenant mix that includes over 30 physician specialties, as well as surgery, imaging, cancer, and diagnostic centers.
Further, these measures should not be considered as an alternative to net income as an indicator of the Company’s operating performance or as an alternative to cash flow from operating activities as a measure of liquidity. 41 The table below reconciles net income attributable to common stockholders to FFO, Normalized FFO and FAD attributable to common stockholders for the years ended December 31, 2024, 2023, and 2022.
Further, these measures should not be considered as an alternative to net income as an indicator of the Company’s operating performance or as an alternative to cash flow from operating activities as a measure of liquidity. 40 The table below reconciles net income attributable to common stockholders to FFO, Normalized FFO and FAD attributable to common stockholders for the years ended December 31, 2025, 2024, and 2023.
The information included in the table below represents management’s estimates and expectations at December 31, 2024, which are subject to change.
The information included in the table below represents management’s estimates and expectations at December 31, 2025, which are subject to change.
The overhead load factors are computed to absorb that portion of indirect employee costs (payroll and benefits, training, and similar costs) that are attributable to the productive time the employee incurs working directly on projects. The employees in the Company’s development departments who work on these projects maintain and report their hours, by project.
The overhead load factors are computed to absorb that portion of indirect employee costs (payroll and benefits, training, and similar costs) that are attributable to the productive time the employee incurs working directly on projects. The employees who work on these projects maintain and report their hours, by project.
Direct costs of a development project generally include construction costs, professional services such as architectural and legal costs, travel expenses, and land acquisition costs as well as other types of fees and expenses. These costs are capitalized as part of the basis of an asset to which such costs relate. Indirect costs include capitalized interest and overhead costs.
Direct costs of development and redevelopment projects generally include construction costs, professional services such as architectural and legal costs, travel expenses, and land acquisition costs as well as other types of fees and expenses. These costs are capitalized as part of the basis of an asset to which such costs relate. Indirect costs include capitalized interest and overhead costs.
Risks relating to government regulations • The Company's property taxes could increase due to reassessment or property tax rate changes; • Trends in the healthcare service industry may negatively affect the demand for the Company’s properties, lease revenues and the values of its investments; • The costs of complying with governmental laws and regulations may adversely affect the Company's results of operations; • Qualifying as a REIT involves highly technical and complex provisions of the Internal Revenue Code; • If the Company fails to remain qualified as a REIT, the Company will be subject to significant adverse consequences, including adversely affecting the value of its common stock; • The Company’s articles of incorporation, as well as provisions of the MGCL, contain limits and restrictions on transferability of the Company’s common stock which may have adverse effects on the value of the Company’s common stock; 27 • Complying with the REIT requirements may cause the Company to forego otherwise attractive opportunities; • The prohibited transactions tax may limit the Company's ability to sell properties; • New legislation or administrative or judicial action, in each instance potentially with retroactive effect, could make it more difficult or impossible for the Company to qualify as a REIT; and • New and increased transfer tax rates may reduce the value of the Company’s properties.
Risks relating to government regulations • The Company's property taxes could increase due to reassessment or property tax rate changes; • Trends in the healthcare service industry, including the impact of the One Big Beautiful Bill Act passed during 2025 that is subject of ongoing analysis, may negatively affect the demand for the Company’s properties, lease revenues and the values of its investments; • The costs of complying with governmental laws and regulations may adversely affect the Company's results of operations; • Qualifying as a REIT involves highly technical and complex provisions of the Internal Revenue Code; • If the Company fails to remain qualified as a REIT, the Company will be subject to significant adverse consequences, including adversely affecting the value of its common stock; • The Company’s articles of incorporation, as well as provisions of the MGCL, contain limits and restrictions on transferability of the Company’s common stock which may have adverse effects on the value of the Company’s common stock; 26 • Complying with the REIT requirements may cause the Company to forego otherwise attractive opportunities; • The prohibited transactions tax may limit the Company's ability to sell properties; • New legislation or administrative or judicial action, in each instance potentially with retroactive effect, could make it more difficult or impossible for the Company to qualify as a REIT; and • New and increased transfer tax rates may reduce the value of the Company’s properties.
Also, as of December 31, 2024, the Company's incurrence of total debt as defined in the senior notes [debt divided by (total assets less intangibles and accounts receivable)] was approximately 38.0% (cannot be greater than 60%) and debt service coverage [interest expense divided by (net income plus interest expense, taxes, depreciation and amortization, gains and impairments)] was approximately 3.1 times (cannot be less than 1.5 times).
Also, as of December 31, 2025, the Company's incurrence of total debt as defined in the senior notes [debt divided by (total assets less intangibles and accounts receivable)] was approximately 35.8% (cannot be greater than 60%) and debt service coverage [interest expense divided by (net income plus interest expense, taxes, depreciation and amortization, gains and impairments)] was approximately 3.5 times (cannot be less than 1.5 times).
As of December 31, 2024 and 2023, the Company's Consolidated Balance Sheets include capitalized pursuit costs relating to potential developments totaling $4.9 million and $6.2 million, respectively. The Company expensed costs related to the pursuit of acquisitions and dispositions totaling $1.7 million, $0.8 million and $1.0 million for the years ended December 31, 2024, 2023 and 2022, respectively.
As of December 31, 2025 and 2024, the Company's Consolidated Balance Sheets include capitalized pursuit costs relating to potential developments totaling $5.0 million and $4.9 million, respectively. The Company expensed costs related to the pursuit of acquisitions and dispositions totaling $1.0 million, $1.7 million and $0.8 million for the years ended December 31, 2025, 2024 and 2023, respectively.
See Note 1 to the Condensed Consolidated Financial Statements accompanying this report for more details. Equity income (loss) from unconsolidated joint ventures The Company recognizes its proportionate share of losses from its unconsolidated joint ventures. The losses are primarily attributable to non-cash depreciation expense. See Note 5 for more details regarding the Company's unconsolidated joint ventures.
