HR 10-K Fiscal year ended Dec. 31, 2019

Portions of the Registrant’s definitive Proxy Statement relating to the Annual Meeting of Stockholders to be held on May 12, 2020 are incorporated by reference into Part III of this Report.

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1	The occupancy column represents the percentage of total rentable square feet leased (including month-to-month and holdover leases). The Company had no properties classified as held for sale as of December 31, 2019 .

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1	Includes 59 leases totaling 142,705 square feet that expired prior to December 31, 2019 and were on month-to-month terms.

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the Tax Cuts and Jobs Act of 2017, affects healthcare providers and health systems in a variety of ways, positively and negatively, including by limiting their ability to deduct interest on debt, denying deductions for and imposing an excise tax on the compensation in excess of $1 million of the five most highly-compensated employees of health systems, and eliminating the tax penalty for the Affordable Care Act’s individual health insurance mandate;

•	the expansion of Medicaid benefits and the implementation of health insurance exchanges under the Affordable Care Act, whether run by the state or by the federal government, whereby individuals and small businesses

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•	various state legislature proposals for state-funded single-payer health insurance and a limit on allowable rates of reimbursement to healthcare providers;

•	the implementation of quality control, cost containment, and value-based payment system reforms for Medicaid and Medicare, such as expansion of pay-for-performance criteria, bundled provider payments, accountable care organizations, comparative effectiveness research, and lower payments for hospital readmissions;

•	MACRA, which requires quality reporting and a transition toward value-based reimbursement models for Medicare payments to physicians;

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equalization of Medicare payment rates across different facility-type settings, according to Section 603 of the Bipartisan Budget Act of 2015, which lowered Medicare payment rates, effective January 1, 2017, for services provided in off-campus, provider-based outpatient departments to the same level of rates for physician office settings; the CMS rule for hospital outpatient department Medicare payments in 2020 expanded site-neutral payments for clinic visits in previously-grandfathered off-campus facilities, although this regulation is subject to ongoing legal challenges;

•	the continued adoption by providers of federal standards for the meaningful-use of electronic health records;

•	reforms to the physician self-referral laws, commonly referred to as the Stark Law, that prohibit physician referral of a Medicare or Medicaid patient to an entity with which the physician has a financial relationship; without reform, both the laws and the regulations stemming from them could impede the transition toward value-based, coordinated care among providers;

•	consideration of broad reforms to Medicare and Medicaid, including capped federal Medicaid payments to states, premium-support models to provide for a fixed amount of Medicare benefits per enrollee, and a significant expansion of Medicare coverage to the greater U.S. population;

•	regulation requiring the publication of hospital prices for certain services, as well as hospitals’ negotiated rates with insurers for these services, beginning 2021, although this regulation is subject to ongoing legal challenges;

•	limits on price increases in pharmaceutical drugs and the cost to Medicare beneficiaries; and

•	legislation to prohibit “surprise billing,” or high payment rates charged to consumers for out-of-network physician services.

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•	The construction of properties generally requires various government and other approvals that may not be received when expected, or at all, which could delay or preclude commencement of construction;

•	Opportunities that the Company pursued but later abandoned could result in the expensing of pursuit costs, which could impact the Company’s consolidated results of operations;

•	Construction costs could exceed original estimates, which could impact the building’s profitability to the Company;

•	Operating expenses could be higher than forecasted;

•	Time required to initiate and complete the construction of a property and to lease up a completed property may be greater than originally anticipated, thereby adversely affecting the Company’s cash flow and liquidity;

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•	Occupancy rates and rents of a completed development property may not be sufficient to make the property profitable to the Company; and

•	Favorable capital sources to fund the Company’s development and redevelopment activities may not be available when needed.

•	The Company’s purchase price for acquired facilities may be based upon a series of market or building-specific judgments which may be incorrect;

•	The costs of any maintenance or improvements for properties might exceed estimated costs;

•	The Company may incur unexpected costs in the acquisition, construction or maintenance of real estate assets that could impact its expected returns on such assets; and

•	Leasing may not occur at all, within expected time frames or at expected rental rates.

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•	disrupt the proper functioning of the Company's networks and systems and therefore the Company's operations and/or those of certain tenants;

•	result in misstated financial reports, violations of loan covenants, missed reporting deadlines, and/or missed permitting deadlines;

•	result in the Company's inability to properly monitor its compliance with the rules and regulations regarding the Company's qualification as a REIT;

•	result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive, or otherwise valuable information of the Company or others, which others could use to compete against the Company or which could expose it to damage claims by third-parties for disruption, destructive, or otherwise harmful purposes or outcomes;

•	result in the Company's inability to maintain the building systems relied upon by the its tenants for the efficient use of their leased space;

•	require significant management attention and resources to remedy any damages that result;

•	subject the Company to claims for breach of contract, damages, credits, penalties, or termination of leases or other agreements; or

•	damage the Company's reputation among its tenants and investors generally.

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•	limit the Company’s ability to adjust rapidly to changing market conditions in the event of a downturn in general economic conditions or in the real estate and/or healthcare industries;

•	impair the Company’s ability to obtain additional debt financing or require potentially dilutive equity to fund obligations and carry out its business strategy; and

•	result in a downgrade of the rating of the Company’s debt securities by one or more rating agencies, which would increase the costs of borrowing under the Unsecured Credit Facility and the cost of issuance of new debt securities, among other things.

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•	potential joint venture partners could have financing and investment goals or strategies that are different than those of the Company, including terms and strategies for such investment and what levels of debt place on the venture;

•	the parties to a joint venture could reach an impasse on certain decisions, which could result in unexpected costs, including costs associated with litigation or arbitration;

•	joint venture partners could have investments that are competitive with the Company's properties in certain markets;

•	interests in joint ventures are often illiquid and the Company may have difficulty exiting such in investment, or may have to exit at less than fair market value;

•	joint venture partners may be structured differently than the Company for tax purposes and their could be conflicts relating to the Company's REIT status; and

•	joint venture partners could become insolvent, fail to fund capital contributions, or otherwise fail to fulfill their obligations as a partner, which could require the Company to invest more capital into such ventures than anticipated.

•	trends in the method of delivery of healthcare services;

•	transition to value-based care and reimbursement of providers;

•	competition among healthcare providers;

•	consolidation among healthcare providers, health insurers, hospitals and health systems;

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•	a rise in government-funded health insurance coverage;

•	pressure on providers' operating profit margins from lower reimbursement rates, lower admissions growth, and higher expense growth;

•	availability of capital;

•	credit downgrades;

•	liability insurance expense;

•	rising pharmaceutical drug expense;

•	regulatory and government reimbursement uncertainty related to the Medicare and Medicaid programs;

•	a trend toward government regulation of hospital, physician and pharmaceutical pricing;

•	federal court decisions on cases challenging the legality of the Affordable Care Act, in whole or in part;

•	site-neutral rate-setting for Medicare services across different care settings;

•	heightened health information technology security standards and the meaningful use of electronic health records by healthcare providers; and

•	potential tax law changes affecting providers.

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•	Preferred Stock. The Company's charter authorizes the board of directors to issue preferred stock in one or more classes and establish the preferences and rights of any class of preferred stock issued. These actions can be taken without stockholder approval. The issuance of preferred stock could have the effect of delaying or preventing someone from taking control of the Company.

•	Business combinations. Pursuant to Maryland law, the Company cannot merge into or consolidate with another corporation or enter into a statutory share exchange transaction in which the Company is not the surviving entity or sell all or substantially all of its assets unless the board of directors adopts a resolution declaring the

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Control share acquisitions. Maryland general corporation law also provides that control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter, excluding shares owned by the acquirer or by officers or employee directors. The control share acquisition statute does not apply to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction, or to acquisitions approved or exempted by the corporation's charter or bylaws.

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Maryland unsolicited takeover statute. Under Maryland law, the Company's board of directors could adopt various anti-takeover provisions without the consent of stockholders. The adoption of such measures could discourage offers for the Company or make an acquisition of the Company more difficult. On February 12, 2019, the Company opted out of the provision of this statute that permits the board to classify without shareholder vote. As such, the Company's board could not classify into multiple classes without stockholders' approval.

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1

The outstanding options relate only to the 2000 Employee Stock Purchase Plan. The Company is unable to ascertain with specificity the number of securities to be issued upon exercise of outstanding rights under the 2000 Employee Stock Purchase Plan or the weighted average exercise price of outstanding rights under that plan. The 2000 Employee Stock Purchase Plan provides that shares of common stock may be purchased at a per share price equal to 85% of the fair market value of the common stock at the beginning of the offering period or a purchase date applicable to such offering period, whichever is lower.

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1	See "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for a discussion of funds from operations (“FFO”), including why the Company presents FFO and a reconciliation of net income attributable to common stockholders to FFO.

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•	The Company's expected results may not be achieved;

•	The Company’s revenues depend on the ability of its tenants under its leases to generate sufficient income from their operations to make rental payments to the Company;

•	Owning real estate and indirect interests in real estate is subject to inherent risks;

•	The Company may incur impairment charges on its real estate properties or other assets;

•	If the Company is unable to promptly re-let its properties, if the rates upon such re-letting are significantly lower than the previous rates or if the Company is required to undertake significant expenditures or make significant leasing concessions to attract new tenants, then the Company’s business, consolidated financial condition and results of operations would be adversely affected;

•	Certain of the Company’s properties are special purpose healthcare facilities and may not be easily adaptable to other uses;

•	The Company has, and in the future may have more exposure to fixed rent escalators, which could lag behind inflation and the growth in operating expenses such as real estate taxes, utilities, insurance, and maintenance expense;

•	The Company’s real estate investments are illiquid and the Company may not be able to sell properties strategically targeted for disposition;

•	The Company is subject to risks associated with the development and redevelopment of properties;

•	The Company may make material acquisitions and undertake developments and redevelopments that may involve the expenditure of significant funds and may not perform in accordance with management’s expectations;

•	The Company is exposed to risks associated with geographic concentration;

•	Many of the Company’s leases are dependent on the viability of associated health systems. Revenue concentrations relating to these leases expose the Company to risks related to the financial condition of the associated health systems;

•	Many of the Company’s properties are held under ground leases. These ground leases contain provisions that may limit the Company’s ability to lease, sell, or finance these properties;

•	The Company may experience uninsured or underinsured losses;

•	Damage from catastrophic weather and other natural events, whether caused by climate change or otherwise, could result in losses to the Company;

•	The Company faces risks associated with security breaches through cyber attacks, cyber intrusions, or otherwise, as well as other significant disruptions of its information technology networks and related systems;

•	Government tenants may not receive annual budget appropriations, which could adversely affect their ability to pay the Company;

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•	The Company has incurred significant debt obligations and may incur additional debt and increase leverage in the future;

•	Covenants in the Company’s debt instruments limit its operational flexibility, and a breach of these covenants could materially affect the Company’s consolidated financial condition and results of operations;

•	A change to the Company’s current dividend payment may have an adverse effect on the market price of the Company’s common stock;

•	If lenders under the Unsecured Credit Facility fail to meet their funding commitments, the Company’s operations and consolidated financial position would be negatively impacted;

•	The unavailability of equity and debt capital, volatility in the credit markets, increases in interest rates, or changes in the Company’s debt ratings could have an adverse effect on the Company’s ability to meet its debt payments, make dividend payments to stockholders or engage in acquisition and development activity;

•	The Company is exposed to increases in interest rates, changes to the method that LIBOR rates are determined, and the potential phasing out of LIBOR. Such changes could adversely impact the Company's ability to refinance existing debt, sell assets or engage in acquisition and development activity;

•	The Company's swap agreements may not effectively reduce its exposure to changes in interest rates;

•	The Company may enter into joint venture agreements that would limit its flexibility with respect to jointly owned properties;

•	If a healthcare tenant loses its licensure or certification, becomes unable to provide healthcare services, cannot meet its financial obligations to the Company or otherwise vacates a facility, the Company would have to obtain another tenant for the affected facility;

•	Trends in the healthcare service industry may negatively affect the Company’s lease revenues and the values of its investments;

•	The costs of complying with governmental laws and regulations may adversely affect the Company's results of operations;

•	If the Company fails to remain qualified as a REIT, the Company will be subject to significant adverse consequences, including adversely affecting the value of its common stock;

•	The Company's Articles of Incorporation, as well as provisions of Maryland general corporation law, contain limits and restrictions on transferability of the Company's common stock which may have adverse effects on the value of the Company's common stock;

•	Complying with the REIT requirements may cause the Company to forego otherwise attractive opportunities;

•	The prohibited transactions tax may limit the Company's ability to sell properties;

•	Qualifying as a REIT involves highly technical and complex provisions of the Internal Revenue Code; and

•	New legislation or administrative or judicial action, in each instance potentially with retroactive effect, could make it more difficult or impossible for the Company to qualify as a REIT.

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•	Liquidity and Capital Resources

•	Trends and Matters Impacting Operating Results

•	Results of Operations

•	Non-GAAP Financial Measures and Key Performance Indicators

•	Off-Balance Sheet Arrangements

•	Contractual Obligations

•	Application of Critical Accounting Policies to Accounting Estimates

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1	The cap rate represents the forecasted first year net operating income ("NOI") divided by purchase price.

2	Includes two properties.

3	Represents the cap rate when tenant build out for existing leases is complete and all tenants are occupying and paying full rent.

4	The Company acquired this property as part of a redevelopment project. During the construction period, the property is expected to be 44% occupied and NOI is expected to break-even.

•	$28.6 million toward development and redevelopment of properties;

•	$19.8 million toward first generation tenant improvements and planned capital expenditures for acquisitions;

•	$28.7 million toward second generation tenant improvements; and

•	$17.2 million toward capital expenditures. See the Trends and Matters Impacting Operating Results - Capital Expenditures for more detail.

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1	MOB = medical office building; SNF = skilled nursing facility; IRF = inpatient rehabilitation facility

2	Cap rate represents the in-place cash NOI divided by sales price.

3	Includes four properties sold to a single purchaser.

4	Previously classified as held for sale.

5	Includes two properties.

•	During the first quarter of 2019, the Company sold 135,265 shares generating $4.3 million in net proceeds at prices to the public ranging from $32.01 to $32.86 per share (weighted average of $32.36 per share).

•	No shares were sold in the second quarter of 2019.

•	During the third quarter of 2019, the Company sold 2,191,522 shares generating $71.6 million in net proceeds at prices to the public ranging from $32.62 to $33.77 per share (weighted average of $33.15 per share).

•	During the fourth quarter of 2019, the Company sold 3,143,886 shares generating $103.2 million in net proceeds at prices to the public ranging from $32.02 to $33.74 per share (weighted average of $33.30 per share).

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1	Balances are reflected net of discounts and debt issuance costs and include premiums.

2	The effective interest rate includes the impact of the $1.7 million settlement of a forward-starting interest rate swap that is included in accumulated other comprehensive income on the Company's Consolidated Balance Sheets.

3	As of December 31, 2019 , the Company had $293.0 million outstanding under the Unsecured Credit Facility with a weighted average interest rate of approximately 2.66% and a remaining borrowing capacity of approximately $407.0 million. As of December 31, 2018, the Company had $262.0 million outstanding with a weighted average interest rate of approximately 3.50%

4	The effective interest rate includes the impact of interest rate swaps totaling $175.0 million to hedge the 1-month LIBOR portion of the cost of borrowing under the Unsecured Term Loan due 2026 at a weighted average interest rate of 2.29% (plus the applicable margin rate, currently 1.00%).

5	As of December 31, 2019, there are no outstanding loans under the $150 million Unsecured Term Loan due 2026. This term loan has a delayed draw feature that allows the Company until February 28, 2020 to draw against the commitments.

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•	The Company completed the redevelopment of a medical office building in Charlotte, North Carolina, which included a 40,278 square foot vertical expansion. The Company funded approximately $1.5 million during the year ended December 31, 2019 . The first tenant took occupancy during the second quarter of 2019.

•	The Company continued development of a 151,000 square foot medical office building in Seattle, Washington. The Company funded $25.2 million during the year ended December 31, 2019 . The Company expects initial occupancy to occur in the first quarter of 2020.

•	The Company began the redevelopment of a 110,883 square foot medical office building in Memphis, Tennessee. The Company funded approximately $0.3 million, excluding $8.7 million for the acquisition of building and land, during the year ended December 31, 2019 .

