Quarterly Report (10-q)

(Healthcare Trust of America, Inc.)

(Healthcare Trust of America Holdings, LP)

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________

FORM 10-Q



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019



☐	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 Trust of America, Inc.)

Commission File Number: 333-190916 (Healthcare Trust of America Holdings, LP)

_________________________

HEALTHCARE TRUST OF AMERICA, INC.

HEALTHCARE TRUST OF AMERICA HOLDINGS, LP

(Exact name of registrant as specified in its charter)



16435 N. Scottsdale Road, Suite 320,	Scottsdale,	Arizona	85254		(480)	998-3478
(Address of Principal Executive Office and Zip Code)				(Registrant’s telephone number, including area code)
				(Registrant’s telephone number, including area code)

www.htareit.com

(Internet address)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	HTA	New 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.



Healthcare Trust of America, Inc.	☒	Yes	¨ No
Healthcare Trust of America Holdings, LP	☒	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).



Healthcare Trust of America, Inc.	☒	Yes	¨ No
Healthcare Trust of America Holdings, LP	☒	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.



Healthcare Trust of America, Inc.	☒	Large accelerated filer	☐	Accelerated filer	☐	Non-accelerated filer
Healthcare Trust of America Holdings, LP	☐	Large accelerated filer	☐	Accelerated filer	☒	Non-accelerated filer



Healthcare Trust of America, Inc.	☐	Smaller reporting company	☐	Emerging growth company
Healthcare Trust of America Holdings, LP	☐	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.



Healthcare Trust of America, Inc.	☐
Healthcare Trust of America Holdings, LP	☐

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



Healthcare Trust of America, Inc.	☐	Yes	x No
Healthcare Trust of America Holdings, LP	☐	Yes	x No

As of October 21, 2019, there were 207,185,978 shares of Class A common stock of Healthcare Trust of America, Inc. outstanding.

Explanatory Note

This quarterly report combines the Quarterly Reports on Form 10-Q (“Quarterly Report”) for the quarter ended September 30, 2019, of Healthcare Trust of America, Inc. (“HTA”), a Maryland corporation, and Healthcare Trust of America Holdings, LP (“HTALP”), a Delaware limited partnership. Unless otherwise indicated or unless the context requires otherwise, all references in this Quarterly Report to “we,” “us,” “our,” “the Company” or “our Company” refer to HTA and HTALP, collectively, and all references to “common stock” shall refer to the Class A common stock of HTA.

HTA operates as a real estate investment trust (“REIT”) and is the general partner of HTALP. As of September 30, 2019, HTA owned a 98.1% partnership interest in HTALP, and other limited partners, including some of HTA’s directors, executive officers and their affiliates, owned the remaining partnership interest (including the long-term incentive plan (“LTIP” Units)) in HTALP. As the sole general partner of HTALP, HTA has the full, exclusive and complete responsibility for HTALP’s day-to-day management and control, including its compliance with the Securities and Exchange Commission (“SEC”) filing requirements.

We believe it is important to understand the few differences between HTA and HTALP in the context of how we operate as an integrated consolidated company. HTA operates as an umbrella partnership REIT structure in which HTALP and its subsidiaries hold substantially all of the assets. HTA’s only material asset is its ownership of partnership interests of HTALP. As a result, HTA does not conduct business itself, other than acting as the sole general partner of HTALP, issuing public equity from time to time and guaranteeing certain debts of HTALP. HTALP conducts the operations of the business and issues publicly-traded debt, but has no publicly-traded equity. Except for net proceeds from public equity issuances by HTA, which are generally contributed to HTALP in exchange for partnership units of HTALP, HTALP generates the capital required for the business through its operations and by direct or indirect incurrence of indebtedness or through the issuance of its partnership units (“OP Units”).

Noncontrolling interests, stockholders’ equity and partners’ capital are the primary areas of difference between the condensed consolidated financial statements of HTA and HTALP. Limited partnership units in HTALP are accounted for as partners’ capital in HTALP’s condensed consolidated balance sheets and as a noncontrolling interest reflected within equity in HTA’s condensed consolidated balance sheets. The differences between HTA’s stockholders’ equity and HTALP’s partners’ capital are due to the differences in the equity issued by HTA and HTALP, respectively.

We believe combining the Quarterly Reports of HTA and HTALP, including the notes to the condensed consolidated financial statements, into this single Quarterly Report results in the following benefits:


•	enhances stockholders’ understanding of HTA and HTALP by enabling stockholders to view the business as a whole in the same manner that management views and operates the business;


•	eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure in this Quarterly Report applies to both HTA and HTALP; and


•	creates time and cost efficiencies through the preparation of a single combined Quarterly Report instead of two separate Quarterly Reports.

In order to highlight the material differences between HTA and HTALP, this Quarterly Report includes sections that separately present and discuss areas that are materially different between HTA and HTALP, including:


•	the condensed consolidated financial statements;


•	certain accompanying notes to the condensed consolidated financial statements, including Note 8 - Debt, Note 12 - Stockholders’ Equity and Partners’ Capital, Note 14 - Per Share Data of HTA, and Note 15 - Per Unit Data of HTALP;


•	as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), the Funds From Operations (“FFO”) and Normalized FFO in Part 1, Item 2 of this Quarterly Report;


•	the Controls and Procedures in Part 1, Item 4 of this Quarterly Report; and


•	the Certifications of the Chief Executive Officer and the Chief Financial Officer included as Exhibits 31 and 32 to this Quarterly Report.

In the sections of this Quarterly Report that combine disclosure for HTA and HTALP, this Quarterly Report refers to actions or holdings as being actions or holdings of the Company. Although HTALP (directly or indirectly through one of its subsidiaries) is generally the entity that enters into contracts, holds assets and issues or incurs debt, management believes this presentation is appropriate for the reasons set forth above and because the business of the Company is a single integrated enterprise operated through HTALP.

HEALTHCARE TRUST OF AMERICA, INC. AND

HEALTHCARE TRUST OF AMERICA HOLDINGS, LP

TABLE OF CONTENTS



		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	4
Healthcare Trust of America, Inc.
	Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018	4
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2019 and 2018	5
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2019 and 2018	6
	Condensed Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 2019 and 2018	7
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018	9
Healthcare Trust of America Holdings, LP
	Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018	10
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2019 and 2018	11
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2019 and 2018	12
	Condensed Consolidated Statements of Changes in Partners’ Capital for the Three and Nine Months Ended September 30, 2019 and 2018	13
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018	15
Notes for Healthcare Trust of America, Inc. and Healthcare Trust of America Holdings, LP
	Notes to Unaudited Condensed Consolidated Financial Statements	16
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.	Controls and Procedures	46

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 6.	Exhibits	47

Signatures		49

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

HEALTHCARE TRUST OF AMERICA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share data)

(Unaudited)



	September 30, 2019			December 31, 2018
ASSETS
Real estate investments:
Land	$	513,946		$	481,871
Building and improvements	6,003,172			5,787,152
Lease intangibles	606,946			599,864
Construction in progress	19,159			4,903
	7,143,223			6,873,790
Accumulated depreciation and amortization	(1,390,752		)	(1,208,169		)
Real estate investments, net	5,752,471			5,665,621
Investment in unconsolidated joint venture	66,348			67,172
Cash and cash equivalents	12,748			126,221
Restricted cash	5,068			7,309
Receivables and other assets, net	230,163			223,415
Right-of-use assets, net	244,024			—
Other intangibles, net	12,176			98,738
Total assets	$	6,322,998		$	6,188,476
LIABILITIES AND EQUITY
Liabilities:
Debt	$	2,665,691		$	2,541,232
Accounts payable and accrued liabilities	157,939			185,073
Derivative financial instruments - interest rate swaps	1,152			—
Security deposits, prepaid rent and other liabilities	43,036			59,567
Lease liabilities	200,945			—
Intangible liabilities, net	39,766			61,146
Total liabilities	3,108,529			2,847,018
Commitments and contingencies
Redeemable noncontrolling interests	—			6,544
Equity:
Preferred stock, $0.01 par value; 200,000,000 shares authorized; none issued and outstanding	—			—
Class A common stock, $0.01 par value; 1,000,000,000 shares authorized; 207,186,452 and 205,267,349 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively	2,072			2,053
Additional paid-in capital	4,581,176			4,525,969
Accumulated other comprehensive income	1,798			307
Cumulative dividends in excess of earnings	(1,443,360		)	(1,272,305		)
Total stockholders’ equity	3,141,686			3,256,024
Noncontrolling interests	72,783			78,890
Total equity	3,214,469			3,334,914
Total liabilities and equity	$	6,322,998		$	6,188,476

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

HEALTHCARE TRUST OF AMERICA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for per share data)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Revenues:
Rental income	$	174,844		$	175,038		$	515,328		$	523,826
Interest and other operating income	160			97			399			302
Total revenues	175,004			175,135			515,727			524,128
Expenses:
Rental	53,807			55,789			158,213			165,364
General and administrative	9,788			8,770			31,157			26,281
Transaction	522			346			858			933
Depreciation and amortization	73,820			70,568			211,730			210,064
Interest expense	24,625			24,834			72,601			77,392
Impairment	—			4,281			—			8,887
Total expenses	162,562			164,588			474,559			488,921
Gain (loss) on sale of real estate, net	—			166,372			(37		)	166,372
Loss on extinguishment of debt, net	(21,646		)	(1,092		)	(21,646		)	(1,092		)
Income from unconsolidated joint venture	422			432			1,456			1,405
Other income	205			89			781			129
Net (loss) income	$	(8,577	)	$	176,348		$	21,722		$	202,021
Net loss (income) attributable to noncontrolling interests ⁽¹⁾	114			(3,362		)	(486		)	(3,887		)
Net (loss) income attributable to common stockholders	$	(8,463	)	$	172,986		$	21,236		$	198,134
Earnings per common share - basic:
Net (loss) income attributable to common stockholders	$	(0.04	)	$	0.83		$	0.10		$	0.96
Earnings per common share - diluted:
Net (loss) income attributable to common stockholders	$	(0.04	)	$	0.82		$	0.10		$	0.94
Weighted average common shares outstanding:
Basic	205,277			207,513			205,156			205,950
Diluted	205,277			211,444			209,026			209,968

(1) Includes amounts attributable to redeemable noncontrolling interests.

The accompanying notes are an integral part of these condensed consolidated financial statements.

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HEALTHCARE TRUST OF AMERICA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018

Net (loss) income	$	(8,577	)	$	176,348		$	21,722		$	202,021

Other comprehensive income (loss)
Change in unrealized gains (losses) on cash flow hedges	2,290			(732		)	1,519			382
Total other comprehensive income (loss)	2,290			(732		)	1,519			382

Total comprehensive (loss) income	(6,287		)	175,616			23,241			202,403
Comprehensive loss (income) attributable to noncontrolling interests	71			(3,331		)	(448		)	(3,830		)
Total comprehensive (loss) income attributable to common stockholders	$	(6,216	)	$	172,285		$	22,793		$	198,573

The accompanying notes are an integral part of these condensed consolidated financial statements.

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HEALTHCARE TRUST OF AMERICA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In thousands)

(Unaudited)



	Class A Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Cumulative Dividends in Excess of Earnings			Total Stockholders’ Equity			Noncontrolling Interests				Total Equity
	Shares		Amount			Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Cumulative Dividends in Excess of Earnings			Total Stockholders’ Equity			Noncontrolling Interests				Total Equity
Balance as of December 31, 2017	204,892		$	2,049		$	4,508,528		$	274		$	(1,232,069	)	$	3,278,782		$	84,666			$	3,363,448
Share-based award transactions, net	289		3			3,504			—			—			3,507			—				3,507
Repurchase and cancellation of common stock	(92	)	(1		)	(2,708		)	—			—			(2,709		)	—				(2,709		)
Redemption of noncontrolling interest and other	91		1			2,412			—			—			2,413			(2,413		)		—
Dividends declared ($0.305 per common share)	—		—			—			—			(62,559		)	(62,559		)	(1,307		)		(63,866		)
Net income	—		—			—			—			9,802			9,802			181				9,983
Other comprehensive income	—		—			—			883			—			883			17				900
Balance as of March 31, 2018	205,180		2,052			4,511,736			1,157			(1,284,826		)	3,230,119			81,144				3,311,263
Issuance of common stock in HTA	2,550		25			72,789			—			—			72,814			—				72,814
Share-based award transactions, net	7		—			2,196			—			—			2,196			—				2,196
Repurchase and cancellation of common stock	(337	)	(3		)	(8,841		)	—			—			(8,844		)	—				(8,844		)
Redemption of noncontrolling interest and other	93		1			2,493			—			—			2,494			(2,494		)		—
Dividends declared ($0.305 per common share)	—		—			—			—			(63,279		)	(63,279		)	(1,253		)		(64,532		)
Net income	—		—			—			—			15,346			15,346			297				15,643
Other comprehensive income	—		—			—			210			—			210			4				214
Balance as of June 30, 2018	207,493		2,075			4,580,373			1,367			(1,332,759		)	3,251,056			77,698				3,328,754
Share-based award transactions, net	27		—			2,127			—			—			2,127			411				2,538
Repurchase and cancellation of common stock	(300	)	(3		)	(7,875		)	—			—			(7,878		)	—				(7,878		)
Redemption of noncontrolling interest and other	11		—			288			—			—			288			(288		)		—
Dividends declared ($0.310 per common share)	—		—			—			—			(64,233		)	(64,233		)	(1,250		)		(65,483		)
Net income	—		—			—			—			172,986			172,986			3,344				176,330
Other comprehensive loss	—		—			—			(719		)	—			(719		)	(13	)		(732		)
Balance as of September 30, 2018	207,231		$	2,072		$	4,574,913		$	648		$	(1,224,006	)	$	3,353,627		$	79,902			$	3,433,529

Table of Contents

HEALTHCARE TRUST OF AMERICA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Cont'd)

(In thousands)

(Unaudited)



	Class A Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Cumulative Dividends in Excess of Earnings			Total Stockholders’ Equity			Noncontrolling Interests			Total Equity
	Shares		Amount			Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Cumulative Dividends in Excess of Earnings			Total Stockholders’ Equity			Noncontrolling Interests			Total Equity
Balance as of December 31, 2018	205,267		$	2,053		$	4,525,969		$	307		$	(1,272,305	)	$	3,256,024		$	78,890		$	3,334,914
Share-based award transactions, net	293		3			3,386			—			—			3,389			—			3,389
Repurchase and cancellation of common stock	(478	)	(5		)	(11,921		)	—			—			(11,926		)	—			(11,926		)
Redemption of noncontrolling interest and other	18		—			527			—			—			527			(527		)	—
Dividends declared ($0.310 per common share)	—		—			—			—			(63,578		)	(63,578		)	(1,306		)	(64,884		)
Net income	—		—			—			—			13,440			13,440			233			13,673
Other comprehensive loss	—		—			—			(382		)	—			(382		)	(8		)	(390		)
Balance as of March 31, 2019	205,100		2,051			4,517,961			(75		)	(1,322,443		)	3,197,494			77,282			3,274,776
Issuance of OP Units in HTALP	—		—			—			—			—			—			2,603			2,603
Share-based award transactions, net	(3	)	—			2,102			—			—			2,102			—			2,102
Repurchase and cancellation of common stock	(6	)	—			(169		)	—			—			(169		)	—			(169		)
Redemption of noncontrolling interest and other	27		—			1,209			—			—			1,209			(785		)	424
Dividends declared ($0.310 per common share)	—		—			—			—			(63,579		)	(63,579		)	(1,334		)	(64,913		)
Net income	—		—			—			—			16,259			16,259			301			16,560
Other comprehensive loss	—		—			—			(374		)	—			(374		)	(7		)	(381		)
Balance as of June 30, 2019	205,118		2,051			4,521,103			(449		)	(1,369,763		)	3,152,942			78,060			3,231,002
Issuance of common stock	1,840		19			51,785			—			—			51,804			—			51,804
Issuance of limited partner OP Units in connection with acquisitions	—		—			—			—			—			—			2,000			2,000
Share-based award transactions, net	31		—			2,337			—			—			2,337			—			2,337
Repurchase and cancellation of common stock	(2	)	—			(65		)	—			—			(65		)	—			(65		)
Redemption of noncontrolling interest and other	199		2			6,016			—			—			6,018			(5,951		)	67
Dividends declared ($0.315 per common share)	—		—			—			—			(65,134		)	(65,134		)	(1,255		)	(66,389		)
Net loss	—		—			—			—			(8,463		)	(8,463		)	(114		)	(8,577		)
Other comprehensive income	—		—			—			2,247			—			2,247			43			2,290
Balance as of September 30, 2019	207,186		$	2,072		$	4,581,176		$	1,798		$	(1,443,360	)	$	3,141,686		$	72,783		$	3,214,469

The accompanying notes are an integral part of these condensed consolidated financial statements.