See Note 1 to the Consolidated Financial Statements accompanying this report for more details. Equity income (loss) from unconsolidated joint ventures The Company recognized its proportionate share of losses from its unconsolidated joint ventures. The losses are primarily attributable to non-cash depreciation expense. See Note 4 for more details regarding the Company's unconsolidated joint ventures.
As a 46 result, a goodwill evaluation was performed. As of the measurement date, the Company's current operations are carried out through a single reporting unit that had a carrying value of approximately $12.0 billion. The Company determined that the carrying value exceeded estimated fair value and therefore an impairment of goodwill was recorded.
As of the measurement date, the Company's current operations are carried out through a single reporting unit that had a carrying value of approximately $12.0 billion. The Company determined that the carrying value 45 exceeded estimated fair value and therefore an impairment of goodwill was recorded.
New Accounting Pronouncements See Note 1 to the Consolidated Financial Statements for information on new accounting standards including both standards that the Company adopted during the year and those that have not yet been adopted. The Company continues to evaluate the impact of the new standards that have not yet been adopted.
New Accounting Pronouncements See Note 1 to the Consolidated Financial Statements for information on new accounting standards including both standards that the Company adopted during the year and those that have not yet been adopted.
See the Company's discussion of its 2024 disposition activity in Note 5 to the Consolidated Financial Statements. Development and Redevelopment Activity The table below details the Company’s activity related to its active development and redevelopment projects as of December 31, 2024.
See the Company's discussion of its 2025 disposition activity in Note 4 to the Consolidated Financial Statements. Development and Redevelopment Activity The table below details the Company’s activity related to its active development and redevelopment projects as of December 31, 2025.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The Company's discussion regarding the comparison of the year ended December 31, 2023 compared to the year ended December 31, 2022 was previously disclosed beginning on page 37 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 16, 2024, and is incorporated herein by reference.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 The Company's discussion regarding the comparison of the year ended December 31, 2024 compared to the year ended December 31, 2023 was previously disclosed beginning on page 38 of the Company's Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 19, 2025, and is incorporated herein by reference.
In 2025, the Company has 1,359 leases totaling 4.3 million square feet in its multi-tenant portfolio that are scheduled to expire. See additional information regarding expiring single-tenant leases under the heading "Single-Tenant Leases" below. The Company seeks contractual rent increases for in-place leases.
In 2026, the Company has 1,130 leases totaling 3.6 million square feet in its multi-tenant portfolio that are scheduled to expire. See additional information regarding expiring single-tenant leases under the heading "Single-Tenant Leases" below. The Company seeks contractual rent increases for in-place leases.
The Company maintains discussions with health systems and developers regarding long-term future new development opportunities. In addition, the Company continually evaluates its portfolio for accretive redevelopment opportunities.
The Company regularly consults with health systems and developers regarding long-term future new development opportunities. In addition, the Company continually evaluates its portfolio for accretive redevelopment opportunities.
Capital expenditures also do not include improvements related to a specific tenant suite, unless the improvement is part of a major building system or common area improvement. The Company invested $32.5 million, or $0.94 per square foot, in capital expenditures in 2024 and $47.7 million, or $1.24 per square foot, in capital expenditures in 2023.
Capital expenditures also do not include improvements related to a specific tenant suite, unless the improvement is part of a major building system or common area improvement. The Company invested $35.1 million, or $1.07 per square foot, in capital expenditures in 2025 and $32.5 million, or $0.94 per square foot, in capital expenditures in 2024.
As a percentage of total cash net operating income, leasing commissions paid for 2024, 2023 and 2022 were 6.0%, 4.3% and 4.0%, respectively. The amount of leasing commissions amortized over the term of the applicable leases totaled $21.2 million, $13.8 million and $11.0 million for the years ended December 31, 2024, 2023 and 2022, respectively.
As a percentage of total cash net operating income, leasing commissions paid for 2025, 2024 and 2023 were 7.5%, 6.0% and 4.3%, respectively. The amount of leasing commissions amortized over the term of the applicable leases totaled $25.9 million, $21.2 million and $13.8 million for the years ended December 31, 2025, 2024 and 2023, respectively.
As of December 31, 2024 and 2023, the Company's contractual rental rate growth averaged 2.83% and 2.82%, respectively, for in-place leases. In addition, the Company continued to see strong quarterly weighted average rental rate growth for renewing leases ("cash leasing spread"). In 2024, cash leasing spreads averaged 3.3%.
As of December 31, 2025 and 2024, the Company's contractual rental rate growth averaged 2.90% and 2.83%, respectively, for in-place leases. In addition, the Company continued to see strong quarterly weighted average rental rate growth for renewing leases ("cash leasing spread").
For the year ended December 31, 2023, includes a $5.2 million credit allowance for a mezzanine loan included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations and $3.4 million reserve included in “Rental Income” on the Statement of Operations for previously deferred rent and straight line rent for three skilled nursing facilities. 4 Includes the Company's proportionate share of lease intangible amortization related to unconsolidated joint ventures. 5 Includes the amortization of deferred financing costs, discounts and premiums, and non-cash financing receivable amortization. 6 Includes the Company's proportionate share of straight-line rent, net related to unconsolidated joint ventures. 42 7 The Company utilizes the treasury stock method which includes the dilutive effect of nonvested share-based awards outstanding of 556,201, 397,168, and 748,385 for the years ended December 31, 2024, 2023, and 2022, respectively.
For the year ended December 31, 2023, includes a $5.2 million credit allowance for a mezzanine loan included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations and $3.4 million reserve included in “Rental Income” on the Statement of Operations for previously deferred rent and straight line rent for three skilled nursing facilities. 41 4 Includes the Company's proportionate share of normalizing items related to unconsolidated joint ventures such as lease intangibles and transaction costs. 5 Includes the amortization of deferred financing costs, discounts and premiums, and non-cash financing receivable amortization. 6 Includes the Company's proportionate share of straight-line rent, net related to unconsolidated joint ventures. 7 The Company utilizes the treasury stock method which includes the dilutive effect of nonvested share-based awards outstanding of 426,098, 556,201 and 397,168 for the years ended December 31, 2025, 2024, and 2023, respectively.
