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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 10-Q
(Mark One)

☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to

Commission File Number: 001-35568 (Healthcare Realty Trust Incorporated)

HEALTHCARE REALTY TRUST INCORPORATED
(Exact name of Registrant as specified in its charter) 
Maryland20-4738467
(State or other jurisdiction of Incorporation or organization)(I.R.S. Employer Identification No.)
3310 West End Avenue, Suite 700
Nashville, Tennessee 37203
(Address of principal executive offices)
(615) 269-8175
(Registrant's telephone number, including area code)
www.healthcarerealty.com
(Internet address)

Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Class A Common Stock, $0.01 par value per shareHRNew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  

☒ Yes☐No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    

☒ Yes☐No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☒ Large accelerated filer ☐Accelerated filer ☐Non-accelerated filer
☐Smaller reporting company ☐Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐Yes☒No





As of July 26, 2024, the Registrant had 363,030,249 shares of Common Stock outstanding.



HEALTHCARE REALTY TRUST INCORPORATED
FORM 10-Q
June 30, 2024


    Table of Contents
     

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Healthcare Realty Trust Incorporated
Condensed Consolidated Balance Sheets
Amounts in thousands, except per share data
ASSETS
Unaudited
JUNE 30, 2024
DECEMBER 31, 2023
Real estate properties
Land$1,287,532 $1,343,265 
Buildings and improvements10,436,218 10,881,373 
Lease intangibles764,730 836,302 
Personal property12,501 12,718 
Investment in financing receivable, net122,413 122,602 
Financing lease right-of-use assets81,401 82,209 
Construction in progress97,732 60,727 
Land held for development59,871 59,871 
Total real estate properties12,862,398 13,399,067 
Less accumulated depreciation and amortization(2,427,709)(2,226,853)
Total real estate properties, net10,434,689 11,172,214 
Cash and cash equivalents41,765 25,699 
Assets held for sale, net34,530 8,834 
Operating lease right-of-use assets261,976 275,975 
Investments in unconsolidated joint ventures374,841 311,511 
Goodwill— 250,530 
Other assets, net655,826 592,368 
Total assets$11,803,627 $12,637,131 
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Notes and bonds payable$5,148,153 $4,994,859 
Accounts payable and accrued liabilities195,884 211,994 
Liabilities of assets held for sale1,805 295 
Operating lease liabilities230,601 229,714 
Financing lease liabilities75,199 74,503 
Other liabilities177,293 202,984 
Total liabilities5,828,935 5,714,349 
Commitments and contingencies
Redeemable non-controlling interests3,875 3,868 
Stockholders' equity
Preferred stock, $.01 par value per share; 200,000 shares authorized; none issued and outstanding
— — 
Class A Common stock, $.01 par value per share; 1,000,000 shares authorized; 364,327 and 380,964 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively
3,643 3,810 
Additional paid-in capital9,340,028 9,602,592 
Accumulated other comprehensive income (loss)6,986 (10,741)
Cumulative net income attributable to common stockholders574,178 1,028,794 
Cumulative dividends(4,037,693)(3,801,793)
Total stockholders' equity5,887,142 6,822,662 
Non-controlling interest83,675 96,252 
Total equity5,970,817 6,918,914 
Total liabilities and equity$11,803,627 $12,637,131 
The accompanying notes, together with the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, are an integral part of these financial statements.


1

Healthcare Realty Trust Incorporated
Condensed Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 2024 and 2023
Amounts in thousands, except per share data
Unaudited
THREE MONTHS ENDED
June 30,		SIX MONTHS ENDED
June 30,
2024202320242023
Revenues
Rental income$308,135 $329,680 $626,211 $653,773 
Interest income3,865 4,233 8,403 8,448 
Other operating4,322 4,230 8,513 8,847 
316,322 338,143 643,127 671,068 
Expenses
Property operating117,719 125,395 238,798 247,436 
General and administrative14,002 15,464 28,788 30,399 
Transaction costs431 669 826 956 
Merger-related costs— (15,670)— (10,815)
Depreciation and amortization173,477 183,193 351,596 367,671 
305,629 309,051 620,008 635,647 
Other income (expense)
Gain on sales of real estate properties and other assets38,338 7,156 38,360 8,162 
Interest expense(62,457)(65,334)(123,510)(129,092)
Impairment of real estate properties and credit loss reserves(132,118)(55,215)(148,055)(86,637)
Impairment of goodwill— — (250,530)— 
Equity loss from unconsolidated joint ventures(146)(17)(568)(797)
Interest and other (expense) income, net(248)592 27 1,139 
(156,631)(112,818)(484,276)(207,225)
Net loss $(145,938)$(83,726)$(461,157)$(171,804)
Net loss attributable to non-controlling interests2,158 967 6,541 1,920 
Net loss attributable to common stockholders$(143,780)$(82,759)$(454,616)$(169,884)
Basic earnings per common share $(0.39)$(0.22)$(1.22)$(0.45)
Diluted earnings per common share $(0.39)$(0.22)$(1.22)$(0.45)
Weighted average common shares outstanding - basic372,477 378,897 375,962 378,861 
Weighted average common shares outstanding - diluted372,477 378,897 375,962 378,861 

The accompanying notes, together with the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, are an integral part of these financial statements.