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HEALTHCARE TRUST OF AMERICA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



	Nine Months Ended September 30,
	2019			2018
Cash flows from operating activities:
Net income	$	21,722		$	202,021
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	203,392			203,550
Share-based compensation expense	7,828			7,830
Impairment	—			8,887
Income from unconsolidated joint venture	(1,456		)	(1,405		)
Distributions from unconsolidated joint venture	2,225			1,680
Loss (gain) on sale of real estate, net	37			(166,372		)
Loss on extinguishment of debt, net	21,646			1,092
Changes in operating assets and liabilities:
Receivables and other assets, net	(2,148		)	(7,820		)
Accounts payable and accrued liabilities	(19,783		)	(5,932		)
Prepaid rent and other liabilities	4,919			(2,780		)
Net cash provided by operating activities	238,382			240,751
Cash flows from investing activities:
Investments in real estate	(223,168		)	(17,389		)
Development of real estate	(14,253		)	(29,593		)
Proceeds from the sale of real estate	1,193			302,440
Capital expenditures	(59,533		)	(61,136		)
Collection of real estate notes receivable	551			524
Net cash (used in) provided by investing activities	(295,210		)	194,846
Cash flows from financing activities:
Borrowings on unsecured revolving credit facility	365,000			145,000
Payments on unsecured revolving credit facility	(350,000		)	(145,000		)
Proceeds from unsecured senior notes	906,927			—
Payments on unsecured senior notes	(700,000		)	—
Payments on secured mortgage loans	(96,765		)	(173,212		)
Deferred financing costs	(6,954		)	(782		)
Debt extinguishment costs	(18,383		)	(1,909		)
Security deposits	—			499
Proceeds from issuance of common stock	51,804			72,814
Issuance of operating partnership units	—			411
Repurchase and cancellation of common stock	(12,159		)	(19,431		)
Dividends paid	(190,853		)	(188,414		)
Distributions paid to noncontrolling interest of limited partners	(7,503		)	(3,976		)
Net cash used in financing activities	(58,886		)	(314,000		)
Net change in cash, cash equivalents and restricted cash	(115,714		)	121,597
Cash, cash equivalents and restricted cash - beginning of period	133,530			118,560
Cash, cash equivalents and restricted cash - end of period	$	17,816		$	240,157

The accompanying notes are an integral part of these condensed consolidated financial statements.

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HEALTHCARE TRUST OF AMERICA HOLDINGS, LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except unit data)

(Unaudited)



	September 30, 2019			December 31, 2018
ASSETS
Real estate investments:
Land	$	513,946		$	481,871
Building and improvements	6,003,172			5,787,152
Lease intangibles	606,946			599,864
Construction in progress	19,159			4,903
	7,143,223			6,873,790
Accumulated depreciation and amortization	(1,390,752		)	(1,208,169		)
Real estate investments, net	5,752,471			5,665,621
Investment in unconsolidated joint venture	66,348			67,172
Cash and cash equivalents	12,748			126,221
Restricted cash	5,068			7,309
Receivables and other assets, net	230,163			223,415
Right-of-use assets, net	244,024			—
Other intangibles, net	12,176			98,738
Total assets	$	6,322,998		$	6,188,476
LIABILITIES AND PARTNERS’ CAPITAL
Liabilities:
Debt	$	2,665,691		$	2,541,232
Accounts payable and accrued liabilities	157,939			185,073
Derivative financial instruments - interest rate swaps	1,152			—
Security deposits, prepaid rent and other liabilities	43,036			59,567
Lease liabilities	200,945			—
Intangible liabilities, net	39,766			61,146
Total liabilities	3,108,529			2,847,018
Commitments and contingencies
Redeemable noncontrolling interests	—			6,544
Partners’ Capital:
Limited partners’ capital, 3,848,279 and 3,929,083 units issued and outstanding as of September 30, 2019 and December 31, 2018, respectively	72,513			78,620
General partners’ capital, 207,186,452 and 205,267,349 units issued and outstanding as of September 30, 2019 and December 31, 2018, respectively	3,141,956			3,256,294
Total partners’ capital	3,214,469			3,334,914
Total liabilities and partners’ capital	$	6,322,998		$	6,188,476

The accompanying notes are an integral part of these condensed consolidated financial statements.

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HEALTHCARE TRUST OF AMERICA HOLDINGS, LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per unit data)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Revenues:
Rental income	$	174,844		$	175,038		$	515,328		$	523,826
Interest and other operating income	160			97			399			302
Total revenues	175,004			175,135			515,727			524,128
Expenses:
Rental	53,807			55,789			158,213			165,364
General and administrative	9,788			8,770			31,157			26,281
Transaction	522			346			858			933
Depreciation and amortization	73,820			70,568			211,730			210,064
Interest expense	24,625			24,834			72,601			77,392
Impairment	—			4,281			—			8,887
Total expenses	162,562			164,588			474,559			488,921
Gain (loss) on sale of real estate, net	—			166,372			(37		)	166,372
Loss on extinguishment of debt, net	(21,646		)	(1,092		)	(21,646		)	(1,092		)
Income from unconsolidated joint venture	422			432			1,456			1,405
Other income	205			89			781			129
Net (loss) income	$	(8,577	)	$	176,348		$	21,722		$	202,021
Net income attributable to noncontrolling interests	—			(18		)	(66		)	(65		)
Net (loss) income attributable to common unitholders	$	(8,577	)	$	176,330		$	21,656		$	201,956
Earnings per common OP Unit - basic:
Net (loss) income attributable to common unitholders	$	(0.04	)	$	0.83		$	0.10		$	0.96
Earnings per common OP Unit - diluted:
Net (loss) income attributable to common unitholders	$	(0.04	)	$	0.83		$	0.10		$	0.96
Weighted average common OP Units outstanding:
Basic	209,164			211,444			209,056			209,968
Diluted	209,164			211,444			209,056			209,968

The accompanying notes are an integral part of these condensed consolidated financial statements.

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HEALTHCARE TRUST OF AMERICA HOLDINGS, LP

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018

Net (loss) income	$	(8,577	)	$	176,348		$	21,722		$	202,021

Other comprehensive income (loss)
Change in unrealized gains (losses) on cash flow hedges	2,290			(732		)	1,519			382
Total other comprehensive income (loss)	2,290			(732		)	1,519			382

Total comprehensive (loss) income	(6,287		)	175,616			23,241			202,403
Comprehensive income attributable to noncontrolling interests	—			(18		)	(66		)	(65		)
Total comprehensive (loss) income attributable to common unitholders	$	(6,287	)	$	175,598		$	23,175		$	202,338

The accompanying notes are an integral part of these condensed consolidated financial statements.

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HEALTHCARE TRUST OF AMERICA HOLDINGS, LP

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL

(In thousands)

(Unaudited)



	General Partners’ Capital					Limited Partners’ Capital					Total Partners’ Capital
	Units		Amount			Units		Amount			Total Partners’ Capital
Balance as of December 31, 2017	204,892		$	3,279,052		4,124		$	84,396		$	3,363,448
Share-based award transactions, net	289		3,507			—		—			3,507
Redemption and cancellation of general partner OP Units	(92	)	(2,709		)	—		—			(2,709		)
Redemption of limited partner OP Units and other	91		2,413			(91	)	(2,413		)	—
Distributions declared ($0.305 per common OP Unit)	—		(62,559		)	—		(1,307		)	(63,866		)
Net income	—		9,802			—		181			9,983
Other comprehensive income	—		883			—		17			900
Balance as of March 31, 2018	205,180		3,230,389			4,033		80,874			3,311,263
Issuance of general partner OP Units, net	2,550		72,814			—		—			72,814
Share-based award transactions, net	7		2,196			—		—			2,196
Redemption and cancellation of general partner OP Units	(337	)	(8,844		)	—		—			(8,844		)
Redemption of limited partner OP Units and other	93		2,494			(93	)	(2,494		)	—
Distributions declared ($0.305 per common OP Unit)	—		(63,279		)	—		(1,253		)	(64,532		)
Net income	—		15,346			—		297			15,643
Other comprehensive income	—		210			—		4			214
Balance as of June 30, 2018	207,493		3,251,326			3,940		77,428			3,328,754
Share-based award transactions, net	27		2,127			—		411			2,538
Redemption and cancellation of general partner OP Units	(300	)	(7,878		)	—		—			(7,878		)
Redemption of limited partner OP Units and other	11		288			(11	)	(288		)
Distributions declared ($0.310 per common OP Unit)	—		(64,233		)	—		(1,250		)	(65,483		)
Net income	—		172,986			—		3,344			176,330
Other comprehensive loss	—		(719		)	—		(13		)	(732		)
Balance as of September 30, 2018	207,231		$	3,353,897		3,929		$	79,632		$	3,433,529

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HEALTHCARE TRUST OF AMERICA HOLDINGS, LP

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL (Cont'd)

(In thousands)

(Unaudited)



	General Partners’ Capital					Limited Partners’ Capital					Total Partners’ Capital
	Units		Amount			Units		Amount			Total Partners’ Capital
Balance as of December 31, 2018	205,267		$	3,256,294		3,929		$	78,620		$	3,334,914
Share-based award transactions, net	293		3,389			—		—			3,389
Redemption and cancellation of general partner OP Units	(478	)	(11,926		)	—		—			(11,926		)
Redemption of limited partner OP Units and other	18		527			(18	)	(527		)	—
Distributions declared ($0.310 per common OP Unit)	—		(63,578		)	—		(1,306		)	(64,884		)
Net income	—		13,440			—		233			13,673
Other comprehensive loss	—		(382		)	—		(8		)	(390		)
Balance as of March 31, 2019	205,100		3,197,764			3,911		77,012			3,274,776
Issuance of limited partner OP Units	—		—			91		2,603			2,603
Share-based award transactions, net	(3	)	2,102			—		—			2,102
Redemption and cancellation of general partner OP Units	(6	)	(169		)	—		—			(169		)
Redemption of limited partner OP Units and other	27		1,209			(27	)	(785		)	424
Distributions declared ($0.310 per common OP Unit)	—		(63,579		)	—		(1,334		)	(64,913		)
Net income	—		16,259			—		301			16,560
Other comprehensive loss	—		(374		)	—		(7		)	(381		)
Balance as of June 30, 2019	205,118		3,153,212			3,975		77,790			3,231,002
Issuance of general partner OP Units	1,840		51,804			—		—			51,804
Issuance of limited partner OP Units in connection with acquisitions	—		—			72		2,000			2,000
Share-based award transactions, net	31		2,337			—		—			2,337
Redemption and cancellation of general partner OP Units	(2	)	(65		)	—		—			(65		)
Redemption of limited partner OP Units and other	199		6,018			(199	)	(5,951		)	67
Distributions declared ($0.315 per common OP Unit)	—		(65,134		)	—		(1,255		)	(66,389		)
Net loss	—		(8,463		)	—		(114		)	(8,577		)
Other comprehensive income	—		2,247			—		43			2,290
Balance as of September 30, 2019	207,186		$	3,141,956		3,848		$	72,513		$	3,214,469

The accompanying notes are an integral part of these condensed consolidated financial statements.

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HEALTHCARE TRUST OF AMERICA HOLDINGS, LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



	Nine Months Ended September 30,
	2019			2018
Cash flows from operating activities:
Net income	$	21,722		$	202,021
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	203,392			203,550
Share-based compensation expense	7,828			7,830
Impairment	—			8,887
Income from unconsolidated joint venture	(1,456		)	(1,405		)
Distributions from unconsolidated joint venture	2,225			1,680
Loss (gain) on sale of real estate, net	37			(166,372		)
Loss on extinguishment of debt, net	21,646			1,092
Changes in operating assets and liabilities:
Receivables and other assets, net	(2,148		)	(7,820		)
Accounts payable and accrued liabilities	(19,783		)	(5,932		)
Prepaid rent and other liabilities	4,919			(2,780		)
Net cash provided by operating activities	238,382			240,751
Cash flows from investing activities:
Investments in real estate	(223,168		)	(17,389		)
Development of real estate	(14,253		)	(29,593		)
Proceeds from the sale of real estate	1,193			302,440
Capital expenditures	(59,533		)	(61,136		)
Collection of real estate notes receivable	551			524
Net cash (used in) provided by investing activities	(295,210		)	194,846
Cash flows from financing activities:
Borrowings on unsecured revolving credit facility	365,000			145,000
Payments on unsecured revolving credit facility	(350,000		)	(145,000		)
Proceeds from unsecured senior notes	906,927			—
Payments from unsecured senior notes	(700,000		)	—
Payments on secured mortgage loans	(96,765		)	(173,212		)
Deferred financing costs	(6,954		)	(782		)
Debt extinguishment costs	(18,383		)	(1,909		)
Security deposits	—			499
Proceeds from issuance of general partner units	51,804			72,814
Issuance of limited partner units	—			411
Repurchase and cancellation of general partner units	(12,159		)	(19,431		)
Distributions paid to general partner	(190,853		)	(188,414		)
Distributions paid to limited partners and redeemable noncontrolling interests	(7,503		)	(3,976		)
Net cash used in financing activities	(58,886		)	(314,000		)
Net change in cash, cash equivalents and restricted cash	(115,714		)	121,597
Cash, cash equivalents and restricted cash - beginning of period	133,530			118,560
Cash, cash equivalents and restricted cash - end of period	$	17,816		$	240,157

The accompanying notes are an integral part of these condensed consolidated financial statements.

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HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unless otherwise indicated or unless the context requires otherwise the use of the words “we,” “us,” or “our” refers to Healthcare Trust of America, Inc. and Healthcare Trust of America Holdings, LP, collectively.

1. Organization and Description of Business

HTA, a Maryland corporation, and HTALP, a Delaware limited partnership, were incorporated or formed, as applicable, on April 20, 2006. HTA operates as a REIT and is the general partner of HTALP, which is the operating partnership, in an umbrella partnership, or “UPREIT” structure. HTA has qualified and intends to continue to be taxed as a REIT for federal income tax purposes under the applicable sections of the Internal Revenue Code.

We own real estate primarily consisting of medical office buildings (“MOBs”) located on or adjacent to hospital campuses or in off-campus, community core outpatient locations across 33 states within the United States. We lease space to tenants primarily consisting of health systems, research and academic institutions, and various sized physician practices. Through our full-service operating platform, we provide leasing, asset management, acquisitions, development and other related services for our properties.

Our primary objective is to maximize stockholder value with growth through strategic investments that provide an attractive risk-adjusted return for our stockholders by consistently increasing our cash flow. In pursuing this objective, we: (i) seek internal growth through proactive asset management, leasing, building services and property management oversight; (ii) target accretive acquisitions and developments of MOBs in markets with attractive demographics that complement our existing portfolio; and (iii) actively manage our balance sheet to maintain flexibility with conservative leverage. Additionally, from time to time we consider, on an opportunistic basis, significant portfolio acquisitions that we believe fit our core business and we expect to enhance our existing portfolio.