In-place leases have a weighted average lease term of 8.3 years and a weighted average remaining lease term of 4.2 years. Demand for well-located real estate with complementary practice types and services remains consistent, and the Company's 2024 quarterly tenant retention statistics ranged from 81% to 85%.
In-place leases have a weighted average lease term of 8.3 years and a weighted average remaining lease term of 4.4 years. Demand for well-located real estate with complementary practice types and services remains consistent, and the Company's 2025 quarterly tenant retention statistics ranged from 77% to 80%.
Security Deposits and Letters of Credit As of December 31, 2024, the Company held approximately $33.4 million in letters of credit and security deposits for the benefit of the Company in the event the obligated tenant fails to perform under the terms of its respective lease.
Security Deposits and Letters of Credit As of December 31, 2025, the Company held approximately $36.7 million in letters of credit and security deposits for the benefit of the Company in the event the obligated tenant fails to perform under the terms of its respective lease.
The Company’s overhead costs are based on overhead load factors that are charged to a project based on direct time incurred. The Company computes the overhead load factors annually for its acquisition and development departments, which have employees who are involved in the projects.
The Company’s overhead costs are based on overhead load factors that are charged to a project based on direct time incurred. The Company computes the overhead load factors annually for its employees who are involved in the projects.
The rules and regulations on capitalizing costs and the subsequent depreciation or amortization of those costs versus expensing them in the period incurred vary depending on the type of costs and the reason for capitalizing the costs.
Capitalization of Costs GAAP generally allows for the capitalization of various types of costs. The rules and regulations on capitalizing costs and the subsequent depreciation or amortization of those costs versus expensing them in the period incurred vary depending on the type of costs and the reason for capitalizing the costs.
As of December 31, 2024 , 95.6% of the Company's leases provide for fixed base rent increases and 4.4% provide for Consumer Price Index-based rent increases.
As of December 31, 2025 , 96% of the Company's leases provide for fixed base rent increases and 4% provide for Consumer Price Index-based rent increases.
In a further effort to maximize revenue growth and reduce its exposure to key expenses such as taxes and utilities, the Company carefully manages its balance of lease types. Gross leases, wherein the Company has full exposure to all operating expenses, comprise 9% of its lease portfolio.
In 2025, cash leasing spreads averaged 2.7%. 33 In a further effort to maximize revenue growth and reduce its exposure to key expenses such as taxes and utilities, the Company carefully manages its balance of lease types. Gross leases, wherein the Company has full exposure to all operating expenses, comprise 8% of its lease portfolio.
Modified gross or base year leases, in which the Company and tenant both pay a share of operating expenses, comprise 28% of the Company's leased portfolio. Net leases, in which tenants pay substantially all operating expenses, total 59% of the leased portfolio.
Modified gross or base year leases, in which the Company and tenant both pay a share of operating expenses, comprise 30% of the Company's leased portfolio. Net leases, in which tenants pay substantially all operating expenses, total 58% of the leased portfolio. Absolute net leases, in which tenants pay substantially all of the building's operating and capital expenses, comprise 4%.
For the year ended December 31, 2023, Merger-related costs are net of a refund of $17.8 million for transfer taxes paid during the year ended December 31, 2022. 3 For the year ended December 31, 2024, includes $59.6 million in credit loss reserves, net of recoveries on four notes receivable included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations, $5.1 million gain on sale of other assets included in "Gains on sales of real estate and other assets" on the Statement of Operations, $4.1 million loss on other asset included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations, and a $1.1 million straight line rent reversal included in "Rental income" on the Statement of Operations.
For the year ended December 31, 2024, includes $59.6 million in credit loss reserves, net of recoveries on four notes receivable included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations, $5.1 million gain on sale of other assets included in "Gains on sales of real estate and other assets" on the Statement of Operations, $4.1 million loss on other asset included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations, and a $1.1 million straight line rent reversal included in "Rental income" on the Statement of Operations.
Operating Activities Cash flows provided by operating activities for the two years ended December 31, 2024 and 2023 were $501.6 million and $499.8 million, respectively.
Operating Activities Cash flows provided by operating activities for the two years ended December 31, 2025 and 2024 were $457.1 million and $501.6 million, respectively.
Any remaining excess purchase price is then allocated 47 to the tangible and intangible assets based on their relative fair values. The identifiable tangible and intangible assets are then subject to depreciation and amortization.
Any remaining excess purchase price is then allocated to the tangible and intangible assets based on their relative fair values.
In 2024, the Company paid leasing commissions of approximately $47.1 million, or $1.37 per square foot. In 2023, the Company paid leasing commissions of approximately $35.9 million, or $0.93 per square foot. In 2022, the Company paid leasing commissions of approximately $22.9 million, or $0.57 per square foot.
In 2025, the Company paid leasing commissions of approximately $54.8 million, or $1.67 per square foot. In 2024, the Company paid leasing commissions of approximately $47.1 million, or $1.37 per square foot. In 2023, the Company paid leasing commissions of approximately $35.9 million, or $0.93 per square foot.
Rent abatements for 2024 totaled approximately $16.0 million, or $0.46 per square foot. Rent abatements for 2023 totaled approximately $14.3 million, or $0.37 per square foot. Rent abatements for 2022 totaled approximately $14.8 million, or $0.37 per square foot.
Rent abatements for 2025 totaled approximately $20.9 million, or $0.72 per square foot. Rent abatements for 2024 totaled approximately $16.0 million, or $0.46 per square foot. Rent abatements for 2023 totaled approximately $14.3 million, or $0.37 per square foot.
Management believes the following paragraphs in this section describe the application of critical accounting policies and estimates by management to arrive at the critical accounting estimates reflected in the Consolidated Financial 44 Statements. The Company’s accounting policies are more fully discussed in Note 1 to the Consolidated Financial Statements.
Management believes the following paragraphs in this section describe the application of critical accounting policies and estimates by management to arrive at the critical accounting estimates reflected in the Consolidated Financial Statements.