2

Healthcare Realty Trust Incorporated
Condensed Consolidated Statements of Comprehensive Loss
For the Three and Six Months Ended June 30, 2024 and 2023
Amounts in thousands
Unaudited
THREE MONTHS ENDED
 June 30,		SIX MONTHS ENDED
June 30,
2024202320242023
Net loss $(145,938)$(83,726)$(461,157)$(171,804)
Other comprehensive income
Interest rate derivatives
Reclassification adjustments for gains included in interest expense(3,662)(3,419)(7,528)(5,703)
Gains arising during the period on interest rate swaps5,891 21,523 25,501 12,981 
2,229 18,104 17,973 7,278 
Comprehensive loss (143,709)(65,622)(443,184)(164,526)
Less: comprehensive loss attributable to non-controlling interests2,124 745 6,295 1,830 
Comprehensive loss attributable to common stockholders$(141,585)$(64,877)$(436,889)$(162,696)
The accompanying notes, together with the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, are an integral part of these financial statements.


3

Healthcare Realty Trust Incorporated
Condensed Consolidated Statements of Equity and Redeemable Non-Controlling Interests
For the Three Months Ended June 30, 2024 and 2023
Amounts in thousands, except per share data
Unaudited
Common
Stock		Additional
Paid-In
Capital		Accumulated
Other
Comprehensive
Income (Loss)		Cumulative
Net Income 		Cumulative
Dividends		Total
Stockholders’
Equity		Non-controlling InterestsTotal
Equity		Redeemable Non-controlling Interests
Balance at March 31, 2024$3,815 $9,609,530 $4,791 $717,958 $(3,920,199)$6,415,895 $87,243 $6,503,138 $3,880 
Common stock redemptions— (3)— — — (3)— (3)— 
Share-based compensation— 3,382 — — — 3,382 — 3,382 — 
Common stock repurchases(172)(272,881)— — — (273,053)— (273,053)— 
Net loss— — — (143,780)— (143,780)(2,158)(145,938)— 
Reclassification adjustments for gains included in net income (interest expense)
— — (3,611)— — (3,611)(51)(3,662)— 
Gains arising during the period on interest rate swaps
— — 5,806 — — 5,806 85 5,891 — 
Adjustments to redemption value of redeemable non-controlling interests— — — — — — — — (5)
Dividends to common stockholders and distributions to non-controlling interest holders ($0.31 per share)
— — — — (117,494)(117,494)(1,444)(118,938)— 
Balance at June 30, 2024$3,643 $9,340,028 $6,986 $574,178 $(4,037,693)$5,887,142 $83,675 $5,970,817 $3,875 
Common
Stock		Additional
Paid-In
Capital		Accumulated
Other
Comprehensive
Income (Loss)		Cumulative
Net Income		Cumulative
Dividends		Total
Stockholders’
Equity		Non-controlling InterestsTotal
Equity		Redeemable Non-controlling Interests
Balance at March 31, 2023$3,808 $9,591,194 $(8,554)$1,219,930 $(3,447,750)$7,358,628 $106,211 $7,464,839 $2,000 
Issuance of common stock, net of issuance costs— 27 — — — 27 — 27 — 
Common stock redemptions— (112)— — — (112)— (112)— 
Share-based compensation— 3,924 — — — 3,924 — 3,924 — 
Net loss— — — (82,759)— (82,759)(967)(83,726)— 
Reclassification adjustments for gains included in net income (interest expense)
— — (3,377)— — (3,377)(42)(3,419)— 
Gains arising during the period on interest rate swaps
— — 21,259 — — 21,259 264 21,523 — 
Contributions from redeemable non-controlling interests— — — — — — — — 487 
Dividends to common stockholders and distributions to non-controlling interest holders ($0.31 per share)
— — — — (118,191)(118,191)(1,448)(119,639)— 
Balance at June 30, 2023$3,808 $9,595,033 $9,328 $1,137,171 $(3,565,941)$7,179,399 $104,018 $7,283,417 $2,487 


The accompanying notes, together with the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, are an integral part of these financial statements.





4

Healthcare Realty Trust Incorporated
Condensed Consolidated Statements of Equity and Redeemable Non-Controlling Interests
For the Six Months Ended June 30, 2024 and 2023
Amounts in thousands, except per share data
Unaudited


Common
Stock		Additional
Paid-In
Capital		Accumulated
Other
Comprehensive
Income (Loss)		Cumulative
Net Income 		Cumulative
Dividends		Total
Stockholders’
Equity		Non-controlling InterestsTotal
Equity		Redeemable Non-controlling Interests
Balance at December 31, 2023$3,810 $9,602,592 $(10,741)$1,028,794 $(3,801,793)$6,822,662 $96,252 $6,918,914 $3,868 
Issuance of common stock, net of issuance costs— 104 — — — 104 — 104 — 
Common stock redemptions— (138)— — — (138)— (138)— 
Conversion of OP Units to common stock2 3,410 — — — 3,412 (3,412)— — 
Share-based compensation3 6,941 — — — 6,944 — 6,944 — 
Common stock repurchases(172)(272,881)— — — (273,053)— (273,053)— 
Net loss— — — (454,616)— (454,616)(6,541)(461,157)— 
Reclassification adjustments for gains included in net income (interest expense)
— — (7,424)— — (7,424)(104)(7,528)— 
Gains arising during the period on interest rate swaps
— — 25,151 — — 25,151 350 25,501 — 
Contributions from redeemable non-controlling interests— — — — — — — — 13 
Adjustments to redemption value of redeemable non-controlling interests— — — — — — — — (6)
Dividends to common stockholders and distributions to non-controlling interest holders (0.62 per share)
— — — — (235,900)(235,900)(2,870)(238,770)— 
Balance at June 30, 2024$3,643 $9,340,028 $6,986 $574,178 $(4,037,693)$5,887,142 $83,675 $5,970,817 $3,875 
Common
Stock		Additional
Paid-In
Capital		Accumulated
Other
Comprehensive
Income (Loss)		Cumulative
Net Income		Cumulative
Dividends		Total
Stockholders’
Equity		Non-controlling InterestsTotal
Equity		Redeemable Non-controlling Interests
Balance at December 31, 2022$3,806 $9,587,637 $2,140 $1,307,055 $(3,329,562)$7,571,076 $108,742 $7,679,818 $2,014 
Issuance of common stock, net of issuance costs— 78 — — — 78 — 78 — 
Common stock redemptions(1)(1,595)— — — (1,596)— (1,596)— 
Share-based compensation3 8,913 — — — 8,916 — 8,916 — 
Net loss— — — (169,884)— (169,884)(1,920)(171,804)— 
Reclassification adjustments for gains included in net income (interest expense)
— — (5,635)— — (5,635)(68)(5,703)— 
Gains arising during the period on interest rate swaps
— — 12,823 — — 12,823 158 12,981 — 
Contributions from redeemable non-controlling interests— — — — — — — — 473 
Dividends to common stockholders and distributions to non-controlling interest holders (0.62 per share)
— — — — (236,379)(236,379)(2,894)(239,273)— 
Balance at June 30, 2023$3,808 $9,595,033 $9,328 $1,137,171 $(3,565,941)$7,179,399 $104,018 $7,283,417 $2,487 