2. Summary of Significant Accounting Policies

The summary of significant accounting policies presented below is designed to assist in understanding our condensed consolidated financial statements. Such condensed consolidated financial statements and the accompanying notes are the representations of our management, who are responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles in the U.S. (“GAAP”) in all material respects and have been consistently applied in preparing our accompanying condensed consolidated financial statements.

Basis of Presentation

Our accompanying condensed consolidated financial statements include our accounts and those of our subsidiaries and any consolidated variable interest entities (“VIEs”). All inter-company balances and transactions have been eliminated in the accompanying condensed consolidated financial statements.

Reclassifications

Certain prior year amounts related to the presentation of interest expense on the accompanying condensed consolidated statements of operations have been reclassified to conform to the current year presentation.

Interim Unaudited Financial Data

Our accompanying condensed consolidated financial statements have been prepared by us in accordance with GAAP in conjunction with the rules and regulations of the SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, our accompanying condensed consolidated financial statements do not include all information and footnotes required by GAAP for complete financial statements. Our accompanying condensed consolidated financial statements reflect all adjustments, which are, in our opinion, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods. Interim results of operations are not necessarily indicative of the results to be expected for the full year; such results may be less favorable for the full year. Our accompanying condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our 2018 Annual Report on Form 10-K.

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HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Principles of Consolidation

The condensed consolidated financial statements include the accounts of our subsidiaries and consolidated joint venture arrangements. The portions of the HTALP operating partnership not owned by us are presented as noncontrolling interests on the accompanying condensed consolidated balance sheets and statements of operations, condensed consolidated statements of comprehensive income, and condensed consolidated statements of equity and changes in partners’ capital. Holders of OP Units are considered to be noncontrolling interest holders in HTALP and their ownership interests are reflected as equity on the accompanying condensed consolidated balance sheets. Further, a portion of the earnings and losses of HTALP are allocated to noncontrolling 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 September 30, 2019 and December 31, 2018, there were approximately 3.8 million and 3.9 million, respectively, of OP Units issued and outstanding.

VIEs are entities where investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or where equity investors, as a group, lack one of the following: (i) the power to direct the activities that most significantly impact the entity’s economic performance; (ii) the obligation to absorb the expected losses of the entity; and (iii) the right to receive the expected returns of the entity. We consolidate our investment in VIEs when we determine that we are the primary beneficiary. A primary beneficiary is one that has both: (i) the power to direct the activities of the VIE that most significantly impacts the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. The HTALP operating partnership and our other joint venture arrangements are VIEs because the limited partners in those partnerships, although entitled to vote on certain matters, do not possess kick-out rights or substantive participating rights. Additionally, we determined that we are the primary beneficiary of our VIEs. Accordingly, we consolidate our interests in the HTALP operating partnership and in our other joint venture arrangements. However, because we hold what is deemed a majority voting interest in the HTALP operating partnership and our other joint venture arrangements, it qualifies for the exemption from providing certain disclosure requirements associated with investments in VIEs. We will evaluate on an ongoing basis the need to consolidate entities based on the standards set forth in GAAP as described above.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of all highly liquid investments with a maturity of three months or less when purchased. Restricted cash is comprised of: (i) reserve accounts for property taxes, insurance, capital and tenant improvements; (ii) collateral accounts for debt and interest rate swaps; and (iii) deposits for future investments.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the accompanying condensed consolidated balance sheets to the combined amounts shown on the accompanying condensed consolidated statements of cash flows (in thousands):



	September 30,
	2019		2018
Cash and cash equivalents	$	12,748	$	225,518
Restricted cash	5,068		14,639
Total cash, cash equivalents and restricted cash	$	17,816	$	240,157

Revenue Recognition

Minimum annual rental revenue is recognized on a straight-line basis over the term of the related lease (including rent holidays). Differences between rental income recognized and amounts contractually due under the lease agreements are recorded as straight-line rent receivables. Tenant reimbursements, which is comprised of additional amounts recoverable from tenants for real estate taxes, common area maintenance and other certain operating expenses are recognized as revenue on a gross basis in the period in which the related recoverable expenses are incurred. We accrue revenue corresponding to these expenses on a quarterly basis to adjust recorded amounts to our best estimate of the final annual amounts to be billed. Subsequent to year-end, on a calendar year basis, we perform reconciliations on a lease-by-lease basis and bill or credit each tenant for any differences between the estimated expenses we billed and the actual expenses that were incurred. We recognize lease termination fees when there is a signed termination letter agreement, all of the conditions of the agreement have been met, and the tenant is no longer occupying the property. Rental income is reported net of amortization of inducements.

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HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The revenue recognition process is based on a five-step model to account for revenue arising from contracts with customers as outlined in Topic 606. We 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. We have identified all of our revenue streams and we have concluded that rental income from leasing arrangements represents a substantial portion of our revenue and is governed and evaluated with the adoption of Topic 842.

Investments in Real Estate

Depreciation expense of buildings and improvements for the three months ended September 30, 2019 and 2018 was $54.9 million and $50.2 million, respectively. Depreciation expense of buildings and improvements for the nine months ended September 30, 2019 and 2018 was $158.9 million and $151.5 million, respectively.

Leases

As a lessor, we lease space in our MOBs primarily to medical enterprises for terms ranging from three to seven years in length. The assets underlying these leases consist of buildings and associated land which are included as real estate investments on our accompanying condensed consolidated balance sheets. All of our leases for which we are the lessor are classified as operating leases under Topic 842.

Leases, for which we are the lessee, are classified as separate components on our accompanying condensed consolidated balance sheets. Operating leases are included as right-of-use (“ROU”) assets, net, with a corresponding lease liability. A lease liability is recognized for our obligation related to the lease and an ROU asset represents our right to use the underlying asset over the lease term. Refer to Note 7 - Leases in the accompanying notes to the condensed consolidated financial statements for more detail relating to our leases.

Redeemable Noncontrolling Interests

We account for redeemable equity securities in accordance with ASU 2009-04 Liabilities (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. We classify redeemable equity securities as redeemable noncontrolling interests on the accompanying condensed consolidated balances sheets. Accordingly, we record the carrying amount at the greater of the initial carrying amount (increased or decreased for the noncontrolling 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 noncontrolling interest. As of September 30, 2019, all redeemable noncontrolling interests have either converted their interest to OP Units or received cash proceeds due to the last exercisable put option that lapsed on June 30, 2019. As of December 31, 2018, we had redeemable noncontrolling interests of $6.5 million. Refer to Note 11 - Redeemable Noncontrolling Interests in the accompanying notes to the condensed consolidated financial statements for more detail relating to our redeemable noncontrolling interests.

Unconsolidated Joint Ventures

We account for our investments in unconsolidated joint ventures using the equity method of accounting because we have the ability to exercise significant influence, but not control, over the financial and operational policy decisions of the investments. Using the equity method of accounting, the initial investment is recognized at cost and subsequently adjusted for our share of the net income and any distributions from the joint venture. As of September 30, 2019 and December 31, 2018, we had a 50% interest in one such investment with a carrying value and maximum exposure to risk of $66.3 million and $67.2 million, respectively, which is recorded in investment in unconsolidated joint venture on the accompanying condensed consolidated balance sheets. We record our share of net income in income from unconsolidated joint venture on the accompanying condensed consolidated statements of operations. For the three months ended September 30, 2019 and 2018, we recognized income of $0.4 million and $0.4 million, respectively. For the nine months ended September 30, 2019 and 2018, we recognized income of $1.5 million and $1.4 million, respectively.

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HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Recently Issued or Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Topic 842, Leases

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-02, codified as ASC 842 - Leases (Topic 842). This new standard superseded ASC Topic 840 and states that companies will be required to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. Topic 842 requires qualitative and quantitative disclosures to supplement the amounts recorded in the financial statements so that users can understand the nature of the entity’s leasing activities, including significant judgments and changes in judgments.

We adopted Topic 842 as of January 1, 2019 and elected to use the optional transition method, which allows us to recognize a cumulative-effect adjustment to the opening balance of retained earnings at January 1, 2019. Using the optional transition method, the cumulative effect adjustment was immaterial and as such no adjustment was made to beginning retained earnings. In addition, it was determined in our analysis that finance leases which we are the lessee were immaterial and as such were excluded from our disclosures.

In addition to electing the optional transition method above, we also elected the following practical expedients offered by the FASB which will allow us:


•	to not reassess: (i) whether an expired or existing contract contains a lease arrangement; (ii) lease classification related to expired or existing lease arrangements; or (iii) whether costs incurred on expired or existing leases qualify as initial direct costs;


•	to not separate, as the lessor, certain non-lease components, such as common area maintenance from lease revenue if the (i) timing and pattern of revenue recognition are the same for the non-lease component, and (ii) related lease component and the combined single lease component would be classified as an operating lease;


•	to exclude land easements from assessment in determining whether they meet the definition of a lease up to the time of adoption; and


•	to not record on our accompanying condensed consolidated balance sheets, lease liabilities and ROU assets with lease terms of 12 months or less.

Lessee Impact

Leases for which we are the lessee, including ground leases and corporate leases, which are primarily for office space, have been recorded on our accompanying condensed consolidated balance sheets as either finance or operating leases with lease liability obligations and corresponding ROU assets based on the present value of the minimum rental payments remaining as of the initial adoption date of January 1, 2019.

Lessor Impact

Topic 842 modifies the treatment of initial direct costs, which historically under Topic 840 have been capitalized upon meeting criteria provided for in that applicable guidance. These initial direct costs now under ASC 842 are eligible for capitalization only if they are incremental in nature, (i.e., would only be incurred if we enter into a new lease arrangement). Under this guidance, only commissions paid and other incurred costs incremental to our leasing activity qualify as initial direct costs. These costs, which were previously capitalized, have been classified as general and administrative expenses on our accompanying condensed consolidated statements of operations. For the three and nine months ended September 30, 2018, we capitalized approximately $1.5 million and $3.7 million, respectively, of initial direct costs.

Additionally, as part of Topic 842, ASU 2018-20 states that (i) a lessor must analyze sales (and other similar) tax laws on a jurisdiction-by-jurisdiction basis to determine whether those taxes are lessor costs or lessee costs and (ii) a lessor shall exclude from variable payments, lessor costs (i.e., property taxes, insurance) paid by a lessee directly to a third party. However, costs that are paid by a lessor directly to a third party and are reimbursed by a lessee are considered lessor costs that shall be accounted for by the lessor as variable payments. As a result of the adoption of Topic 842, we no longer record income or expense when the lessee pays the property taxes directly to a third party. For the three and nine months ended September 30, 2018, we recognized approximately $3.5 million and $10.5 million, respectively, of tenant paid property taxes.

Except where stated above, the adoption of Topic 842 did not have a substantive impact on our results of operations and cash flows and no significant impact on any of our debt covenants.

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HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

ASU 2018-07, Compensation - Stock Compensation; Improvements to Nonemployee Share-Based Payment Accounting

In June 2018, the FASB issued ASU 2018-07, which expands the scope of Topic 718. The amendments specify that ASU 2018-07 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. ASU 2018-07 also clarifies that it does not apply to share-based payments used to effectively provide (i) financing to the issuer or (ii) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606. We adopted ASU 2018-07 on January 1, 2019 (the effective date) and did not have any reclassifications or material impacts on our consolidated financial statements as a result of this adoption.

Recently Issued Accounting Pronouncements

ASU 2016-13, Financial Instruments Credit Losses; Measurement of Credit Losses on Financial Instruments and ASU 2018-19, 2019-04 and 2019-05, Improvements to Topic 326, Financial Instruments-Credit Losses

In June 2016, the FASB issued ASU 2016-13, which is intended to improve financial reporting by requiring more timely recognition of credit losses on loans and other financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other such commitments. ASU 2016-13 requires that financial statement assets measured at an amortized cost be presented at the net amount expected to be collected through an allowance for credit losses that is deducted from the amortized cost basis. ASU 2018-19 also clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of these receivables should be accounted for in accordance with Topic 842, Leases. ASU 2019-04 provides clarification on the measurement, presentation and disclosure of credit losses on financial assets. ASU 2019-05 provides an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis for comparability to any new financial assets that elect the fair value option. We will adopt ASU 2016-13, ASU 2018-19, ASU 2019-04 and ASU 2019-05 collectively as of January 1, 2020 (the effective date) and do not anticipate there to be a material impact to our consolidated financial statements and related notes based on our ongoing evaluation.

ASU 2018-13, Fair Value Measurement; Changes to the Disclosure Requirements for Fair Value Measurement

In August 2018, the FASB issued ASU 2018-13, which modifies the disclosure requirements on fair value measurements in Topic 820 as follows: (a) disclosure removals: (i) the amount of and reasons for transfers between Level 1 and Level 2; (ii) the policy for timing of transfers between levels; and (iii) the valuation process for Level 3 fair value measurements; (b) disclosure modifications: (i) no requirement to disclose the timing of liquidation unless the investee has communicated the timing to the reporting entity or announced the timing publicly; and (ii) for Level 3 fair value measurements, a narrative description of measurement uncertainty at the reporting date, not the sensitivity to future changes; and (c) disclosure additions: (i) for recurring Level 3 measurements, disclose the changes in unrealized gains and losses for the period included in OCI and the statement of comprehensive income; and (ii) for Level 3 fair value measurements in the table of significant input, disclose the range and weighted average of the significant unobservable inputs and the way it is calculated. We will adopt ASU 2018-13 as of January 1, 2020 (the effective date) and will consider all level inputs but we do not anticipate there to be a material impact to our consolidated financial statements and related notes based on our ongoing evaluation.

3. Investments in Real Estate

For the nine months ended September 30, 2019, our investments had an aggregate purchase price of $229.9 million. As part of these investments, we incurred approximately $1.5 million of capitalized costs. As part of one of our acquisitions in the third quarter of 2019, we issued to our sellers 72,294 OP Units with a market value at the time of issuance of $2.0 million. The allocations for these investments, in which we own a controlling financial interest, are set forth below in the aggregate for the nine months ended September 30, 2019 and 2018, respectively (in thousands):



	Nine Months Ended September 30,
	2019			2018
Land	$	33,408		$	1,895
Building and improvements	174,708			14,458
In place leases	18,532			1,237
Below market leases	(3,386		)	(201		)
Above market leases	2,046			—
Net real estate assets acquired	225,308			17,389
Other, net	4,543			447
Aggregate purchase price	$	229,851		$	17,836

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The acquired intangible assets and liabilities referenced above had weighted average lives of the following terms for the nine months ended September 30, 2019 and 2018, respectively (in years):



	Nine Months Ended September 30,
	2019	2018
Acquired intangible assets	5.6	5.8
Acquired intangible liabilities	7.7	6.5

4. Impairment

During the nine months ended September 30, 2019, we recorded no impairment charges. During the nine months ended September 30, 2018, we recorded an impairment charge of $8.9 million on six MOBs located in Tennessee, Texas and South Carolina.

5. Intangible Assets and Liabilities

Intangible assets and liabilities consisted of the following as of September 30, 2019 and December 31, 2018, respectively (in thousands, except weighted average remaining amortization terms):



	September 30, 2019				December 31, 2018
	Balance			Weighted Average Remaining Amortization in Years	Balance			Weighted Average Remaining Amortization in Years
Assets:
In place leases	$	459,307		9.4	$	449,424		9.8
Tenant relationships	147,639			9.6	150,440			9.4
Above market leases	37,988			6.2	36,862			6.1
Below market leasehold interests ⁽¹⁾	—				91,759			64.3
	644,934				728,485
Accumulated amortization	(384,996		)		(355,576		)
Total	$	259,938		9.2	$	372,909		22.1

Liabilities:
Below market leases	$	64,409		13.4	$	61,395		14.6
Above market leasehold interests ⁽¹⁾	—				20,610			49.2
	64,409				82,005
Accumulated amortization	(24,643		)		(20,859		)
Total	$	39,766		13.4	$	61,146		25.3

(1) As a result of the adoption of Topic 842 on January 1, 2019, the presentation of below and above market leasehold interests as of September 30, 2019 does not conform to the prior year presentation.