The first and second generation tenant overage amount amortized to rent, including interest, totaled approximately $7.8 million in 2024, $8.4 million in 2023, and $7.5 million in 2022. Second generation tenant improvement commitments in 2024 for renewals averaged $2.14 per square foot per lease year, ranging quarterly from $1.80 to $2.39.
The first and second generation tenant overage amount amortized to rent, including interest, totaled approximately $10.0 million in 2025, $7.8 million in 2024, and $8.4 million in 2023. 34 Second generation tenant improvement commitments in 2025 for renewals averaged $2.22 per square foot per lease year, ranging quarterly from $1.66 to $3.13.
Single-Tenant Leases As of December 31, 2024, the Company had a total of 110 single-tenant buildings, with a weighted average lease term of 11.6 years and a weighted average remaining lease term of 5.5 years. Twenty-two single-tenant buildings have leases that expire in 2025. Five of these leases have been renewed.
Single-Tenant Leases As of December 31, 2025, the Company had a total of 102 single-tenant buildings, with a weighted average lease term of 11.6 years and a weighted average remaining lease term of 5.7 years. Ten single-tenant buildings have leases that expire in 2026. Four of the buildings have been renewed.
See additional information in “Liquidity and Capital Resources - Financing Activities” above. 37 Impact of Inflation The Company is subject to the risk of inflation as most of its revenues are derived from long-term leases.
The Company had $1.3 billion of outstanding debt that matures in 2026 and 2027. See additional information in “Liquidity and Capital Resources - Financing Activities” above. Impact of Inflation The Company is subject to the risk of inflation as most of its revenues are derived from long-term leases.
Interest Rate Swaps As of December 31, 2024, the Company had outstanding interest rate derivatives totaling approximately $1.1 billion to hedge one-month Secured Overnight Financing Rate (“SOFR”).
Interest Rate Swaps As of December 31, 2025, the Company had seven outstanding interest rate derivatives totaling $500 million to hedge one-month Secured Overnight Financing Rate (“SOFR”).
Investing Activities A summary of the significant transactions impacting investing activities for the year ended December 31, 2024 is listed below. See Note 5 to the Consolidated Financial Statements for more detail on these activities. The Company had no real estate acquisition activity for the year ended December 31, 2024.
Investing Activities A summary of the significant transactions impacting investing activities for the year ended December 31, 2025 is listed below. See Note 4 to the Consolidated Financial Statements for more detail on these activities.
The effect of any required adjustment is reflected in income from continuing operations at the date of the decision not to sell. The Company recorded impairment charges totaling $249.9 million for the year ended December 31, 2024 related to real estate properties and other long-lived assets.
The effect of any required adjustment is reflected in income from continuing operations at the date of the decision not to sell. The Company recorded impairment charges totaling $361.1 million and $249.9 million, respectively, for the years ended December 31, 2025 and December 31, 2024, related to real estate properties sold and properties with changes in the expected holding periods.
Debt Activity Below is a summary of the significant debt financing activity for the year ended December 31, 2024. See Note 10 to the Consolidated Financial Statements for additional information on financing activities.
As of December 31, 2025, there has been no activity under the program. Debt Activity Below is a summary of the significant debt financing activity for the year ended December 31, 2025. See Note 9 to the Consolidated Financial Statements for additional information on financing activities.
These transactions yielded net cash proceeds of $1.2 billion, net of $67.3 million of closing costs and related adjustments and $172.7 million of retained joint venture interests. The weighted average capitalization rate for these properties was 6.6%. The Company calculates the capitalization rate for dispositions as the in-place cash net operating income divided by the sales price.
These transactions yielded net cash proceeds of approximately $1.0 billion, net of approximately $77.6 million of closing costs and related adjustments, and $11.8 million in Company financed notes. The weighted average capitalization rate for these sales was 6.7%. The Company calculates the capitalization rate for dispositions as the in-place cash net operating income divided by the sales price.
In 2023, these commitments averaged $5.69 per square foot per lease year, ranging quarterly from $4.44 to $7.11. In 2022, these commitments averaged $5.74 per square foot per lease year, ranging quarterly from $4.84 to $7.07.
In 2024, these commitments averaged $7.22 per square foot per lease year, ranging quarterly from $6.93 to $7.34. In 2023, these commitments averaged $5.69 per square foot per lease year, ranging quarterly from $4.44 to $7.11.
Interest Expense Interest expense decreased $16.2 million for the year ended December 31, 2024 compared to the prior year.
Interest Expense Interest expense decreased $33.4 million for the year ended December 31, 2025 compared to the prior year.
The Company is in negotiations with tenants in fifteen of these buildings and expects the leases to be renewed or the building to be backfilled. The Company expects the tenants of two of these single-tenant buildings to vacate the buildings upon lease expiration.
The Company is in negotiations with tenants in six of these buildings and expects the leases to be renewed or the building to be backfilled.
Debt Management The Company maintains a flexible capital structure that allows it to fund new investments and operate its existing portfolio. The Company has approximately $45.3 million of mortgage notes payable, maturing in 2025 and 2026 , most of which were assumed when the Company acquired properties.
Debt Management The Company maintains a flexible capital structure that allows it to fund new investments and operate its existing portfolio. The Company has approximately $28.9 million of mortgage notes payable, maturing in 2026, most of which were assumed when the Company acquired properties. The Company will repay mortgages with cash on hand or borrowings under the Unsecured Credit Facility.
In 2023, this spending totaled $63.5 million, or 7.7% of total cash net operating income. 35 If the cost of a tenant improvement project exceeds a tenant improvement allowance, the Company generally offers the tenant the option to finance the excess over the lease term with interest or to reimburse the overage to the Company in a lump sum.
If the cost of a tenant improvement project exceeds a tenant improvement allowance, the Company generally offers the tenant the option to finance the excess over the lease term with interest or to reimburse the overage to the Company in a lump sum.
As of December 31, 2024, the Company had commitments of approximately $212.8 million that are expected to be spent on tenant improvements throughout the portfolio, excluding development properties currently under construction.
As of December 31, 2025, the Company had commitments of approximately $161.8 million that are expected to be spent on tenant improvements throughout the portfolio, excluding development properties currently under construction. First Generation Tenant Improvements First generation tenant improvements totaled $90.2 million and $52.4 million for the years ended December 31, 2025 and 2024, respectively.