•	The Company funded an additional $1.0 million on a previously completed redevelopment in Nashville, Tennessee and $0.6 million on a previously completed development project in Denver, Colorado.

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1	The purchase option price includes a fair market value component that is determined by an appraisal process.

2	Includes properties with stated purchase prices or prices based on fixed capitalization rates. These properties have purchase prices that are on average 17% greater than the Company's current gross investment.

3	These purchase options have been exercisable for an average of 11.4 years.

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•	Acquisitions and developments in 2018 and 2019 contributed $19.7 million.

•	Leasing activity, including contractual rent increases, contributed $9.7 million.

•	Dispositions in 2018 and 2019 resulted in a decrease of $4.5 million.

•	Dispositions in 2018 and 2019 resulted in a decrease of $4.7 million.

•	Leasing activity, including contractual rent increases, contributed $0.9 million.

•	Acquisitions and developments in 2018 and 2019 resulted in an increase of $1.1 million.

•	Dispositions in 2018 and 2019 resulted in a decrease of $0.2 million.

•	Reduced rent abatements along with net leasing activity and contractual rent increases resulted in a decrease of $2.2 million.

•	Acquisitions and developments in 2018 and 2019 resulted in an increase of $8.7 million.

•	Increases in portfolio operating expenses as follows:

◦	Property tax expense of $1.1 million;

◦	Maintenance and repair expense of $1.6 million;

◦	Leasing commission amortization of $0.9 million;

◦	Insurance expense of $0.6 million; and

◦	Janitorial expense of $0.2 million.

•	Utilities expense decreased $0.9 million.

•	Dispositions in 2018 and 2019 resulted in a decrease of $2.7 million.

•	The Company's former Executive Chairman, David R. Emery, died on September 30, 2019 resulting in a $2.9 million charge for the acceleration of his outstanding nonvested share-based awards and associated taxes. This amount was partially offset by $0.3 reduction in non-cash compensation expense.

•	Non-cash compensation expense decreased $0.8 million mainly due to an officer retirement.

•	Office rent decreased $0.8 million due to the 2018 acquisition of the Company's headquarters.

•	Other net decreases, including professional fees and other administrative costs, of $0.7 million.

•	Acquisitions and developments in 2018 and 2019 resulted in increases of $13.4 million.

•	Various building and tenant improvement expenditures caused increases of $10.5 million.

•	Dispositions in 2018 and 2019 resulted in decreases of $5.4 million.

•	Assets that became fully depreciated resulted in decreases of $4.8 million.

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•	The Unsecured Credit Facility accounted for a net increase of $1.9 million.

•	The Unsecured Term Loan due 2024 accounted for a net increase of $1.3 million.

•	The ticking fee on committed amounts that remain undrawn associated with the Unsecured Term Loan due 2026 accounted for an increase of $0.2 million.

•	Mortgage notes repayments accounted for a decrease of $1.2 million.

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1	Acquisition and pursuit costs include third party and travel costs related to the pursuit of acquisitions and developments.

2

The Company adopted the 2018 NAREIT FFO White Paper Restatement during the first quarter of 2019. This amended definition specifically includes the impact of acquisition related market lease intangible amortization in the calculation of NAREIT FFO.  The Company historically included this amortization in the real estate depreciation and amortization line item which is added back in the calculation of NAREIT FFO.  Prior periods were not restated for the adoption.

3	The Company's former Executive Chairman, David R. Emery, died on September 30, 2019 resulting in a $2.9 million charge for the acceleration of his outstanding nonvested share-based awards and associated taxes.

4	Includes the amortization of deferred financing costs, discounts and premiums.

5	The Company utilizes the treasury stock method which includes the dilutive effect of nonvested share-based awards outstanding of 779,081, 753,121 and 860,145, respectively, for the twelve months ended December 31, 2019 , 2018 , and 2017 .

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•	Properties having less than 60% occupancy that is expected to last at least two quarters;

•	Properties that experience a loss of occupancy over 30% in a single quarter; or

•	Properties with negative net operating income that is expected to last at least two quarters.

1	Properties are based on the same store definition included above and exclude assets classified as held for sale, if any.

1	Includes acquisition and pursuit costs, bad debt, above and below market ground lease intangible amortization, leasing commission amortization and ground lease straight-line rent.

2	Includes management fee income, interest, above and below market lease intangible amortization, lease inducement amortization, lease terminations and tenant improvement overage amortization.

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1

The amounts shown include estimated interest on total debt other than the Unsecured Credit Facility and a portion of the Unsecured Term Loan due 2024, whose balance and interest rate may fluctuate from day to day. The fixed rate interest resulting from the Company's outstanding swaps on $175.0 million of the Unsecured Term Loan due 2024 are reflected in the table above. As of December 31, 2019, there are no outstanding loans under the Unsecured Term Loan 2026. This term loan has a delayed draw feature that allows the Company up to February 2020 to draw against the $150 million commitments. Excluded from the table above are the discounts on the Company's outstanding senior notes of approximately $3.0 million, net premiums totaling approximately $0.6 million on 16 mortgage notes payable, and debt issuance costs totaling approximately $5.8 million which are included in notes and bonds payable on the Company’s Consolidated Balance Sheet as of December 31, 2019 . The Company’s long-term debt principal obligations are presented in more detail in the table below.

2	Includes primarily ground leases, with expiration dates through 2117 , related to various real estate investments for which the Company is currently making payments.

3	Includes three ground leases, with expiration dates through 2091, related to real estate investments for which the Company is currently making payments.

4	Includes cash flow projections related to the construction of one building in Seattle, Washington. This amount includes $3.6 million of invoices that were accrued and included in construction in progress on the Company's Consolidated Balance Sheet as of December 31, 2019 .

5	The Company has remaining tenant improvement allowances, excluding construction in progress, of approximately $46.6 million . This amount includes $9.7 million of invoices that were accrued as of December 31, 2019 .

6	Includes the Memphis Redevelopment tenant improvement obligations of $8.2 million. The Company executed the contract for the redevelopment of the core and shell in January 2020.

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•	Management, having the authority to approve the action, commits to a plan to sell the property or disposal group;

•	The property or disposal group is available for immediate sale (i.e., a seller currently has the intent and ability to transfer the property or disposal group to a buyer) in its present condition, subject only to conditions that are usual and customary for sales of such properties or disposal groups;

•	An active program to locate a buyer and other actions required to complete the plan to sell have been initiated;

•	The sale of the property or disposal group is probable (i.e., likely to occur) and the transfer is expected to qualify for recognition as a completed sale within one year, with certain exceptions;

•	The property or disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and

•	Actions necessary to complete the plan indicate that it is unlikely significant changes to the plan will be made or that the plan will be withdrawn.

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1	As of December 31, 2019 the Company had interest rate swaps that fix the interest rate of $175.0 million of the Unsecured Term Loan due 2024.

2	As of December 31, 2019, there are no outstanding loans under the Unsecured Term Loan due 2026. This term loan has a delayed draw feature that allows the Company up to February 2020 to draw against the $150 million commitment.

1	Fair values as of December 31, 2018 represent fair values of obligations that were outstanding as of that date, and do not reflect the effect of any subsequent changes in principal balances and/or additions or extinguishments of instruments.

2	Balances are presented net of discounts and debt issuance costs and including premiums. The fair value presented is based on Level 2 inputs defined as model-derived valuations in which significant inputs and significant value drivers are observable in active markets.

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Utilizing professionals with specialized skills and knowledge to assist in: (i) evaluating the reasonableness of the methodology used to determine the appropriate discount rates that approximated the incremental borrowing rates for the underlying leased asset, (ii) performing sensitivity analyses to evaluate the impact of changes in the estimated incremental borrowing rates on the right-of-use assets and lease liabilities recorded, and (iii) evaluating the reasonableness of certain assumptions and inputs used to determine the incremental borrowing rates including the unsecured credit rating based on the Company's credit profile as compared to market data.

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Assessing the reasonableness of management’s key assumptions and inputs, including certain qualitative factors such as acquisition dates of properties, terms of current leases, anticipated new leases and renewals of existing leases, potential sales of properties based on offers received, and market considerations such as closures of nearby hospitals, used to determine that no triggering events had occurred for properties and verifying that forecasted cash flows were sufficient such that no triggering event had occurred.

•	Testing the completeness and accuracy of the underlying real estate property data including validating the number of properties and certain financial results to the general ledger.

•	Reviewing internal documentation including Board of Director minutes, letters of intent for properties held for sale, and operation department communications for properties including those at or near breakeven, properties with lower occupancy and properties with leases expiring in the near term, to assess whether additional triggering factors were present.

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Utilizing professionals with specialized skills and knowledge to assist in: (i) evaluating the reasonableness of the purchase price allocation methodology used by management for a sample of transactions to determine the relative fair value of the tangible and intangible assets acquired, and (ii) obtaining independent comparable sale transactions for land and evaluating the reasonableness of the market inputs and assumptions utilized by management.

•	Evaluating the appropriateness of the comparable transactions utilized by management by reviewing the underlying assumptions and inputs including location of land acquired and other relevant information.

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Business Overview

Healthcare Realty Trust Incorporated (the “Company”) is a real estate investment trust ("REIT") that owns, leases, manages, acquires, finances, develops and redevelops income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States of America. The Company had gross investments of approximately $ 4.4 billion in 204 real estate properties, construction in progress, the Memphis Redevelopment, land held for development and corporate property as of December 31, 2019 . The Company’s 204 owned real estate properties are located in 25 states and total approximately 15.4 million square feet. The Company provided property management services to approximately 11.4 million square feet nationwide. Square footage and property count disclosures in these Notes to the Company's Consolidated Financial Statements are unaudited.

Principles of Consolidation

The Company’s Consolidated Financial Statements include the accounts of the Company, its wholly owned subsidiaries, joint ventures, and partnerships where the Company controls the operating activities.

The Company's investments in its unconsolidated joint ventures are included in other assets and the related equity income is recognized within interest and other income (expense), net in other income (expense) on the Company's Consolidated Financial Statements. See Note 7 for additional information.

All significant intercompany accounts, transactions and balances have been eliminated upon consolidation in the Consolidated Financial Statements.

Use of Estimates in the Consolidated Financial Statements

Preparation of the Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates.

Segment Reporting

The Company owns, leases, acquires, manages, finances, develops and redevelops outpatient and other healthcare-related properties. The Company is managed as one reporting unit, rather than multiple reporting units, for internal reporting purposes and for internal decision-making. Therefore, the Company discloses its operating results in a single reportable segment.

Real Estate Properties

Real estate properties are recorded at cost or at fair value if acquired in a transaction that is a business combination under Accounting Standards Codification Topic 805, Business Combinations . Cost or fair value at the time of acquisition is allocated among land, buildings, tenant improvements, lease and other intangibles, and personal property as applicable. The Company’s gross real estate assets, on a financial reporting basis, totaled approximately $ 4.4 billion as of December 31, 2019 and $ 4.0 billion as of December 31, 2018 .

During 2019 and 2018 , the Company eliminated against accumulated depreciation approximately $ 17.2 million and $ 9.9 million , respectively, of fully amortized real estate intangibles that were initially recorded as a component of certain real estate acquisitions. Also during 2019 and 2018 , approximately $ 1.3 million and $ 0.5 million of fully depreciated tenant and capital improvements that were no longer in service were eliminated against accumulated depreciation.

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Depreciation expense of real estate properties for the three years ended December 31, 2019, 2018 and 2017 was $ 152.6 million , $ 143.8 million and $ 129.4 million , respectively. Depreciation and amortization of real estate assets and liabilities in place as of December 31, 2019 , is provided for on a straight-line basis over the asset’s estimated useful life:

Land improvements	3.0 to 39.0 years
Buildings and improvements	3.3 to 39.0 years
Lease intangibles (including ground lease intangibles)	2.1 to 99.0 years
Personal property	2.8 to 20.0 years

The Company capitalizes direct costs, including costs such as construction costs and professional services, and indirect costs, including capitalized interest and overhead costs, associated with the development and construction of real estate assets while substantive activities are ongoing to prepare the assets for their intended use. Capitalized interest cost is calculated using the weighted average interest rate of the Company's unsecured debt or the interest rate on project specific debt, if applicable. The Company continues to capitalize interest on the unoccupied portion of the properties in stabilization for up to one year after the buildings have been placed into service, at which time the capitalization of interest must cease.

Land Held for Development

Land held for development includes parcels of land owned by the Company, upon which the Company intends to develop and own outpatient healthcare facilities. The Company’s investment in seven parcels of land held for development located adjacent to certain of the Company's existing medical office buildings in Texas, Iowa, Tennessee and Colorado totaled approximately $ 24.6 million as of December 31, 2019 and December 31, 2018 .

Asset Impairment

The Company assesses the potential for impairment of identifiable, definite-lived, intangible assets and long-lived assets, including real estate properties, whenever events occur or a change in circumstances indicates that the carrying value might not be fully recoverable. Indicators of impairment may include significant underperformance of an asset relative to historical or expected operating results; significant changes in the Company’s use of assets or the strategy for its overall business; plans to sell an asset before its depreciable life has ended; the expiration of a significant portion of leases in a property; or significant negative economic trends or negative industry trends for the Company or its operators. In addition, the Company reviews for possible impairment, those assets subject to purchase options and those impacted by casualties, such as tornadoes and hurricanes. If management determines that the carrying value of the Company’s assets may not be fully recoverable based on the existence of any of the factors above, or others, management would measure and record an impairment charge based on the estimated fair value of the property or the estimated fair value less costs to sell the property.

Acquisitions of Real Estate Properties with In-Place Leases

The Company's acquisitions of real estate properties typically do not meet the definition of a business and are accounted for as asset acquisitions. Acquisitions of real estate properties with in-place leases are accounted for at relative fair value. When a building with in-place leases is acquired, the cost of the acquisition must be allocated between the tangible real estate assets "as-if-vacant" and the intangible real estate assets related to in-place leases based on their estimated fair values. Land fair value is estimated by using an assessment of comparable transactions and other relevant data. The values related to above- or below-market in-place lease intangibles are amortized over the remaining term of the leases upon acquisition to rental income where the Company is the lessor and to property operating expense where the Company is the lessee.

The Company considers whether any of the in-place lease rental rates are above- or below-market. An asset (if the actual rental rate is above-market) or a liability (if the actual rental rate is below-market) is calculated and recorded in an amount equal to the present value of the future cash flows that represent the difference between the actual lease rate and the estimated market rate. If an in-place lease is identified as a below-market rental rate, the

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Company would also evaluate any renewal options associated with that lease to determine if the intangible should include those periods.

The Company also estimates an absorption period, which can vary by property, assuming the building is vacant and must be leased up to the actual level of occupancy when acquired. During that absorption period, the owner would incur direct costs, such as tenant improvements, and would suffer lost rental income. Likewise, the owner would have acquired a measurable asset in that, assuming the building was vacant, certain fixed costs would be avoided because the actual in-place lessees would reimburse a certain portion of fixed costs through expense reimbursements during the absorption period.

All of these intangible assets (above- or below-market lease, tenant improvement costs avoided, leasing costs avoided, rental income lost, and expenses recovered through in-place lessee reimbursements) are estimated and recorded in amounts equal to the present value of estimated future cash flows. The actual purchase price is allocated based on the various asset fair values described above.

The building and tenant improvement components of the purchase price are depreciated over the estimated useful life of the building or the weighted average remaining term of the in-places leases. The at-market, in-place lease intangibles are amortized to amortization expense over the weighted average remaining term of the leases, customer relationship assets are amortized to amortization expense over terms applicable to each acquisition. Any goodwill recorded through a business combination would be reviewed for impairment at least annually and is not amortized.

See Note 8 for more details on the Company’s intangible assets.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. In calculating fair value, a company must maximize the use of observable market inputs, minimize the use of unobservable market inputs and disclose in the form of an outlined hierarchy the details of such fair value measurements.

A hierarchy of valuation techniques is defined to determine whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when available. These inputs have created the following fair value hierarchy:

•	Level 1 – quoted prices for identical instruments in active markets;

•	Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

•	Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Executed purchase and sale agreements, that are binding agreements, are categorized as level one inputs. Brokerage estimates, letters of intent, or unexecuted purchase and sale agreements are considered to be level three as they are nonbinding in nature.

