10-K
Healthcare Realty Trust Inc (HR)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
Form 10-K
| (Mark One) | |
|---|---|
| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934<br><br>For the fiscal year ended: December 31, 2025 |
| OR | |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934<br><br>For the transition period from to |
Commission File Number: 001-35568
HEALTHCARE REALTY TRUST INCORPORATED
(Exact name of Registrant as specified in its charter)
| Maryland | 20-4738467 |
|---|---|
| (State or other jurisdiction of<br>Incorporation or organization) | (I.R.S. Employer <br>Identification No.) |
3310 West End Avenue
Suite 700
Nashville, Tennessee 37203
(Address of principal executive offices)
(615) 269-8175
(Registrant’s telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
|---|---|---|
| Class A Common Stock, $0.01 par value per share | HR | New York Stock Exchange |
Securities Registered Pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.:
Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15- U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the Registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No ☒
The aggregate market value of the shares of common stock of the Registrant (based upon the closing price of these shares on the New York Stock Exchange on June 30, 2025), held by non-affiliates on June 30, 2025 was $5,534,691,368.
As of February 5, 2026, there were 348,849,902 shares of the Registrant’s common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s definitive Proxy Statement relating to the Annual Meeting of Stockholders to be held on May 19, 2026 are incorporated by reference into Part III of this Report.
HEALTHCARE REALTY TRUST INCORPORATED
FORM 10-K
December 31, 2025
Table of Contents
| PART I | ||
|---|---|---|
| Item 1 | Business | 1 |
| Item 1A | Risk Factors | 7 |
| Item 1B | Unresolved Staff Comments | 21 |
| Item 1C | Cybersecurity | 21 |
| Item 2 | Properties | 22 |
| Item 3 | Legal Proceedings | 22 |
| Item 4 | Mine Safety Disclosures | 22 |
| PART II | ||
| Item 5 | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 22 |
| Item 6 | [Reserved] | 24 |
| Item 7 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25 |
| Item 7A | Quantitative and Qualitative Disclosures About Market Risk | 48 |
| Item 8 | Financial Statements and Supplementary Data | 49 |
| Item 9 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 90 |
| Item 9A | Controls and Procedures | 90 |
| Item 9B | Other Information | 93 |
| Item 9C | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 93 |
| PART III | ||
| Item 10 | Directors, Executive Officers and Corporate Governance | 94 |
| Item 11 | Executive Compensation | 95 |
| Item 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 95 |
| Item 13 | Certain Relationships and Related Transactions, and Director Independence | 95 |
| Item 14 | Principal Accountant Fees and Services | 96 |
| Item 15 | Exhibits and Financial Statement Schedules | 96 |
| Item 16 | Form 10-K Summary | 100 |
| SIGNATURES AND SCHEDULES | 100 |
Item 1. Business
Healthcare Realty Trust Incorporated is a self-managed and self-administered real estate investment trust (“REIT”) that owns, leases, manages, acquires, finances, develops and redevelops income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. All references in this report to "Healthcare Realty," the "Company," "we," "us," or "our" mean Healthcare Realty Trust Incorporated together with its consolidated subsidiaries, including Healthcare Realty Holdings, L.P., or operating partnership (the "OP").
The Company operates so as to qualify as a REIT for federal income tax purposes. As a REIT, the Company is not subject to corporate federal income tax with respect to taxable income distributed to its stockholders. See “Item 1A. Risk Factors” for a discussion of risks associated with qualifying as a REIT.