The following is a summary of the net intangible amortization for the three and nine months ended September 30, 2019 and 2018, respectively (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Amortization recorded against rental income related to above and (below) market leases	$	(1,658	)	$	(352	)	$	(2,678	)	$	(660	)
Rental expense related to above and (below) market leasehold interests ⁽¹⁾	—			287			—			850
Amortization expense related to in place leases and tenant relationships	16,149			18,475			44,906			52,800

(1) As a result of the adoption of Topic 842 on January 1, 2019, the presentation of rental expense related to above and below market leasehold interests for the three and nine months ended September 30, 2019 does not conform to the prior year presentation.

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6. Receivables and Other Assets

Receivables and other assets consisted of the following as of September 30, 2019 and December 31, 2018, respectively (in thousands):



	September 30, 2019		December 31, 2018
Tenant receivables, net	$	16,596	$	14,588
Other receivables, net	17,218		16,078
Deferred financing costs, net	4,756		6,049
Deferred leasing costs, net	34,811		30,731
Straight-line rent receivables, net	104,794		92,973
Prepaid expenses, deposits, equipment and other, net	50,695		61,885
Derivative financial instruments - interest rate swaps	1,293		1,111
Total	$	230,163	$	223,415

The following is a summary of the amortization of deferred leasing costs and financing costs for the three and nine months ended September 30, 2019 and 2018, respectively (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Amortization expense related to deferred leasing costs	$	1,949	$	1,357	$	5,978	$	4,166
Interest expense related to deferred financing costs	431		431		1,293		1,293

7. Leases

The majority of our lease expenses are derived from our ground leases and a few corporate leases, which are primarily for office space. We recognize lease expense for these leases on a straight-line basis over the lease term. Many of our leases contain renewal options that can extend the lease term from one to ten years, or in certain cases, longer durations. The exercise of lease renewal options is at our sole discretion. Certain of our ground leases have the option to purchase the land at the end of the initial term. Our leases have one of the following payment options: (i) fixed payment throughout the term; (ii) fixed payments with periodic escalations; (iii) variable lease payments based on the Consumer Price Index (“CPI”) or another similar index; and (iv) a combination of the aforementioned. Our leases do not contain any material residual value guarantees or material restrictive covenants other than certain prohibitions as to the nature of business that can be conducted within the buildings which we own in order to limit activities that may be deemed competitive in nature to the ground lessor’s activities.

As part of the adoption of Topic 842, a lease liability and a corresponding ROU asset was recorded on our accompanying condensed consolidated balance sheets effective January 1, 2019. The lease liability was calculated as the present value of the remaining lease payments using the lease term at lease commencement and an incremental borrowing rate. In determining this calculation, we made the following assumptions and judgments:


•	only material ground leases and corporate leases exceeding one year in duration were included in our lease population. Office equipment and other non-essential leases were excluded from this population due to immateriality; and


•	a series of incremental borrowing rates were determined based on observed prices and credit spreads of our unsecured senior debt as of December 31, 2018 after applying treasury or other similar index rates as of January 1, 2019 to leases that correspond to the remaining lease terms, adjusted for the effects of collateral.

At adoption, the ROU asset was calculated as the sum of the lease liability, deferred rent of approximately ($19.0) million, and the above and below market leasehold interest balances as of December 31, 2018 of approximately $66.5 million, which were previously recorded as other intangibles and intangible liabilities on our accompanying condensed consolidated balance sheets.

As of September 30, 2019, we have an executed ground lease that has not commenced in accordance with Topic 842. The date of commencement is anticipated to be in the fourth quarter of 2019 when substantive rights and economic control of the underlying asset transfers to us, at which time we will commence construction of a new MOB located in Bakersfield, CA. On that date, we will book a ROU asset and a corresponding lease liability of approximately $3.3 million. As of September 30, 2019, we have no new corporate leases that have not yet commenced.

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Lessee - Lease Costs

Lease costs consisted of the following for the three and nine months ended September 30, 2019 (in thousands):



	Three Months Ended		Nine Months Ended
	September 30, 2019		September 30, 2019
Operating lease cost	$	3,221	$	9,342
Variable lease cost	517		1,231
Total lease cost	$	3,738	$	10,573

Lessee - Lease Term and Discount Rates

The following is the weighted average remaining lease term and the weighted average discount rate for our operating leases as of September 30, 2019 (weighted average remaining lease term in years):



	September 30, 2019
Weighted-average remaining lease term	47.7
Weighted-average discount rate	5.3	%

Lessee - Maturity of Lease Liabilities

The following table summarizes the future minimum lease obligations of our operating leases as of September 30, 2019 under Topic 842 (in thousands):



Year	Amount
2019	$	2,507
2020	10,160
2021	10,283
2022	10,440
2023	10,600
2024	10,263
Thereafter	624,145
Total undiscounted lease payments	$	678,398
Less: Interest	(477,453		)
Present value of lease liabilities	$	200,945

As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting standard, Topic 840, the following table summarizes the future minimum lease obligations of our operating leases as of December 31, 2018 (in thousands):



Year	Amount
2019	$	10,309
2020	10,408
2021	9,877
2022	10,031
2023	10,132
Thereafter	639,234
Total	$	689,991

Lessor - Lease Revenues and Maturity of Future Minimum Rents

For the three and nine months ended September 30, 2019, we recognized $173.1 million and $511.5 million, respectively, of rental and other lease-related income related to our operating leases of which $39.1 million and $115.2 million, respectively, were variable lease payments.

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HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table summarizes the future minimum rent contractually due under operating leases, excluding tenant reimbursements of certain costs, as of September 30, 2019 under Topic 842 (in thousands):



Year	Amount
2019	$	122,688
2020	493,571
2021	444,676
2022	391,467
2023	340,671
2024	295,613
Thereafter	1,144,912
Total	$	3,233,598

As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting standard, Topic 840, the following table summarizes the future minimum rent contractually due under operating leases, excluding tenant reimbursements of certain costs, as of December 31, 2018 (in thousands):



Year	Amount
2019	$	497,083
2020	448,956
2021	401,871
2022	341,889
2023	294,451
Thereafter	1,244,246
Total	$	3,228,496

8. Debt

Debt consisted of the following as of September 30, 2019 and December 31, 2018, respectively (in thousands):



	September 30, 2019			December 31, 2018
Unsecured revolving credit facility	$	15,000		$	—
Unsecured term loans	500,000			500,000
Unsecured senior notes	2,050,000			1,850,000
Fixed rate mortgages	114,657			211,421
	2,679,657			2,561,421
Deferred financing costs, net	(16,088		)	(13,741		)
Discount, net	2,122			(6,448		)
Total	$	2,665,691		$	2,541,232

Unsecured Credit Agreement

Unsecured Revolving Credit Facility due 2022

In 2017, HTALP entered into an amended and restated $1.3 billion unsecured credit agreement (the “Unsecured Credit Agreement”) which increased the amount available under the unsecured revolving credit facility to $1.0 billion and extended the maturities of the unsecured revolving credit facility to June 30, 2022 and for the $300.0 million unsecured term loan referenced below to February 1, 2023. The maximum principal amount of the Unsecured Credit Agreement may be increased by up to $750.0 million, subject to certain conditions, for a total principal amount of $2.05 billion.

Borrowings under the unsecured revolving credit facility accrue interest at a rate equal to adjusted LIBOR, plus a margin ranging from 0.83% to 1.55% per annum based on our credit rating. We also pay a facility fee ranging from 0.13% to 0.30% per annum on the aggregate commitments under the unsecured revolving credit facility. As of September 30, 2019, HTALP had $15.0 million under this unsecured revolving credit facility outstanding and an interest rate of 3.24% per annum. The margin associated with our borrowings was 1.00% per annum and the facility fee was 0.20% per annum.

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HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Unsecured Term Loan due 2023

In 2017, we entered into the Unsecured Credit Agreement as noted above. As part of this agreement, we obtained a $300.0 million unsecured term loan that was guaranteed by HTA with a maturity date of February 1, 2023. Borrowings under this unsecured term loan accrue interest equal to adjusted LIBOR, plus a margin ranging from 0.90% to 1.75% per annum based on our credit rating. The margin associated with our borrowings as of September 30, 2019 was 1.10% per annum. Including the impact of the interest rate swaps associated with our unsecured term loan, the interest rate was 2.52% per annum, based on our current credit rating. As of September 30, 2019, HTALP had $300.0 million under this unsecured term loan outstanding.

$200.0 Million Unsecured Term Loan due 2024

In 2018, HTALP entered into a modification of our $200.0 million unsecured term loan with a maturity date of January 15, 2024. Borrowings under the unsecured term loan accrue interest at a rate equal to LIBOR, plus a margin ranging from 0.75% to 1.65% per annum based on our credit rating. The margin associated with our borrowings as of September 30, 2019 was 1.00% per annum. HTALP had interest rate swaps on a portion of the balance, which resulted in a fixed interest rate at 2.32% per annum, based on our current credit rating. As of September 30, 2019, HTALP had $200.0 million under this unsecured term loan outstanding.

$300.0 Million Unsecured Senior Notes due 2021

In September 2019, in connection with HTALP’s issuance of $900.0 million of unsecured senior notes, all of the $300.0 million outstanding 2021 unsecured senior notes originally due to mature on July 15, 2021, including any accrued and unpaid interest and a make-whole provision, were redeemed in full, with net proceeds from the offering. The make-whole fee of $7.4 million is recorded in loss on extinguishment of debt in the accompanying condensed consolidated statements of operations.

$400.0 Million Unsecured Senior Notes due 2022

In September 2019, in connection with HTALP’s issuance of $900.0 million of unsecured senior notes, all of the $400.0 million outstanding 2022 unsecured senior notes originally due to mature on July 1, 2022, including any accrued and unpaid interest and a make-whole provision, were redeemed in full, with net proceeds from the offering. The make-whole fee of $10.9 million is recorded in loss on extinguishment of debt in the accompanying condensed consolidated statements of operations.

$300.0 Million Unsecured Senior Notes due 2023

As of September 30, 2019, HTALP had $300.0 million of unsecured senior notes outstanding that are guaranteed by HTA. These unsecured senior notes are registered under the Securities Act of 1933, as amended (the “Securities Act”), bear interest at 3.70% per annum and are payable semi-annually. Additionally, these unsecured senior notes were offered at 99.19% of the principal amount thereof, with an effective yield to maturity of 3.80% per annum. As of September 30, 2019, HTALP had $300.0 million of these unsecured senior notes outstanding that mature on April 15, 2023.

$600.0 Million Unsecured Senior Notes due 2026

In September 2019, in connection with the $650.0 million unsecured senior notes due 2030 referenced below, HTALP issued $250.0 million as additional unsecured senior notes to the $350.0 million aggregate principal of senior notes issued on July 12, 2016, all of which are guaranteed by HTA. These unsecured senior notes are registered under the Securities Act, bear interest at 3.50% per annum and are payable semi-annually. Additionally, these unsecured senior notes were offered at 103.66% and 99.72%, respectively, of the principal amount thereof, with an effective yield to maturity of 2.89% and 3.53%, respectively, per annum. As of September 30, 2019, HTALP had $600.0 million of these unsecured senior notes outstanding that mature on August 1, 2026.

$500.0 Million Unsecured Senior Notes due 2027

In 2017, in connection with the $400.0 million unsecured senior notes due 2022 referenced above, HTALP issued $500.0 million of unsecured senior notes that are guaranteed by HTA. These unsecured senior notes are registered under the Securities Act, bear interest at 3.75% per annum and are payable semi-annually. Additionally, these unsecured senior notes were offered at 99.49% of the principal amount thereof, with an effective yield to maturity of 3.81% per annum. As of September 30, 2019, HTALP had $500.0 million of these unsecured senior notes outstanding that mature on July 1, 2027.

$650.0 Million Unsecured Senior Notes due 2030

In September 2019, in connection with the $250.0 million additional unsecured senior notes due 2026 referenced above, HTALP issued $650.0 million of unsecured senior notes that are guaranteed by HTA. These unsecured senior notes are registered under the Securities Act, bear interest at 3.10% per annum and are payable semi-annually. Additionally, these unsecured senior notes were offered at 99.66% of the principal amount thereof, with an effective yield to maturity of 3.14% per annum. As of September 30, 2019, HTALP had $650.0 million of these unsecured senior notes outstanding that mature on February 15, 2030.

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Fixed Rate Mortgages

As of September 30, 2019, HTALP and its subsidiaries had fixed rate mortgages with interest rates ranging from 2.85% to 4.00% per annum and a weighted average interest rate of 3.93% per annum. During the nine months ended September 30, 2019, we repaid $96.8 million of our fixed rate mortgages. As of September 30, 2019, we had $114.7 million of fixed rate mortgages outstanding.

Future Debt Maturities

The following table summarizes the debt maturities and scheduled principal repayments of our indebtedness as of September 30, 2019 (in thousands):



Year	Amount
2019	$	598
2020	97,429
2021	2,504
2022	17,005
2023	612,121
Thereafter	1,950,000
Total	$	2,679,657

Deferred Financing Costs

As of September 30, 2019, the future amortization of our deferred financing costs is as follows (in thousands):



Year	Amount
2019	$	858
2020	2,555
2021	2,560
2022	2,561
2023	1,842
Thereafter	5,712
Total	$	16,088

Debt Covenants

We are required by the terms of our applicable loan agreements to meet various affirmative and negative covenants that we believe are customary for these types of facilities, such as limitations on the incurrence of debt by us and our subsidiaries that own unencumbered assets, limitations on the nature of HTALP’s business, and limitations on distributions by HTALP and its subsidiaries that own unencumbered assets. Our loan agreements also impose various financial covenants on us, such as a maximum ratio of total indebtedness to total asset value, a minimum ratio of EBITDA to fixed charges, a minimum tangible net worth covenant, a maximum ratio of unsecured indebtedness to unencumbered asset value, rent coverage ratios and a minimum ratio of unencumbered Net Operating Income (“NOI”) to unsecured interest expense. As of September 30, 2019, we believe that we were in compliance with all such financial covenants and reporting requirements. In addition, certain of our loan agreements include events of default provisions that we believe are customary for these types of facilities, including restricting us from making dividend distributions to our stockholders in the event we are in default thereunder, except to the extent necessary for us to maintain our REIT status.

9. Derivative Financial Instruments and Hedging Activities

Risk Management Objective of Using Derivative Financial Instruments

We may use derivative financial instruments, including interest rate swaps, caps, options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with our borrowings. The principal objective of such arrangements is to minimize the risks and/or costs associated with our operating and financial structure as well as to hedge specific anticipated transactions. We do not intend to utilize derivatives for speculative or other purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, we only enter into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which we and our affiliates may also have other financial relationships. We do not anticipate that any of the counterparties will fail to meet their obligations. We record counterparty credit risk valuation adjustments on interest rate swap derivative assets in order to properly reflect the credit quality of the counterparty. In addition, the fair value of derivative financial instruments designated as cash flow hedges are adjusted to reflect the impact of our credit quality.

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Cash Flow Hedges of Interest Rate Risk

Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we primarily use interest rate swaps and treasury locks as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable rate amounts from a counterparty in exchange for us making fixed rate payments over the life of the agreements without exchange of the underlying notional amount. A treasury lock is a synthetic forward sale of a U.S. treasury note, which is settled in cash based upon the difference between an agreed upon treasury rate and the prevailing treasury rate at settlement. Such treasury locks are entered into to effectively fix the treasury component of an upcoming debt issuance.