Fair Value of Derivative Financial Instruments

Derivative financial instruments are recorded at fair value on the Company's Consolidated Balance Sheets as other assets or other liabilities. The valuation of derivative instruments requires the Company to make estimates and judgments that affect the fair value of the instruments. Fair values of derivatives are estimated by pricing models that consider the forward yield curves and discount rates. The fair value of the Company's forward starting interest rate swap contracts are estimated by pricing models that consider foreign trade rates and discount rates. Such amounts and the recognition of such amounts are subject to significant estimates that may change in the future. For derivatives designated in qualifying cash flow hedging relationships, the change in fair value of the effective portion of the derivatives is recognized in accumulated other comprehensive income (loss). Gains and losses are reclassified

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from accumulated other comprehensive income (loss) into earnings once the underlying hedged transaction is recognized in earnings. As of December 31, 2019 and 2018, the Company had $ 6.2 million and $ 0.9 million , respectively, recorded in accumulated other comprehensive loss related to forward starting interest rate swaps entered into and settled during 2015 and a hedge of the Company's variable rate debt. See Note 10 for additional information.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents includes short-term investments with original maturities of three months or less when purchased. Restricted cash includes cash held in escrow in connection with proceeds from the sales of certain real estate properties. The Company did not have any restricted cash for the year ended December 31, 2019. The Company had restricted cash during the year ended December 31, 2018, however it was reinvested for real estate acquisitions prior to the ending balance sheet date.

Goodwill and Other Intangible Assets

Goodwill and intangible assets with indefinite lives are not amortized, but are tested at least annually for impairment. Intangible assets with finite lives are amortized over their respective lives to their estimated residual values and are reviewed for impairment only when impairment indicators are present.

Identifiable intangible assets of the Company are comprised of enterprise goodwill, in-place lease intangible assets, customer relationship intangible assets, and debt issuance costs. In-place lease and customer relationship intangible assets are amortized on a straight-line basis over the applicable lives of the assets. Debt issuance costs are amortized over the term of the debt instrument on the effective interest method or the straight-line method when the effective interest method is not applicable. Goodwill is not amortized but is evaluated annually as of December 31 for impairment. Both the 2019 and 2018 impairment evaluations indicated that no impairment had occurred with respect to the $ 3.5 million goodwill asset. See Note 8 for more detail on the Company’s intangible assets.

Contingent Liabilities

From time to time, the Company may be subject to loss contingencies arising from legal proceedings and similar matters. Additionally, while the Company maintains comprehensive liability and property insurance with respect to each of its properties, the Company may be exposed to unforeseen losses related to uninsured or underinsured damages.

The Company continually monitors any matters that may present a contingent liability, and, on a quarterly basis, management reviews the Company’s reserves and accruals in relation to each of them, adjusting provisions as necessary in view of changes in available information. Liabilities for contingencies are first recorded when a loss is determined to be both probable and can be reasonably estimated. Changes in estimates regarding the exposure to a contingent loss are reflected as adjustments to the related liability in the periods when they occur.

Because of uncertainties inherent in the estimation of contingent liabilities, it is possible that the Company’s provision for contingent losses could change materially in the near term. To the extent that any significant losses, in addition to amounts recognized, are at least reasonably possible, such amounts will be disclosed in the notes to the Consolidated Financial Statements.

Share -Based Compensation

The Company has various employee and director share-based awards outstanding. These awards include non-vested common stock and options to purchase common stock granted to employees pursuant to the 2015 Stock Incentive Plan and its predecessor plans (the “2015 Incentive Plan”) and the 2000 Employee Stock Purchase Plan (the “Employee Stock Purchase Plan”). The Company recognizes share-based payments to employees and directors in the Consolidated Statements of Income on a straight-line basis over the requisite service period based on the fair value of the award on the measurement date. See Note 12 for details on the Company’s share-based awards.

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Accumulated Other Comprehensive Income (Loss)

Certain items must be included in comprehensive income, including items such as foreign currency translation adjustments, minimum pension liability adjustments, derivative instruments and unrealized gains or losses on available-for-sale securities. As of December 31, 2019, the Company’s accumulated other comprehensive income (loss) consists of the loss for changes in the fair value of active derivatives designated as cash flow hedges and the loss on the unamortized settlement of four forward starting swaps. See Note 10 for more details on the Company's derivative financial instruments.

Revenue from Contracts with Customers (Topic 606)

The Company recognizes certain revenue under the core principle of Topic 606. This requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Lease revenue is not within the scope of Topic 606. To achieve the core principle, the Company applies the five step model specified in the guidance. See the New Accounting Pronouncements section below for additional information.

Revenue that is accounted for under Topic 606 is segregated on the Company’s Consolidated Statements of Income in the Other operating line item. This line item includes parking income, property lease guaranty income, management fee income and other miscellaneous income. Below is a detail of the amounts by category:

	YEAR ENDED DECEMBER 31,
In thousands	2019			2018			2017
Type of Revenue
Parking income	$	7,520		$	6,930		$	6,611
Property lease guaranty income	128			675			726
Management fee income	270			273			308
Miscellaneous	155			114			114
	$	8,073		$	7,992		$	7,759

The Company’s three major types of revenue that are accounted for under Topic 606 that are listed above are all accounted for as the performance obligation is satisfied. The performance obligations that are identified for each of these items are satisfied over time and the Company recognizes revenue monthly based on this principle.

One of the Company’s owned real estate properties as of December 31, 2018 and 2017 respectively, was covered under property operating agreements between the Company and a sponsoring health system, which contractually obligate the sponsoring health system to provide to the Company a minimum return on the Company’s investment in the property in exchange for the right to be involved in the operating decisions of the property, including tenancy. The agreement expired February 28, 2019. If the minimum return was not achieved through normal operations of the property, the Company calculated and accrued to property lease guaranty revenue, each quarter, any shortfalls due from the sponsoring health systems under the terms of the property operating agreement.

Management fee income for property management services provided to third parties are generally calculated, accrued and billed monthly based on a percentage of cash collections of tenant receivables for the month or a stated amount per square foot. Internal management fee income, where the Company manages its owned properties, is eliminated in consolidation.

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Rental Income

Rental income related to non-cancelable operating leases is recognized as earned over the life of the lease agreements on a straight-line basis. The Company's lease agreements generally include provisions for stated annual increases or increases based on a Consumer Price Index ("CPI"). Rental income from properties under multi-tenant office lease arrangements and rental income from properties with single-tenant lease arrangements are included in rental income on the Company's Consolidated Statements of Income. The components of rental income are as follows:

	YEAR ENDED DECEMBER 31,
(Dollars in thousands)	2019			2018			2017
Property operating income	$	415,142		$	390,256		$	358,009
Single-tenant net lease	44,083			47,860			52,897
Straight-line rent	3,000			4,281			6,072
Rental income	$	462,225		$	442,397		$	416,978

Federal Income Taxes

No provision has been made for federal income taxes. The Company intends at all times to qualify as a REIT under Sections 856 through 860 of the Internal Revenue Code. The Company must distribute at least 90 % per annum of its real estate investment trust taxable income to its stockholders and meet other requirements to continue to qualify as a real estate investment trust. See Note 15 for further discussion.

The Company classifies interest and penalties related to uncertain tax positions, if any, in the Consolidated Financial Statements as a component of general and administrative expenses. No such amounts were recognized during the three years ended December 31, 2019.

Federal tax returns for the years 2016, 2017 , 2018 and 2019 are currently subject to examination by taxing authorities.

State Income Taxes

The Company must pay certain state income taxes and the provisions for such taxes are generally included in general and administrative expense on the Company’s Consolidated Statements of Income. See Note 15 for further discussion.

Sales and Use Taxes

The Company must pay sales and use taxes to certain state tax authorities based on rents collected from tenants in properties located in those states. The Company is generally reimbursed for these taxes by the tenant. The Company accounts for the payments to the taxing authority and subsequent reimbursement from the tenant on a net basis in revenues in the Company’s Consolidated Statements of Income.

Assets Held for Sale

Long-lived assets held for sale are reported at the lower of their carrying amount or their fair value less estimated cost to sell. Further, depreciation of these assets ceases at the time the assets are classified as held for sale. Losses resulting from the sale of such properties are characterized as impairment losses in the Consolidated Statements of Income. See Note 5 for more detail on assets held for sale.

Earnings per Share

The Company uses the two-class method of computing net earnings per common share. Earnings per common share is calculated by considering share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents as participating securities. Undistributed earnings (excess net income over dividend payments) are allocated on a pro rata basis to common shareholders and restricted shareholders. Undistributed losses (dividends in excess of net income) do not get allocated to restricted stockholders as they do not have the contractual obligation to share in losses. The amount of undistributed losses that applies to the restricted stockholders is allocated to the common stockholders.

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Basic earnings per common share is calculated using weighted average shares outstanding less issued and outstanding non-vested shares of common stock. Diluted earnings per common share is calculated using weighted average shares outstanding plus the dilutive effect of the outstanding stock options from the Employee Stock Purchase Plan using the treasury stock method and the average stock price during the period. See Note 13 for the calculations of earnings per share.

New Accounting Pronouncements

Accounting Standards Update No. 2016-02, No. 2018-01 and No. 2018-11

In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, "Leases." In January 2018, the FASB issued ASU 2018-01, "Leases - Land Easement Practical Expedient for Transition to Topic 842," in July 2018, the FASB issued ASU 2018-10, "Codification Improvements to Topic 842, Leases" and ASU 2018-11, "Leases - Targeted Improvements," and in December 2018, the FASB issued ASU 2018-20, “Narrow-Scope Improvements for Lessors.” These accounting standard updates are collectively referred to as "Topic 842."

Topic 842 provides several practical expedients that the Company elected. These are (a) the package of practical expedients offered that allows an entity not to reassess upon adoption (i) whether an expired or existing contract contains a lease, (ii) lease classification related to expired or existing lease arrangements, and (iii) whether costs incurred on expired or existing leases qualify as initial direct costs, (b) the lessor practical expedient not to separate certain non-lease components, such as common area maintenance, from the lease component if (i) the timing and pattern of transfer are the same for the non-lease component and associated lease component, and (ii) the lease component would be classified as an operating lease if accounted for separately and (c) the lessee practical expedient not to separate certain non-lease components from the associated lease component.

For lessees, the new standard establishes a right-of-use ("ROU") model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with the classification affecting the pattern of expense recognition in the income statement. The Company's ground leases executed or assumed prior to the adoption of Topic 842 continue to be accounted for as operating leases and will not result in a materially different ground lease expense. However, each ground lease executed by the Company after the adoption of Topic 842 will be evaluated to determine if it is an operating or finance lease. If the lease is to be accounted for as a finance lease, ground lease expense would be accounted for using the effective interest method instead of the straight-line method over the term of the lease, which would result in higher ground lease expense in the earlier years of a ground lease when compared to the straight-line method. Leases in which the Company is the lessee are primarily ground leases, but also includes management office leases in third party buildings and certain copier and postage machine leases. The terms of the ground leases generally range from 40 to 99 years with a weighted average remaining lease term remaining of 52.1 years, excluding renewal options. The Company's discount rates, which approximates the Company's incremental borrowing rate, ranged from 3.8 % for leases expiring in 2021 to 6.2 % for leases expiring in 2115. The Company utilized a third party to assist in determining the discount rates for its ground leases. The discount rates consider the general economic environment and factor in various financing and asset specific adjustments so that the discount rate is appropriate for the intended use of the underlying lease. As of January 1, 2019, the Company recognized the present value of its lease payments and a corresponding lease liability of $ 91.7 million . In addition, the Company reclassified $ 45.0 million of prepaid ground leases and below-market lease intangibles from the Other assets line item, $ 1.9 million of above-market lease intangibles from the Other liabilities line and $ 8.4 million of straight-line rent from the Accounts payable and accrued liabilities line item to the Operating lease right-of-use assets line item on the Consolidated Balance Sheet.

For lessors, the new standard requires a lessor to classify leases as either sales-type, direct-financing or operating. A lease will be treated as a sale if it is considered to transfer control of the underlying asset to the lessee. A lease will be classified as direct-financing if risks and rewards are conveyed without the transfer of control. Otherwise, the lease is treated as an operating lease. Lessor accounting remains largely unchanged with some exceptions including the concept of separating lease and nonlease components. Nonlease components, such as common area maintenance, are generally accounted for under Topic 606 and separated from the lease payments. However, the Company elected the

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lessor practical expedient allowing the Company to not separate these components when certain conditions are met. The combined component is accounted for under Topic 842.

The adoption of Topic 842, where the Company is the lessor, did not have a material impact on the Company's Consolidated Financial Statements for the twelve months ended months ended December 31, 2019 .

The new standard was effective for the Company on January 1, 2019. Topic 842 provides two transition alternatives. The Company elected the prospective optional transition method available to apply Topic 842 in the year of adoption and the guidance in Accounting Standards Codification Topic 840 in the comparative periods. Topic 842 includes extensive quantitative and qualitative disclosures as compared to Topic 840, Leases, for both lessees and lessors. See Note 3 to the Company's Consolidated Financial Statements for additional disclosures.

Accounting Standards Update No. 2016-13

In June 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments." This update is intended to improve financial reporting by requiring timelier 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. This update requires that financial statement assets measured at an amortized cost and certain other financial instruments be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. This standard is effective for annual and interim periods beginning after December 15, 2019 with early adoption permitted. Operating lease receivables, representing the majority of the Company's receivables, are not within the scope of the new standard. The Company adopted this standard as of January 1, 2020. There was a not material impact to the Consolidated Financial Statements from the adoption of this standard.

Accounting Standards Update No. 2017-04

In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment." This update eliminates Step 2 of the goodwill impairment test. As such, an entity will perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize a goodwill impairment charge for the amount by which the reporting unit's carrying amount exceeds its fair value. This standard is effective for the Company for annual and interim periods beginning after December 15, 2019. The Company adopted this standard as of January 1, 2020. There was not a material impact to the Consolidated Financial Statements from the adoption of this standard.

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The Company invests in healthcare-related properties located throughout the United States. The Company provides management, leasing, development and redevelopment services, and capital for the construction of new facilities as well as for the acquisition of existing properties. The following table summarizes the Company’s investments at December 31, 2019.

Dollars in thousands	NUMBER OF PROPERTIES		LAND			BUILDINGS, IMPROVEMENTS, AND LEASE INTANGIBLES			PERSONAL PROPERTY			TOTAL			ACCUMULATED DEPRECIATION
Seattle, WA	25		$	58,565		$	532,767		$	421		$	591,753		$	( 88,890	)
Dallas, TX	25		19,194			496,683			442			516,319			( 181,556		)
Los Angeles, CA	14		44,386			205,829			347			250,562			( 95,979		)
Atlanta, GA	9		3,679			212,509			84			216,272			( 20,040		)
Nashville, TN	6		20,053			180,463			1,109			201,625			( 64,038		)
Charlotte, NC	16		4,200			176,261			105			180,566			( 67,040		)
Denver, CO	9		16,514			134,004			271			150,789			( 25,265		)
Washington, D.C.	6		—			150,304			21			150,325			( 25,097		)
Richmond, VA	7		—			149,132			106			149,238			( 44,204		)
Houston, TX	9		16,211			132,013			78			148,302			( 44,229		)
Honolulu, HI	3		8,327			135,641			159			144,127			( 39,165		)
Des Moines, IA	7		12,665			126,401			99			139,165			( 34,725		)
Oklahoma City, OK	4		10,401			115,706			15			126,122			( 19,351		)
Indianapolis, IN	4		3,299			118,847			—			122,146			( 26,082		)
San Francisco, CA	3		14,054			107,396			43			121,493			( 20,906		)
Springfield, MO	1		1,989			109,304			—			111,293			( 17,740		)
Austin, TX	5		14,236			92,809			123			107,168			( 24,048		)
Memphis, TN	7		5,241			92,508			194			97,943			( 37,582		)
San Antonio, TX	6		6,487			88,583			404			95,474			( 40,573		)
Chicago, IL	3		5,859			87,588			211			93,658			( 23,540		)
Minneapolis, MN	4		2,090			62,359			—			64,449			( 10,486		)
Other (16 markets)	31		17,079			475,409			806			493,294			( 165,159		)
	204		284,529			3,982,516			5,038			4,272,083			( 1,115,695		)
Construction in progress	—		—			48,731			—			48,731			—
Land held for development	—		24,647			—			—			24,647			( 671		)
Memphis Redevelopment	—		5,222			3,810			—			9,032			( 50		)
Corporate property	—		—			—			5,500			5,500			( 4,686		)
Total real estate investments	204		$	314,398		$	4,035,057		$	10,538		$	4,359,993		$	( 1,121,102	)

Lessor Accounting Under ASC 842

The Company’s properties generally are leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through 2035. Some leases provide for fixed rent renewal terms in addition to market rent renewal terms. Some leases provide the lessee, during the term of the lease, with an option or right of first refusal to purchase the leased property. The Company’s portfolio of single-tenant net leases generally requires the lessee to pay minimum rent and all taxes (including property tax), insurance, maintenance and other operating costs associated with the leased property. The Company records these expenses on a net basis, with the exception of property taxes. Property taxes are recorded on a gross basis as a lessor cost in which the tenant reimburses the Company. The Company generally expects that collectibility is probable at lease commencement. If the assessment of collectibility changes after the lease commencement date and Rental income is not considered probable, Rental income is recognized on a cash basis and all previously recognized uncollectible Rental income is reversed in the period in which the it is

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determined not to be probable of collection. In addition to the lease-specific collectibility assessment performed under Topic 842, the Company may also apply a general reserve ("provision for bad debt"), as a reduction to Rental income, for its portfolio of operating lease receivables.