The accompanying notes, together with the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, are an integral part of these financial statements.



5

Healthcare Realty Trust Incorporated
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2024 and 2023
Amounts in thousands
Unaudited
OPERATING ACTIVITIES
SIX MONTHS ENDED
June 30,
20242023
Net loss$(461,157)$(171,804)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization351,596 367,671 
Other amortization23,390 23,405 
Share-based compensation6,944 8,916 
Amortization of straight-line rent receivable (lessor)(14,198)(19,313)
Amortization of straight-line rent on operating leases (lessee)1,998 3,062 
Gain on sales of real estate properties and other assets(38,360)(8,162)
Impairment of real estate properties and credit loss reserves148,055 86,637 
Impairment of goodwill250,530 — 
Equity loss from unconsolidated joint ventures 568 797 
Distributions from unconsolidated joint ventures2,649 3,031 
Non-cash interest from financing and notes receivable(478)(488)
Changes in operating assets and liabilities:
Other assets, including right-of-use-assets(4,257)(17,502)
Accounts payable and accrued liabilities(23,131)(38,601)
Other liabilities155 16,673 
Net cash provided by operating activities244,304 254,322 
INVESTING ACTIVITIES
Acquisitions of real estate— (39,301)
Development of real estate(31,901)(17,594)
Additional long-lived assets(117,775)(94,013)
Funding of mortgages and notes receivable(3,466)(11,503)
Investments in unconsolidated joint ventures— (3,824)
Investment in financing receivable475 (780)
Contributions from redeemable non-controlling interests13 — 
Proceeds from sales of real estate properties and additional long-lived assets303,475 160,870 
Proceeds from notes receivable repayments567 — 
Net cash provided by (used in) investing activities151,388 (6,145)
FINANCING ACTIVITIES
Net borrowings (repayments) on unsecured credit facility250,000 (31,000)
Repayment on term loan(100,000)— 
Repayments of notes and bonds payable(17,746)(1,340)
Dividends paid(235,618)(236,105)
Net proceeds from issuance of common stock104 77 
Common stock redemptions(321)(1,842)
Common stock repurchases(273,053)— 
Distributions to non-controlling interest holders(2,399)(2,546)
Debt issuance and assumption costs(563)(438)
Payments made on finance leases(30)(40)
Net cash used in financing activities(379,626)(273,234)
Increase (decrease) in cash and cash equivalents16,066 (25,057)
Cash and cash equivalents at beginning of period25,699 60,961 
Cash and cash equivalents at end of period$41,765 $35,904 


6

Supplemental Cash Flow InformationSIX MONTHS ENDED
JUNE 30,
20242023
Interest paid$103,708 $106,985 
Mortgage note receivables taken in connection with sale of real estate$— $45,000 
Invoices accrued for construction, tenant improvements and other capitalized costs$39,016 $30,956 
Capitalized interest$1,916 $1,282 
Proceeds from dispositions held in escrow$96,008 $— 
Contribution of real estate properties into unconsolidated joint venture$66,547 $— 


The accompanying notes, together with the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, are an integral part of these financial statements.


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Table of Contents
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies
Business Overview
Healthcare Realty Trust Incorporated (the "Company") is a 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. As of June 30, 2024, the Company had gross investments of approximately $12.9 billion in 629 consolidated real estate properties, construction in progress, redevelopments, financing receivables, financing lease right-of-use assets, land held for development and corporate property, excluding held for sale assets. In addition, as of June 30, 2024, the Company had a weighted average ownership interest of approximately 36% in 44 real estate properties held in unconsolidated joint ventures. See Note 2 below for more details regarding the Company's unconsolidated joint ventures. The Company's real estate properties are located in 35 states and total approximately 37.2 million square feet. The Company provided leasing and property management services to 92% of its portfolio nationwide as of June 30, 2024.
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”). 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”.
The Company is structured as an umbrella partnership REIT under which substantially all of its business is conducted through the OP, the day-to-day management of which is exclusively controlled by the Company. As of June 30, 2024, the Company owned 98.6% of the issued and outstanding units of the OP, with other investors owning the remaining 1.4% of the OP's issued and outstanding units.
Any references to square footage or occupancy percentage, and any amounts derived from these values in these notes to the Company's Condensed Consolidated Financial Statements, are outside the scope of our independent registered public accounting firm’s review.
Basis of Presentation
The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. All material intercompany transactions and balances have been eliminated in consolidation.
This interim financial information should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. In addition, the interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2024 for many reasons including, but not limited to, acquisitions, dispositions, capital financing transactions, changes in interest rates and the effects of other trends, risks and uncertainties.
Principles of Consolidation
The Company’s Condensed Consolidated Financial Statements include the accounts of the Company, its wholly owned subsidiaries, and joint ventures and partnerships where the Company controls the operating activities. GAAP requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). Accounting Standards Codification (“ASC”) Topic 810, Consolidation broadly defines a VIE as an entity in which either (i) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. The Company identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the