Real Estate Properties
The Company had gross investments of approximately $10.3 billion in 502 consolidated real estate properties, construction in progress, redevelopments, financing receivables, financing lease right-of-use assets, land held for development and corporate property as of December 31, 2025, excluding held for sale assets. The Company had a weighted average ownership interest of approximately 30% in 61 real estate properties, excluding held for sale assets, held in unconsolidated joint ventures as of December 31, 2025. The Company provided leasing and property management services to approximately 93% of its portfolio nationwide as of December 31, 2025. The Company’s real estate property investments by geographic area are detailed in Note 2 to the Consolidated Financial Statements. The following table details the Company's owned properties by facility type as of December 31, 2025:
| December 31, 2025 | ||||||
|---|---|---|---|---|---|---|
| Dollars and square feet in thousands | INVESTMENT | SQUARE FEET | NUMBER OF PROPERTIES | OCCUPANCY 1 | ||
| Medical office/outpatient 2 | $ | 9,306,615 | 26,690 | 481 | 89.6 | % |
| Inpatient | 406,399 | 869 | 14 | 100.0 | % | |
| Office | 272,967 | 1,096 | 4 | 99.5 | % | |
| 9,985,981 | 28,655 | 499 | 90.3 | % | ||
| Land held for development | 57,535 | — | — | — | ||
| Investments in financing receivables, net 3,4 | 123,249 | 160 | 1 | 100.0 | % | |
| Financing lease right-of-use assets 4 | 75,083 | 27 | 1 | 80.9 | % | |
| Corporate property | 50,748 | 109 | 1 | 97.0 | % | |
| Total real estate investments | 10,292,596 | 28,951 | 502 | 90.4 | % | |
| Unconsolidated joint ventures 5 | 453,607 | 3,889 | 61 | 90.9 | % | |
| Total investments | $ | 10,746,203 | 32,840 | 563 | 90.5 | % |
1The occupancy column represents the percentage of total rentable square feet leased (including month-to-month and holdover leases), excluding held for sale assets.
2Includes two real estate properties held in consolidated joint ventures.
3Investments in financing receivables, net includes an investment of $117.3 million in a single-tenant net lease property in San Diego, CA related to a sale-leaseback transaction.
4Financing lease right-of-use assets includes a multi-tenant lease property in Columbus, OH related to a sale-leaseback transaction totaling $13.9 million, of which $7.9 million was accounted for as an imputed lease arrangement as required under ASC 842, Leases. The remaining $6.0 million was accounted for as a financing arrangement and is included in investments in financing receivables, net.
5Represents the Company's equity investment in unconsolidated joint ventures. Square feet have not been adjusted by the Company's ownership percentage. Square feet, number of properties, and occupancy excludes two properties that are classified as held for sale.
Financial Concentrations
The Company’s real estate portfolio is leased to a diverse tenant base. For the year ended December 31, 2025, the Company did not have any tenants that accounted for 10% or more of the Company’s consolidated revenues. See Note 2 to the Consolidated Financial Statements for additional information regarding the Company's gross investments by geographic market.
Expiring Leases
As of December 31, 2025, the weighted average remaining years to expiration pursuant to the Company’s leases was approximately 4.4 years, with expirations through 2052. The table below details the Company’s lease expirations as of December 31, 2025, excluding the Company's unconsolidated joint ventures, financing receivables, assets held for sale and right-of-use assets.
| EXPIRATION YEAR | NUMBER OF LEASES | LEASED <br>SQUARE FEET | PERCENTAGE <br>OF LEASED <br>SQUARE FEET | |
|---|---|---|---|---|
| 2026 (1) | 1,155 | 3,885,553 | 14.9 | % |
| 2027 | 949 | 4,363,442 | 16.8 | % |
| 2028 | 906 | 3,463,342 | 13.3 | % |
| 2029 | 683 | 3,060,019 | 11.8 | % |
| 2030 | 634 | 3,021,085 | 11.6 | % |
| 2031 | 329 | 1,663,709 | 6.4 | % |
| 2032 | 301 | 1,969,215 | 7.6 | % |
| 2033 | 190 | 751,017 | 2.9 | % |
| 2034 | 190 | 1,061,192 | 4.1 | % |
| 2035 | 206 | 1,274,194 | 4.9 | % |
| Thereafter | 187 | 1,475,890 | 5.7 | % |
| 5,730 | 25,988,658 | 100.0 | % |
1Includes 85 leases totaling 238,548 square feet that expired prior to December 31, 2025, and were on month-to-month terms.