The Company's leases typically have escalators that are either based on a stated percentage or an index such as CPI (consumer price index). In addition, most of the Company's leases include nonlease components such as reimbursement of operating expenses as additional rent or include the reimbursement of expected operating expenses as part of the lease payment. The Company adopted an accounting policy to combine lease and nonlease components. Rent escalators based on indices and reimbursements of operating expenses that are not included in the lease rate are considered variable lease payments. Variable payments are recognized in the period earned. Lease income for the Company's operating leases recognized for the twelve months ended December 31, 2019 was $ 462.2 million .

Future minimum lease payments under the non-cancelable operating leases, excluding any reimbursements, as of December 31, 2019 are as follows:

In thousands
2020	$	360,340
2021	315,426
2022	275,798
2023	233,424
2024	177,738
2025 and thereafter	501,849
	$	1,864,575

Revenue Concentrations

The Company’s real estate portfolio is leased to a diverse tenant base. The Company did not have any customers that account for 10% or more of the Company's revenues for the years ended December 31, 2019, 2018 and 2017.

Purchase Option Provisions

Certain of the Company’s leases include purchase option provisions. The provisions vary by agreement but generally allow the lessee to purchase the property covered by the agreement at fair market value or an amount equal to the Company’s gross investment . The Company expects that the purchase price from its purchase options will be greater than its net investment in the properties at the time of potential exercise by the lessee. The Company had investments of approximately $ 96.0 million in four real estate properties as of December 31, 2019 that were subject to purchase options that were exercisable.

Lessor Accounting Under ASC 840

The Company’s properties are generally leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through 2036. Some leases and financial arrangements provide for fixed rent renewal terms in addition to market rent renewal terms. Some leases provide the lessee, during the term of the lease and for a short period thereafter, with an option or a right of first refusal to purchase the leased property. The Company’s portfolio of single-tenant net leases generally requires the lessee to pay minimum rent and all taxes (including property tax), insurance, maintenance and other operating costs associated with the leased property.

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Future minimum lease payments under the non-cancelable operating leases, excluding any reimbursements, as of December 31, 2018 were as follows:

In thousands
2019	$	326,441
2020	279,211
2021	235,660
2022	201,072
2023	163,978
2024 and thereafter	476,673
	$	1,683,035

Lessee Accounting Under ASC 842

As of December 31, 2019 , the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. As of December 31, 2019 , the Company had 108 properties totaling 8.9 million square feet that were held under ground leases. Some of the ground leases renewal terms are based on fixed rent renewal terms and others have market rent renewal terms. These ground leases typically have initial terms of 40 to 99 years with expiration dates through 2117. Any rental increases related to the Company’s ground leases are generally either stated or based on the Consumer Price Index. The Company had 46 prepaid ground leases as of December 31, 2019 . The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $ 0.6 million for the twelve months ended December 31, 2019 , 2018 and 2017 respectively.

The Company’s future lease payments (primarily for its 62 non-prepaid ground leases) as of December 31, 2019 were as follows:

In thousands	OPERATING			FINANCING
2020	$	4,814		$	746
2021	4,844			754
2022	4,875			763
2023	4,913			774
2024	4,969			795
2025 and thereafter	307,665			83,404
Total undiscounted lease payments	332,080			87,236
Discount	( 240,506		)	( 69,199		)
Lease liabilities	$	91,574		$	18,037

Lessee Accounting Under ASC 840

As of December 31, 2018, the Company was obligated under operating lease agreements consisting primarily of the Company’s ground leases. At December 31, 2018 the Company had 107 properties totaling 8.8 million square feet that were held under ground leases with a remaining weighted average term of 53.9 years, excluding renewal options. These ground leases typically have initial terms of 50 to 75 years with one or more renewal options extending the terms to 75 to 100 years, with expiration dates through 2117 . Any rental increases related to the Company’s ground leases are generally either stated or based on the Consumer Price Index.

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The Company’s future minimum lease payments (primarily for its 60 non-prepaid ground leases) as of December 31, 2018 were as follows:

In thousands
2019	$	5,288
2020	5,260
2021	5,238
2022	5,207
2023	5,224
2024 and thereafter	323,533
	$	349,750

The following table provides details of the Company's total lease expense for the year ended December 31, 2019 :

In thousands	YEAR ENDED Dec. 31, 2019
Operating lease cost
Operating lease expense	$	4,623
Variable lease expense	3,161
Finance lease cost
Amortization of right-of-use assets	165
Interest on lease liabilities	616
Total lease expense	$	8,565
Other information
Operating cash flows outflows related to operating leases	$	6,972
Financing cash flows outflows related to financing leases	$	379
Right-of-use assets obtained in exchange for new finance lease liabilities	$	17,800
Weighted-average remaining lease term (excluding renewal options) - operating leases	49.5
Weighted-average remaining lease term (excluding renewal options) -finance leases	65.2
Weighted-average discount rate - operating leases	5.7		%
Weighted-average discount rate - finance leases	5.4		%

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2019 Acquisitions

The following table details the Company's acquisitions for the year ended December 31, 2019 :

Dollars in millions	TYPE 1	DATE ACQUIRED	PURCHASE PRICE			CASH CONSIDERATION 2			REAL ESTATE			OTHER 3			SQUARE FOOTAGE unaudited
Washington, D.C. 4	MOB	3/28/19	$	46.0		$	45.9		$	50.2		$	( 4.3	)	158,338
Indianapolis, IN 5	MOB	3/28/19	47.0			44.8			43.7			1.1			143,499
Atlanta, GA	MOB	4/2/19	28.0			28.0			28.0			—			47,963
Dallas, TX	MOB	6/10/19	17.0			16.7			17.0			( 0.3		)	89,990
Seattle, WA	MOB	6/11/19	7.7			7.8			7.8			—			29,870
Seattle, WA	MOB	6/14/19	19.0			19.1			19.5			( 0.4		)	47,255
Seattle, WA	MOB	6/28/19	30.5			30.4			30.6			( 0.2		)	78,288
Houston, TX	MOB	8/1/19	13.5			13.5			13.5			—			29,903
Oklahoma City, OK	MOB	9/26/19	4.1			4.1			4.1			—			28,542
Los Angeles, CA 6	MOB	9/30/19	61.1			60.9			61.8			( 0.9		)	115,634
Raleigh, NC	MOB	10/31/19	21.6			22.0			21.7			0.3			57,730
Dallas, TX 7	MOB	10/31/19	20.1			19.5			20.2			( 0.7		)	48,192
Seattle, WA	MOB	11/18/19	22.8			23.1			23.2			( 0.1		)	36,350
Seattle, WA	MOB	12/10/19	24.2			24.5			24.6			( 0.1		)	44,166
Memphis, TN	MOB	12/13/19	8.7			8.9			8.9			—			110,883
Seattle, WA	MOB	12/18/19	10.0			9.3			9.9			( 0.6		)	20,109
			$	381.3		$	378.5		$	384.7		$	( 6.2	)	1,086,712

1	MOB = medical office building.

2	Cash consideration excludes prorations of revenue and expense due to/from seller at the time of the acquisition.

3	Includes other assets acquired, liabilities assumed, and intangibles recognized at acquisition.

4

Includes two properties. The Company assumed two ground leases in connection with this acquisition that are classified as financing leases. The present value of future lease payments totaling $ 14.3 million was recorded on the Company's Consolidated Balance Sheets under the caption Finance lease liabilities. In addition, the right-of-use assets were partially offset by $ 5.2 million of above-market lease intangibles included in Other.

5	The Company assumed a prepaid ground lease totaling $ 0.8 million and recorded a below-market lease intangible totaling $ 0.9 million in connection with this acquisition that is classified as an operating lease that is included in Other.

6	Includes two properties.

7	The Company assumed a ground lease in connection with this acquisition that is classified as a financing lease. The present value of future lease payments totaling $ 3.6 million was recorded on the Company's Consolidated Balance Sheets under the caption Finance lease liabilities.

The following table summarizes the estimated relative fair values of the assets acquired and liabilities assumed in the real estate acquisitions for 2019 as of the acquisition date:

	ESTIMATED FAIR VALUE in millions			ESTIMATED USEFUL LIFE in years
Building	$	270.7		8.0 - 37.0
Land	59.1			—
Land Improvements	4.2			3.0 - 12.0
Intangibles
At-market lease intangibles	50.7			3.3 - 9.2
Above-market lease intangibles (lessor)	0.7			2.4 - 9.9
Below-market lease intangibles (lessor)	( 0.7		)	1.2 - 8.6
Above-market lease intangibles (lessee)	( 5.1		)	69.1 - 72.3
Below-market lease intangibles (lessee)	0.9			65.1
Other assets acquired	2.3
Accounts payable, accrued liabilities and other liabilities assumed	( 4.3		)
Total cash paid	$	378.5

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Subsequent Acquisition

On January 3, 2020, the Company acquired an 86,986 square foot medical office building in Los Angeles, California for a purchase price of $ 42.0 million .

2018 Real Estate Acquisitions

The following table details the Company's acquisitions for the year ended December 31, 2018:

Dollars in millions	TYPE 1	DATE ACQUIRED	PURCHASE PRICE			MORTGAGE NOTES PAYABLE ASSUMED 2			CASH CONSIDERATION 3			REAL ESTATE			OTHER 4			SQUARE FOOTAGE unaudited
Seattle, WA	MOB	5/4/18	$	7.8		$	—		$	7.8		$	7.8		$	—		13,314
Denver, CO 5	MOB	5/18/18	12.1			( 8.0		)	3.8			12.1			( 0.2		)	93,992
Denver, CO 5	OFC	5/18/18	12.9			—			12.8			13.0			( 0.2		)	93,869
Oklahoma City, OK	MOB	5/21/18	11.4			—			11.4			11.5			( 0.1		)	82,647
Seattle, WA	MOB	6/29/18	26.2			—			26.2			26.7			( 0.5		)	86,942
Denver, CO	MOB	8/24/18	4.1			—			4.2			4.2			—			17,084
Nashville, TN	OFC	12/4/18	31.9			—			32.0			32.0			—			108,691
Chicago, IL 6	MOB	12/19/18	5.1			—			4.9			5.1			( 0.2		)	14,883
			$	111.5		$	( 8.0	)	$	103.1		$	112.4		$	( 1.2	)	511,422

1	MOB = medical office building; OFC = office

2	The mortgage note payable assumed in the acquisition does not reflect the fair value premium totaling $ 0.1 million recorded by the Company upon acquisition (included in Other).

3	Cash consideration excludes prorations of revenue and expense due to/from seller at the time of the acquisition.

4	Includes other assets acquired, liabilities assumed, intangibles recognized at acquisition and fair value adjustments on debt assumed.

5	The mortgage note payable assumed at acquisition encumbers both buildings.

6	The Company acquired an additional suite in a previously acquired medical office building.

The following table summarizes the estimated relative fair values of the assets acquired and liabilities assumed in the real estate acquisitions for 2018 as of the acquisition date:

	ESTIMATED FAIR VALUE in millions			ESTIMATED USEFUL LIFE in years
Building	$	64.0		20.0 - 30.0
Land	31.4			—
Land Improvements	2.7			5.0 - 13.5
Intangibles
At-market lease intangibles (lessor)	14.3			1.3 - 4.2
Below-market lease intangibles (lessor)	( 0.1		)	3.8
Mortgage notes payable assumed, including fair value adjustments	( 8.0		)
Other assets acquired	0.2
Accounts payable, accrued liabilities and other liabilities assumed	( 1.4		)
Total cash paid	$	103.1

Non-monetary Exchange

On June 29, 2018, the Company completed the swap of a non-revenue producing garage that was built by the Company in 2012 located in Denver, Colorado for 20.5 acres of land adjacent to the CommonSpirit Health's St. Anthony Hospital campus. A portion of this land, approximately 4.6 acres, has been allocated to an existing medical office building that was developed by the Company in 2017. This building is located on land previously ground leased

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from the hospital. The remaining land has been recorded in land held for development. The land acquired was appraised for $ 5.8 million . The Company had a net investment of $ 3.9 million in the parking garage and recognized a gain of $ 1.9 million in connection with this transaction.

2019 Real Estate Asset Dispositions

The following table details the Company's dispositions for the year ended December 31, 2019 :

Dollars in millions	TYPE 1	DATE DISPOSED	SALES PRICE			CLOSING ADJUSTMENTS			NET PROCEEDS			NET REAL ESTATE INVESTMENT			OTHER including receivables 2			GAIN/ (IMPAIRMENT)			SQUARE FOOTAGE unaudited
Tucson, AZ 3	MOB	4/9/19	$	13.0		$	( 0.9	)	$	12.1		$	6.9		$	0.4		$	4.8		67,345
Virginia Beach, VA 4	MOB	8/1/19	1.3			( 0.1		)	1.2			1.2			—			—			10,000
San Antonio, TX	MOB	8/28/19	0.9			( 0.1		)	0.8			0.6			—			0.2			10,138
Erie, PA	IRF	10/25/19	14.0			—			14.0			1.3			—			12.7			90,123
New Orleans, LA 5	MOB	11/25/19	3.7			( 0.2		)	3.5			1.2			0.2			2.1			136,155
Kingsport, TN	SNF	11/27/19	9.5			( 0.3		)	9.2			5.0			1.3			2.9			75,000
Pittsburgh, PA 6	IRF	12/18/19	3.8			( 0.3		)	3.5			3.5			—			—			78,731
Dallas, TX 5	MOB	12/30/19	8.7			( 0.6		)	8.1			6.1			( 0.4		)	2.4			69,558
			$	54.9		$	( 2.5	)	$	52.4		$	25.8		$	1.5		$	25.1		537,050

1	MOB = medical office building; IRF = inpatient rehabilitation facility; SNF = skilled nursing facility

2	Includes straight-line rent receivables, leasing commissions and lease inducements.

3	Includes four properties sold to a single purchaser.

4	The Company reclassified this property to held for sale during the second quarter of 2019 and recorded an impairment charge of $ 0.4 million based on the sales price less estimated costs to sell.

5	Includes two properties.

6	The Company reclassified this property to held for sale during the first quarter of 2017 and subsequently in the second quarter of 2019, the Company accepted an offer to purchase and recorded an impairment charge of $ 5.2 million .

2018 Real Estate Asset Dispositions

The following table details the Company's dispositions for the year ended December 31, 2018:

Dollars in millions		TYPE 1	DATE DISPOSED	SALES PRICE			CLOSING ADJUSTMENTS			NET PROCEEDS			NET REAL ESTATE INVESTMENT			OTHER including receivables 3			GAIN/ (IMPAIRMENT)			SQUARE FOOTAGE unaudited
Roanoke, VA 2, 4		MOB, OFC	4/26/18	$	46.2		$	—		$	46.2		$	23.9		$	—		$	22.3		460,881
Michigan 5		SNF	6/27/18	9.5			( 0.7		)	8.8			3.4			—			5.4			121,672
St. Louis, MO		MOB	8/30/18	9.8			( 0.5		)	9.3			7.5			0.5			1.3			70,893
Denver, CO		IRF	12/20/18	16.9			( 0.3		)	16.6			9.2			1.4			6.0			34,068
Cleveland, TN		MOB	12/21/18	13.3			( 0.2		)	13.1			8.6			0.4			4.1			81,382
Tucson, AZ		MOB	12/27/18	3.0			( 0.2		)	2.8			1.9			0.2			0.7			37,310
				$	98.7		$	( 1.9	)	$	96.8		$	54.5		$	2.5		$	39.8		806,206

1	MOB = medical office building; IRF = inpatient rehabilitation facility; OFC = office; SNF = skilled nursing facility

2	Previously classified as held for sale.

3	Includes straight-line rent receivables, leasing commissions and lease inducements.

4	Includes seven properties and comprised of five single-tenant net lease buildings and two multi-tenant buildings. These buildings were sold pursuant to the exercise of a fixed-price purchase option.