8


Table of Contents
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.
activities of the VIE that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity. The Company consolidates its investment in a VIE when it determines that it is the VIE’s primary beneficiary, with any minority interests reflected as non-controlling interests or redeemable non-controlling interests in the accompanying Condensed Consolidated Financial Statements.
The Company may change its original assessment of a VIE upon subsequent events, such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk, the disposition of all or a portion of an interest held by the primary beneficiary, or changes in facts and circumstances that impact the power to direct activities of the VIE that most significantly impacts economic performance. The Company performs this analysis on an ongoing basis.
For property holding entities not determined to be VIEs, the Company consolidates such entities in which it owns 100% of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest. All intercompany balances and transactions are eliminated in consolidation. For entities in which the Company owns less than 100% of the equity interest, the Company consolidates the entity if it has the direct or indirect ability to control the entities’ activities based upon the terms of the respective entities’ ownership agreements.
The OP is 98.6% owned by the Company. Other holders of operating partnership units (“OP Units”) are considered to be non-controlling interest holders in the OP and their ownership interests are reflected as equity on the accompanying Condensed Consolidated Balance Sheets. Further, a portion of the earnings and losses of the OP are allocated to non-controlling interest holders based on their respective ownership percentages. Upon conversion of OP Units to common stock, any difference between the fair value of the common stock issued and the carrying value of the OP Units converted to common stock is recorded as a component of equity. As of June 30, 2024, there were approximately 5.3 million OP Units, or 1.4% of OP Units issued and outstanding, held by non-controlling interest holders. Additionally, the Company is the primary beneficiary of this VIE. Accordingly, the Company consolidates its interests in the OP.
As of June 30, 2024, the Company had four consolidated VIEs, in addition to the OP, consisting of joint venture investments in which the Company is the primary beneficiary of the VIE based on the combination of operational control and the rights to receive residual returns or the obligation to absorb losses arising from the joint ventures. Accordingly, such joint ventures have been consolidated, and the table below summarizes the balance sheets of consolidated VIEs, excluding the OP, in the aggregate:
(dollars in thousands)JUNE 30, 2024
Assets:
Total real estate properties, net
$112,694 
Cash and cash equivalents3,205 
Other assets, net
2,556 
Total assets
$118,455 
Liabilities:
Accrued expenses and other liabilities
7,848 
Total liabilities
7,848 
Redeemable non-controlling interests
3,194 
Partners' equity
108,612 
Cumulative net loss
(1,199)
Total partners' equity
107,413 
Total liabilities and equity
$118,455 
As of June 30, 2024, the Company had three unconsolidated VIEs consisting of two notes receivables and one joint venture. The Company does not have the power or economic interests to direct the activities of these VIEs on a


9


Table of Contents
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.
stand-alone basis, and therefore it was determined that the Company was not the primary beneficiary. As a result, the Company accounts for the two notes receivables as amortized cost and a joint venture arrangement under the equity method. See below for additional information regarding the Company's unconsolidated VIEs.
(dollars in thousands) ORIGINATION DATELOCATIONSOURCECARRYING AMOUNT MAXIMUM EXPOSURE TO LOSS
2021
Houston, TX 1
Note receivable$20,500 $20,500 
2021
Charlotte, NC 1
Note receivable7,111 7,211 
2022
Texas 2
Joint venture59,239 59,239 
1Assumed mortgage note receivable in connection with the Merger.
2Includes investments in seven properties.

As of June 30, 2024, the Company's unconsolidated joint venture arrangements were accounted for using the equity method of accounting as the Company exercised significant influence over but did not control these entities. See Note 2 below for more details regarding the Company's unconsolidated joint ventures.
Use of Estimates in the Condensed Consolidated Financial Statements
Preparation of the Condensed Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates.                                                     
Redeemable Non-Controlling Interests
The Company accounts for redeemable equity securities in accordance with ASC Topic 480: Accounting for Redeemable Equity Instruments, which requires that equity securities redeemable at the option of the holder, not solely within our control, be classified outside permanent stockholders’ equity. The Company classifies redeemable equity securities as redeemable non-controlling interests in the accompanying Condensed Consolidated Balance Sheets. Accordingly, the Company records the carrying amount at the greater of the initial carrying amount (increased or decreased for the non-controlling interest’s share of net income or loss and distributions) or the redemption value. We measure the redemption value and record an adjustment to the carrying value of the equity securities as a component of redeemable non-controlling interest. As of June 30, 2024, the Company had redeemable non-controlling interests of $3.9 million.
Asset Impairment
The Company assesses the potential for impairment of identifiable, definite-lived, intangible assets and long-lived assets, including real estate properties, whenever the occurrence of an event or a change in circumstances indicates that the carrying value might not be fully recoverable. Indicators of impairment may include significant underperformance of an asset relative to historical or expected operating results; significant changes in the Company’s use of assets or the strategy for its overall business; plans to sell an asset before its depreciable life has ended; the expiration of a significant portion of leases in a property; or significant negative economic trends or negative industry trends for the Company or its tenants. During the three and six months ended June 30, 2024, the Company recognized real estate impairments totaling $120.9 million and $136.9 million, respectively, as a result of completed and planned disposition activity.
As of June 30, 2024, 16 real estate properties totaling $265.6 million were measured at fair value using level 3 fair value hierarchy. The level 3 fair value techniques included brokerage estimates, letters of intent, and unexecuted purchase and sale agreements, less estimated closing costs.
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. The Company's current operations are carried out through a single reporting unit with 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. The Company recorded a $250.5 million full impairment of its goodwill, which is recorded as a non-cash charge in “Impairment of goodwill” in the Condensed Consolidated Statements of Operations.