Additional information about the amount and basis for determination of the purchase price is detailed in the table below (dollars in thousands): YEAR EXERCISABLE NUMBER OF PROPERTIES GROSS REAL ESTATE INVESTMENT AS OF DECEMBER 31, 2024 1 Current 2 6 $ 111,399 2025 5 99,970 2026 6 173,761 2027 4 112,305 2028 5 136,814 2029 3 82,026 2030 — — 2031 4 106,839 2032 2 23,848 2033 — — 2034 — — 2035 and thereafter 3 9 326,103 Total 44 $ 1,173,065 1 Purchase option prices are based on fair market value components that are determined by an appraisal process, except for three properties totaling $45.4 million wi th stated prices or prices based on fixed capitalization rates. 2 These purchase options have been exercisable for an average of 15.1 years. 3 Includes two medical outpatient properties tha t are recorded in the line item Investment in financing receivable, net on the Company's Consolidated Balance Sheet.
Additional information about the amount and basis for determination of the purchase price is detailed in the table below (dollars in thousands): YEAR EXERCISABLE NUMBER OF PROPERTIES GROSS REAL ESTATE INVESTMENT AS OF DECEMBER 31, 2025 1 Current 2 3 $ 55,723 2026 4 132,946 2027 5 142,340 2028 5 135,641 2029 3 82,272 2030 — — 2031 4 111,905 2032 2 24,789 2033 — — 2034 — — 2035 2 43,660 2036 and thereafter 3 9 348,870 Total 37 $ 1,078,146 1 Purchase option prices are based on fair market value components that are determined by an appraisal process, except for two properties totaling $ 62.9 million w i th stated prices or prices based on fixed capitalization rates. 2 These purchase options have been exercisable for an average of 21.5 years. 3 Includes two medical outpatient properties that are recorded in the line item Investment in financing receivable, net on the Company's Consolidated Balance Sheet.
Valuation of Long-Lived Assets Held and Used, Unconsolidated Joint Ventures, Intangible Assets and Goodwill Long-Lived Assets Held and Used The Company assesses the potential for impairment of identifiable intangible assets and long-lived assets, primarily real estate properties, whenever events occur or a change in circumstances indicates that the carrying value might not be recoverable.
In addition, the Company expensed costs related to the pursuit of developments totaling $1.0 million, $1.1 million, and $0.8 million for the years ended December 31, 2025, 2024 and 2023, respectively. 44 Valuation of Long-Lived Assets Held and Used, Unconsolidated Joint Ventures, Intangible Assets and Goodwill Long-Lived Assets Held and Used The Company assesses the potential for impairment of identifiable intangible assets and long-lived assets, primarily real estate properties, whenever events occur or a change in circumstances indicates that the carrying value might not be recoverable.
In 2023, these commitments averaged $1.78 per square foot per lease year, ranging quarterly from $1.64 to $1.89. In 2022, these commitments averaged $1.76 per square foot per lease year, ranging quarterly from $1.46 to $1.90. Second generation tenant improvement commitments in 2024 for new leases averaged $7.22 per square foot per lease year, ranging quarterly from $6.93 to $7.34.
In 2024, these commitments averaged $2.14 per square foot per lease year, ranging quarterly from $1.80 to $2.39. In 2023, these commitments averaged $1.78 per square foot per lease year, ranging quarterly from $1.64 to $1.89. Second generation tenant improvement commitments in 2025 for new leases averaged $6.91 per square foot per lease year, ranging quarterly from $6.08 to $7.60.
The Company also performs an annual goodwill impairment review. The Company's reviews are typically performed as of December 31 of each year. However, during the first quarter of 2024, the Company experienced a sustained decline in the price per share of its common stock, which was identified as an indicator of goodwill impairment.
During the first quarter of 2024, the Company experienced a sustained decline in the price per share of its common stock, which was identified as an indicator of goodwill impairment. As a result, a goodwill evaluation was performed.
Principles of Consolidation The Company’s Consolidated Financial Statements include the accounts of the Company, its wholly owned subsidiaries, joint ventures, and partnerships where the Company controls the operating activities. All material intercompany accounts and transactions have been eliminated. Capitalization of Costs GAAP generally allows for the capitalization of various types of costs.
The Company’s accounting policies are more fully discussed in Note 1 to the Consolidated Financial Statements. 43 Principles of Consolidation The Company’s Consolidated Financial Statements include the accounts of the Company, its wholly owned subsidiaries, joint ventures, and partnerships where the Company controls the operating activities. All material intercompany accounts and transactions have been eliminated.
Additionally, the Company recorded $59.5 million of credit loss reserves on its mortgage note receivables and a $4.1 million fair value adjustment for an equity investment in other assets. Impairment of real estate assets in 2023 totaling approximately $149.7 million is associated with completed or planned disposition activity.
Additionally, the Company recorded $59.5 million of credit loss reserves on its mortgage note receivables and a $4.1 million fair value adjustment for an equity investment in other assets. Impairment of Goodwill There was no goodwill impairment in 2025.
Expenses Property operating expenses decreased $27.0 million, or 5.4%, from the prior year primarily as a result of the following activity: • Dispositions in 2023 and 2024 resulted in a decrease of $35.9 million. • Acquisitions and developments in 2023 and 2024 resulted in an increase of $0.8 million. • Increases in portfolio operating expenses as follows: ◦ Administrative, primarily leasing commissions, of $5.1 million; ◦ Utilities of $2.7 million; ◦ Property taxes of $1.9 million; ◦ Security expense of $0.3 million; and ◦ Janitorial expense of $0.2 million. • Decreases in portfolio operating expenses were due to maintenance and repair expenses of $1.3 million and compensation expense of $0.8 million. 38 General and administrative expenses increased approximately $24.7 million, or 42.3%, from the prior year primarily as a result of the following activity: • Increase in restructuring and severance-related charges of $28.3 million • Decrease in payroll and payroll related expenses of approximately $2.4 million. • Increase in cash compensation expense of $1.4 million. • Increase in non-cash compensation incentive expense of $0.9 million. • Other decreases including travel, legal and other administrative costs of $3.5 million.