5	Includes five skilled nursing facilities. Sales price includes $ 0.5 million of forfeited earnest money from a prior terminated transaction.

Assets and liabilities of properties sold or classified as held for sale are separately identified on the Company’s Consolidated Balance Sheets. As of December 31, 2019 the Company had no properties classified as held for sale, and as of December 31, 2018, the Company had one property classified as held for sale.

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The table below reflects the assets and liabilities of the properties classified as held for sale as of December 31, 2019 and 2018 .

	DECEMBER 31,
Dollars in thousands	2019			2018
Balance Sheet data
Land	$	—		$	1,125
Buildings, improvements and lease intangibles	—			18,231
	—			19,356
Accumulated depreciation	—			( 10,657		)
Real estate assets held for sale, net	—			8,699
Other assets, net	37			573
Assets held for sale, net	$	37		$	9,272
Accounts payable and accrued liabilities	$	37		$	450
Other liabilities	108			137
Liabilities of properties held for sale	$	145		$	587

An asset is impaired when undiscounted cash flows expected to be generated by the asset are less than the carrying value of the asset. The Company must assess the potential for impairment of its long-lived assets, including real estate properties, whenever events occur or there is a change in circumstances, such as the sale of a property or the decision to sell a property, that indicate that the recorded value might not be fully recoverable.

Other assets consist primarily of straight-line rent receivables, additional long-lived assets, prepaids, intangible assets, debt issuance costs and accounts receivable. Items included in "Other assets, net" on the Company’s Consolidated Balance Sheets as of December 31, 2019 and 2018 are detailed in the table below:

		DECEMBER 31,
Dollars in millions		2019			2018
Straight-line rent receivables		$	70.5		$	69.5
Prepaid assets		44.3			66.2
Additional long-lived assets, net		22.7			23.5
Accounts receivable, net		13.0			9.7
Ground lease modification, net		9.4			9.9
Equity investments in joint ventures		8.1			8.5
Debt issuance costs, net 1		5.0			2.2
Project costs		4.6			2.2
Goodwill		3.5			3.5
Customer relationship intangible assets, net		2.5			1.7
Above-market intangible assets, net 2		1.2			16.8
Interest rate swap assets		—			0.2
Other		0.6			0.8
		$	185.4		$	214.7

1	Includes debt issuance costs related to the Company's Unsecured Credit Facility and Unsecured Term Loan due 2026.

2	Includes below-market ground lease intangibles as of December 31, 2018. These intangibles were reclassified to Operating right-of-use assets on the Company's Consolidated Balance Sheets as of December 31, 2019.

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Unconsolidated Joint Ventures

The Company owns a non-managing membership interest in two limited liability companies, or LLCs, that own two parking garages in Atlanta, Georgia which is included in the equity investments in the joint ventures line in the table above. The parking garage interests were purchased in connection with three buildings that were acquired in the fourth quarter of 2017. The Company's investment in and income (loss) recognized for the years ended December 31, 2019 and 2018 related to its LLCs accounted for under the equity method are shown in the table below:

	DECEMBER 31,
Dollars in millions	2019			2018
Net LLC investments, beginning of period	$	8.5		$	8.7
Equity income (loss) recognized during the period	—			—
Owner distributions	( 0.4		)	( 0.2		)
Net LLC investments, end of period	$	8.1		$	8.5

The Company has several types of intangible assets and liabilities included in its Consolidated Balance Sheets, including goodwill, debt issuance costs, above-, below-, and at-market lease intangibles, and customer relationship intangibles. The Company’s intangible assets and liabilities as of December 31, 2019 and 2018 consisted of the following:

	GROSS BALANCE at December 31,						ACCUMULATED AMORTIZATION at December 31,						WEIGHTED AVG. REMAINING LIFE in years	BALANCE SHEET CLASSIFICATION
Dollars in millions	2019			2018			2019			2018
Goodwill	$	3.5		$	3.5		$	—		$	—		N/A	Other assets, net
Credit facility debt issuance costs	5.8			5.4			0.8			3.2			3.8	Other assets, net
Above-market lease intangibles (lessor)	4.0			4.5			2.8			3.3			3.9	Other assets, net
Customer relationship intangibles (lessor)	4.1			2.7			1.6			1.0			43.1	Other assets, net
Below-market lease intangibles	( 7.3		)	( 7.3		)	( 4.0		)	( 4.0		)	6.7	Other liabilities
Debt issuance costs 1	9.2			9.3			3.5			2.8			5.8	Notes and bonds payable
At-market lease intangibles	147.9			114.4			59.8			52.0			5.4	Real estate properties
Above-market lease intangibles (lessee)	( 7.2		)	( 2.0		)	( 0.2		)	( 0.1		)	75.5	Right-of-use asset
Below-market lease intangibles (lessee)	18.8			17.8			2.5			2.2			63.0	Right-of-use asset
	$	178.8		$	148.3		$	66.8		$	60.4		16.6

1	Includes debt issuance costs related to the Company's Unsecured Senior Notes payable, Unsecured Term Loan due 2024, and mortgage notes payable.

For the years ended December 31, 2019 and 2018, the Company recognized approximately $ 28.0 million and $ 23.2 million of intangible amortization expense, respectively.

The following table represents expected amortization over the next five years of the Company’s intangible assets and liabilities in place as of December 31, 2019 :

Dollars in millions	FUTURE AMORTIZATION OF INTANGIBLES, NET
2019	$	24.1
2020	19.1
2021	16.0
2022	11.2
2023	7.0

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	DECEMBER 31,						MATURITY DATES	CONTRACTUAL INTEREST RATES		PRINCIPAL PAYMENTS	INTEREST PAYMENTS
Dollars in thousands	2019			2018
Unsecured Credit Facility	$	293,000		$	262,000		5/23	LIBOR + .90%		At maturity	Monthly
Unsecured Term Loan due 2024 1	199,013			149,183			5/24	LIBOR + 1.00%		At maturity	Monthly
Unsecured Term Loan due 2026 2	—			—			6/26	LIBOR + 1.60%		At maturity	Monthly
Senior Notes due 2023 1	248,540			248,117			4/23	3.75	%	At maturity	Semi-Annual
Senior Notes due 2025 1	248,522			248,278			5/25	3.88	%	At maturity	Semi-Annual
Senior Notes due 2028 1	295,651			295,198			1/28	3.63	%	At maturity	Semi-Annual
Mortgage notes payable 3	129,343			143,208			7/20-5/40	3.31%-6.88%		Monthly	Monthly
	$	1,414,069		$	1,345,984

1	Balances are shown net of discounts and unamortized issuance costs.

2	As of December 31, 2019, there are no outstanding loans under the Unsecured Term Loan 2026. This term loan has a delayed draw feature that allows the Company up to February 2020 to draw against the $ 150 million commitments.

3	Balances are shown net of discounts and unamortized issuance costs and include premiums.

The Company’s various debt agreements contain certain representations, warranties, and financial and other covenants customary in such loan agreements. Among other things, these provisions require the Company to maintain certain financial ratios and impose certain limits on the Company’s ability to incur indebtedness and create liens or encumbrances. As of December 31, 2019 , the Company was in compliance with its financial covenant provisions under its various debt instruments.

Unsecured Credit Facility

On October 14, 2011, the Company entered into a $ 700.0 million unsecured credit facility with a syndicate of lenders. On May 31, 2019, the Company entered into an amended and restated Unsecured Credit Facility to extend the maturity date to May 2023. The credit facility agreement provides the Company with two six -month extension options that could extend the maturity date to May 2024. Each option is subject to an extension fee of 0.0625 % of the aggregate commitments. Amounts outstanding under the Unsecured Credit Facility bear interest at LIBOR plus an applicable margin rate. The margin rate, which depends on the Company's credit ratings, ranges from 0.775 % to 1.45 % ( 0.90 % as of December 31, 2019 ). In addition, the Company pays a facility fee per annum on the aggregate amount of commitments ranging from 0.125 % to 0.30 % ( 0.20 % as of December 31, 2019 ). In connection with the amendment, the Company paid up-front fees to the lenders of approximately $ 3.5 million , which will be amortized over the term of the facility. As of December 31, 2019 , the Company had $ 293.0 million outstanding under the Unsecured Credit Facility with an effective interest rate of approximately 2.66 % and had a remaining borrowing capacity of approximately $ 407.0 million.

Unsecured Term Loan due 2024

In February 2014, the Company entered into a $ 200.0 million unsecured term loan with a syndicate of nine lenders. On July 5, 2016, the Company repaid $ 50.0 million of the outstanding principal. On May 31, 2019, the Company entered into an amendment to the unsecured term loan due 2022 with a syndicate of nine lenders to extend the maturity date to May 2024 and to increase the loan amount from $ 150.0 million to $ 200 million . The Unsecured Term Loan due 2024 bears interest at a rate equal to (x) LIBOR plus (y) a margin ranging from 0.85 % to 1.65 % ( 1.00 % as of December 31, 2019 ) based upon the Company's unsecured debt ratings. Payments under the Unsecured Term Loan due 2024 are interest only, with the full amount of the principal due at maturity. The Unsecured Term Loan due 2024 may be prepaid at any time, without penalty. The Unsecured Term Loan due 2024 has various financial covenant provisions that are required to be met on a quarterly and annual basis that are equivalent to those of the Unsecured Credit Facility. As of December 31, 2019 , the Company had interest rate swaps totaling $ 175.0 million to hedge the 1-month LIBOR portion of the cost of borrowing under the Unsecured Term Loan due 2024 at a weighted average rate of 2.29 % . The outstanding balance on the Unsecured Term Loan due 2024 was $ 200.0 million as of December 31, 2019 with an effective interest rate of approximately 3.27 % including the impact of the interest rate swaps. In connection

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with the amendment, the Company paid up-front fees to the lenders of approximately $ 0.7 million , of which $ 0.4 million was capitalized and will be amortized over the term of the loan, and $ 0.3 million was expensed during the second quarter of 2019. For each of the years ended December 31, 2019 , 2018 , and 2017 the Company amortized approximately $ 0.2 million of the debt issuance costs which is included in interest expense on the Company's Consolidated Statements of Income. The following table reconciles the balance of the Unsecured Term Loan due 2024 on the Company’s Consolidated Balance Sheets as of December 31, 2019 and 2018 :

	DECEMBER 31,
Dollars in thousands	2019			2018
Unsecured Term Loan due 2024 principal balance	$	200,000		$	150,000
Debt issuance costs	( 987		)	( 817		)
Unsecured Term Loan due 2024 carrying amount	$	199,013		$	149,183

Unsecured Term Loan due 2026

On May 31, 2019, the Company amended and restated its term loan agreement with a syndicate of lenders. The Unsecured Term Loan due 2026 has a delayed draw feature that allows the Company up to nine months to draw against the $ 150.0 million commitments. Loans outstanding under the Unsecured Term Loan due 2026 will bear interest at a rate equal to LIBOR plus a margin ranging from 1.45 % to 2.40 % ( 1.60 % at December 31, 2019 ). As of December 31, 2019 , no loans were outstanding under the Unsecured Term Loan due 2026. Committed amounts that remain undrawn are subject to a ticking fee ranging from 0.125 % to 0.30 % per annum ( 0.20 % at December 31, 2019 ). In connection with the amendment, the Company paid up-front fees to the lenders of approximately $ 1.1 million , of which $ 0.7 million was capitalized and will be amortized over the term of the loan, and $ 0.4 million was expensed during the second quarter of 2019.

Senior Notes due 2023

On March 26, 2013, the Company issued $ 250.0 million of unsecured senior notes due 2023 (the "Senior Notes due 2023") in a registered public offering. The Senior Notes due 2023 bear interest at 3.75 % , payable semi-annually on April 15 and October 15, beginning October 15, 2013, and are due on April 15, 2023, unless redeemed earlier by the Company. The notes were issued at a discount of approximately $ 2.1 million and the Company incurred debt issuance cost of $ 2.1 million , which yielded a 3.95 % interest rate per annum upon issuance. For each of the years ended December 31, 2019 , 2018 and 2017 , the Company amortized approximately $ 0.2 million of the discount and $ 0.2 million of the debt issuance cost which are included in interest expense on the Company’s Consolidated Statements of Income. The following table reconciles the balance of the Senior Notes due 2023 on the Company’s Consolidated Balance Sheets as of December 31, 2019 and 2018 :

	DECEMBER 31,
Dollars in thousands	2019			2018
Senior Notes due 2023 face value	$	250,000		$	250,000
Unaccreted discount	( 761		)	( 974		)
Debt issuance costs	( 699		)	( 909		)
Senior Notes due 2023 carrying amount	$	248,540		$	248,117

Senior Notes due 2025

On April 24, 2015, the Company issued $ 250.0 million of unsecured senior notes due 2025 (the "Senior Notes due 2025") in a registered public offering. The Senior Notes due 2025 bear interest at 3.875 % , payable semi-annually on May 1 and November 1, beginning November 1, 2015, and are due on May 1, 2025, unless redeemed earlier by the Company. The notes were issued at a discount of approximately $ 0.2 million and the Company incurred approximately $ 2.3 million in debt issuance costs which yielded a 4.08 % interest rate per annum upon issuance. For each of the years ended December 31, 2019 , 2018 , and 2017 the Company amortized approximately $ 0.2 million of the debt issuance costs which is included in interest expense on the Company's Consolidated Statements of Income. Concurrent with this transaction, the Company settled four forward starting swap agreements for $ 1.7 million . The

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Senior Notes due 2025 have various financial covenants that are required to be met on a quarterly and annual basis. The following table reconciles the balance of the Senior Notes due 2025 on the Company’s Consolidated Balance Sheets as of December 31, 2019 and 2018 :

	DECEMBER 31,
Dollars in thousands	2019			2018
Senior Notes due 2025 face value	$	250,000		$	250,000
Unaccreted discount	( 121		)	( 141		)
Debt issuance costs	( 1,357		)	( 1,581		)
Senior Notes due 2028 carrying amount	$	248,522		$	248,278

Senior Notes due 2028

On December 11, 2017, the Company issued $ 300.0 million of unsecured Senior Notes due 2028 (the "Senior Notes due 2028") in a registered public offering. The Senior Notes due 2028 bear interest at 3.625 % , payable semi-annually on January 15 and July 15, beginning July 15, 2018, and are due on January 15, 2028, unless redeemed earlier by the Company. The notes were issued at a discount of approximately $ 2.5 million and the Company incurred approximately $ 2.7 million in debt issuance costs which yielded a 3.84 % interest rate per annum upon issuance. For the year ended December 31, 2019 , the Company amortized approximately $ 0.2 million of the discount and $ 0.2 million of the debt issuance costs which are included in interest expense on the Company's Consolidated Statements of Income. The Senior Notes due 2028 have various financial covenants that are required to be met on a quarterly and annual basis. The following table reconciles the balance of the Senior Notes due 2028 on the Company’s Consolidated Balance Sheets as of December 31, 2019 :

	DECEMBER 31,
Dollars in thousands	2019			2018
Senior Notes due 2028 face value	$	300,000		$	300,000
Unaccreted discount	( 2,100		)	( 2,319		)
Debt issuance costs	( 2,249		)	( 2,483		)
Senior Notes due 2028 carrying amount	$	295,651		$	295,198

Mortgage Notes Payable

The following table reconciles the Company’s aggregate mortgage notes principal balance with the Company’s Consolidated Balance Sheets as of December 31, 2019 and 2018 . For the years ended December 31, 2019 , 2018 and 2017 , the Company amortized approximately $ 0.6 million, $ 0.4 million and $ 0.3 million of the discount and $ 0.4 million, $ 0.8 million, and $ 0.7 million of the premium. For the years ended December 31, 2019 , 2018 and 2017 , the Company also amortized approximately $ 0.2 million, $ 0.1 million , and $ 0.1 million of the debt issuance costs, respectively, on the mortgage notes payable which is included in interest expense on the Company’s Consolidated Statements of Income.