Amounts reported in accumulated other comprehensive income in the accompanying condensed consolidated balance sheets related to derivatives will be reclassified to interest expense as interest payments are made on our variable rate debt. During the next twelve months, we estimate that an additional $1.2 million will be reclassified from other comprehensive income in the accompanying condensed consolidated balance sheets as an increase to interest related to derivative financial instruments in the accompanying condensed consolidated statements of operations.

As of September 30, 2019, we had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (in thousands, except number of instruments):



Interest Rate Swaps	September 30, 2019
Number of instruments	7
Notional amount	$	500,000

The table below presents the fair value of our derivative financial instruments designated as cash flow hedges as well as the classification in the accompanying condensed consolidated balance sheets as of September 30, 2019 and December 31, 2018, respectively (in thousands):

Asset Derivatives

Liability Derivatives

Fair Value at:

Derivatives Designated as Hedging Instruments:

Balance Sheet

Location

September 30, 2019

December 31, 2018

Balance Sheet

Location

September 30, 2019

December 31, 2018

Interest rate swaps

Receivables and other assets

1,293

1,111

Derivative financial instruments

1,152

—

The table below presents the gain or loss recognized on our derivative financial instruments designated as cash flow hedges as well as the classification in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2019 and 2018, respectively (in thousands):



	Gain (Loss) Recognized in OCI on Derivative					Gain (Loss) Reclassified from Accumulated OCI into Income
	Three Months Ended September 30,					Three Months Ended September 30,
Derivatives Cash Flow Hedging Relationships:	2019		2018		Statement of Operations Location	2019		2018
Interest rate swaps	$	2,559	$	96	Interest expense	$	269	$	223



	Gain (Loss) Recognized in OCI on Derivative					Gain (Loss) Reclassified from Accumulated OCI into Income
	Nine Months Ended September 30,					Nine Months Ended September 30,
Derivatives Cash Flow Hedging Relationships:	2019		2018		Statement of Operations Location	2019		2018
Interest rate swaps	$	2,508	$	1,437	Interest expense	$	989	$	450

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Tabular Disclosure of Offsetting Derivatives

The table below sets forth the net effects of offsetting and net presentation of our derivatives as of September 30, 2019 and December 31, 2018, respectively (in thousands). The net amounts of derivative assets can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets are presented in the accompanying condensed consolidated balance sheets.



	Offsetting of Derivative Assets
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Balance Sheets		Net Amounts of Assets Presented in the Balance Sheets		Financial Instruments		Cash Collateral Received		Net Amount
September 30, 2019	$	571	$	722	$	1,293	$	—	$	—	$	1,293
December 31, 2018	1,111		—		1,111		—		—		1,111



	Offsetting of Derivative Liabilities
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Balance Sheets		Net Amounts of Liabilities Presented in the Balance Sheets		Financial Instruments		Cash Collateral Received		Net Amount
September 30, 2019	$	430	$	722	$	1,152	$	—	$	—	$	1,152
December 31, 2018	—		—		—		—		—		—

Credit Risk Related Contingent Features

We have agreements with each of our derivative counterparties that contain a provision that if we default on any of our indebtedness, including a default where repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations.

We also have agreements with each of our derivative counterparties that incorporate provisions from our indebtedness with a lender affiliate of the derivative counterparty requiring it to maintain certain minimum financial covenant ratios on our indebtedness. Failure to comply with the covenant provisions would result in us being in default on any derivative instrument obligations covered by these agreements.

As of September 30, 2019, the fair value of derivatives in a net liability position, including accrued interest, but excluding any adjustment for nonperformance risk related to these agreements, was $0.4 million. As of September 30, 2019, we have not posted any collateral related to these agreements and we were not in breach of any of the provisions of these agreements. If we had breached any of the provisions of these agreements, we could have been required to settle our obligations under these agreements at an aggregate termination value of $0.4 million at September 30, 2019.

10. Commitments and Contingencies

Litigation

We engage in litigation from time to time with various parties as a routine part of our business, including tenant defaults. However, we are not presently subject to any material litigation nor, to our knowledge, is any material litigation threatened against us, which if determined unfavorably to us, would have a material adverse effect on our condensed consolidated financial position, results of operations or cash flows.

Environmental Matters

We follow the policy of monitoring our properties for the presence of hazardous or toxic substances. While there can be no assurance that a material environmental liability does not exist at our properties, we are not currently aware of any environmental liability with respect to our properties that would have a material effect on our condensed consolidated financial position, results of operations or cash flows. Further, we are not aware of any material environmental liability or any unasserted claim or assessment with respect to an environmental liability at our properties that we believe would require additional disclosure or the recording of a loss contingency.

Other

Our other commitments and contingencies include the usual obligations of real estate owners and operators in the normal course of business. In our opinion, these matters are not expected to have a material adverse effect on our condensed consolidated financial position, results of operations or cash flows.

11. Redeemable Noncontrolling Interests

As discussed in Note 2 - Summary of Significant Accounting Policies, redeemable noncontrolling interests on the accompanying condensed consolidated balance sheets represent the noncontrolling interest in a joint venture in which we own

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HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

the majority interest. The noncontrolling interest holders in the joint venture have the option to redeem their noncontrolling interest through the exercise of put options that were issued at the initial formation of the joint venture. The last exercisable put option lapsed on June 30, 2019. The redemption price was based on the fair value of their interest at the time of option exercise. As of September 30, 2019, all redeemable noncontrolling interests have either converted their interest to OP Units or received cash proceeds.

The following is a summary of the activity of our redeemable noncontrolling interests as of September 30, 2019 and December 31, 2018, respectively (in thousands):



	September 30, 2019			December 31, 2018
Beginning balance	$	6,544		$	6,737
Net income attributable to noncontrolling interests	66			89
Distributions	(141		)	(282		)
Fair value adjustment	(425		)	—
Redemptions	(3,441		)	—
Issuance of OP Units	(2,603		)	—
Ending balance	$	—		$	6,544

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HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

12. Stockholders’ Equity and Partners’ Capital

HTALP’s operating partnership agreement provides that it will distribute cash flow from operations and net sale proceeds to its partners in accordance with their overall ownership interests at such times and in such amounts as the general partner determines. Dividend distributions are made such that a holder of one OP Unit in HTALP will receive distributions from HTALP in an amount equal to the dividend distributions paid to the holder of one share of our common stock. In addition, for each share of common stock issued or redeemed by HTA, HTALP issues or redeems a corresponding number of OP Units.

Common Stock Offerings

In December 2018, we entered into new equity distribution agreements with various sales agents with respect to our at-the-market (“ATM”) offering program of common stock with an aggregate sales amount of up to $500.0 million. In September 2019, we settled a forward sale arrangement pursuant to a forward equity agreement that was entered into in June 2019, which included the sale of approximately 1.8 million shares of our common stock for net proceeds of approximately $51.8 million, adjusted for costs to borrow equating to a net price to us of $28.13 per share of common stock. As of September 30, 2019, $448.2 million remained available for issuance by us under the ATM.

In October 2019, we entered into a forward sale arrangement pursuant to a forward equity agreement, with anticipated net proceeds of $172.7 million with a maturity date of October 2020, subject to adjustments as provided in the forward equity agreement. Refer to Note 14 - Per Share Data of HTA to these condensed consolidated financial statements for a more detailed discussion related to our forward equity agreements.

Stock Repurchase Plan

During the nine months ended September 30, 2019, we repurchased 345,786 shares of our common stock, at an average price of $24.65 per share, for an aggregate amount of approximately $8.5 million, pursuant to our stock repurchase plan. As of September 30, 2019, the remaining amount of common stock available for repurchase under our stock repurchase plan was approximately $224.3 million.

Common Stock Dividends

See our accompanying condensed consolidated statements of equity and condensed statements of changes in partners’ capital for the dividends declared during the three and nine months ended September 30, 2019 and 2018. On October 28, 2019, our Board of Directors announced a quarterly cash dividend of $0.315 per share of common stock and per OP Unit to be paid on January 9, 2020 to stockholders of record of our common stock and holders of our OP Units on January 2, 2020.

Incentive Plan

Our Incentive Plan permits the grant of incentive awards to our employees, officers, non-employee directors and consultants as selected by our Board of Directors. This Plan authorizes us to grant awards in any of the following forms: options; stock appreciation rights; restricted stock; restricted or deferred stock units; performance awards; dividend equivalents; other stock-based awards, including units in HTALP; and cash-based awards. Subject to adjustment as provided in the Plan, the aggregate number of awards reserved and available for issuance under the Plan is 5,000,000 shares. As of September 30, 2019, there were 1,065,132 awards available for grant under the Plan.

Restricted Common Stock

For the three and nine months ended September 30, 2019, we recognized compensation expense of $2.3 million and $7.8 million, respectively. For the three and nine months ended September 30, 2018, we recognized compensation expense of $2.1 million and $7.8 million, respectively. Substantially all compensation expense was recorded in general and administrative expenses in the accompanying condensed consolidated statements of operations.

As of September 30, 2019, we had $7.3 million of unrecognized compensation expense, net of estimated forfeitures, which we will recognize over a remaining weighted average period of 1.4 years.

The following is a summary of our restricted common stock activity as of September 30, 2019 and 2018, respectively:



	September 30, 2019				September 30, 2018
	Restricted Common Stock		Weighted Average Grant Date Fair Value		Restricted Common Stock		Weighted Average Grant Date Fair Value
Beginning balance	624,349		$	29.35	589,606		$	29.38
Granted	333,820		26.06		360,700		28.70
Vested	(338,540	)	28.53		(255,946	)	28.68
Forfeited	(13,951	)	28.22		(38,882	)	28.97
Ending balance	605,678		$	28.05	655,478		$	29.30

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HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

13. Fair Value of Financial Instruments

Financial Instruments Reported at Fair Value - Recurring

The table below presents the carrying amounts and fair values of our financial instruments on a recurring basis as of September 30, 2019 and December 31, 2018 (in thousands):



	September 30, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Level 2 - Assets:
Derivative financial instruments	$	1,293	$	1,293	$	1,111	$	1,111
Level 2 - Liabilities:
Derivative financial instruments	$	1,152	$	1,152	$	—	$	—
Debt	2,665,691		2,734,978		2,541,232		2,508,599

The carrying amounts of cash and cash equivalents, tenant and other receivables, restricted cash, accounts payable, and accrued liabilities approximate fair value. There have been no transfers of assets or liabilities between levels. We will record any such transfers at the end of the reporting period in which a change of event occurs that results in a transfer. Although we have determined that the majority of the inputs used to value our cash flow hedges fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with these instruments utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our cash flow hedge positions and have determined that the credit valuation adjustments are not significant to their overall valuation. As a result, we have determined that our cash flow hedge valuations in their entirety are classified in Level 2 of the fair value hierarchy. For further discussion of the assumptions considered, refer to Note 2 - Summary of Significant Accounting Policies.

Financial Instruments Reported at Fair Value - Non-Recurring

We also have assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. This generally includes assets subject to impairment.

14. Per Share Data of HTA

In September 2019, we settled a forward sale arrangement pursuant to a forward equity agreement that was entered into in June 2019, to sell approximately 1.8 million shares of common stock through our ATM at a price of $28.13 per share, for net proceeds of $51.8 million. To account for the forward equity agreement, we considered the accounting guidance governing financial instruments and derivatives and concluded that our forward equity agreement was not a liability as it did not embody obligations to repurchase our shares of common stock nor did it embody obligations to issue a variable number of shares for which the monetary value was predominately fixed, varying with something other than the fair value of the shares, or varying inversely in relation to our shares. We also evaluated whether the agreement met the derivatives and hedging guidance scope exception to be accounted for as an equity instrument and concluded that the agreement can be classified as an equity contract based on the following assessment: (i) none of the agreements’ exercise contingencies were based on observable markets or indices besides those related to the market for our own stock price and operations; and (ii) none of the settlement provisions precluded the agreement from being indexed to our own common stock.

In addition, we considered the potential dilution resulting from the forward equity agreement mentioned above on our earnings per common share calculations. We use the treasury method to determine the dilution resulting from the forward equity agreement during the period of time prior to settlement. The impact to our weighted-average shares - diluted was anti-dilutive in nature and thus approximately 24,000 and 9,000, respectively, were excluded from the calculation for the three and nine months ended September 30, 2019.

In October 2019, we entered into a forward sale arrangement pursuant to a forward equity agreement to sell approximately 6.0 million shares of common stock through our ATM at a price of $28.64 per share, for anticipated net proceeds of approximately $172.7 million with a maturity date of October 2020, subject to adjustments as provided in the forward equity agreement. We anticipate using these net proceeds to fund purchases of additional MOBs and for general corporate purposes.

We include unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents as “participating securities” pursuant to the two-class method. The resulting classes are our common stock and restricted stock. Our forward equity agreement is not considered a participating security and, therefore, is not included in the computation of earnings per share using the two-class method. For the three and nine months ended September 30, 2019 and 2018, all of our earnings were distributed and the calculated earnings per share amount would be the same for all classes.

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HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following is the reconciliation of the numerator and denominator used in basic and diluted earnings per share of HTA for the three and nine months ended September 30, 2019 and 2018, respectively (in thousands, except per share data):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Numerator:
Net (loss) income	$	(8,577	)	$	176,348		$	21,722		$	202,021
Net income attributable to noncontrolling interests	114			(3,362		)	(486		)	(3,887		)
Net income attributable to common stockholders	$	(8,463	)	$	172,986		$	21,236		$	198,134
Denominator:
Weighted average shares outstanding - basic	205,277			207,513			205,156			205,950
Dilutive shares - OP Units convertible into common stock	—			3,931			3,870			4,018
Adjusted weighted average shares outstanding - diluted	205,277			211,444			209,026			209,968
Earnings per common share - basic
Net (loss) income attributable to common stockholders	$	(0.04	)	$	0.83		$	0.10		$	0.96
Earnings per common share - diluted
Net (loss) income attributable to common stockholders	$	(0.04	)	$	0.82		$	0.10		$	0.94

15. Per Unit Data of HTALP

In September 2019, we settled a forward sale arrangement pursuant to a forward equity agreement, that was entered into in June 2019, to sell 1.8 million shares of common stock through our ATM. In October 2019, we entered into a forward sale arrangement pursuant to a forward equity agreement to sell 6.0 million shares of common stock through our ATM. Refer to Note 14 - Per Share Data of HTA to these condensed consolidated financial statements for a more detailed discussion related to our forward equity agreements executed in June 2019 and October 2019.

The following is the reconciliation of the numerator and denominator used in basic and diluted earnings per unit of HTALP for the three and nine months ended September 30, 2019, and 2018, respectively (in thousands, except per unit data):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Numerator:
Net (loss) income	$	(8,577	)	$	176,348		$	21,722		$	202,021
Net income attributable to noncontrolling interests	—			(18		)	(66		)	(65		)
Net (loss) income attributable to common unitholders	$	(8,577	)	$	176,330		$	21,656		$	201,956
Denominator:
Weighted average OP Units outstanding - basic	209,164			211,444			209,056			209,968
Dilutive units - OP Units convertible into common units	—			—			—			—
Adjusted weighted average units outstanding - diluted	209,164			211,444			209,056			209,968
Earnings per common unit - basic:
Net (loss) income attributable to common unitholders	$	(0.04	)	$	0.83		$	0.10		$	0.96
Earnings per common unit - diluted:
Net (loss) income attributable to common unitholders	$	(0.04	)	$	0.83		$	0.10		$	0.96

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HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

16. Supplemental Cash Flow Information

The following is the supplemental cash flow information for the nine months ended September 30, 2019 and 2018, respectively (in thousands):



	Nine Months Ended September 30,
	2019		2018
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	84,155	$	87,303
Income taxes paid	1,846		1,656
Cash paid for operating leases	9,277		—

Supplemental Disclosure of Noncash Investing and Financing Activities:
Accrued capital expenditures	$	3,922	$	243
Dividend distributions declared, but not paid	66,397		65,544
Issuance of OP Units in HTALP	2,603		—
Issuance of OP Units in HTALP in connection with an acquisition	2,000		—
Redemption of noncontrolling interest	7,263		5,195
Redemption of redeemable noncontrolling interest	3,441		—
ROU assets obtained in exchange for lease obligations	200,879		—

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The use of the words “we,” “us,” or “our” refers to HTA and HTALP, collectively.