See "Trends and Matters Impacting Operating Results" as part of Management's Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of this report for additional information regarding the Company's leases and leasing efforts.
Liquidity
The Company believes that its liquidity and sources of capital are adequate to satisfy its cash requirements. The Company expects to meet its liquidity needs through cash on hand, cash flows from operations, asset sales and joint venture contributions, equity and debt issuances in the public or private markets and borrowings under commercial credit facilities.
Business Strategy
The Company owns and operates properties that facilitate the delivery of healthcare services in primarily outpatient settings. To execute its strategy, the Company engages in a broad spectrum of integrated services including leasing, management, acquisition, financing, development and redevelopment of such properties. The Company seeks to generate stable, growing income and lower the long-term risk profile of its portfolio of properties by focusing on facilities primarily located on or near the campuses of acute care hospitals associated with leading health systems. The Company seeks to reduce financial and operational risk by owning properties in high-growth markets with a broad tenant mix that includes over 30 physician specialties, as well as surgery, imaging, cancer, and diagnostic centers.
2025 Investment Activity
The Company disposed of 70 properties in 2025 for sales prices totaling approximately $1.1 billion. These transactions yielded net cash proceeds of approximately $1.0 billion, net of approximately $77.6 million of closing costs and related adjustments, and $11.8 million in Company financed notes. The weighted average capitalization rate for these sales was 6.7%. The Company calculates the capitalization rate for dispositions as the in-place cash net operating income divided by the sales price.
In 2025, the Company funded $136.6 million toward development and redevelopment of properties.
See the Company's discussion regarding the 2025 joint venture and disposition activity in Note 4 to the Consolidated Financial Statements and development activity in Note 14 to the Consolidated Financial Statements. Also, please refer to the Company's discussion in "Trends and Matters Impacting Operating Results" as part of Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations included in Part II of this report.
Competition
The Company competes for the acquisition and development of real estate properties with private investors, healthcare providers, other REITs, real estate partnerships and financial institutions, among others. The business of acquiring and developing new healthcare facilities is highly competitive and is subject to price, construction and operating costs, and other competitive pressures. Some of the Company's competitors may have lower costs of capital.
The financial performance of all of the Company’s properties is subject to competition from similar properties. The extent to which the Company’s properties are utilized depends upon several factors, including the number of physicians using or referring patients to an associated healthcare facility, healthcare employment, competitive systems of healthcare delivery, and the area’s population, size and composition. Private, federal and state health insurance programs and other laws and regulations may also have an effect on the utilization of the properties.
Government Regulation
The facilities owned by the Company are utilized by medical tenants which are required to comply with extensive regulation and legislation at the federal, state and local levels, including, but not limited to, the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, the "Affordable Care Act"), the Bipartisan Budget Act of 2015, the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”), and laws intended to combat fraud, waste and abuse such as the Anti-Kickback Statute, Stark Law and False Claims Act, and laws intended to protect the privacy and security of patient information, such as the Health Insurance Portability and Accountability Act of 1996. Medical tenants are subject to state and federal laws and regulations that establish, among other things, requirements for participation in government-sponsored reimbursement programs, including the Medicare and Medicaid programs. The Company's leases generally require the tenant to comply with all applicable laws relating to the tenant's use and occupation of the leased premises. Although lease payments to the Company are not directly affected by these laws and regulations, changes in these programs or the loss by a tenant of its license or ability to participate in government-sponsored reimbursement programs could have a material adverse effect on the tenant's ability to make lease payments to the Company.
Government healthcare programs have increased over time as a significant percentage of the U.S. population’s health insurance coverage. The Medicare and Medicaid programs are highly regulated and subject to frequent evaluation and change. Changes from year to year in reimbursement methodology, rates and other regulatory requirements may cause the profitability of providing care to Medicare and Medicaid patients to decline, which could adversely affect tenants' ability to make lease payments to the Company.