	DECEMBER 31,
Dollars in thousands	2019			2018
Mortgage notes payable principal balance	$	129,258		$	143,115
Unamortized premium	1,162			1,805
Unaccreted discount	( 528		)	( 968		)
Debt issuance costs	( 549		)	( 744		)
Mortgage notes payable carrying amount	$	129,343		$	143,208

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The following table details the Company’s mortgage notes payable, with related collateral.

	ORIGINAL BALANCE			EFFECTIVE INTEREST RATE 20		MATURITY DATE	COLLATERAL 21	PRINCIPAL AND INTEREST PAYMENTS 19	INVESTMENT IN COLLATERAL at December 31,			BALANCE at December 31,
Dollars in millions									2019			2019			2018
Commercial Bank 1	$	9.4		4.55	%	7/19	MOB	Monthly/8-yr amort	$	—		$	—		$	9.0
Commercial Bank 2	15.2			7.65	%	7/20	MOB	18	18.6			12.5			12.5
Life Insurance Co. 3	7.9			4.00	%	8/20	MOB	Monthly/15-yr amort.	20.7			0.5			1.3
Life Insurance Co. 4	7.3			5.25	%	8/20	MOB	Monthly/27-yr amort.	18.1			6.0			6.2
Life Insurance Co. 5	5.6			4.30	%	1/21	MOB	Monthly/10-yr amort.	15.8			4.5			4.6
Commercial Bank 6	12.9			6.43	%	2/21	MOB	Monthly/12-yr amort.	55.2			10.1			10.3
Life Insurance Co. 7	11.0			3.87	%	11/22	MOB	Monthly/7-yr amort.	22.0			10.0			10.2
Life Insurance Co. 8	12.3			3.86	%	8/23	MOB	Monthly/7-yr amort.	25.4			10.9			11.2
Financial Services 9	12.4			4.27	%	10/23	MOB	Monthly/10-yr amort.	22.6			11.7			12.0
Life Insurance Co. 10	9.0			4.84	%	12/23	MOB,OFC	Monthly/10-yr amort.	25.7			7.6			7.8
Life Insurance Co. 11	13.3			4.13	%	1/24	MOB	Monthly/10-yr amort.	20.8			12.7			13.0
Life Insurance Co. 12	6.8			3.96	%	2/24	MOB	Monthly/7-yr amort.	14.6			6.4			6.6
Financial Services 13	9.7			4.32	%	9/24	MOB	Monthly/10-yr amort.	17.0			8.3			8.6
Commercial Bank	11.5			3.71	%	1/26	MOB	Monthly/10-yr amort.	38.6			9.6			10.1
Commercial Bank 14	15.0			5.25	%	4/27	MOB	Monthly/20-yr amort.	33.5			7.9			8.8
Municipal Government 15, 16	11.0			4.79	%	17	MOB	Semi-Annual 17	21.0			10.6			11.0
									$	369.6		$	129.3		$	143.2

1	The Company repaid this mortgage note in April 2019. The Company's unencumbered gross investment was $ 27.8 million at December 31, 2019.

2	The unaccreted portion of the $ 2.4 million discount recorded on this note upon acquisition is included in the balance above.

3	The unamortized portion of the $ 0.3 million premium recorded on this note upon acquisition is included in the balance above.

4	The unamortized portion of the $ 0.4 million premium recorded on this note upon acquisition is included in the balance above. This mortgage note payable was repaid in full on February 3, 2020.

5	The unamortized portion of the $ 0.2 million premium recorded on this note upon acquisition is included in the balance above.

6	The unaccreted portion of the $ 1.0 million discount recorded on this note upon acquisition is included in the balance above.

7	The unaccreted portion of the $ 0.1 million discount recorded on this note upon acquisition is included in the balance above.

8	The unaccreted portion of the $ 0.2 million discount recorded on this note upon acquisition is included in the balance above.

9	The unamortized portion of the $ 0.4 million premium recorded on this note upon acquisition is included in the balance above.

10	The unamortized portion of the $ 0.1 million premium recorded on this note upon acquisition is included in the balance above.

11	The unamortized portion of the $ 0.8 million premium recorded on this note upon acquisition is included in the balance above.

12	The unamortized portion of the $ 0.2 million premium recorded on this note upon acquisition is included in the balance above.

13	The unamortized portion of the $ 0.1 million premium recorded on this note upon acquisition is included in the balance above.

14	The unamortized portion of the $ 0.7 million premium recorded on this note upon acquisition is included in the balance above.

15	Balance consists of three notes secured by the same building.

16	The unamortized portion of the $ 1.0 million premium recorded on the three notes upon acquisition is included in the balance above.

17

These three mortgage notes payable are series municipal bonds that have maturity dates ranging from from May 2022 to May 2040. One of the four original notes payable was repaid upon maturity in May 2017. The remaining three require interest only payments and have future maturity dates but allow repayment after May 2020 without penalty. The Company intends on repaying all three notes payable at that time.

18	Payable in monthly installments of interest only for 24 months and then installments of principal and interest based on an 11 -year amortization with the final payment due at maturity.

19	Payable in monthly installments of principal and interest with the final payment due at maturity (unless otherwise noted).

20	The contractual interest rates for the 17 outstanding mortgage notes ranged from 3.3 % to 6.9 % as of December 31, 2019 .

21	MOB-Medical office building. OFC-Office

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Other Long-Term Debt Information

Future maturities of the Company’s notes and bonds payable as of December 31, 2019 were as follows:

Dollars in thousands	PRINCIPAL MATURITIES			NET ACCRETION/ AMORTIZATION 1			DEBT ISSUANCE COSTS 2			NOTES AND BONDS PAYABLE			%
2020	$	23,064		$	( 392	)	$	( 1,081	)	$	21,591		1.5	%
2021	17,594			( 326		)	( 1,065		)	16,203			1.1	%
2022	12,977			( 336		)	( 1,077		)	11,564			0.8	%
2023	573,230			( 183		)	( 921		)	572,126			40.5	%
2024	225,966			( 262		)	( 667		)	225,037			15.9	%
2025 and thereafter	569,427			( 849		)	( 1,030		)	567,548			40.2	%
	$	1,422,258		$	( 2,348	)	$	( 5,841	)	$	1,414,069		100.0	%

1	Includes discount accretion and premium amortization related to the Company’s Senior Notes due 2023, Senior Notes due 2025, Senior Notes due 2028 and 16 mortgage notes payable.

2	Excludes approximately $ 5.0 million in debt issuance costs related to the Company's Unsecured Credit Facility and Unsecured Term Loan due 2026 included in other assets, net.

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During 2019, 2018 and 2017, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated other comprehensive income (loss) and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

The Company had eight outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

INTEREST RATE DERIVATIVE	NUMBER OF INSTRUMENTS		NOTIONAL in millions
Interest rate swaps - 2017	2		$	25.0
Interest rate swaps - 2018	2		50.0
Interest rate swaps - 2019	4		100.0
Total interest rate swaps	8		$	175.0

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Tabular Disclosure of Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the fair value of the Company's derivative financial instruments, as well as, their classification on the Consolidated Balance Sheets as of December 31, 2019 and 2018 .

	AS OF DECEMBER 31, 2019				AS OF DECEMBER 31, 2018
Dollars in thousands	BALANCE SHEET LOCATION	FAIR VALUE			BALANCE SHEET LOCATION	FAIR VALUE
Derivatives designated as hedging instruments
Interest rate swaps 2017	Other liabilities	$	( 467	)	Other assets, net	$	229
Interest rate swaps 2018	Other liabilities	( 1,335		)	Other liabilities	( 68		)
Interest rate swaps 2019	Other liabilities	( 3,478		)	Other liabilities	—
Total derivatives designated as hedging instruments		$	( 5,280	)		$	161

Tabular Disclosure of the Effect of Fair Value and Cash Flow Hedge Accounting on Accumulated Other Comprehensive

Income (Loss)

The table below presents the effect of cash flow hedge accounting on Accumulated other comprehensive income (loss) as of December 31, 2019 related to the Company's outstanding interest rate swaps.

	AMOUNT OF (LOSS) RECOGNIZED IN OCI on derivatives				AMOUNT OF (GAIN)/LOSS RECLASSIFIED FROM OCI INTO INCOME for the twelve months ended December 31,
Dollars in thousands	2019				2019			2018
Interest rate swaps 2017	$	( 674	)	Interest expense	$	( 22	)	$	51
Interest rate swaps 2018	( 1,366		)	Interest expense	99			204
Interest rate swaps 2019	( 3,552		)	Interest expense	74			—
Settled interest rate swaps	—			Interest expense	168			169
	$	( 5,592	)	Total interest expense	$	319		$	424

The Company estimates that an additional $ 1.4 million will be reclassified from accumulated other comprehensive loss as an increase to interest expense over the next 12 months.

Tabular Disclosure Offsetting Derivatives

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company's derivatives as of December 31, 2019. The net amounts of derivative liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative liabilities are presented on the Company's Consolidated Balance Sheets.

Offsetting of Derivative Liabilities
	GROSS AMOUNTS of recognized liabilities			GROSS AMOUNTS OFFSET in the Consolidated Balance Sheets			NET AMOUNTS OF LIABILITIES presented in the Consolidated Balance Sheets			GROSS AMOUNTS NOT OFFSET in the Consolidated Balance Sheets
										FINANCIAL INSTRUMENTS			CASH COLLATERAL			NET AMOUNT
Derivatives	$	( 5,280	)	$	—		$	( 5,280	)	$	5,280		$	—		$	—

Credit-risk-related Contingent Features

The Company has agreements with each of its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company's default on the indebtedness. The Compa ny has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

As of December 31, 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 $ 5.5 million . As of December 31, 2019, the Company has not posted any collateral related to these agreements and was not in breach of any agreement

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provisions. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value of $ 5.5 million .

Common Stock

The Company had no preferred shares outstanding and had common shares outstanding for the three years ended December 31, 2019 as follows:

	YEAR ENDED DECEMBER 31,
	2019			2018			2017
Balance, beginning of year	$	125,279,455		$	125,131,593		$	116,416,900
Issuance of common stock	9,251,440			26,203			8,395,607
Non-vested share-based awards, net of withheld shares and forfeitures	175,259			121,659			319,086
Balance, end of year	$	134,706,154		$	125,279,455		$	125,131,593

Equity Offering

On March 19, 2019, the Company issued 3,737,500 shares of common stock, par value $ 0.01 per share, at $ 31.40 per share in an underwritten public offering pursuant to the Company's existing effective registration statement. The net proceeds of the offering, after underwriting discounts and offering expenses, were approximately $ 115.8 million.

At-The-Market Equity Offering Program

The Company has in place an at-the-market equity offering program to sell shares of the Company’s common stock from time to time in at-the-market sales transactions. The following table details the shares sold under this program.

	SHARES SOLD		SALE PRICE per share	NET PROCEEDS in millions
2019	5,470,673		$32.01 - $33.77	$	179.1
2018	—		NA	$	—
2017	—		NA	$	—

The Company had 398,024 authorized shares remaining available to be sold under the current sales agreements as of January 31, 2020 and no shares were sold related to this program during 2017 or 2018.

Dividends Declared

During 2019 , the Company declared and paid common stock dividends aggregating $ 1.20 per share ( $ 0.30 per share per quarter).

On February 11, 2020, the Company declared a quarterly common stock dividend in the amount of $ 0.30 per share payable on March 9, 2020 to stockholders of record on February 24, 2020.

Authorization to Repurchase Common Stock

On April 30, 2019, the Company’s Board of Directors authorized the repurchase of up to $ 50 million of outstanding shares of the Company’s common stock either in the open market or through privately negotiated transactions, subject to market conditions, regulatory constraints, and other customary conditions. The Company is not obligated under this authorization to repurchase any specific number of shares. This authorization supersedes all previous stock repurchase authorizations. As of the date of these Consolidated Financial Statements, the Company has not repurchased any shares of its common stock under this authorization.

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Accumulated Other Comprehensive Loss

During each of the two years ended December 31, 2019 and 2018 , the Company entered into interest rate swaps to hedge the variable cash flows associated with existing variable-rate debt. The Company continues to amortize the 2015 settlement of forward-starting interest rate swaps. This amount will be reclassified out of accumulated other comprehensive loss impacting net income over the 10 -year term of the associated senior note issuance. See Note 10 for more information regarding the Company's derivative instruments.

The following table represents the changes in accumulated other comprehensive loss during the years ended December 31, 2019 and 2018 :

	INTEREST RATE SWAPS as of December 31,
Dollars in thousands	2019			2018
Beginning balance	$	( 902	)	$	( 1,299	)
Other comprehensive loss before reclassifications	319			424
Amounts reclassified from accumulated other comprehensive income (loss)	( 5,592		)	( 27		)
Net current-period other comprehensive (loss) income	( 5,273		)	397
Ending balance	$	( 6,175	)	$	( 902	)

The following table represents the details regarding the reclassifications from Accumulated other comprehensive income (loss) during the year ended December 31, 2019 (dollars in thousands):

DETAILS ABOUT ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) COMPONENTS	AMOUNT RECLASSIFIED from accumulated other comprehensive income (loss)			AFFECTED LINE ITEM in the statement where net income is presented
Amounts reclassified from accumulated other comprehensive income (loss) related to settled interest rate swaps	$	168		Interest Expense
Amounts reclassified from accumulated other comprehensive income (loss) related to current interest rate swaps	151			Interest Expense
	$	319

Stock Incentive Plan

In May 2015, the Company's stockholders approved the 2015 Stock Incentive Plan which authorizes the Company to issue 3,500,000 shares of common stock to its employees and directors. The 2015 Incentive Plan, which superseded the 2007 Employee Stock Incentive Plan (the "Predecessor Plan"), will continue until terminated by the Company’s Board of Directors. As of December 31, 2019 and 2018 , the Company had issued a total of 1,988,079 and 1,711,240 restricted shares, respectively, under the 2015 Incentive Plan for compensation-related awards to employees and directors, with a total of 1,511,921 and 1,788,760 , respectively, remaining unissued under the plan. Under the Predecessor Plan for compensation-related awards to employees and directors, the Company had issued, net of forfeitures, a total of 1,878,637 restricted shares for the year ended December 31, 2015. Non-vested shares issued under the 2015 Incentive Plan are generally subject to fixed vesting periods varying from three to eight years beginning on the date of issue. If a recipient voluntarily terminates his or her relationship with the Company or is terminated for cause before the end of the vesting period, the shares are forfeited, at no cost to the Company. The Company recognizes the impact of forfeitures as they occur. Once the shares have been issued, the recipient has the right to receive dividends and the right to vote the shares. Compensation expense, included in general and administrative expense, recognized during the years ended December 31, 2019 , 2018 and 2017 from the amortization of the value of shares over the vesting period issued to employees and directors was $ 12.0 million , $ 10.4 million and $ 9.8 million , respectively. The Company's former Executive Chairman, David R. Emery, died on September 30, 2019 resulting in $ 2.9 million of expenses associated with the acceleration of his outstanding nonvested share-based awards. This charge is included in the 2019 compensation expense. In connection with the vesting, 80,490 shares

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were withheld to pay employee federal income taxes. T he following table represents expected amortization of the Company's non-vested shares issued:

Dollars in millions	FUTURE AMORTIZATION of non-vested shares
2020	$	8.7
2021	7.3
2022	5.9
2023	3.8
2024	2.5
2025 and thereafter	1.9
Total	$	30.1

Executive Incentive Plan

On July 31, 2012, the Company adopted an Executive Incentive Plan, which was amended and restated on February 16, 2016 ("Executive Incentive Plan"), to provide specific award criteria with respect to incentive awards made under the 2015 Incentive Plan subject to the discretion of the Compensation Committee. No new shares of common stock were authorized in connection with the Executive Incentive Plan. Under the terms of the Executive Incentive Plan, the Company's named executive officers, and certain other members of senior management, may earn incentive awards in the form of cash and non-vested stock. Cash incentive awards are based on individual and Company performance. Company performance is measured over a four-quarter period against targeted financial and operational metrics set in advance by the Compensation Committee. Non-vested stock awards are based on the Company's relative total shareholder return ("TSR") performance over one -year and three -year periods, measured against the Company's peer group. For 2019 , 2018 and 2017 , compensation expense, included in general and administrative expense, resulting from the amortization of non-vested share grants to officers was approximately $ 5.7 million , $ 5.7 million , and $ 5.0 million , respectively. Details of the awards that have been earned from this plan are as follows:

•

On December 12, 2019, the Company granted non-vested stock awards for TSR performance to its four named executive officers, five senior vice presidents, and five first vice presidents with a grant date fair value totaling $ 6.1 million , which were granted in the form of 187,072 non-vested shares, with a five -year vesting period, which will result in annual compensation expense of $ 1.2 million for the each of 2020, 2021, 2022, and 2023, and $ 1.1 million for 2024, respectively.