The following discussion should be read in conjunction with our condensed consolidated financial statements and notes appearing elsewhere in this Quarterly Report, as well as with the audited consolidated financial statements, accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2018 Annual Report on Form 10-K.

The information set forth below is intended to provide readers with an understanding of our financial condition, changes in financial condition and results of operations.


•	Forward-Looking Statements;


•	Executive Summary;


•	Company Highlights;


•	Critical Accounting Policies;


•	Recently Issued or Adopted Accounting Pronouncements;


•	Factors Which May Influence Results of Operations;


•	Results of Operations;


•	Non-GAAP Financial Measures;


•	Liquidity and Capital Resources;


•	Commitments and Contingencies;


•	Debt Service Requirements;


•	Off-Balance Sheet Arrangements; and


•	Inflation.

Forward-Looking Statements

Certain statements contained in this Quarterly Report constitute forward-looking statements within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”)). Such statements include, in particular, statements about our plans, strategies, prospects and estimates regarding future MOB market performance. Additionally, such statements are subject to certain risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ materially and in adverse ways from those projected or anticipated. Therefore, such statements are not intended to be a guarantee of our performance in future periods. Forward-looking statements are generally identifiable by the use of such terms as “expect,” “project,” “may,” “should,” “could,” “would,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “opinion,” “predict,” “potential,” “pro forma” or the negative of such terms and other comparable terminology. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this Quarterly Report is filed with the SEC. We cannot guarantee the accuracy of any such forward-looking statements contained in this Quarterly Report, and we do not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Any such forward-looking statements reflect our current views about future events, are subject to unknown risks, uncertainties, and other factors, and are based on a number of assumptions involving judgments with respect to, among other things, future economic, competitive and market conditions, all of which are difficult or impossible to predict accurately. To the extent that our assumptions differ from actual results, our ability to meet such forward-looking statements, including our ability to generate positive cash flow from operations, provide dividends to stockholders and maintain the value of our real estate properties, may be significantly hindered. Factors that might impair our ability to meet such forward-looking statements include, without limitation, those discussed in Part I, Item 1A - Risk Factors in our 2018 Annual Report on Form 10-K, which is incorporated herein.

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Forward-looking statements express expectations of future events. All forward-looking statements are inherently uncertain as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties that could cause actual events or results to differ materially from those projected. Due to these inherent uncertainties, our stockholders are urged not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date made. In addition, we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to projections over time, except as required by law.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning us and our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Executive Summary

We are the largest publicly-traded REIT focused on MOBs in the U.S. as measured by the Gross Leasable Area ("GLA") of our MOBs. We conduct substantially all of our operations through HTALP. We invest in MOBs that we believe will serve the future of healthcare delivery and MOBs that are primarily located on health system campuses, near university medical centers, or in core community outpatient locations. We also focus on key markets that have certain demographic and macro-economic trends and where we can utilize our institutional full-service operating platform to generate strong tenant and health system relationships and operating cost efficiencies. Our primary objective is to maximize stockholder value with disciplined growth through strategic investments that provide an attractive risk-adjusted return for our stockholders by consistently increasing our cash flow. In pursuing this objective, we: (i) seek internal growth through proactive asset management, leasing, building services and property management oversight; (ii) target accretive acquisitions and developments of MOBs in markets with attractive demographics that complement our existing portfolio; and (iii) actively manage our balance sheet to maintain flexibility with conservative leverage. Additionally, from time to time we consider, on an opportunistic basis, significant portfolio acquisitions that we believe fit our core business and could enhance our existing portfolio.

Since 2006, we have invested $7.0 billion primarily in MOBs, development projects, land and other healthcare real estate assets consisting of approximately 23.7 million square feet of GLA throughout the U.S. Approximately 67% of our portfolio was located on the campuses of, or adjacent to, nationally and regionally recognized healthcare systems. Our portfolio is diversified geographically across 33 states, with no state having more than 20% of our total GLA as of September 30, 2019. We are concentrated in 20 to 25 key markets that are experiencing higher economic and demographic trends than other markets, on average, that we expect will drive demand for MOBs. As of September 30, 2019, we had approximately 1 million square feet of GLA in nine of our top 20 markets and approximately 93% of our portfolio, based on GLA, is located in the top 75 Metropolitan Statistical Area ("MSAs"), with Dallas, Houston, Boston, Tampa and Atlanta being our largest markets by investment.

Company Highlights

Portfolio Operating Performance


•	For the three months ended September 30, 2019, total revenue was $175.0 million, compared to $175.1 million for the three months ended September 30, 2018. For the nine months ended September 30, 2019, total revenue was $515.7 million, compared to $524.1 million for the nine months ended September 30, 2018.


•	For the three months ended September 30, 2019, net (loss) income was $(8.6) million, compared to $176.3 million, for the three months ended September 30, 2018. For the nine months ended September 30, 2019, net income was $21.7 million, compared to $202.0 million, for the nine months ended September 30, 2018.

•

For the three months ended September 30, 2019, net (loss) income attributable to common stockholders was $(0.04) per diluted share, or $(8.5) million, compared to $0.82 per diluted share, or $173.0 million for the three months ended September 30, 2018. For the nine months ended September 30, 2019, net income attributable to common stockholders was $0.10 per diluted share, or $21.2 million, compared to $0.94 per diluted share, or $198.1 million for the nine months ended September 30, 2018.

•

For the three months ended September 30, 2019, HTA’s FFO, as defined by NAREIT, was $65.0 million, or $0.31 per diluted share, compared to $0.38 per diluted share, or $81.4 million, for the three months ended September 30, 2018. For the nine months ended September 30, 2019 HTA’s FFO, was $232.5 million, or $1.11 per diluted share, compared to $1.19 per diluted share, or $250.4 million, for the nine months ended September 30, 2018. Due to the adoption of Topic 842, initial direct costs are now reported in general and administrative expenses on the accompanying condensed consolidated statements of operations. For the three and nine months ended September 30, 2018, we capitalized approximately $1.5 million and $3.7 million, respectively, of initial direct costs.

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•

For the three months ended September 30, 2019, HTALP’s FFO was $64.9 million, or $0.31 per diluted OP Unit, compared to $0.40 per diluted OP unit, or $84.7 million, for the three months ended September 30, 2018. For the nine months ended September 30, 2019, HTALP’s FFO was $232.9 million, or $1.11 per diluted OP Unit, compared to $1.21 per diluted OP Unit, or $254.2 million, for the nine months ended September 30, 2018.


•	For the three months ended September 30, 2019, HTA’s and HTALP’s Normalized FFO was $0.42 per diluted share and OP Unit, or $87.1 million. For the nine months ended September 30, 2019, HTA’s and HTALP’s Normalized FFO was $1.22 per diluted share and OP Unit, or $255.4 million.


•	For additional information on FFO and Normalized FFO, see “FFO and Normalized FFO” below, which includes a reconciliation to net income attributable to common stockholders/unitholders and an explanation of why we present this non-GAAP financial measure.


•	For the three months ended September 30, 2019, NOI was $121.2 million, compared to $119.3 million for the three months ended September 30, 2018. For the nine months ended September 30, 2019, NOI was $357.5 million, compared to $358.8 million for the nine months ended September 30, 2018.


•	For the three months ended September 30, 2019, Same-Property Cash NOI increased 2.5%, or $2.8 million, to $113.2 million, compared to $110.5 million for the three months ended September 30, 2018. For the nine months ended September 30, 2019, Same-Property Cash NOI increased 2.7%, or $9.0 million, to $336.1 million, compared to $327.1 million for the nine months ended September 30, 2018.


•	For additional information on NOI and Same-Property Cash NOI, see “NOI, Cash NOI and Same-Property Cash NOI” below, which includes a reconciliation from net income and an explanation of why we present these non-GAAP financial measures.

Key Market Focused Strategy and Investments

We believe we have been one of the most active investors in the medical office sector over the last decade. This has enabled us to create a high quality portfolio focused on MOBs serving the future of healthcare with scale and significance in 20 to 25 key markets.

•

Our investment strategy includes alignment with key healthcare systems, hospitals, and leading academic medical universities. We are the largest owner of on-campus or adjacent MOBs in the country, with approximately 15.8 million square feet of GLA, or 67%, of our portfolio located in these locations. The remaining 33% of our portfolio is located in core community outpatient locations where healthcare is increasingly being delivered.

•

Over the past decade, our investments have been focused in our 20 to 25 key markets which we believe will outperform the broader U.S. markets from an economic and demographic perspective. As of September 30, 2019, approximately 93% of our portfolio’s GLA is located in the top 75 MSAs. Our key markets represent top MSAs with strong growth metrics in jobs, household income and population, as well as low unemployment and mature healthcare infrastructures. Many of our key markets are also supported by strong university systems.

•

Our key market focus has enabled us to establish scale across 20 to 25 key markets and effectively utilize our asset management and leasing platform to deliver consistent same store growth and additional yield on investments, and also cost effective service to tenants. As of September 30, 2019, we had approximately 1 million square feet of GLA in nine of our top 20 markets and approximately 0.5 million square feet of GLA in 15 of our top 20 markets.


•	During the nine months ended September 30, 2019, we invested $217.2 million to acquire ten MOBs primarily located in our existing key markets totaling approximately 522,000 square feet of GLA. In addition, we invested approximately $11.2 million in a parcel of land and to consolidate our ownership interests in several other MOBs.

Internal Growth through Proactive In-House Property Management and Leasing

We believe we have the largest full-service operating platform in the medical office sector that consists of our in-house asset management and leasing platform which allows us to better manage and service our existing portfolio. In each of these markets, we have established a strong in-house asset management and leasing platform that has allowed us to develop valuable relationships with health systems, physician practices, universities, and regional development firms that have led to investment and leasing opportunities. Our full-service operating platform has also enabled us to focus on generating cost efficiencies as we gain scale across individual markets and regions.


•	As of September 30, 2019, our in-house asset management and leasing platform operated approximately 22.1 million square feet of GLA, or 93% of our total portfolio.


•	As of September 30, 2019, our leased rate (which includes leases which have been executed, but which have not yet commenced) was 90.6% by GLA and our occupancy rate was 89.7% by GLA.

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•	We entered into new and renewal leases on approximately 0.7 million and 2.6 million square feet of GLA, or approximately 2.9% and 11.0%, respectively, of the GLA of our total portfolio, during the three and nine months ended September 30, 2019.

•

During the three and nine months ended September 30, 2019, tenant retention for the Same-Property portfolio was 86% and 85%, respectively, which included approximately 0.8 million and 2.4 million square feet of GLA of expiring leases, respectively, which we believe is indicative of our commitment to maintaining buildings in desirable locations and fostering strong tenant relationships. Tenant retention is defined as the sum of the total leased GLA of tenants that renewed a lease during the period over the total GLA of leases that renewed or expired during the period.

Financial Strategy and Balance Sheet Flexibility


•	As of September 30, 2019, we had total leverage, measured by debt less cash and cash equivalents to total capitalization, of 30.0%. Total liquidity was approximately $1.0 billion, including cash and cash equivalents of $12.7 million, and approximately $1.0 billion available on our unsecured revolving credit facility as of September 30, 2019.


•	As of September 30, 2019, the weighted average remaining term of our debt portfolio was 6.6 years.


•	During the three months ended September 30, 2019, we settled a forward sale arrangement pursuant to a forward equity agreement that was entered into in June 2019, which included the sale of approximately 1.8 million shares of our common stock for net proceeds of approximately $51.8 million, adjusted for costs to borrow equating to a net price to us of $28.13 per share of common stock.


•	During the nine months ended September 30, 2019, we repurchased 345,786 shares of our common stock totaling approximately $8.5 million, at an average price of $24.65 per share, pursuant to our stock repurchase plan.


•	On October 28, 2019, our Board of Directors announced a quarterly cash dividend of $0.315 per share of common stock and per OP Unit to be paid on January 9, 2020 to stockholders of record of our common stock and holders of our OP Units on January 2, 2020.

Critical Accounting Policies

The complete list of our critical accounting policies was disclosed in our 2018 Annual Report on Form 10-K. On January 1, 2019 we adopted Topic 842. For more detail on the implementation and policies of this adoption see Note 2 - Summary of Significant Accounting Policies and Note 7 - Leases in the accompanying condensed consolidated financial statements. For further information on other significant accounting policies that impact us, see Note 2 - Summary of Significant Accounting Policies in the accompanying condensed consolidated financial statements.

Recently Issued or Adopted Accounting Pronouncements

See Note 2 - Summary of Significant Accounting Policies in the accompanying condensed consolidated financial statements for a discussion of recently issued or adopted accounting pronouncements.

Factors Which May Influence Results of Operations

We are not aware of any material trends or uncertainties, other than national economic conditions affecting real estate generally and the risk factors previously listed in Part I, Item 1A - Risk Factors, in our 2018 Annual Report on Form 10-K that may reasonably be expected to have a material impact, favorable or unfavorable, on revenues or income from the investment, management and operation of our properties.

Rental Income

The amount of rental income generated by our properties depends principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space and space that will become available from unscheduled lease terminations at the then applicable rental rates. Negative trends in one or more of these factors could adversely affect our rental income in future periods.

Investment Activity

During the nine months ended September 30, 2019, we had investments with an aggregate gross purchase price of $229.9 million. During the nine months ended September 30, 2018, we had investments with an aggregate gross purchase price of $17.8 million. The amount of any future acquisitions or dispositions could have a significant impact on our results of operations in future periods.

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Results of Operations

Comparison of the Three and Nine Months Ended September 30, 2019 and 2018

As of September 30, 2019 and 2018, we owned and operated approximately 23.7 million and 23.2 million square feet of GLA, respectively, with a leased rate of 90.6% and 92.1%, respectively (including leases which have been executed, but which have not yet commenced), and an occupancy rate of 89.7% and 90.9%, respectively. All explanations are applicable to both HTA and HTALP unless otherwise noted.