Expenses Property operating expenses decreased $24.4 million, or 5.1%, from the prior year primarily as a result of the following activity: • Dispositions in 2024 and 2025 resulted in a decrease of $45.5 million. • Developments completed in 2024 and 2025 resulted in an increase of $2.0 million. • Increases in portfolio operating expenses as follows: ◦ Administrative, leasing commissions, and other legal expenses of $7.3 million; ◦ Compensation expense of $4.8 million; ◦ Utilities expense of $3.6 million; ◦ Maintenance and repair expense of $2.1 million; and ◦ Janitorial expense of $1.3 million.
Among other things, these provisions require the Company to maintain certain financial ratios and impose certain limits on the Company’s ability to incur indebtedness and create liens or encumbrances. As of December 31, 2024, the Company was in compliance with the financial covenant provisions under all of its various debt instruments.
Debt Covenant Information The Company’s various debt agreements contain certain representations, warranties, and financial and other covenants customary in such debt agreements. Among other things, these provisions require the Company to maintain certain financial ratios and impose certain limits on the Company’s ability to incur indebtedness and create liens or encumbrances.
The annual base rent for leases that are not expected to renew or be backfilled in 2025 is $4.1 million. Operating Leases As of December 31, 2024, the Company was obligated to make rental payments under operating lease agreements consisting primarily of ground leases related to 142 real estate investments, excluding those ground leases the Company has prepaid.
Operating Leases As of December 31, 2025, the Company was obligated to make rental payments under operating lease agreements consisting primarily of ground leases related to 108 real estate investments, excluding those ground leases the Company has prepaid.
See Note 4 to the Consolidated Financial Statements for additional discussion of operating and financing lease payment obligations. See "Trends and Matters Impacting Operating Results" for additional information regarding the Company's sources and uses of cash.
See Note 3 to the Consolidated Financial Statements for additional discussion of operating and financing lease payment obligations.
Approximately $0.8 million is not expected to recur in subsequent quarters in 2025. Results of Operations Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 The Company’s consolidated results of operations for 2024 compared to 2023 were impacted by acquisitions, developments, dispositions, gain on sales and impairment charges recorded on real estate properties, and capital markets transactions.
The Company continues to evaluate the impact of the new standards that have not yet been adopted. 36 Results of Operations Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 The Company’s consolidated results of operations for 2025 compared to 2024 were impacted by developments, dispositions, gain on sales and impairment charges recorded on real estate properties, and capital markets transactions.
The Company cannot, however, be certain that these sources of funds will be available at a time and upon terms acceptable to the Company in sufficient amounts to meet its liquidity needs. The Company has exposure to variable interest rates and its common stock price is impacted by the volatility in the stock markets.
The Company believes that its liquidity and sources of capital are adequate to satisfy its cash requirements. The Company cannot, however, be certain that these sources of funds will be available at a time and upon terms acceptable to the Company in sufficient amounts to meet its liquidity needs.
Purchase Options The Company had approximately $111.4 million in real estate properties as of December 31, 2024 that were subject to exercisable purchase options. The Company has approximately $1.1 billion in real estate properties that are subject to purchase options that will become exercisable after 2024.
The Company has approximate ly $1.0 billion in real estate properties that are subject to purchase options that will become exercisable after 2025.
The following details the amount and rate of each swap as of such date (dollars in thousands): 31 EXPIRATION AMOUNT WEIGHTED AVERAGE RATE May 2026 $ 275,000 3.74 % June 2026 150,000 3.83 % December 2026 150,000 3.84 % June 2027 200,000 4.27 % December 2027 300,000 3.93 % Total $ 1,075,000 3.92 % The following table details the Company's debt balances as of December 31, 2024: PRINCIPAL BALANCE CARRYING BALANCE 1 WEIGHTED YEARS TO MATURITY 2 CONTRACTUAL RATE EFFECTIVE RATE Senior Notes due 2025 $ 250,000 $ 249,868 0.3 3.88 % 4.12 % Senior Notes due 2026 3 600,000 586,824 1.6 3.50 % 4.94 % Senior Notes due 2027 3 500,000 488,104 2.5 3.75 % 4.76 % Senior Notes due 2028 300,000 298,029 3.0 3.63 % 3.85 % Senior Notes due 2030 3 650,000 586,028 5.1 3.10 % 5.30 % Senior Notes due 2030 299,500 297,190 5.2 2.40 % 2.72 % Senior Notes due 2031 299,785 296,343 6.2 2.05 % 2.25 % Senior Notes due 2031 3 800,000 667,233 6.2 2.00 % 5.13 % Total Senior Notes Outstanding 3,699,285 3,469,619 2.97 % 4.44 % $1.5 billion unsecured credit facility 4 — — 2.8 SOFR + 0.94% 5.30 % $200 million unsecured term loan 200,000 199,896 1.4 SOFR + 1.04% 5.59 % $150 million unsecured term loan 150,000 149,790 1.4 SOFR + 1.04% 5.59 % $300 million unsecured term loan 3 300,000 299,981 1.8 SOFR + 1.04% 5.59 % $200 million unsecured term loan 3 200,000 199,641 2.5 SOFR + 1.04% 5.59 % $300 million unsecured term loan 300,000 298,708 3.0 SOFR + 1.04% 5.59 % Mortgage notes payable 45,279 45,136 1.3 4.04 % 4.17 % Total Outstanding Notes and Bonds Payable $ 4,894,564 $ 4,662,771 3.59 % 4.72 % 1 Balances are reflected net of discounts and debt issuance costs and include premiums. 2 Includes extension options. 3 Debt instruments assumed as part of the Merger with Legacy HTA on July 20, 2022.