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Table of Contents
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.
Investments in Leases - Financing Receivables, Net
In accordance with ASC Topic 842: Leases, for transactions in which the Company enters into a contract to acquire an asset and leases it back to the seller (i.e., a sale leaseback transaction), control of the asset is not considered to have transferred when the seller-lessee has a purchase option. As a result, the Company does not recognize the underlying real estate asset but instead recognizes a financial asset in accordance with ASC Topic 310: Receivables. See below for additional information regarding the Company's financing receivables.
(dollars in thousands) ORIGINATION DATELOCATIONINTEREST RATECARRYING VALUE as of JUNE 30, 2024
May 2021Poway, CA5.72%$115,056 
November 2021Columbus, OH6.48%7,357 
$122,413 

Real Estate Notes Receivable
Real estate notes receivable consists of mezzanine and other real estate loans, which are generally collateralized by a pledge of the borrower’s ownership interest in the respective real estate owner, a mortgage or deed of trust, and/or corporate guarantees. Real estate notes receivable are intended to be held to maturity and are recorded at amortized cost, net of unamortized loan origination costs and fees and allowance for credit losses. As of June 30, 2024, real estate notes receivable, net, which are included in Other assets on the Company's Condensed Consolidated Balance Sheets, totaled $168.8 million.
(dollars in thousands)ORIGINATIONMATURITYSTATED INTEREST RATEMAXIMUM LOAN COMMITMENTOUTSTANDING as of
JUN 30, 2024		INTEREST RECEIVABLE (OTHER ASSETS)ALLOWANCE FOR CREDIT LOSSESFAIR VALUE DISCOUNT AND FEESCARRYING VALUE as of JUNE 30, 2024
Mezzanine loans
Texas 1
6/24/20216/24/20248.00 %$54,119 $54,119 $906 $(5,196)$(3,067)$46,762 
Arizona12/21/202312/20/20269.00 %6,000 6,000 36 — — 6,036 
60,119 60,119 942 (5,196)(3,067)52,798 
Mortgage loans
Texas 2
6/30/202112/02/20247.00 %31,150 31,150 551 (11,201)— 20,500 
North Carolina 3
12/22/202112/22/20248.00 %6,000 6,000 1,211 — (100)7,111 
Florida5/17/20222/27/20266.00 %65,000 35,623 532 — (34)36,121 
California3/30/20233/29/20266.00 %45,000 45,000 178 — — 45,178 
Florida12/28/202312/28/20269.00 %7,700 7,133 — — — 7,133 
154,850 124,906 2,472 (11,201)(134)116,043 
$214,969 $185,025 $3,414 $(16,397)$(3,201)$168,841 
1As of the date of these financial statements, the outstanding principal and interest on these loans had not been repaid, and on July 15, 2024, the senior lender on the construction loans associated with the underlying projects provided notice of foreclosure proceedings to the borrower. The borrower is in negotiations with a third party to provide financing that will repay the senior lender.
2During the second quarter of 2024, the Company determined that an allowance for credit loss of $11.2 million was needed on this mortgage loan. The reserve amount consists of approximately $10.7 million of principal and approximately $0.5 million of interest. Additionally, the maturity date on this mortgage loan was extended to December 2, 2024.
3Outstanding principal and interest due upon maturity.


Allowance for Credit Losses
Pursuant to ASC Topic 326: Financial Instruments - Credit Losses, the Company adopted a policy to evaluate current expected credit losses at the inception of loans qualifying for treatment under ASC Topic 326. The Company utilizes a probability of default method approach for estimating current expected credit losses and evaluates the liquidity and creditworthiness of its borrowers on a quarterly basis to determine whether any updates to the future expected losses recognized upon inception are necessary. The Company’s evaluation considers industry and economic conditions, credit enhancements, liquidity, and other factors. The determination of the credit allowance is based on a quarterly