•

On December 12, 2018, the Company granted non-vested stock awards for TSR performance to its four named executive officers and five senior vice presidents with a grant date fair value totaling $ 5.0 million , which were granted in the form of 165,261 non-vested shares, with a five -year vesting period, which will result in annual compensation expense of $ 1.0 million for the each of 2019, 2020, 2021, and 2022, and $ 0.9 million for 2023, respectively.

•

On December 11, 2017, the Company granted non-vested stock awards for TSR performance to its five named executive officers and four senior vice presidents with a grant date fair value totaling $ 10.1 million , which were granted in the form of 309,874 non-vested shares, with a five -year vesting period, which will result in annual compensation expense of $ 2.0 million for the each of 2019, 2020, and 2021, and $ 1.9 million for 2022, respectively.

Long-Term Incentive Program

In the first quarter of 2019 and 2018 , the Company granted a performance-based award to officers, excluding the four named executive officers and five senior vice presidents, under the Long-term Incentive Program adopted under the 2015 Incentive Plan (the "LTIP") totaling approximately $ 1.0 million and $ 1.2 million , which was granted in the form of 31,262 non-vested shares and 43,414 non-vested shares, respectively. The shares have vesting periods ranging from three to eight years with a weighted average vesting period of approximately six years.

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For 2019 , 2018 and 2017 , compensation expense resulting from the amortization of non-vested share grants to officers was approximately $ 1.1 million , $ 1.2 million , and $ 1.1 million , respectively.

Salary Deferral Plan

The Company's salary deferral plan allows certain of its officers to elect to defer up to 50 % of their base salary in the form of non-vested shares issued under the 2015 Incentive Plan subject to long-term vesting. The number of shares will be increased through a Company match depending on the length of the vesting period selected by the officer. The officer's vesting period choices are: three years for a 30 % match; five years for a 50 % match; and eight years for a 100 % match. During 2019 , 2018 and 2017 , the Company issued 33,509 shares, 33,348 shares and 39,016 shares, respectively, to its officers through the salary deferral plan. For 2019 , 2018 and 2017 , compensation expense resulting from the amortization of non-vested share grants to officers was approximately $ 0.9 million , $ 1.0 million , and $ 1.2 million , respectively.

Non-employee Directors Incentive Plan

The Company issues non-vested shares to its non-employee directors under the 2015 Incentive Plan. The directors’ shares issued have a one -year vesting period beginning with the May 2015 grant (previously a three -year vesting period) and are subject to forfeiture prior to such date upon termination of the director’s service, at no cost to the Company. During 2019 , 2018 and 2017 , the Company issued 24,996 shares, 30,989 shares, and 23,231 shares, respectively, to its non-employee directors through the 2015 Incentive Plan. For each of the years 2019 , 2018 and 2017 , compensation expense resulting from the amortization of non-vested share grants to directors was approximately $ 0.8 million , respectively.

Other Grants

The Company issued three one-time non-vested share grants related to executive management transition in 2016. For 2019 , 2018 and 2017 compensation expense resulting from the amortization of these non-vested share grants to officers was approximately $ 3.5 million , $ 1.7 million , and $ 1.7 million , respectively. The following information provides information about each grant:

•	On March 1, 2016, the Company issued 50,000 shares to the Chief Financial Officer with a 10 -year vesting period, resulting in compensation expense of $ 0.2 million per year.

•	On December 30, 2016, the Company issued 200,000 shares to the President and Chief Executive Officer with a 10 -year vesting period, resulting in compensation expense of $ 0.6 million per year.

•	On December 30, 2016, the Company issued 150,000 shares to the Executive Chairman with a 5 -year vesting period, resulting in compensation expense of $ 0.9 million per year. The Company's former Executive Chairman, David R. Emery, died on September 30, 2019 resulting in the acceleration of this outstanding grant totaling $ 2.0 million .

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A summary of the activity under the 2015 Incentive Plan and related information for the three years in the period ended December 31, 2019 follows:

	YEAR ENDED DECEMBER 31,
Dollars in thousands, except per share data	2019			2018			2017
Share-based awards, beginning of year	1,769,863			1,907,645			1,786,497
Granted	276,839			273,012			413,489
Vested	( 292,636		)	( 410,794		)	( 292,341		)
Share-based awards, end of year	1,754,066			1,769,863			1,907,645
Weighted-average grant date fair value of
Share-based awards, beginning of year	$	29.36		$	28.44		$	27.18
Share-based awards granted during the year	$	31.75		$	29.72		$	32.05
Share-based awards vested during the year	$	28.84		$	25.32		$	25.88
Share-based awards, end of year	$	29.82		$	29.36		$	28.44
Grant date fair value of shares granted during the year	$	8,791		$	8,114		$	13,254

The vesting periods for the non-vested shares granted during 2019 ranged from one to eight years with a weighted-average amortization period remaining as of December 31, 2019 of approximately 5 years.

During 2019 , 2018 and 2017 , the Company withheld 101,580 shares, 151,353 shares and 94,403 shares, respectively, of common stock from its officers to pay estimated withholding taxes related to the vesting of shares.

401(k) Plan

The Company maintains a 401(k) plan that allows eligible employees to defer salary, subject to certain limitations imposed by the Internal Revenue Code. The Company provides a matching contribution of up to 3 % of each eligible employee’s salary, subject to certain limitations. The Company’s matching contributions were approximately $ 0.5 million for the year ended December 31, 2019 and $ 0.4 million for each year during 2018 and 2017 .

Dividend Reinvestment Plan

The Company is authorized to issue 1,000,000 shares of common stock to stockholders under the Dividend Reinvestment Plan. As of December 31, 2019 , the Company had issued 599,104 shares under the plan of which 7,990 shares were issued in 2019 , 9,487 shares were issued in 2018 and 26,031 shares were issued in 2017 .

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan, pursuant to which the Company is authorized to issue shares of common stock. Under the Employee Stock Purchase Plan, each eligible employee in January of each year is able to purchase up to $ 25,000 of common stock at the lesser of 85 % of the market price on the date of grant or 85 % of the market price on the date of exercise of such option. The number of shares subject to each year’s option becomes fixed on the date of grant. Options granted under the Employee Stock Purchase Plan expire if not exercised 27 months after each such option’s date of grant. The Company accounts for these awards based on fair value, using the Black-Scholes model, and generally recognizes expense over the award’s vesting period, net of forfeitures. Since the options granted under the Employee Stock Purchase Plan immediately vest, the Company records compensation expense for those options when they are granted in the first quarter of each year and then may record additional compensation expense in subsequent quarters as warranted.

During the years ended December 31, 2019 , 2018 and 2017 , the Company recognized in general and administrative expenses approximately $ 0.2 million , $ 0.3 million , and $ 0.2 million , respectively, of compensation expense related to the annual grant of options to its employees to purchase shares under the Employee Stock Purchase Plan.

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Cash received from employees upon exercising options under the Employee Stock Purchase Plan was approximately $ 1.0 million for the year ended December 31, 2019 , $ 0.4 million for the year ended December 31, 2018 , and $ 0.8 million for the year ended December 31, 2017 .

A summary of the Employee Stock Purchase Plan activity and related information for the three years in the period ended December 31, 2019 is as follows:

	YEAR ENDED DECEMBER 31,
Dollars in thousands, except per share data	2019			2018			2017
Options outstanding, beginning of year	328,533			318,100			316,321
Granted	235,572			203,836			206,824
Exercised	( 35,277		)	( 16,716		)	( 32,076		)
Forfeited	( 54,095		)	( 40,897		)	( 40,659		)
Expired	( 142,074		)	( 135,790		)	( 132,310		)
Options outstanding and exercisable, end of year	332,659			328,533			318,100
Weighted-average exercise price of
Options outstanding, beginning of year	$	24.17		$	25.00		$	23.69
Options granted during the year	$	24.17		$	27.30		$	25.77
Options exercised during the year	$	25.01		$	24.01		$	24.31
Options forfeited during the year	$	25.26		$	24.06		$	25.01
Options expired during the year	$	25.77		$	23.55		$	23.22
Options outstanding, end of year	$	25.59		$	24.17		$	25.00
Weighted-average fair value of options granted during the year (calculated as of the grant date)	$	7.02		$	7.81		$	6.31
Intrinsic value of options exercised during the year	$	269		$	71		$	271
Intrinsic value of options outstanding and exercisable (calculated as of December 31)	$	2,589		$	1,402		$	2,683
Exercise prices of options outstanding (calculated as of December 31)	$	25.59		$	24.17		$	25.00
Weighted-average contractual life of outstanding options (calculated as of December 31, in years)	0.8			0.8			0.8

The fair values for these options were estimated at the date of grant using a Black-Scholes options pricing model with the weighted-average assumptions for the options granted during the period noted in the following table. The risk-free interest rate was based on the U.S. Treasury constant maturity-nominal two-year rate whose maturity is nearest to the date of the expiration of the latest option outstanding and exercisable; the expected dividend yield was based on the expected dividends of the current year as a percentage of the average stock price of the prior year; the expected life of each option was estimated using the historical exercise behavior of employees; expected volatility was based on historical volatility of the Company’s common stock; and expected forfeitures were based on historical forfeiture rates within the look-back period.

	2019		2018		2017
Risk-free interest rates	2.48	%	1.89	%	1.20	%
Expected dividend yields	4.19	%	3.66	%	3.70	%
Expected life (in years)	1.45		1.45		1.45
Expected volatility	29.8	%	28.4	%	20.4	%
Expected forfeiture rates	85	%	85	%	85	%

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The Company uses the two-class method of computing net earnings per common share. Non-vested share-based awards containing non-forfeitable rights to dividends are considered participating securities pursuant to the two-class method. The table below sets forth the computation of basic and diluted earnings per common share for the three years in the period ended December 31, 2019 .

	YEAR ENDED DECEMBER 31,
Dollars in thousands, except per share data	2019			2018			2017
Weighted average common shares
Weighted average common shares outstanding	129,735,723			125,219,773			119,739,216
Non-vested shares	( 1,736,022		)	( 1,927,648		)	( 1,813,058		)
Weighted average common shares - basic	127,999,701			123,292,125			117,926,158
Weighted average common shares - basic	127,999,701			123,292,125			117,926,158
Dilutive effect of employee stock purchase plan	84,283			58,808			91,007
Weighted average common shares - diluted	128,083,984			123,350,933			118,017,165
Net income	$	39,185		$	69,771		$	23,092
Dividends paid on nonvested share-based awards	( 2,075		)	( 2,320		)	( 2,149		)
Net income applicable to common stockholders	$	37,110		$	67,451		$	20,943
Basic earnings per common share	$	0.29		$	0.55		$	0.18
Diluted earnings per common share	$	0.29		$	0.55		$	0.18

Redevelopment Activity

The Company completed the redevelopment of a medical office building in Charlotte, North Carolina, which includes a 40,278 square foot vertical expansion and funded approximately $ 1.5 million during the year ended December 31, 2019 . The first tenant took occupancy in the second quarter of 2019.

The Company initiated the redevelopment of a 110,883 square foot medical office building in Memphis, Tennessee in December 2019. The Company funded approximately $ 0.3 million , excluding the purchase price of $ 8.7 million for the land and building. The building will continue to operate with in-place leases during construction. The Memphis Redevelopment is expected to be completed in the first quarter of 2021.

The Company also funded approximately $ 1.0 million of primarily tenant improvements in connection with its previously completed redevelopment of a medical office building in Nashville, Tennessee.

Development Activity

The Company continued the development of a 151,000 square foot medical office building in Seattle, Washington. The Company spent approximately $ 25.2 million on the development during the year ended December 31, 2019 . The Company expects initial occupancy to occur in the first quarter of 2020.

The Company also funded approximately $ 0.6 million of primarily tenant improvements as the Company continues to lease up its previously completed development of a medical office building in Denver, Colorado.

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The table below details the Company’s construction activity as of December 31, 2019 . The information included in the table below represents management’s estimates and expectations at December 31, 2019 , which are subject to change. The Company’s disclosures regarding certain projections or estimates of completion dates may not reflect actual results.

				DECEMBER 31, 2019									ESTIMATED REMAINING FUNDINGS unaudited			ESTIMATED TOTAL INVESTMENT unaudited			APPROXIMATE SQUARE FEET unaudited
Dollars in thousands	NUMBER OF PROPERTIES		INITIAL OCCUPANCY	CONSTRUCTION IN PROGRESS BALANCE			TOTAL FUNDED during the year			TOTAL AMOUNT FUNDED
Construction Activity
Seattle, WA	1		Q1 2020	$	48,731		$	25,211		$	49,033		$	15,087		$	64,120		151,000
Redevelopment Activity
Memphis, TN 1	1		Q1 2021	—			9,032			9,032			18,768			27,800			110,883
Total				$	48,731		$	34,243		$	58,065		$	33,855		$	91,920		261,883

1	Initial occupancy represents the quarter in which the redevelopment is expected to be completed. The building will continue to operate with in-place leases during construction.

Tenant Improvements

The Company may provide a tenant improvement allowance in new or renewal leases for the purpose of refurbishing or renovating tenant space. As of December 31, 2019 , the Company had commitments of approximately $ 46.6 million that are expected to be spent on tenant improvements throughout the portfolio, excluding development properties currently under construction.

Land Held for Development

Taxable Income (unaudited)

The Company has elected to be taxed as a REIT, as defined under the Internal Revenue Code. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its taxable income to its stockholders.

As a REIT, the Company generally will not be subject to federal income tax on taxable income it distributes currently to its stockholders. Accordingly, no provision for federal income taxes has been made in the accompanying Consolidated Financial Statements. If the Company fails to qualify as a REIT for any taxable year, then it will be subject to federal income taxes at regular corporate rates, including any applicable alternative minimum tax, and may not be able to qualify as a REIT for four subsequent taxable years. Even if the Company qualifies as a REIT, it may be subject to certain state and local taxes on its income and property and to federal income and excise tax on its undistributed taxable income.

Earnings and profits (as defined under the Internal Revenue Code), the current and accumulated amounts of which determine the taxability of distributions to stockholders, vary from net income attributable to common stockholders and taxable income because of different depreciation recovery periods, depreciation methods, and other items.

On a tax-basis, the Company’s gross real estate assets totaled approximately $ 4.4 billion , $ 4.0 billion , and $ 4.0 billion as of December 31, 2019 , 2018 and 2017, respectively.

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The following table reconciles the Company’s consolidated net income attributable to common stockholders to taxable income for the three years ended December 31, 2019 :

	YEAR ENDED DECEMBER 31,
Dollars in thousands	2019			2018			2017
Net income	$	39,185		$	69,771		$	23,092
Reconciling items to taxable income
Depreciation and amortization	67,953			64,775			46,426
Gain or loss on disposition of depreciable assets	( 15,689		)	( 27,581		)	1,570
Straight-line rent	( 11,535		)	( 3,049		)	( 4,551		)
Receivable allowances	1,942			2,470			1,680
Share-based compensation	2,628			( 1,699		)	1,855
Other	12,631			842			6,552
	57,930			35,758			53,532
Taxable income 1	$	97,115		$	105,529		$	76,624
Dividends paid	$	155,358		$	150,266		$	142,327

1	Before REIT dividend paid deduction .

Characterization of Distributions (unaudited)

Distributions in excess of earnings and profits generally constitute a return of capital. The following table gives the characterization of the distributions on the Company’s common stock for the three years ended December 31, 2019 .

For the three years ended December 31, 2019 , there were no preferred shares outstanding. As such, no dividends were distributed related to preferred shares for those periods.