The following details the amount and rate of each swap as of such date (dollars in thousands): EXPIRATION DATE NOTIONAL AMOUNT WEIGHTED AVERAGE RATE May 2026 $ 100,000 2.15 % December 2026 150,000 3.84 % June 2027 150,000 4.13 % December 2027 100,000 4.13 % Total $ 500,000 3.65 % 30 The following table details the Company's debt balances as of December 31, 2025: PRINCIPAL BALANCE CARRYING BALANCE 1 WEIGHTED YEARS TO MATURITY 2 CONTRACTUAL RATE EFFECTIVE RATE Senior Notes due 2026 $ 600,000 $ 595,026 0.6 3.50 % 4.94 % Senior Notes due 2027 500,000 492,693 1.5 3.75 % 4.76 % Senior Notes due 2028 300,000 298,652 2.0 3.63 % 3.85 % Senior Notes due 2030 650,000 597,188 4.1 3.10 % 5.30 % Senior Notes due 2030 299,500 297,610 4.2 2.40 % 2.72 % Senior Notes due 2031 299,785 296,866 5.2 2.05 % 2.25 % Senior Notes due 2031 800,000 685,874 5.2 2.00 % 5.13 % Total Senior Notes Outstanding 3,449,285 3,263,909 2.90 % 4.47 % $1.5 billion unsecured credit facility 120,000 120,000 4.5 SOFR + 0.84% 4.61 % $200 million unsecured term loan 200,000 199,635 3.5 SOFR + 0.94% 4.81 % $300 million unsecured term loan 300,000 299,055 3.0 SOFR + 0.94% 4.81 % Mortgage notes payable 28,904 28,824 0.6 3.94 % 4.50 % Total Outstanding Notes and Bonds Payable $ 4,098,189 $ 3,911,423 3.19 % 4.52 % 1 Balances are reflected net of discounts and debt issuance costs and include premiums. 2 Includes extension options.
The Company also had unencumbered real estate assets with a gross book value of approximately $11.7 billion at December 31, 2024, of which a portion could serve as collateral for secured mortgage financing. The Company believes that its liquidity and sources of capital are adequate to satisfy its cash requirements.
See "Trends and Matters Impacting Operating Results" for additional information regarding the Company's sources and uses of cash. 27 The Company also had unencumbered real estate assets with a gross book value of approximately $10.4 billion at December 31, 2025, of which a portion could serve as collateral for secured mortgage financing.
The components of interest expense are as fol lows: CHANGE Dollars in thousands 2024 2023 $ % Contractual interest $ 196,392 $ 208,305 $ (11,913) (5.7) % Net discount/premium accretion 41,050 38,941 2,109 5.4 % Debt issuance costs amortization 4,769 5,588 (819) (14.7) % Amortization of interest rate swap settlement 168 168 — — % Amortization of treasury hedge settlement 427 427 — — % Fair value derivative 187 4,412 (4,225) (95.8) % Interest cost capitalization (4,295) (2,961) (1,334) 45.1 % Interest on lease liabilities 3,727 3,704 23 0.6 % Total interest expense $ 242,425 $ 258,584 $ (16,159) (6.2) % Contractual interest decreased $11.9 million, or 5.7%, primarily as a result of the following activity: • The Unsecured Term Loans accounted for an decrease of approximately $4.8 million, primarily due to the repayment of the $350 million Unsecured Term Loan, due 2025. • The Unsecured Credit Facility accounted for a decrease of approximately $11.4 million . • Active interest rate derivatives account ed for a decrease of $2.5 million, while expired interest rate derivatives accounted for an increase of $8.2 million. • Mortgage note repayments, net of assumptions, accounted for a decrease of approximately $1.4 million. 39 Impairment of Real Estate Assets and Credit Loss Reserves Impairment of real estate assets in 2024 totaling approximately $249.9 million is associated with completed or planned disposition activity.
The components of interest expense are as follows: CHANGE Dollars in thousands 2025 2024 $ % Contractual interest $ 169,014 $ 196,392 $ (27,378) (13.9) % Net discount/premium accretion 43,163 41,050 2,113 5.1 % Debt issuance costs amortization 4,760 4,769 (9) (0.2) % Amortization of interest rate swap settlement 53 168 (115) (68.5) % Amortization of treasury hedge settlement 427 427 — — % Fair value derivative — 187 (187) (100.0) % Interest cost capitalization (12,123) (4,295) (7,828) 182.3 % Interest on lease liabilities 3,695 3,727 (32) (0.9) % Total interest expense $ 208,989 $ 242,425 $ (33,436) (13.8) % Contractual interest decreased $27.4 million, or 13.9%, primarily as a result of the following activity: • The unsecured term loans accounted for a decrease of approximately $18.5 million. • The unsecured term loan repayments accounted for a decrease of approximately $15.1 million. • The Unsecured Credit Facility accounted for an increase of approximately $3.0 million as a result of an increased weighted average balance outstanding. • Active interest rate swaps accounted for an increase of $9.7 million, while expired interest rate swaps accounted for an increase of $0.3 million. • Mortgage note repayments, net of assumptions, accounted for a decrease of approximately $0.3 million. • The repayment of the Senior Note due 2025 accounted for a decrease of $6.5 million.
Depreciation of Real Estate Assets and Amortization of Related Intangible Assets As of December 31, 2024, the Company had gross investments of approximately $10.5 billion in depreciable real estate assets and related intangible assets. When real estate assets and related intangible assets are acquired or placed in service, they must be depreciated or amortized.
When real estate assets and related intangible assets are acquired or placed in service, they must be depreciated or amortized.
Other operating income increased $1.7 million, or 9.8%, from the prior year primarily as a result of income from management fees.
Other operating income increased $9.1 million, or 47.3%, for the year ended December 31, 2025, compared to the prior year primarily as a result of income from management fees related to unconsolidated joint ventures and managed properties.
As of December 31, 2024, the Company had 215 properties totaling 16.1 million square feet that were held under ground leases with a remaining weighted average term of 63.6 years, including renewal options. 36 These ground leases typically have initial terms of 50 to 75 years with one or more renewal options extending the terms to 75 to 100 years, with expiration dates through 2119.
As of December 31, 2025, the Company had 168 properties totaling 12.4 million square feet that were held under ground leases with a remaining weighted average term of 60.6 years, including renewal options.