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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.
evaluation of all outstanding loans, including general economic conditions and estimated collectability of loan payments. The Company evaluates the collectability of loan receivables based on a combination of credit quality indicators, including, but not limited to, payment status, historical loan charge-offs, financial strength of the borrower and guarantors, and nature, extent, and value of the underlying collateral. A loan is considered to have deteriorated credit quality when, based on current information and events, it is probable that the Company will be unable to collect all amounts due as scheduled according to the contractual terms of the loan agreement. For those loans identified as having deteriorated credit quality, the amount of credit loss is determined on an individual basis. Placement on non-accrual status may be required. Consistent with this definition, all loans on non-accrual status are deemed to have deteriorated credit quality. To the extent circumstances improve and the risk of collectability is diminished, the loan may return to income accrual status. While a loan is on non-accrual status, any cash receipts are applied against the outstanding principal balance.
During the first quarter of 2023, the Company determined that the risk of credit loss on two of its mezzanine loans were no longer remote and recorded a credit loss reserve of $5.2 million. During the three and six months ended June 30, 2024, the Company determined that the risk of credit loss on one of its mortgage note receivables was no longer remote and recorded a credit loss reserve of $11.2 million. The Company utilized the level 3 fair value hierarchy, which included a brokerage estimate on the underlying collateral of the loan, to determine the amount of credit loss reserve.
The following table summarizes the Company's allowance for credit losses on real estate notes receivable:
Dollars in thousandsSIX MONTHS ENDED JUNE 30, 2024TWELVE MONTHS ENDED DECEMBER 31, 2023
Allowance for credit losses, beginning of period$5,196 $— 
Credit loss reserves11,201 5,196 
Allowance for credit losses, end of period$16,397 $5,196 
Interest Income
Income from Lease Financing Receivables
The Company recognized the related income from two financing receivables totaling $2.1 million and $4.2 million, respectively, for the three and six months ended June 30, 2024, and $2.1 million and $4.2 million, respectively, for the three and six months ended June 30, 2023, based on an imputed interest rate over the terms of the applicable lease. As a result, the interest recognized from the financing receivable in any particular period will not equal the cash payments from the lease agreement in that period.
Acquisition costs incurred in connection with entering into the financing receivable are treated as loan origination fees. These costs are classified with the financing receivable and are included in the balance of the net investment. Amortization of these amounts will be recognized as a reduction to Interest income over the life of the lease.
Income from Real Estate Notes Receivable
The Company recognized interest income related to real estate notes receivable of $1.8 million and $4.2 million, respectively, for the three and six months ended June 30, 2024, and $2.2 million and $4.3 million, respectively, for the three and six months ended June 30, 2023. The Company recognizes interest income on an accrual basis unless the Company has determined that collectability of contractual amounts is not reasonably assured, at which point the note is placed on non-accrual status and interest income is recognized on a cash basis. In 2023, the Company placed two of its real estate notes receivable with principal balances, net of credit loss, of $48.9 million on non-accrual status and accordingly did not recognize any interest income for the three and six month periods ended June 30, 2024. In 2024, the Company placed one of its real estate notes receivable with a principal balance, net of credit loss, of $20.5 million on non-accrual status.
Revenue from Contracts with Customers (ASC Topic 606)
The Company recognizes certain revenue under the core principle of ASC Topic 606. This topic requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Lease revenue is not within the scope of ASC Topic 606. To achieve the core principle, the Company applies the five-step model specified in the guidance.


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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.
Revenue that is accounted for under ASC Topic 606 is segregated on the Company’s Condensed Consolidated Statements of Operations in the Other operating line item. This line item includes parking income, management fee income and other miscellaneous income. Below is a detail of the amounts by category:
THREE MONTHS ENDED
June 30,		SIX MONTHS ENDED
June 30,
in thousands2024202320242023
Type of Revenue
Parking income$2,463 $2,370 $5,009 $4,761 
Management fee income/other 1
1,859 1,860 3,504 4,086 
$4,322 $4,230 $8,513 $8,847 
1 Includes the recovery of certain expenses under the financing receivable as outlined in the management agreement.

The Company’s major types of revenue that are accounted for under Topic 606 that are listed above are all accounted for as the performance obligation is satisfied. The performance obligations that are identified for each of these items are satisfied over time, and the Company recognizes revenue monthly based on this principle.
New Accounting Pronouncements
On November 27, 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, Segment Reporting (Topic 280). Some of the main provisions of this update to segment reporting include; (i) a requirement to disclose significant segment expenses, on an annual and interim basis, that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss; (ii) a requirement to disclose the title and position of the CODM and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources, and (iii) a requirement that an entity that has a single reportable segment provide all the disclosures required by the amendments in this update.
The update is effective for annual reporting periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024. Early adoption is permitted. At this time, the Company does not expect that the adoption of this ASU will have a material impact on its consolidated financial statements other than compliance with these new disclosure requirements, which will begin with the Company's Annual Report on Form 10-K for the year ending December 31, 2024.
Note 2. Real Estate Investments
2024 Acquisition Activity
The Company had no real estate acquisition activity for the six months ended June 30, 2024.

Unconsolidated Joint Ventures
The Company's investment in and loss recognized for the three and six months ended June 30, 2024 and 2023 related to its unconsolidated joint ventures accounted for under the equity method are shown in the table below:
THREE MONTHS ENDED
June 30,		SIX MONTHS ENDED
June 30,
Dollars in thousands2024202320242023
Investments in unconsolidated joint ventures, beginning of period $309,754 $327,746 $311,511 $327,248 
New investment during the period 1
66,547 — 66,547 3,824 
Equity loss recognized during the period (146)(17)(568)(797)
Owner distributions(1,314)(484)(2,649)(3,030)
Investments in unconsolidated joint ventures, end of period $374,841 $327,245 $374,841 $327,245 
1In the second quarter of 2024, the Company contributed 11 properties into a new joint venture in which it retained a 20% ownership interest. See 2024 "Real Estate Asset Dispositions" below for additional information. In 2023, there was an additional investment in an existing joint venture in which the Company retained a 40% ownership interest. The investment consisted of the Company's contribution of a property in Dallas, Texas to the joint venture.