The Centers for Medicare and Medicaid Services continued to adjust Medicare payment rates in 2025 to implement site-neutral payment policies. These changes have lowered Medicare payments for services delivered in off-campus hospital outpatient departments in an effort to lessen reimbursement disparity in off-campus medical office and outpatient facilities. The Company’s medical office buildings that are located on hospital campuses could become more valuable as hospital tenants will keep their higher Medicare rates for on-campus outpatient services. However, the Company has not seen a material impact from site-neutral Medicare payment policy, positively or negatively. The Company cannot predict the amount of benefit or loss from these measures or if other federal health policy will ultimately require cuts to reimbursement rates for services provided in other settings. The Company cannot predict the degree to which these changes, or changes to federal healthcare programs in general, may affect the economic performance of some or all of the Company's tenants, positively or negatively.
Since 2018, physicians have been required to report patient data on quality and performance measures that began to affect their Medicare payments in 2020. Implementation of MACRA, and the ongoing debate over the most effective payment system to use to promote value-based reimbursement, along with its budget-neutrality rule that requires any increases in payments to be offset by decreases, present the industry and its individual participants with uncertainty and financial risk. The Company cannot predict the degree to which any such changes may affect the economic performance of the Company's tenants or, indirectly, the Company.
Legislative Developments
Taxation of Dividends
The Tax Cuts and Jobs Act of 2017 (“TCJA”) generally allows a deduction for individuals equal to 20% of certain income from pass-through entities, including ordinary dividends distributed by a REIT (excluding capital gain dividends and qualified dividend income). In addition, the deduction for ordinary REIT dividends is not subject to the wage and tax basis limitations applicable to the deduction for other qualifying pass-through income. The TCJA was a far-reaching and complex revision to the existing U.S. federal income tax laws. Many provisions of this act, such as the 20% deduction mentioned above, that were set to expire at the end of 2025 have been permanently extended as a result of the passing of the One Big Beautiful Bill Act of 2025 (“OBBBA”) that was signed into law on July 4, 2025.
Healthcare
Each year, legislative proposals for health policy are introduced in Congress and state legislatures, and regulatory changes are proposed and enacted by government agencies. These proposals, individually or in the aggregate, could significantly change the delivery of healthcare services and limit the ability of the Company and other REITs to own and lease certain healthcare facilities, either nationally or at the state level, if implemented. Examples of significant legislation or regulatory action recently proposed, enacted, or in the process of implementation include:
•federal legislative proposals that would prohibit payments from federal healthcare programs to healthcare providers that sell assets to REITs or use assets as collateral for loans from REITs;
•state legislation and legislative proposals that (i) prohibit licensure of certain healthcare facilities leased from REITs, (ii) require additional government oversight and approval of healthcare provider transactions involving a change in control or sales of assets, including real estate, and (iii) impose public reporting requirements on ownership and control of healthcare provider entities;
•the expansion or reduction of, or the decision in some states not to expand, Medicaid benefits and health insurance exchange subsidies established by the Affordable Care Act, whereby individuals and small businesses purchase health insurance with assistance from federal subsidies;
•various state legislature proposals for state-funded single-payer health insurance and a limit on allowable rates of reimbursement to healthcare providers;
•the implementation of quality control, cost containment, and value-based payment system reforms for Medicaid and Medicare, such as expansion of pay-for-performance criteria, bundled provider payments, accountable care organizations, comparative effectiveness research, and lower payments for hospital readmissions;
•ongoing evaluation of and transition toward value-based reimbursement models for Medicare payments to physicians as designated under MACRA;
•annual regulatory updates to Medicare policy for healthcare providers that can broadly change reimbursement methodology under budget-neutral guidelines, with the effect of lowering payments for some services and increasing payments for others, having a varying impact, positively or negatively, on providers;
•ongoing efforts to equalize Medicare payment rates across different facility-type settings, according to Section 603 of the Bipartisan Budget Act of 2015, which lowered Medicare payment rates, effective January 1, 2017, for services provided in off-campus, provider-based outpatient departments to the same level of rates for physician office settings;
•the continued adoption by providers of federal standards for the Medicare Promoting Interoperability Program;
•reforms to the physician self-referral laws, commonly referred to as the Stark Law, as adjusted in 2020 in order to promote the transition toward value-based, coordinated care among providers, although clear intent to boost referrals could still yield provider penalties;
•consideration of broad reforms to Medicare and Medicaid impacting eligibility and reimbursement;
•more stringent regulatory criteria by which federal antitrust agencies evaluate the potential for anti-competitive practices as a result of mergers and acquisitions of health systems and physicians;
•state and federal regulations requiring increased scrutiny of healthcare-related transactions, particularly those involving REITs and private equity firms;
•regulations requiring the publication of hospital prices for certain services, as well as hospitals’ negotiated rates with insurers for these services;
•limits on price increases in pharmaceutical drugs and the cost to Medicare beneficiaries, including the potential for setting prices according to an international standard; and
•the prohibition of “surprise billing,” or high payment rates charged to consumers for out-of-network physician services.