Comparison of the three months ended September 30, 2019 and 2018, respectively, is set forth below (in thousands):



	Three Months Ended September 30,
	2019			2018			Change			% Change
Revenues:
Rental income	$	174,844		$	175,038		$	(194	)	(0.1	)%
Interest and other operating income	160			97			63			64.9
Total revenues	175,004			175,135			(131		)	(0.1	)
Expenses:
Rental	53,807			55,789			(1,982		)	(3.6	)
General and administrative	9,788			8,770			1,018			11.6
Transaction	522			346			176			50.9
Depreciation and amortization	73,820			70,568			3,252			4.6
Impairment	—			4,281			(4,281		)	NM
Interest expense	24,625			24,834			(209		)	(0.8	)
Total expenses	162,562			164,588			(2,026		)	(1.2	)
(Loss) gain on sale of real estate, net	—			166,372			(166,372		)	NM
Loss on extinguishment of debt, net	(21,646		)	(1,092		)	(20,554		)	NM
Income from unconsolidated joint venture	422			432			(10		)	(2.3	)
Other income	205			89			116			NM
Net income	$	(8,577	)	$	176,348		$	(184,925	)	NM

NOI	$	121,197		$	119,346		$	1,851		1.6	%
Same-Property Cash NOI	$	113,206		$	110,455		$	2,751		2.5	%

Comparison of the nine months ended September 30, 2019 and 2018, respectively, is set forth below (in thousands):



	Nine Months Ended September 30,
	2019			2018			Change			% Change
Revenues:
Rental income	$	515,328		$	523,826		$	(8,498	)	(1.6	)%
Interest and other operating income	399			302			97			32.1
Total revenues	515,727			524,128			(8,401		)	(1.6	)
Expenses:
Rental	158,213			165,364			(7,151		)	(4.3	)
General and administrative	31,157			26,281			4,876			18.6
Transaction	858			933			(75		)	(8.0	)
Depreciation and amortization	211,730			210,064			1,666			0.8
Interest expense	72,601			77,392			(4,791		)	(6.2	)
Impairment	—			8,887			(8,887		)	NM
Total expenses	474,559			488,921			(14,362		)	(2.9	)
(Loss) gain on sale of real estate, net	(37		)	166,372			(166,409		)	NM
Loss on extinguishment of debt, net	(21,646		)	(1,092		)	(20,554		)	NM
Income from unconsolidated joint venture	1,456			1,405			51			3.6
Other income	781			129			652			NM
Net income	$	21,722		$	202,021		$	(180,299	)	(89.2	)%

NOI	$	357,514		$	358,764		$	(1,250	)	(0.3	)%
Same-Property Cash NOI	$	336,063		$	327,088		$	8,975		2.7	%

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Rental Income

For the three and nine months ended September 30, 2019 and 2018, respectively, rental income was comprised of the following (in thousands):



	Three Months Ended September 30,
	2019		2018		Change			% Change
Contractual rental income	$	166,338	$	168,169	$	(1,831	)	(1.1	)%
Straight-line rent and amortization of above and (below) market leases	5,149		4,252		897			21.1
Other rental revenue	3,357		2,617		740			28.3
Total rental income	$	174,844	$	175,038	$	(194	)	(0.1	)%



	Nine Months Ended September 30,
	2019		2018		Change			% Change
Contractual rental income	$	491,132	$	502,984	$	(11,852	)	(2.4	)%
Straight-line rent and amortization of above and (below) market leases	14,034		12,727		1,307			10.3
Other rental revenue	10,162		8,115		2,047			25.2
Total rental income	$	515,328	$	523,826	$	(8,498	)	(1.6	)%

Contractual rental income, which includes expense reimbursements, decreased $(1.8) million and $(11.9) million for the three and nine months ended September 30, 2019, respectively, compared to the three and nine months ended September 30, 2018. The decreases were primarily due to $3.7 million and $17.0 million of reduced contractual rent as a result of buildings we sold during 2018 and 2019 and $3.5 million and $10.5 million of tenant paid property tax that we no longer record due to the adoption of Topic 842, for the three and nine months ended September 30, 2019, respectively, partially offset by additional contractual rental income of $3.3 million and $6.0 million from our 2018 and 2019 acquisitions, and contractual rent increases for the three and nine months ended September 30, 2019, respectively.

Average starting and expiring base rents for new and renewal leases consisted of the following for the three and nine months ended September 30, 2019 and 2018, respectively (in thousands, except in average base rents per square foot of GLA):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
New and renewal leases:
Average starting base rents	$	24.59	$	22.10	$	22.23	$	23.07
Average expiring base rents	23.94		21.32		21.51		22.59

Square feet of GLA	696		532		2,596		2,204

Lease rates can vary across markets, and lease rates that are considered above or below current market rent may change over time. Leases that expired in 2019 had rents that we believed were at market rates. In general, leasing concessions vary depending on lease type and term.

Tenant improvements, leasing commissions and tenant concessions for new and renewal leases consisted of the following for the three and nine months ended September 30, 2019 and 2018, respectively (in per square foot of GLA):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
New leases:
Tenant improvements	$	22.91	$	17.93	$	29.95	$	22.91
Leasing commissions	1.78		2.26		2.01		1.95
Tenant concessions	2.62		0.02		3.79		1.85
Renewal leases:
Tenant improvements	$	7.29	$	6.51	$	11.14	$	7.73
Leasing commissions	1.72		0.68		2.01		1.30
Tenant concessions	0.39		0.02		3.79		0.76

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The average term for new and renewal leases executed consisted of the following for the three and nine months ended September 30, 2019 and 2018, respectively (in years):



	Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018
New leases	6.3	7.6	7.1	7.3
Renewal leases	5.9	4.2	7.4	5.2

Rental Expenses

For the three months ended September 30, 2019 and 2018, rental expenses attributable to our properties were $53.8 million and $55.8 million, respectively. For the nine months ended September 30, 2019 and 2018, rental expenses attributable to our properties were $158.2 million and $165.4 million, respectively. The decreases in rental expenses were primarily due to $1.2 million and $5.7 million of reduced rental expenses as a result of buildings we sold during 2018 and 2019, $3.5 million and $10.5 million of tenant paid property tax that we no longer record due to the adoption of Topic 842, and improved operating efficiencies for the three and nine months ended September 30, 2019, respectively, partially offset by additional rental expenses associated with our 2018 and 2019 acquisitions for the three and nine months ended September 30, 2019.

General and Administrative Expenses

For the three months ended September 30, 2019 and 2018, general and administrative expenses were $9.8 million and $8.8 million, respectively. For the nine months ended September 30, 2019 and 2018, general and administrative expenses were $31.2 million and $26.3 million, respectively. The increases were primarily due to an increase in the overall head count due to the continued growth of the Company and stock based compensation expense. In addition, due to the adoption of Topic 842, initial direct costs are now reported in general and administrative expenses on the accompanying condensed consolidated statements of operations. For the three and nine months ended September 30, 2018, we capitalized approximately $1.5 million and $3.7 million, respectively, of initial direct costs.

Depreciation and Amortization Expense

For the three months ended September 30, 2019 and 2018, depreciation and amortization expense was $73.8 million and $70.6 million, respectively. For the nine months ended September 30, 2019 and 2018, depreciation and amortization expense was $211.7 million and $210.1 million, respectively. These increases were associated with our 2018 and 2019 acquisitions, partially offset by buildings we disposed during 2018 and 2019.

Impairment

During the nine months ended September 30, 2019, we recorded no impairment charges. During the nine months ended September 30, 2018, we recorded impairment charges of $8.9 million related to two MOBs located in Texas and South Carolina.

Interest Expense

For the three months ended September 30, 2019 and 2018, interest expense was $24.6 million and $24.8 million, respectively. For the nine months ended September 30, 2019 and 2018, interest expense was $72.6 million and $77.4 million, respectively. The decreases in interest expense were primarily due to early payoffs of our fixed rate mortgages.

To achieve our objectives, we borrow at both fixed and variable rates. From time to time, we also enter into derivative financial instruments, such as interest rate swaps, in order to mitigate our interest rate risk on a related financial instrument. We do not enter into derivative or interest rate transactions for speculative purposes.

Net Income

For the three months ended September 30, 2019 and 2018, net income was $(8.6) million and $176.3 million, respectively. For the nine months ended September 30, 2019 and 2018, net income was $21.7 million and $202.0 million, respectively. The decreases were primarily the result of asset dispositions that occurred in 2018 and a loss on extinguishment of debt that occurred in 2019 offset by continued growth in our operations and improved operating efficiencies.

NOI and Same-Property Cash NOI

For the three months ended September 30, 2019 and 2018, NOI was $121.2 million and $119.3 million, respectively. For the nine months ended September 30, 2019 and 2018, NOI was $357.5 million and $358.8 million, respectively. The increases in NOI were primarily due to additional NOI from our 2018 and 2019 acquisitions of $2.7 million and $5.7 million for the three and nine months ended September 30, 2019, respectively, partially offset by $2.5 million and $11.3 million of reduced NOI as a result of the buildings we sold during 2018 and 2019 for the three and nine months ended September 30, 2019, respectively, and a reduction in straight-line rent from properties we owned more than a year.

Same-Property Cash NOI increased 2.5% to $113.2 million for the three months ended September 30, 2019 compared to the three months ended September 30, 2018. Same-Property Cash NOI increased 2.7% to $336.1 million for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increases were primarily the result of

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rent escalations, improved operating efficiencies, offset by a slight decrease in average occupancy.

Non-GAAP Financial Measures

FFO and Normalized FFO

We compute FFO in accordance with the current standards established by NAREIT. NAREIT defines FFO as net income or loss attributable to common stockholders/unitholders (computed in accordance with GAAP), excluding gains or losses from sales of real estate property and impairment write-downs of depreciable assets, plus depreciation and amortization related to investments in real estate, and after adjustments for unconsolidated partnerships and joint ventures. Because FFO excludes depreciation and amortization unique to real estate, among other items, it provides a perspective not immediately apparent from net income or loss attributable to common stockholders/unitholders.

We also compute Normalized FFO, which excludes from FFO: (i) transaction expenses; (ii) gain or loss on extinguishment of debt; (iii) noncontrolling income or loss from OP Units included in diluted shares (only applicable to the Company); and (iv) other normalizing items, which include items that are unusual and infrequent in nature. Our methodology for calculating Normalized FFO may be different from the methods utilized by other REITs and, accordingly, may not be comparable to other REITs.

We present FFO and Normalized FFO because we consider them important supplemental measures of our operating performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs. Historical cost accounting assumes that the value of real estate assets diminishes ratably over time. Since real estate values have historically risen or fallen based on market conditions, many industry investors have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. FFO and Normalized FFO should not be considered as alternatives to net income or loss attributable to common stockholders/unitholders (computed in accordance with GAAP) as indicators of our financial performance, nor are they indicative of cash available to fund cash needs. FFO and Normalized FFO should be reviewed in connection with other GAAP measurements.

In addition, the amounts included in the calculation of FFO and Normalized FFO are generally the same for HTALP and HTA, except for net income or loss attributable to common stockholders/unitholders, noncontrolling income or loss from OP Units included in diluted shares (only applicable to the Company) and the weighted average shares of our common stock or HTALP OP Units outstanding.

The following is the reconciliation of HTA’s FFO and Normalized FFO to net income attributable to common stockholders for the three and nine months ended September 30, 2019 and 2018, respectively (in thousands, except per share data):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019		2018
Net (loss) income attributable to common stockholders	$	(8,463	)	$	172,986		$	21,236	$	198,134
Depreciation and amortization expense related to investments in real estate	73,042			70,004			209,814		208,445
(Gain) loss on sale of real estate, net	—			(166,372		)	37		(166,372		)
Impairment	—			4,281			—		8,887
Proportionate share of joint venture depreciation and amortization	468			463			1,390		1,277
FFO attributable to common stockholders	$	65,047		$	81,362		$	232,477	$	250,371
Transaction expenses	522			346			858		789
Loss on extinguishment of debt, net	21,646			1,092			21,646		1,092
Noncontrolling income from OP Units included in diluted shares	(114		)	3,344			420		3,822
Other normalizing items, net	—			—			—		144
Normalized FFO attributable to common stockholders	$	87,101		$	86,144		$	255,401	$	256,218

Net (loss) income attributable to common stockholders per diluted share	$	(0.04	)	$	0.82		$	0.10	$	0.94
FFO adjustments per diluted share, net	0.35			(0.44		)	1.01		0.25
FFO attributable to common stockholders per diluted share	$	0.31		$	0.38		$	1.11	$	1.19
Normalized FFO adjustments per diluted share, net	0.11			0.03			0.11		0.03
Normalized FFO attributable to common stockholders per diluted share	$	0.42		$	0.41		$	1.22	$	1.22

Weighted average diluted common shares outstanding	209,072			211,444			209,026		209,968

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The following is the reconciliation of HTALP’s FFO and Normalized FFO to net income attributable to common unitholders for the three and nine months ended September 30, 2019 and 2018, respectively (in thousands, except per unit data):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019		2018
Net (loss) income attributable to common unitholders	$	(8,577	)	$	176,330		$	21,656	$	201,956
Depreciation and amortization expense related to investments in real estate	73,042			70,004			209,814		208,445
(Gain) loss on sale of real estate, net	—			(166,372		)	37		(166,372		)
Impairment	—			4,281			—		8,887
Proportionate share of joint venture depreciation and amortization	468			463			1,390		1,277
FFO attributable to common unitholders	$	64,933		$	84,706		$	232,897	$	254,193
Transaction expenses	522			346			858		789
Loss on extinguishment of debt, net	21,646			1,092			21,646		1,092
Other normalizing items, net	—			—			—		144
Normalized FFO attributable to common unitholders	$	87,101		$	86,144		$	255,401	$	256,218

Net (loss) income attributable to common unitholders per diluted share	$	(0.04	)	$	0.83		$	0.10	$	0.96
FFO adjustments per diluted unit, net	0.35			(0.43		)	1.01		0.25
FFO attributable to common unitholders per diluted unit	$	0.31		$	0.40		$	1.11	$	1.21
Normalized FFO adjustments per diluted unit, net	0.11			0.01			0.11		0.01
Normalized FFO attributable to common unitholders per diluted unit	$	0.42		$	0.41		$	1.22	$	1.22

Weighted average diluted common units outstanding	209,164			211,444			209,056		209,968

NOI, Cash NOI and Same-Property Cash NOI

NOI is a non-GAAP financial measure that is defined as net income or loss (computed in accordance with GAAP) before: (i) general and administrative expenses; (ii) transaction expenses; (iii) depreciation and amortization expense; (iv) impairment; (v) interest expense and net change in fair value of derivative financial instruments; (vi) gain or loss on sales of real estate; (vii) gain or loss on extinguishment of debt; (viii) income or loss from unconsolidated joint venture; and (ix) other income or expense. We believe that NOI provides an accurate measure of the operating performance of our operating assets because NOI excludes certain items that are not associated with the management of our properties. Additionally, we believe that NOI is a widely accepted measure of comparative operating performance of REITs. However, our use of the term NOI may not be comparable to that of other REITs as they may have different methodologies for computing this amount. NOI should not be considered as an alternative to net income or loss (computed in accordance with GAAP) as an indicator of our financial performance. NOI should be reviewed in connection with other GAAP measurements.

Cash NOI is a non-GAAP financial measure which excludes from NOI: (i) straight-line rent adjustments; (ii) amortization of below and above market leases/leasehold interests and other GAAP adjustments; and (iii) notes receivable interest income. Contractual base rent, contractual rent increases, contractual rent concessions and changes in occupancy or lease rates upon commencement and expiration of leases are a primary driver of our revenue performance. We believe that Cash NOI, which removes the impact of straight-line rent adjustments, provides another measurement of the operating performance of our operating assets. Additionally, we believe that Cash NOI is a widely accepted measure of comparative operating performance of REITs. However, our use of the term Cash NOI may not be comparable to that of other REITs as they may have different methodologies for computing this amount. Cash NOI should not be considered as an alternative to net income or loss (computed in accordance with GAAP) as an indicator of our financial performance. Cash NOI should be reviewed in connection with other GAAP measurements.

To facilitate the comparison of Cash NOI between periods, we calculate comparable amounts for a subset of our owned and operational properties referred to as “Same-Property”. Same-Property Cash NOI excludes (i) properties which have not been owned and operated by us during the entire span of all periods presented and disposed properties, (ii) our share of unconsolidated joint ventures, (iii) development, redevelopment and land parcels, (iv) properties intended for disposition in the near term which have (a) been approved by the Board of Directors, (b) are actively marketed for sale, and (c) an offer has been received at prices we would transact and the sales process is ongoing, and (v) certain non-routine items. Same-Property Cash NOI should not be considered as an alternative to net income or loss (computed in accordance with GAAP) as an indicator of our financial performance. Same-Property Cash NOI should be reviewed in connection with other GAAP measurements.