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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.
2024 Real Estate Asset Dispositions
The following table details the Company's dispositions and joint venture contributions for the six months ended June 30, 2024.
Dollars in thousandsDATE DISPOSEDSALE PRICECLOSING ADJUSTMENTSNET PROCEEDSNET REAL ESTATE INVESTMENTOTHER (INCLUDING RECEIVABLES) GAIN/(IMPAIRMENT)SQUARE FOOTAGE
Albany, NY4/1/24$725 $(60)$665 $765 $(82)$(18)14,800 
San Angelo, TX4/12/245,085 (128)4,957 4,917 66 (26)24,580 
Houston, TX5/20/24250 (9)241 713 (520)48 37,040 
Multiple 1
5/23/24284,348 (14,270)270,078 254,176 25,836 (9,934)556,274 
Denver, CO5/30/2419,000 (628)18,372 18,522 165 (315)37,130 
Austin, TX 1
6/6/2454,858 (1,575)53,283 27,964 623 24,696 129,879 
Minneapolis, MN6/21/241,082 (144)938 303 43 592 50,291 
Greensboro/Raleigh, NC 2, 3
6/28/2499,518 (2,835)96,683 86,810 906 8,967 309,424 
Total dispositions$464,866 $(19,649)$445,217 $394,170 $27,037 $24,010 1,159,418 
1The Company contributed the following medical outpatient properties to a joint venture in which the Company retained 20% ownership: one in each of Raleigh, NC, New York, NY, Philadelphia, PA, Atlanta, GA and Austin, TX; two medical outpatient properties in Los Angeles and four in Seattle, WA. Sale price and square footage reflect the total sale price paid by the joint venture and total square footage of the property. The net proceeds to the Company related to these dispositions totaled $256.8 million.
2The Company sold seven medical outpatient properties in Greensboro, NC and two medical outpatient properties in Raleigh, NC to a single buyer in a single transaction.
3The amount in the net proceeds column for this portfolio disposition includes the receivable for the cash held in escrow that closed on June 28, 2024 and was received by the Company on July 1, 2024. These proceeds were recorded as a receivable in other assets, net as of June 30, 2024.
Assets Held for Sale
The Company had three properties classified as assets held for sale as of June 30, 2024 and one property classified as assets held for sale as of December 31, 2023. The table below reflects the assets and liabilities classified as held for sale as of June 30, 2024 and December 31, 2023:
Dollars in thousandsJune 30, 2024December 31, 2023
Balance Sheet data:
Land$2,330 $1,850 
Building and improvements43,342 6,779 
Lease intangibles1,017 1,017 
46,689 9,646 
Accumulated depreciation(13,600)(913)
Real estate assets held for sale, net 33,089 8,733 
Cash and cash equivalents— — 
Operating lease right-of-use assets850 — 
Other assets, net591 101 
Assets held for sale, net$34,530 $8,834 
Accounts payable and accrued liabilities$531 $23 
Operating lease liabilities589 — 
Other liabilities685 272 
Liabilities of assets held for sale$1,805 $295 

Note 3. Leases
Lessor Accounting
The Company’s properties generally are leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through 2052. Some leases provide tenants with fixed rent renewal terms while others have market rent renewal terms. Some leases provide the lessee, during the term of the lease, with an option or right of first refusal to purchase the leased property. The Company’s single-tenant net leases generally require the lessee to pay


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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.
minimum rent and all taxes (including property tax), insurance, maintenance and other operating costs associated with the leased property.
The Company's leases typically have escalators that are either based on a stated percentage or an index such as the Consumer Price Index ("CPI"). In addition, most of the Company's leases include nonlease components, such as reimbursement of operating expenses as additional rent, or include the reimbursement of expected operating expenses as part of the lease payment. The Company adopted an accounting policy to combine lease and nonlease components. Rent escalators based on indices and reimbursements of operating expenses that are not included in the lease rate are considered variable lease payments. Variable payments are recognized in the period earned. Lease income for the Company's operating leases recognized for the three and six months ended June 30, 2024 was $308.1 million and $626.2 million, respectively. Lease income for the Company's operating leases recognized for the three and six months ended June 30, 2023 was $329.7 million and $653.8 million, respectively.
Future lease payments under the non-cancelable operating leases, excluding any reimbursements and one sale-type lease, as of June 30, 2024 were as follows:
Dollars in thousandsOPERATING
2024$441,170 
2025827,950 
2026734,851 
2027614,428 
2028500,591 
2029 and thereafter1,629,794 
$4,748,784 
Lessee Accounting
As of June 30, 2024, the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. As of June 30, 2024, the Company had 221 properties totaling 16.5 million square feet that were held under ground leases. Some of the Company's ground lease renewal terms are based on fixed rent renewal terms, and others have market rent renewal terms. These ground leases typically have initial terms of 40 to 99 years with expiration dates through 2119. Any rental increases related to the Company’s ground leases are generally stated in the lease or based on CPI. The Company had 73 prepaid ground leases as of June 30, 2024. The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $0.5 million and $0.3 million of the Company's rental expense for the three months ended June 30, 2024 and 2023, respectively, and $0.9 million and $0.7 million for the six months ended June 30, 2024 and 2023, respectively.
The Company’s future lease payments (primarily for its 148 non-prepaid ground leases) as of June 30, 2024 were as follows:
Dollars in thousandsOPERATINGFINANCING
2024$5,912 $1,013 
202512,644 2,218 
202612,739 2,255 
202712,934 2,294 
202813,061 2,326 
2029 and thereafter693,556 394,072 
Total undiscounted lease payments750,846 404,178 
Discount(520,245)(328,979)
Lease liabilities$230,601 $75,199 