The Company cannot predict whether any proposals, rulings, or legislation will be fully implemented, adopted, repealed, or amended, or what effect, whether positive or negative, such developments might have on the Company's business. Such proposals, rulings, or legislation could have a material adverse effect on the Company's business and results of operations.
Environmental Matters
Under various federal, state and local environmental laws, ordinances and regulations, an owner of real property (such as the Company) may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, under, or disposed of in connection with such property, as well as certain other potential costs (including government fines and injuries to persons and adjacent property) relating to hazardous or toxic substances. Most, if not all, of these laws, ordinances and regulations contain stringent enforcement provisions including, but not limited to, the authority to impose substantial administrative, civil, and criminal fines and penalties upon violators. Such laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence or disposal of such substances, and liability may be imposed on the owner in connection with the activities of a tenant or operator of the property. The cost of any required remediation, removal, fines or personal or property damages and the owner’s liability therefore could exceed the value of the property and/or the aggregate assets of the owner. In addition, the presence of such substances, or the failure to properly dispose of or remediate such substances, may adversely affect the owner’s ability to sell or lease such property or to borrow using such property as collateral. A property can also be negatively impacted either through physical contamination, or by virtue of an adverse effect on value, from contamination that has or may have emanated from other properties.
Operations of the properties owned, developed or managed by the Company are and will continue to be subject to numerous federal, state, and local environmental laws, ordinances and regulations, including those relating to the following: the generation, segregation, handling, packaging and disposal of medical wastes; air quality requirements related to operations of generators, incineration devices, or sterilization equipment; facility siting and construction; disposal of non-medical wastes and ash from incinerators; and underground storage tanks. Certain properties owned, developed or managed by the Company contain, and others may contain or at one time may have contained, underground storage tanks that are or were used to store waste oils, petroleum products or other hazardous substances. Such underground storage tanks can be the source of releases of hazardous or toxic materials. Operations of nuclear medicine departments at some properties also involve the use and handling, and subsequent disposal of, radioactive isotopes and similar materials, activities which are closely regulated by the Nuclear Regulatory Commission and state regulatory agencies. In addition, several of the Company's properties were built during the period that asbestos was commonly used in building construction and other such facilities may be acquired by the Company in the future. The presence of such materials could result in significant costs in the event that any asbestos-containing materials requiring immediate removal and/or encapsulation are located in or on any facilities or in the event of any future renovation activities.
The Company has had environmental site assessments conducted on substantially all of the properties that it currently owns. These site assessments are limited in scope and provide only an evaluation of potential environmental conditions associated with the property, not compliance assessments of ongoing operations. While it is the Company’s policy to seek indemnification from tenants relating to environmental liabilities or conditions, even
where leases do contain such provisions, there can be no assurance that the tenant will be able to fulfill its indemnification obligations. In addition, the terms of the Company’s leases do not give the Company control over the operational activities of its tenants or healthcare operators, nor will the Company monitor the tenants or healthcare operators with respect to environmental matters.