Downgrades in ratings by the rating agencies could have a material adverse impact on the Company’s cost and availability of capital, which could in turn have a material adverse impact on consolidated results of operations, liquidity and/or financial condition. 32 Supplemental Guarantor Information The OP has issued unsecured notes described in Note 10 to the Company's Consolidated Financial Statements included in this report.
The Company plans to manage its capital structure to maintain compliance with its debt covenants consistent with its current profile. Downgrades in ratings by the rating agencies could have a material adverse impact on the Company’s cost and availability of capital, which could in turn have a material adverse impact on consolidated results of operations, liquidity and/or financial condition.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFAIR VALUE Dollars in thousands CARRYING VALUE as of Dec. 31, 2024 1 DEC. 31, 2024 1 ASSUMING 10% INCREASE in market interest rates ASSUMING 10% DECREASE in market interest rates DEC. 31, 2023 Fixed Rate Debt Senior Notes due 2025 $ 249,868 $ 250,605 $ 250,515 $ 250,679 $ 244,233 Senior Notes due 2026 586,824 595,052 594,141 595,919 581,556 Senior Notes due 2027 488,104 494,909 493,756 496,037 483,590 Senior Notes due 2028 298,029 290,349 289,532 291,144 282,200 Senior Notes due 2030 586,028 590,648 587,926 593,321 577,702 Senior Notes due 2030 297,190 258,718 257,480 259,924 249,124 Senior Notes due 2031 296,343 244,270 242,884 245,622 235,894 Senior Notes due 2031 667,233 659,624 655,870 663,292 649,347 Mortgage Notes Payable 45,136 44,251 44,196 44,305 69,058 Total Fixed Rate Debt $ 3,514,755 $ 3,428,426 $ 3,416,300 $ 3,440,243 $ 3,372,704 1 Balances are presented net of discounts and debt issuance costs and including premiums.
Biggest changeFAIR VALUE Dollars in thousands CARRYING VALUE as of Dec. 31, 2025 1 DEC. 31, 2025 1 ASSUMING 10% INCREASE in market interest rates ASSUMING 10% DECREASE in market interest rates DEC. 31, 2024 Fixed Rate Debt Senior Notes due 2025 $ — $ — $ — $ — $ 250,605 Senior Notes due 2026 595,026 606,164 605,811 606,493 595,052 Senior Notes due 2027 492,693 506,079 505,358 506,790 494,909 Senior Notes due 2028 298,653 300,739 300,160 301,308 290,349 Senior Notes due 2030 597,188 624,006 621,642 626,339 590,648 Senior Notes due 2030 297,610 274,335 273,254 275,389 258,718 Senior Notes due 2031 296,866 261,216 259,950 262,451 244,270 Senior Notes due 2031 685,873 707,455 704,018 710,818 659,624 Mortgage Notes Payable 28,824 28,766 28,751 28,782 44,251 Total Fixed Rate Debt $ 3,292,733 $ 3,308,760 $ 3,298,944 $ 3,318,370 $ 3,428,426 1 Balances are presented net of discounts and debt issuance costs and including premiums.
The fair value presented is based on Level 2 inputs defined as model-derived valuations in which significant inputs and significant value drivers are observable in active markets. 49
The fair value presented is based on Level 2 inputs defined as model-derived valuations in which significant inputs and significant value drivers are observable in active markets. 48
As of December 31, 2024 , $3.5 billion of the Company’s $4.7 billion carrying value of debt bore interest at fixed rates, excluding the interest rate swaps. The following table provides information regarding the sensitivity of certain of the Company’s financial instruments, as described above, to market conditions and changes resulting from changes in interest rates.
As of December 31, 2025 , $3.3 billion of the Company’s $3.9 billion carrying value of debt bore interest at fixed rates, excluding the interest rate swaps. The following table provides information regarding the sensitivity of certain of the Company’s financial instruments, as described above, to market conditions and changes resulting from changes in interest rates.
IMPACT ON EARNINGS AND CASH FLOW Dollars in thousands OUTSTANDING PRINCIPAL BALANCE as of Dec. 31, 2024 CALCULATED ANNUAL INTEREST ASSUMING 10% INCREASE in market interest rates ASSUMING 10% DECREASE in market interest rates Variable Rate Debt Unsecured Credit Facility $ — $ — $ — $ — Unsecured Term Loan due 2025 200,000 11,180 (1,118) 1,118 Unsecured Term Loan due 2025 300,000 16,770 (1,677) 1,677 Unsecured Term Loan due 2026 150,000 8,385 (839) 839 Unsecured Term Loan due 2027 200,000 11,180 (1,118) 1,118 Unsecured Term Loan due 2028 300,000 16,770 (1,677) 1,677 $ 1,150,000 $ 64,285 $ (6,429) $ 6,429 The Company has outstanding interest rate swaps to help mitigate its risk related to variable rate debt.
IMPACT ON EARNINGS AND CASH FLOW Dollars in thousands OUTSTANDING PRINCIPAL BALANCE as of Dec. 31, 2025 CALCULATED ANNUAL INTEREST ASSUMING 10% INCREASE in market interest rates ASSUMING 10% DECREASE in market interest rates Variable Rate Debt Unsecured Credit Facility $ 120,000 $ 4,524 $ (452) $ 452 Unsecured Term Loan due 2027 200,000 7,745 (775) 775 Unsecured Term Loan due 2028 300,000 11,618 (1,162) 1,162 $ 620,000 $ 23,887 $ (2,389) $ 2,389 The Company has outstanding interest rate swaps to help mitigate its risk related to variable rate debt.
As of December 31, 2024, the Company h ad $1.1 billion of interest rate swaps at a weighted average rate of 3.92% . See Note 11 to the Consolidated Financial Statements for more information regarding the Company's interest rate swaps.
As of December 31, 2025, the Company had $500.0 million o f interest rate swaps at a weighted average rate of 3.6 5%. See Note 10 to the Consolidated Financial Statements for more information regarding the Company's interest rate swaps.

Other HR 10-K year-over-year comparisons