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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.
The following table provides details of the Company's total lease expense for the three and six months ended June 30, 2024 and 2023:
THREE MONTHS ENDED
June 30,		SIX MONTHS ENDED
June 30,
Dollars in thousands2024202320242023
Operating lease cost
Operating lease expense$4,599 $5,329 $9,065 $10,436 
Variable lease expense1,315 2,235 2,542 4,371 
Finance lease cost
Amortization of right-of-use assets392 387 779 774 
Interest on lease liabilities942 923 1,880 1,841 
Total lease expense$7,248 $8,874 $14,266 $17,422 
Other information
Operating cash flows outflows related to operating leases$4,889 $5,230 $8,929 $11,190 
Operating cash flows outflows related to financing leases$591 $541 $1,154 $1,094 
Financing cash flows outflows related to financing leases$4 $6 $30 $17 
Right-of-use assets obtained in exchange for new operating lease liabilities$2,561 $— $2,561 $— 
Weighted-average years remaining lease term (excluding renewal options) - operating leases45.947.3
Weighted-average years remaining lease term (excluding renewal options) - finance leases57.458.4
Weighted-average discount rate - operating leases5.7 %5.8 %
Weighted-average discount rate - finance leases5.0 %5.0 %

Note 4. Notes and Bonds Payable
The table below details the Company’s notes and bonds payable as of June 30, 2024 and December 31, 2023. 
 MATURITY DATE
BALANCE 1 AS OF
EFFECTIVE INTEREST RATE
as of 6/30/2024
Dollars in thousands6/30/202412/31/2023
$1.5 billion Unsecured Credit Facility 2
10/25$250,000 $— 6.28 %
$200 million Unsecured Term Loan 3
5/25199,750 199,903 6.37 %
$250 million Unsecured Term Loan 4
7/25249,659 349,798 6.37 %
$300 million Unsecured Term Loan
10/25299,970 299,958 6.37 %
$150 million Unsecured Term Loan
6/26149,716 149,643 6.37 %
$200 million Unsecured Term Loan
7/27199,571 199,502 6.37 %
$300 million Unsecured Term Loan
1/28298,498 298,288 6.37 %
Senior Notes due 20255/25249,674 249,484 4.12 %
Senior Notes due 2026
8/26582,873 579,017 4.94 %
Senior Notes due 2027 7/27485,889 483,727 4.76 %
Senior Notes due 20281/28297,726 297,429 3.85 %
Senior Notes due 2030 2/30580,667 575,443 5.30 %
Senior Notes due 20303/30296,983 296,780 2.72 %
Senior Notes due 2031 3/31296,086 295,832 2.25 %
Senior Notes due 2031 3/31658,263 649,521 5.13 %
Mortgage notes payable
9/24-12/2652,828 70,534 
3.57% - 6.88%
$5,148,153 $4,994,859 
1Balance is presented net of discounts and issuance costs and inclusive of premiums, where applicable.
2As of June 30, 2024, the Company had $1.3 billion available to be drawn on its $1.5 billion Unsecured Credit Facility.


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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.
3In April 2024, the Company exercised its option to extend the maturity date for one year to May 2025 for a fee of approximately $0.3 million.
4In June 2024, the Company repaid $100 million of the initial $350 million Unsecured Term Loan and exercised its second option to extend the maturity date for one year to July 2025 for a fee of approximately $0.3 million.

Changes in Debt Structure
On January 6, 2024, the Company repaid in full at maturity a mortgage note payable bearing interest at a rate of 4.77% per annum with an outstanding principal balance of $11.3 million. The mortgage note encumbered a 63,012 square foot property in California.
On February 1, 2024, the Company repaid in full at maturity a mortgage note payable bearing interest at a rate of 4.12% per annum with an outstanding principal balance of $5.6 million. The mortgage note encumbered a 40,324 square foot property in Georgia.
Note 5. Derivative Financial Instruments
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings.
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.
For derivatives designated, and that qualify, as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income (Loss) ("AOCI") and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.
As of June 30, 2024, the Company had 15 outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:
AMOUNTWEIGHTED
AVERAGE RATE
May 2026$275,000 3.74 %
June 2026150,000 3.83 %
December 2026150,000 3.84 %
June 2027200,000 4.27 %
December 2027300,000 3.93 %
$1,075,000 3.92 %


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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.
Tabular Disclosure of Fair Values of Derivative Instruments on the Balance Sheet
The table below presents the fair value of the Company's derivative financial instruments and their classification on the Condensed Consolidated Balance Sheet as of June 30, 2024.
BALANCE AT JUNE 30, 2024
In thousandsBALANCE SHEET LOCATIONFAIR VALUE
Derivatives designated as hedging instruments
Interest rate swapsOther liabilities$(1,839)
Interest rate swapsOther assets$11,538 
Total derivatives designated as hedging instruments$9,699 

Tabular Disclosure of the Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss)
The table below presents the effect of cash flow hedge accounting on AOCI during the three and six months ended June 30, 2024 and 2023 related to the Company's outstanding interest rate swaps.
(GAIN)/LOSS RECOGNIZED IN
AOCI ON DERIVATIVE
three months ended June 30,		(GAIN)/LOSS RECLASSIFIED FROM
AOCI INTO INCOME
three months ended June 30,
In thousands2024202320242023
Interest rate swaps$(5,891)$(21,523)Interest expense$(3,811)$(3,568)
Settled treasury hedges— — Interest expense