Human Capital Resources
We believe our employees are a critical component to the achievement of our business objectives and recognition as a trusted owner and operator of medical office properties. As of December 31, 2025, the Company employed 539 people. Our employees are comprised of accountants, maintenance engineers, property managers, leasing personnel, architects, administrative staff, an investments team, and the corporate management team. By supporting, recognizing, and investing in our employees, we believe that we are able to attract and retain the highest quality talent. We are committed to fostering, cultivating, and preserving a culture of diversity and inclusion. We embrace employee differences in race, color, religion, sex, sexual orientation, national origin, age, disability, veteran status, and other characteristics that make our employees unique.
To retain talented employees who contribute to the Company’s strategic objectives, we offer an attractive set of employee benefits, including:
•Health benefits and 401(k) eligibility starting on the first day of employment;
•Dollar-for-dollar match on 401(k) contributions up to $2,800, encouraging higher employee savings;
•100% of long-term disability and life insurance premiums paid; and
•Tuition reimbursement up to $3,000 annually for any employee pursuing higher education.
Additional information regarding employee and community engagement is available in the 2025 Corporate Responsibility Report, which is posted on the Company's website (www.healthcarerealty.com).
Environment, Social, and Governance (“ESG”)
Our goal is to create long-term value for all stakeholders, including our employees and investors who expect responsible financial and environmental stewardship, and for our healthcare system partners who rely on the Company to provide well-operated facilities that allow them to effectively serve and care for their local communities.
We seek to help healthcare professionals deliver the best care by providing the highest level of service in the most desirable outpatient settings. Our ESG objectives include full integration of our sustainability strategy, improved transparency and reporting, enhanced operational frameworks, and continued stakeholder engagement.
As we implement our strategy and pursue our objectives, the Company’s actions are guided by our Sustainability Principles and Policies, to ensure continuous improvement and long-term success. Our Sustainability Principles and Policies include:
a.Integration: Embed and integrate leading environmental, social and governance practices designed to enhance portfolio performance into the Company’s daily operations.
b.Impact: Drive positive impact across the Company while mitigating risk and creating long-term value for stakeholders, including our tenants, investors, employees, and the communities in which we live, work and invest.
c.Integrity: Conduct business with integrity, respect and excellence, earning the right to be a preferred provider of outpatient medical properties.
The Company’s Board of Directors is committed to overseeing the integration of our ESG principles throughout the Company. In addition, the Company's incentive program for named executive officers includes ESG performance measures.
To more effectively track and communicate the Company’s ESG performance, we have adopted various frameworks and methodologies, including participation in the annual GRESB Assessment; reporting disclosures in alignment with the Sustainability Accounting Standards Board; establishing goals and key performance indicators under the
Sustainable Development Goals, and we are working toward expanding our climate risk and resiliency strategies in alignment with the Task Force on Climate-Related Disclosure.
More information regarding the Company’s Sustainability Principles and Policies and ESG performance can be found in the Company’s 2025 Corporate Responsibility Report on its website (www.healthcarerealty.com).
Available Information
The Company makes available to the public free of charge through its website the Company’s Proxy Statement, Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as soon as reasonably practicable after the Company electronically files such reports with, or furnishes such reports to, the Securities and Exchange Commission ("SEC"). The Company’s website address is www.healthcarerealty.com.
Corporate Governance Principles
The Company has adopted Corporate Governance Principles relating to the conduct and operations of the Board of Directors. The Corporate Governance Principles are posted on the Company’s website (www.healthcarerealty.com) and are available in print to any stockholder who requests a copy.
Committee Charters
The Board of Directors has an Audit Committee, Compensation and Human Capital Committee, and Nominating and Corporate Governance Committee. The Board of Directors has adopted written charters for each committee, which are posted on the Company’s website (www.healthcarerealty.com) and are available in print to any stockholder who requests a copy.
Executive Officers
Information regarding the executive officers of the Company is set forth in Part III, Item 10 of this report and is incorporated herein by reference.
Item 1A. Risk Factors
The following are some of the risks and uncertainties that could negatively affect the Company’s consolidated financial condition, results of operations, business and prospects. These risk factors are grouped into three categories: risks relating to the Company’s business and operations; risks relating to the Company’s capital structure and financings; and risks relating to government regulations.