	2019					2018					2017
	PER SHARE			%		PER SHARE			%		PER SHARE			%
Common stock
Ordinary income 1	$	0.79		65.7	%	$	0.75		62.2	%	$	0.42		34.5	%
Return of capital	0.40			33.9	%	0.33			27.8	%	0.50			42.0	%
Unrecaptured section 1250 gain	0.01			0.4	%	0.12			10.0	%	0.28			23.5	%
Common stock distributions	$	1.20		100.0	%	$	1.20		100.0	%	$	1.20		100.0	%

1	For the 2018 reporting year all ordinary income is also Code Section 199A eligible per the The Tax Cut and Jobs Act of 2017.

State Income Taxes

The Company must pay certain state income taxes, which are typically included in general and administrative expense on the Company’s Consolidated Statements of Income.

The State of Texas gross margins tax on gross receipts from operations is disclosed in the table below as an income tax because it is considered such by the Securities and Exchange Commission.

State income tax expense and state income tax payments for the three years ended December 31, 2019 are detailed in the table below:

	YEAR ENDED DECEMBER 31,
Dollars in thousands	2019			2018			2017
State income tax expense
Texas gross margins tax	$	550		$	586		$	608
Total state income tax expense	$	550		$	586		$	608
State income tax payments, net of refunds and collections	$	543		$	637		$	555

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The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practical to estimate that value.

•	Cash, cash equivalents and restricted cash - The carrying amount approximates fair value.

•	Borrowings under the Unsecured Credit Facility, Unsecured Term Loan due 2024 and Unsecured Term Loan due 2026 - The carrying amount approximates fair value because the borrowings are based on variable market interest rates.

•	Senior unsecured notes payable - The fair value of notes and bonds payable is estimated using cash flow analyses, based on the Company’s current interest rates for similar types of borrowing arrangements.

•	Mortgage notes payable - The fair value is estimated using cash flow analyses, based on the Company’s current interest rates for similar types of borrowing arrangements.

•	Interest rate swap agreements - Interest rate swap agreements are recorded in other liabilities on the Company's Consolidated Balance Sheets at fair value. Fair value is estimated by utilizing pricing models that consider forward yield curves and discount rates.

The table below details the fair value and carrying values for notes and bonds payable as of December 31, 2019 and 2018 .

	DECEMBER 31, 2019						DECEMBER 31, 2018
Dollars in millions	CARRYING VALUE			FAIR VALUE			CARRYING VALUE			FAIR VALUE
Notes and bonds payable 1	$	1,414.1		$	1,425.8		$	1,346.0		$	1,326.5

1	Level 2 – model-derived valuations in which significant inputs and significant value drivers are observable in active markets.

Quarterly financial information for the year ended December 31, 2019 is summarized below.

	QUARTER ENDED
Dollars in thousands, except per share data	MARCH 31			JUNE 30			SEPTEMBER 30			DECEMBER 31 1
2019
Revenues	$	112,657		$	116,317		$	119,799		$	121,524
Net income attributable to common stockholders	$	4,891		$	4,484		$	2,601		$	27,210
Net income attributable to common stockholders per share
Basic earnings per common share	$	0.04		$	0.03		$	0.02		$	0.20
Diluted earnings per common share	$	0.04		$	0.03		$	0.02		$	0.20

1	The increases in net income and amounts per share for the fourth quarter of 2019 are primarily attributable to gains of $ 20.0 million on the sale of six properties.

Quarterly financial information for the year ended December 31, 2018 is summarized below.

	QUARTER ENDED
Dollars in thousands, except per share data	MARCH 31			JUNE 30 1			SEPTEMBER 30			DECEMBER 31 2
2018
Revenues	$	112,124		$	111,634		$	113,462		$	113,168
Net income attributable to common stockholders	$	9,180		$	37,729		$	6,548		$	16,314
Net income attributable to common stockholders per share
Basic earnings per common share	$	0.07		$	0.30		$	0.05		$	0.13
Diluted earnings per common share	$	0.07		$	0.30		$	0.05		$	0.13

1	The increases in net income and amounts per share for the second quarter of 2018 are primarily attributable to gains of $ 27.7 million on the sale of twelve properties.

2	The increases in net income and amounts per share for the fourth quarter of 2018 are primarily attributable to gains of $ 10.8 million on the sale of three properties.

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•	Consolidated Balance Sheets – December 31, 2019 and December 31, 2018 .

•	Consolidated Statements of Income for the years ended December 31, 2019 , December 31, 2018 and December 31, 2017 .

•	Consolidated Statements of Comprehensive Income for the years ended December 31, 2019 , December 31, 2018 and December 31, 2017 .

•	Consolidated Statements of Equity for the years ended December 31, 2019 , December 31, 2018 and December 31, 2017 .

•	Consolidated Statements of Cash Flows for the years ended December 31, 2019 , December 31, 2018 and December 31, 2017 .

•	Notes to Consolidated Financial Statements.

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1	Filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed on February 13, 2019 and hereby incorporated by reference.

2	Filed as an exhibit to the Company's Registration Statement on Form S-11 (Registration No. 33-60506) previously filed pursuant to the Securities Act of 1933 and hereby incorporated by reference.

3	Filed as an exhibit to the Company's Form 8-K filed May 17, 2001 and hereby incorporated by reference.

4	Filed as an exhibit to the Company's Form 8-K filed March 26, 2013 and hereby incorporated by reference.

5	Filed as an exhibit to the Company’s Form 8-K filed April 24, 2015 and hereby incorporated by reference.

6	Filed as an exhibit to the Company’s Form 8-K filed December 11, 2017 and hereby incorporated by reference.

7	Filed as an exhibit to the Company’s Form 10-K for the year ended December 31, 1999 and hereby incorporated by reference.

8	Filed as an exhibit to the Company's Form 10-Q for the quarter ended March 31, 2018 and hereby incorporated by reference.

9	Filed as an exhibit to the Company’s Registration Statement on Form S-3 (Registration No. 33-79452) previously filed on September 26, 2003 pursuant to the Securities Act of 1933 and hereby incorporated by reference.

10	Filed as an exhibit to the Company's Form 10-K for the year ended December 31, 2015 and hereby incorporated by reference.

11	Filed as an exhibit to the Company's Form 10-K for the year ended December 31, 2016 and hereby incorporated by reference.

12	Filed as an exhibit to the Company's Form 8-K filed February 3, 2016 and hereby incorporated by reference.

13	Filed as an exhibit to the Company's Form 10-Q for the quarter ended March 31, 2010 and hereby incorporated by reference.

14	Filed as an exhibit to the Company’s Form 10-K for the year ended December 31, 2013 and hereby incorporated by reference.

15	Filed as an exhibit to the Company’s Form 10-Q for the quarter ended June 30, 2015 and hereby incorporated by reference.

16	Filed as an exhibit to the Company's Form 10-Q for the quarter ended June 30, 2012 and hereby incorporated by reference.

17	Filed as an exhibit to the Company's proxy statement filed March 30, 2015 and hereby incorporated by reference.

18	Filed as an exhibit to the Company's Form 8-K filed May 31, 2019 and hereby incorporated by reference.

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1.	2000 Employee Stock Purchase Plan (filed as Exhibit 10.1)

2.	Amendment No. 1 to 2000 Employee Stock Purchase Plan (filed as Exhibit 10.2)

3.	Third Amended and Restated Employment Agreement, dated February 16, 2016, between Todd J. Meredith and the Company (filed as Exhibit 10.4)

4.	Amendment No. 1 to Third Amended and Restated Employment Agreement, dated February 12, 2020, between Todd J. Meredith and the Company (filed as Exhibit 10.5)

5.	Third Amended and Restated Employment Agreement, dated February 15, 2017, between John M. Bryant, Jr. and the Company (filed as Exhibit 10.6)

6.	Amendment No. 1 to Third Amended and Restated Employment Agreement, dated February 12, 2020, between John M. Bryant, Jr. and the Company (filed as Exhibit 10.7)

7.	Amended and Restated Employment Agreement, dated January 1, 2017, between Robert E. Hull and the Company (filed as Exhibit 10.8)

8.	Amendment No. 1 to Amended and Restated Employment Agreement, dated February 12, 2020, between Robert E. Hull and the Company (filed as Exhibit 10.9)

9.	Amended and Restated Employment Agreement, dated February 2, 2016, between J. Christopher Douglas and the Company (filed as Exhibit 10.10)

10.	Amendment No. 1 to Amended and Restated Employment Agreement, dated February 12, 2020, between J. Christopher Douglas and the Company (filed as Exhibit 10.11)

11.	Healthcare Realty Trust Incorporated Amended and Restated Executive Incentive Plan (filed as Exhibit 10.12)

12.	2010 Restricted Stock Implementation for Non-Employee Directors, dated May 4, 2010 (filed as Exhibit 10.13)

13.	Amendment No. 1 to Restricted Stock Implementation for Non-Employee Directors (filed as Exhibit 10.14)

14.	Amendment No. 2 to Restricted Stock Implementation for Non-Employee Directors (filed as Exhibit 10.15)

15.	Healthcare Realty Trust Incorporated Form of Restricted Stock Agreement for Non-Employee Directors (filed as Exhibit 10.16)

16.	Healthcare Realty Trust Incorporated Form of Restricted Stock Agreement for Officers (filed as Exhibit 10.17)

17.	Healthcare Realty Trust Incorporated 2015 Stock Incentive Plan (filed as Exhibit 10.18)

18.	Amendment No. 1 to Healthcare Realty Trust Incorporated 2015 Stock Incentive Plan (filed as Exhibit 10.19)

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Schedule II – Valuation and Qualifying Accounts for the years ended December 31, 2019 , 2018 and 2017

Dollars in thousands					ADDITIONS AND DEDUCTIONS
DESCRIPTION		BALANCE AT BEGINNING OF PERIOD			CHARGED/(CREDITED) TO COSTS AND EXPENSES			CHARGED TO OTHER ACCOUNTS			UNCOLLECTIBLE ACCOUNTS WRITTEN-OFF			BALANCE AT END OF PERIOD
2019	Accounts receivable allowance	$	251		$	167		$	—		$	—		$	418
2018	Accounts receivable allowance	$	256		$	60		$	—		$	65		$	251
2017	Accounts receivable allowance	$	148		$	159		$	—		$	51		$	256

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Schedule III – Real Estate and Accumulated Depreciation as of December 31, 2019

Dollars in thousands			LAND 1									BUILDINGS, IMPROVEMENTS, LEASE INTANGIBLES AND CIP 1
MARKET	NUMBER OF PROP.		INITIAL INVESTMENT			COST CAPITALIZED subsequent to acquisition			TOTAL			INITIAL INVESTMENT			COST CAPITALIZED subsequent to acquisition			TOTAL			PERSONAL PROPERTY			2, 3, 5 TOTAL PROPERTY			1, 3 ACCUMULATED DEPRECIATION			4 ENCUMBRANCES			DATE ACQUIRED	DATE CONST.
Seattle, WA	25		$	54,446		$	4,119		$	58,565		$	490,461		$	42,306		$	532,767		$	421		$	591,753		$	88,890		$	22,666		2008-2019	1957-2010
Dallas, TX	25		18,785			409			19,194			372,644			124,039			496,683			442			516,319			181,556			—			2003-2019	1974-2018
Los Angeles, CA	14		43,719			667			44,386			161,322			44,507			205,829			347			250,562			95,979			22,340			1993-2019	1973-1998
Atlanta, GA	9		3,251			428			3,679			209,400			3,109			212,509			84			216,272			20,040			31,715			2017-2019	1999-2014
Nashville, TN	6		20,004			49			20,053			115,061			65,402			180,463			1,109			201,625			64,038			—			2004-2018	1960-2015
Charlotte, NC	16		4,163			37			4,200			159,340			16,921			176,261			105			180,566			67,040			—			2008-2013	1961-2008
Denver, CO	9		13,887			2,627			16,514			106,183			27,821			134,004			271			150,789			25,265			7,565			2010-2018	1977-2015
Washington, DC	6		—			—			—			141,467			8,837			150,304			21			150,325			25,097			11,707			2004-2019	1967-2005
Richmond, VA	7		—			—			—			139,636			9,496			149,132			106			149,238			44,204			—			2011	1992-2005
Houston, TX	9		15,475			736			16,211			107,902			24,111			132,013			78			148,302			44,229			—			1993-2019	1984-2012
Honolulu, HI	3		8,314			13			8,327			93,839			41,802			135,641			159			144,127			39,165			—			2003-2004	1975-2010
Des Moines, IA	7		12,584			81			12,665			114,527			11,874			126,401			99			139,165			34,725			515			2008-2014	2002-2009
Oklahoma, City, OK	4		9,838			563			10,401			114,212			1,494			115,706			15			126,122			19,351			5,985			2010-2019	1970-2014
Indianapolis, IN	4		3,299			—			3,299			112,718			6,129			118,847			—			122,146			26,082			—			2008-2019	1992-2008
San Francisco, CA	3		14,054			—			14,054			93,852			13,544			107,396			43			121,493			20,906			—			2015-2017	1975-2014
Springfield, MO	1		1,989			—			1,989			109,304			—			109,304			—			111,293			17,740			—			2013	2013
Austin, TX	5		14,233			3			14,236			70,976			21,833			92,809			123			107,168			24,048			—			2007-2015	1972-2015
Memphis, TN	7		5,241			—			5,241			66,868			25,640			92,508			194			97,943			37,582			—			1999-2013	1993-2007
San Antonio, TX	6		6,456			31			6,487			62,161			26,422			88,583			404			95,474			40,573			—			1996-2010	1978-2011
Chicago, IL	3		5,859			—			5,859			69,993			17,595			87,588			211			93,658			23,540			—			2004-2018	1993-2009
Minneapolis, MN	4		2,090			—			2,090			61,078			1,281			62,359			—			64,449			10,486			18,907			2014-2017	1974-2010
Other (16 markets)	31		16,434			645			17,079			388,102			87,307			475,409			806			493,294			165,159			7,943			1993-2019	1906-2009
Total real estate	204		274,121			10,408			284,529			3,361,046			621,470			3,982,516			5,038			4,272,083			1,115,695			129,343
Construction in progress	—		—			—			—			—			—			48,731			—			48,731						—
Land held for develop.	—		24,647			—			24,647			—			—			—			—			24,647			671			—
Memphis redevelopment	—		5,222			—			5,222			3,810			—			3,810			—			9,032			50			—
Corporate property	—		—			—			—			—			—			—			5,500			5,500			4,686			—
Total properties	204		$	303,990		$	10,408		$	314,398		$	3,364,856		$	621,470		$	4,035,057		$	10,538		$	4,359,993		$	1,121,102		$	129,343

1	The Company had no assets held for sale as of December 31, 2019.

2	Total properties as of December 31, 2019 have an estimated aggregate total cost of $ 4.4 billion for federal income tax purposes.

3	Depreciation is provided for on a straight-line basis on buildings and improvements over 3.3 to 39.0 years , lease intangibles over 2.1 to 99.0 years , personal property over 2.8 to 20.0 years, and land improvements over 3.0 to 39.0 years.

4	Includes unamortized premium of $ 1.2 million and unaccreted discount of $ 0.5 million and issuance costs of $ 0.5 million as of December 31, 2019 .

5 Rollforward of Total Property and Accumulated Depreciation, including assets held for sale, for the year ended December 31, 2019 , 2018 and 2017 follows:

	YEAR ENDED DEC. 31, 2019						YEAR ENDED DEC. 31, 2018						YEAR ENDED DEC. 31, 2017
Dollars in thousands	TOTAL PROPERTY			ACCUMULATED DEPRECIATION			TOTAL PROPERTY			ACCUMULATED DEPRECIATION			TOTAL PROPERTY			ACCUMULATED DEPRECIATION
Beginning Balance	$	3,993,427		$	1,025,831		$	3,907,010		$	933,220		$	3,633,993		$	843,816
Additions during the period
Real Estate acquired	384,762			9,285			112,591			4,175			322,616			4,206
Other improvements	71,666			165,367			74,317			157,385			59,442			135,807
Land held for development	—			278			4,525			153			—			74
Construction in Progress	15,625			—			27,649			—			14,598			—
Retirement/dispositions
Real Estate	( 105,487		)	( 79,659		)	( 132,665		)	( 69,102		)	( 123,639		)	( 50,683		)
Land held for development	—						—			—			—			—
Ending Balance	$	4,359,993		$	1,121,102		$	3,993,427		$	1,025,831		$	3,907,010		$	933,220

All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are omitted because they are not required under the related instructions or are not applicable, or because the required information is shown in the consolidated financial statements or notes thereto.