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The following is the reconciliation of HTA’s and HTALP’s NOI, Cash NOI and Same-Property Cash NOI to net income for the three and nine months ended September 30, 2019 and 2018, respectively (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income	$	(8,577	)	$	176,348		$	21,722		$	202,021
General and administrative expenses	9,788			8,770			31,157			26,281
Transaction expenses	522			346			858			933
Depreciation and amortization expense	73,820			70,568			211,730			210,064
Impairment	—			4,281			—			8,887
Interest expense	24,625			24,834			72,601			77,392
(Gain) loss on sale of real estate, net	—			(166,372		)	37			(166,372		)
Loss on extinguishment of debt, net	21,646			1,092			21,646			1,092
Income from unconsolidated joint venture	(422		)	(432		)	(1,456		)	(1,405		)
Other income	(205		)	(89		)	(781		)	(129		)
NOI	$	121,197		$	119,346		$	357,514		$	358,764
Straight-line rent adjustments, net	(2,539		)	(2,746		)	(8,261		)	(8,289		)
Amortization of (below) and above market leases/leasehold interests, net and other GAAP adjustments	(1,017		)	(66		)	(1,140		)	74
Notes receivable interest income	(23		)	(32		)	(75		)	(102		)
Cash NOI	$	117,618		$	116,502		$	348,038		$	350,447
Acquisitions not owned/operated for all periods presented and disposed properties Cash NOI	(2,449		)	(2,918		)	(5,154		)	(13,384		)
Redevelopment Cash NOI	(527		)	(1,671		)	(2,479		)	(5,176		)
Intended for sale Cash NOI	(1,436		)	(1,458		)	(4,342		)	(4,799		)
Same-Property Cash NOI ⁽¹⁾	$	113,206		$	110,455		$	336,063		$	327,088

(1) Same-Property includes 407 and 405 buildings for the three and nine months ended September 30, 2019 and 2018, respectively.

Liquidity and Capital Resources

Our primary sources of cash include: (i) cash flow from operations; (ii) borrowings under our unsecured revolving credit facility; (iii) net proceeds from the issuances of debt and equity securities; and (iv) proceeds from our dispositions. During the next 12 months our primary uses of cash are expected to include: (a) the funding of acquisitions of MOBs, development properties and other facilities that serve the healthcare industry; (b) capital expenditures; (c) the payment of operating expenses; (d) debt service payments, including principal payments; and (e) the payment of dividends to our stockholders. We anticipate cash flow from operations, restricted cash and reserve accounts and our unsecured revolving credit facility, if needed, will be sufficient to fund our operating expenses, capital expenditures and dividends to stockholders. Investments and maturing indebtedness may require funds from borrowings under our unsecured revolving credit facility, the issuance of debt and/or equity securities or proceeds from sales of real estate.

As of September 30, 2019, we had liquidity of $1.0 billion, including $1.0 billion available under our unsecured revolving credit facility and $12.7 million of cash and cash equivalents.

In addition, we had unencumbered assets with a gross book value of $7.0 billion. The unencumbered properties may be used as collateral to secure additional financings in future periods or refinance our current debt as it becomes due. Our ability to raise funds from future debt and equity issuances is dependent on our investment grade credit ratings, general economic and market conditions and our operating performance.

When we acquire a property, we prepare a capital plan that contemplates the estimated capital needs of that investment. In addition to operating expenses, capital needs may also include costs of refurbishment, tenant improvements or other major capital expenditures. The capital plan for each investment will be adjusted through ongoing, regular reviews of our portfolio or as necessary to respond to unanticipated additional capital needs. As of September 30, 2019, we estimate that our expenditures for capital improvements for the remainder of 2019 will range from $15 million to $25 million depending on leasing activity. Although we cannot provide assurance that we will not exceed these estimated expenditure levels, our liquidity of $1.0 billion allows us the flexibility to fund such capital expenditures.

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If we experience lower occupancy levels, reduced rental rates, reduced revenues as a result of asset sales, or increased capital expenditures and leasing costs compared to historical levels due to competitive market conditions for new and renewal leases, the effect would be a reduction of net cash provided by operating activities. If such a reduction of net cash provided by operating activities is realized, we may have a cash flow deficit in subsequent periods. Our estimate of net cash available is based on various assumptions which are difficult to predict, including the levels of our leasing activity and related leasing costs. Any changes in these assumptions could impact our financial results and our ability to fund working capital and unanticipated cash needs.

Cash Flows

The following is a summary of our cash flows for the nine months ended September 30, 2019 and 2018, respectively (in thousands):



	Nine Months Ended September 30,
	2019			2018			Change
Cash, cash equivalents and restricted cash - beginning of period	$	133,530		$	118,560		$	14,970
Net cash provided by operating activities	238,382			240,751			(2,369		)
Net cash (used in) provided by investing activities	(295,210		)	194,846			(490,056		)
Net cash used in financing activities	(58,886		)	(314,000		)	255,114
Cash, cash equivalents and restricted cash - end of period	$	17,816		$	240,157		$	(222,341	)

Net cash provided by operating activities decreased in 2019 primarily due to the timing of payments on certain liabilities and the impact of our 2018 and 2019 dispositions, partially offset by our 2018 and 2019 acquisitions, contractual rent increases and improved operating efficiencies. We anticipate cash flows from operating activities to increase as a result of the growth in our portfolio through new acquisitions and continued leasing activity in our existing portfolio.

For the nine months ended September 30, 2019, net cash used in investing activities primarily related to investments in real estate of $223.2 million and capital expenditures of $59.5 million. For the nine months ended September 30, 2018, net cash used in investing activities primarily related to capital expenditures of $61.1 million, development of real estate of $29.6 million, and investments in real estate of $17.4 million.

For the nine months ended September 30, 2019, net cash used in financing activities primarily related to payments on our unsecured senior notes of $700.0 million, dividends paid to holders of our common stock of $190.9 million, payments on our secured mortgage loans of $96.8 million, and the repurchase and cancellation of common stock of $12.2 million, which was partially offset by proceeds from the issuance of unsecured senior notes of $906.9 million, proceeds from issuance of common stock of $51.8 million and net borrowings on our unsecured revolving credit facility of $15.0 million. For the nine months ended September 30, 2018, net cash used in financing activities primarily related to dividends paid to holders of our common stock of $188.4 million and payments on our secured mortgage loans of $173.2 million, which was partially offset by net proceeds of shares of common stock issued of $72.8 million.

Dividends

The amount of dividends we pay to our stockholders is determined by our Board of Directors, in their sole discretion, and is dependent on a number of factors, including funds available, our financial condition, capital expenditure requirements and annual dividend distribution requirements needed to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended. We have paid monthly or quarterly dividends since February 2007, and if our investments produce sufficient cash flow, we expect to continue to pay dividends to our stockholders. Because our cash available for dividend distributions in any year may be less than 90% of our taxable income for the year, we may obtain the necessary funds through borrowings, issuing new securities or selling assets to pay out enough of our taxable income to satisfy our dividend distribution requirement. Our organizational documents do not establish a limit on dividends that may constitute a return of capital for federal income tax purposes. The dividend we pay to our stockholders is equal to the distributions received from HTALP in accordance with the terms of the HTALP partnership agreement. It is our intention to continue to pay dividends. However, our Board of Directors may reduce our dividend rate and we cannot guarantee the timing and amount of dividends that we may pay in the future, if any.

For the nine months ended September 30, 2019, we paid cash dividends of $190.9 million on our common stock. In October 2019, we paid cash dividends on our common stock of $65.3 million for the quarter ended September 30, 2019.

Financing

We have historically maintained a low leveraged balance sheet and intend to continue to maintain this structure in the long term. However, our total leverage may fluctuate on a short-term basis as we execute our business strategy. As of September 30, 2019, our leverage ratio, measured by debt less cash and cash equivalents to total capitalization, was 30.0%.

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As of September 30, 2019, we had debt outstanding of $2.7 billion and the weighted average interest rate therein was 3.29% per annum, inclusive of the impact of our cash flow hedges. The following is a summary of our unsecured and secured debt. See Note 8 - Debt in the accompanying condensed consolidated financial statements for a further discussion of our debt.

Unsecured Revolving Credit Facility

As of September 30, 2019, $1.0 billion was available on our $1.0 billion unsecured revolving credit facility. Our unsecured revolving credit facility matures in June 2022.

Unsecured Term Loans

As of September 30, 2019, we had $500.0 million of unsecured term loans outstanding, comprised of $300.0 million under our Unsecured Credit Agreement maturing in 2023, and $200.0 million under our unsecured term loan maturing in 2024.

Unsecured Senior Notes

As of September 30, 2019, we had $2.05 billion of unsecured senior notes outstanding, comprised of $300.0 million of senior notes maturing in 2023, $600.0 million of senior notes maturing in 2026, $500.0 million of senior notes maturing in 2027, and $650.0 million of senior notes maturing in 2030.

Fixed Rate Mortgages

During the nine months ended September 30, 2019, we made payments on our fixed rate mortgages of $96.8 million and have $0.6 million of principal payments due during the remainder of 2019.

Commitments and Contingencies

There have been no material changes from the commitments and contingencies previously disclosed in our 2018 Annual Report on Form 10-K.

Debt Service Requirements

We are required by the terms of our applicable loan agreements to meet certain financial covenants, such as minimum net worth and liquidity, and reporting requirements, among others. As of September 30, 2019, we believe that we were in compliance with all such covenants and we are not aware of any covenants that it is reasonably likely that we would not be able to meet in accordance with our loan agreements.

Off-Balance Sheet Arrangements

As of and during the nine months ended September 30, 2019, we had no material off-balance sheet arrangements that have had or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Inflation

We are exposed to inflation risk as income from future long-term leases is the primary source of our cash flows from operations. There are provisions in the majority of our tenant leases that protect us from the impact of normal inflation. These provisions include rent escalations, reimbursement billings for operating expense pass-through charges and real estate tax and insurance reimbursements on a per square foot allowance. However, due to the long-term nature of our leases, among other factors, the leases may not reset frequently enough to cover inflation.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes from the quantitative and qualitative disclosures about market risk previously disclosed in our 2018 Annual Report on Form 10-K.

Item 4. Controls and Procedures

Healthcare Trust of America, Inc.

HTA’s management is responsible for establishing and maintaining disclosure controls and procedures that are designed to ensure that information required to be disclosed in its reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to management, including HTA’s Chief Executive Officer (as the principal executive officer) and Chief Financial Officer (as the principal financial officer and principal accounting officer), to allow timely decisions regarding required disclosures.

As of September 30, 2019, an evaluation was conducted by HTA under the supervision and with the participation of its management, including HTA’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, HTA’s Chief Executive Officer and Chief Financial Officer each concluded that HTA’s disclosure controls and procedures were effective as of September 30, 2019.

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2019 that have materially affected, or are reasonably believed to be likely to materially affect, our internal control over financial reporting.

October 29, 2019

Healthcare Trust of America Holdings, LP

HTALP’s management is responsible for establishing and maintaining disclosure controls and procedures that are designed to ensure that information required to be disclosed in its reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to management, including HTA’s Chief Executive Officer (as the principal executive officer) and Chief Financial Officer (as the principal financial officer and principal accounting officer), to allow timely decisions regarding required disclosures.

As of September 30, 2019, an evaluation was conducted by HTALP under the supervision and with the participation of its management, including HTA’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, HTA’s Chief Executive Officer and Chief Financial Officer, on behalf of HTA in its capacity as general partner of HTALP, each concluded that HTALP’s disclosure controls and procedures were effective as of September 30, 2019.

There were no changes in HTALP’s internal control over financial reporting that occurred during the quarter ended September 30, 2019 that have materially affected, or are reasonably believed to be likely to materially affect, HTALP’s internal control over financial reporting.

October 29, 2019

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to claims and litigation arising in the ordinary course of business. We do not believe any liability from any reasonably foreseeable disposition of such claims and litigation, individually or in the aggregate, would have a material adverse effect on our accompanying condensed consolidated financial statements.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in our 2018 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

During the three months ended September 30, 2019, we repurchased shares of our common stock as follows:



Period	Total Number of Shares Purchased ^{(1) (2)}	Average Price Paid per Share ^{(1) (2)}		Total Number of Shares Purchased as Part of Publicly Announced Plan or Program	Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
July 1, 2019 to July 31, 2019	2,313	$	28.00	—	—
August 1, 2019 to August 31, 2019	—	—		—	—
September 1, 2019 to September 30, 2019	—	—		—	—

(1) Purchases represent shares withheld to satisfy withholding obligations on the vesting of restricted shares and shares repurchased under our stock repurchase plan. The price paid per share was the then closing price of our common stock on the NYSE.
(2) For each share of common stock redeemed by HTA, HTALP redeems a corresponding number of OP Units in the HTALP operating partnership. Therefore, the OP Units in the HTALP operating partnership repurchased by HTALP are the same as the shares of common stock repurchased by HTA as shown above.

Item 6. Exhibits

The exhibits listed on the Exhibit Index are included, and incorporated by reference, in this Quarterly Report.

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EXHIBIT INDEX

Pursuant to Item 601(a)(2) of Regulation S-K, this Exhibit Index immediately precedes the exhibits.

The following exhibits are included, or incorporated by reference, in this Quarterly Report for the quarter ended September 30, 2019 (and are numbered in accordance with Item 601 of Regulation S-K).



1.1	Underwriting Agreement, dated September 5, 2019, among Healthcare Trust of America Holdings, LP, Healthcare Trust of America, Inc., and BofA Securities, Inc., J.P. Morgan Securities LLC, U.S. Bancorp Investments, Inc. and Wells Fargo Securities, LLC, as representatives of the several underwriters named therein (included as Exhibit 1.1 to our Current Report on Form 8-K filed on September 6, 2019 and incorporated herein by reference).
4.1	2030 Notes Indenture, dated as of September 16, 2019, among Healthcare Trust of America Holdings, LP, Healthcare Trust of America, Inc. and U.S. Bank National Association, as trustee, including the form of 3.100% Senior Notes due 2030 and the guarantee thereof (included as Exhibit 4.1 to our Current Report on Form 8-K filed on September 16, 2019 and incorporated herein by reference).
5.1	Opinion of Venable LLP (included as Exhibit 5.1 to our Current Report on Form 8-K filed on September 16, 2019 and incorporated herein by reference).
5.2	Opinion of O'Melveny & Myers LLP (included as Exhibit 5.2 to our Current Report on Form 8-K filed on September 16, 2019 and incorporated herein by reference).
8.1	Opinion of O'Melveny & Myers LLP as to certain tax matters (included as Exhibit 8.1 to our Current Report on Form 8-K filed on September 16, 2019 and incorporated herein by reference).
23.1	Consent of Venable LLP (included as Exhibit 5.1 to our Current Report on Form 8-K filed on September 16, 2019 and incorporated herein by reference).
23.2	Consents of O'Melveny & Myers LLP (included as Exhibit 5.2 and 8.1 to our Current Report on Form 8-K filed on September 16, 2019 and incorporated herein by reference).
31.1*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Healthcare Trust of America, Inc.
31.2*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Healthcare Trust of America, Inc.
31.3*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Healthcare Trust of America Holdings, LP.
31.4*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Healthcare Trust of America Holdings, LP.
32.1**	Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002 for Healthcare Trust of America Inc.
32.2**	Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002 for Healthcare Trust of America, Inc.
32.3**	Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002 for Healthcare Trust of America Holdings, LP.
32.4**	Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002 for Healthcare Trust of America Holdings, LP.
101.INS*	This instance document does not appear in the interactive data file because of XBRL tags are embedded within the inline XBRL document.
101.SCH*	XBRL Taxonomy Extension Schema Document.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document.

*	Filed herewith.
**	Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	Healthcare Trust of America, Inc.

By:	/s/ Scott D. Peters	Chief Executive Officer, President and Chairman
	Scott D. Peters	(Principal Executive Officer)
Date:	October 29, 2019

By:	/s/ Robert A. Milligan	Chief Financial Officer
	Robert A. Milligan	(Principal Financial Officer and Principal Accounting Officer)
Date:	October 29, 2019



	Healthcare Trust of America Holdings, LP

By:	Healthcare Trust of America, Inc.,
	its General Partner

By:	/s/ Scott D. Peters	Chief Executive Officer, President and Chairman
	Scott D. Peters	(Principal Executive Officer)
Date:	October 29, 2019

By:	/s/ Robert A. Milligan	Chief Financial Officer
	Robert A. Milligan	(Principal Financial Officer and Principal Accounting Officer)
Date:	October 29, 2019