These risks, as well as the risks described in Item 1 under the headings “Competition,” “Government Regulation,” “Legislative Developments,” and “Environmental Matters,” and in Item 7 under the heading “Disclosure Regarding Forward-Looking Statements,” should be carefully considered before making an investment decision regarding the Company. The risks and uncertainties described in Item 1 and below are not the only ones facing the Company, and there may be additional risks that the Company does not presently know of or that the Company currently considers not likely to have a material impact. If any of the events underlying the following risks actually occurred, the Company’s business, consolidated financial condition, operating results and cash flows, including distributions to the Company's stockholders, could suffer, and the trading price of its common stock could decline.
Risks relating to our business and operations
The Company's expected results may not be achieved.
The Company's expected results may not be achieved, and actual results may differ materially from expectations. This may be the result of various factors, including, but not limited to: changes in the economy; the availability and cost of capital at favorable rates; increases in property taxes, utilities and other operating expenses; changes to facility-related healthcare regulations; changes in interest rates; competition for quality assets; negative developments in the operating results or financial condition of the Company's tenants, including, but not limited to, their ability to pay rent; the Company's ability to reposition or sell facilities with profitable results; the Company's ability to re-lease space at similar rates as vacancies occur; the Company's ability to timely reinvest proceeds from the sale of assets at similar yields; government regulations affecting tenants' Medicare and Medicaid reimbursement
rates and operational requirements; unanticipated difficulties and/or expenditures relating to future acquisitions and developments; changes in rules or practices governing the Company's financial reporting; and other financial, legal and operational matters.
The Company may from time to time decide to sell properties and may be required under purchase options to sell certain properties. The Company may not be able to reinvest the proceeds from sales at rates of return equal to the return received on the properties sold. Uncertain market conditions could result in the Company selling properties at unfavorable prices or at losses in the future.
The Company’s revenues depend on the ability of its tenants under its leases to generate sufficient income from their operations to make rental payments to the Company.
The Company’s revenues are subject to the financial strength of its tenants and associated health systems. The Company has no operational control over the business of these tenants and associated health systems who face a wide range of economic, competitive, government reimbursement and regulatory pressures and constraints, including the loss of licensure or certification. Any slowdown in the economy, decline in the availability of financing from the capital markets, and changes in healthcare regulations may adversely affect the businesses of the Company’s tenants to varying degrees. Such conditions may further impact such tenants’ abilities to meet their obligations to the Company and, in certain cases, could lead to restructurings, disruptions, or bankruptcies of such tenants. The Company leases to government tenants from time to time that may be subject to annual budget appropriations. If a government tenant fails to receive its annual budget appropriation, it might not be able to make its lease payments to the Company. In addition, defaults under leases with federal government tenants are governed by federal statute and not by state eviction or rent deficiency laws. These conditions could adversely affect the Company’s revenues and could increase allowances for losses and result in impairment charges, which could decrease net income attributable to common stockholders and equity and reduce cash flows from operations.
The Company's results of operations have been and will continue to be impacted negatively by the Prospect Medical bankruptcy.
As previously disclosed, Prospect Medical Holdings (“Prospect”) filed petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in January of 2025. Prospect leased approximately 80,912 square feet of space from the Company. In October 2025, a subsidiary of Hartford HealthCare (“Hartford Health”) was selected as the successful bidder for the Prospect assets associated with the Company’s Prospect leases. The Company signed direct leases with Hartford Heath totaling 65,477 square feet effective January 1, 2026 and retained certain sublet in additional spaces. There is no assurance that the Company will be able to timely relet the remaining Prospect leased space that was not assumed by Hartford Health.
Owning real estate and indirect interests in real estate is subject to inherent risks.
The Company’s operating performance and the value of its real estate assets are subject to the risk that if its properties do not generate revenues sufficient to meet its operating expenses, including debt service, the Company’s cash flow and ability to pay dividends to stockholders will be adversely affected.
The Company may incur impairment charges on its real estate properties or other assets.
The Company performs an impairment review on its real estate properties every year. In addition, the Company assesses the potential for impairment of identifiable intangible assets and long-lived assets, including real estate properties and goodwill, whenever events occur or a change in circumstances indicates that the recorded value might not be fully recoverable. The decision to sell a property also requires the Company to assess the potential for impairment. The Company incurred impairment charges of $361.1 million in 2025, related to completed or planned dispositions, changes in holding periods or changes in property use. The Company may determine in future periods that an impairment has occurred in the value of one or more of its real estate properties or other assets. In such an event, the Company may be required to recognize an impairment which could have a material adverse effect on the Company’s consolidated financial condition and results of operations.
The Company has properties subject to purchase options that expose it to reinvestment risk and reduction in expected investment returns.
The Company had approximately $55.7 million, or 0.54%, of real estate property investments that were subject to purchase options held by lessees that were exercisable as of December 31, 2025. Other properties have purchase
options that will become exercisable after 2025. Properties with purchase options exercisable in 2025 produced aggregate net operating income of approximately $7.2 million in 2025. The exercise of these purchase options exposes the Company to reinvestment risk and a reduction in investment return. Certain properties subject to purchase options may be purchased at rates of return above the rates of return the Company expects to achieve with new investments. If the Company is unable to reinvest the sale proceeds at rates of return equal to the return received on the properties that are sold, it may experience a decline in lease revenues and profitability and a corresponding material adverse effect on the Company’s consolidated financial condition and results of operations.
For more specific information concerning the Company’s purchase options, see “Purchase Options” in the “Trends and Matters Impacting Operating Results” as a part of Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations included in Part II of this report.
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.
A portion of the Company’s leases will expire over the course of any year. For more specific information concerning the Company’s expiring leases, see "Expiring Leases" in Item 1 and in the "Trends and Matters Impacting Operating Results" as part of Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations included in Part II of this report. The Company may not be able to re-let space on terms that are favorable to the Company or at all. Further, the Company may be required to make significant capital expenditures to renovate or reconfigure space or make significant leasing concessions to attract new tenants.
Certain of the Company’s properties are special purpose healthcare facilities and may not be easily adaptable to other uses.
Some of the Company’s properties are specialized medical facilities. If the Company or the Company’s tenants terminate the leases for these properties or the Company’s tenants lose their regulatory authority to operate such properties, the Company may not be able to locate suitable replacement tenants to lease the properties for their specialized uses. Alternatively, the Company may be required to spend substantial amounts to adapt the properties to other uses. Any loss of revenues and/or additional capital expenditures occurring as a result may have a material adverse effect on the Company’s consolidated financial condition and results of operations.
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 receives a significant portion of its revenues by leasing assets subject to fixed rent escalations. Approximately 96% of leases have increases that are based upon fixed percentages and approximately 4% of leases have increases based on the Consumer Price Index ("CPI"). To the extent fixed percentage increases lag behind inflation and operating expense growth, the Company's performance, growth, and profitability would be negatively impacted. As of December 31, 2025, the Company had weighted average annual fixed rent escalators of 2.93% with its wholly-owned and consolidated properties.
The Company’s real estate investments are illiquid and the Company may not be able to sell properties strategically targeted for disposition.
Because real estate investments are relatively illiquid, the Company’s ability to adjust its portfolio promptly in response to economic or other conditions is limited. Certain significant expenditures generally do not change in response to economic or other conditions, including debt service (if any), real estate taxes, and operating and maintenance costs. This combination of variable revenue and relatively fixed expenditures may result in reduced earnings and could have an adverse effect on the Company’s financial condition. In addition, the Company may not be able to sell properties targeted for disposition, including properties held for sale, due to adverse market conditions. This may negatively affect, among other things, the Company’s ability to sell properties on favorable terms, execute its operating strategy, repay debt, or pay dividends.
The Company is subject to risks associated with the development and redevelopment of properties.
The Company expects development and redevelopment of properties will continue to be a key component of its growth plans. The Company is subject to certain risks associated with the development and redevelopment of properties including the following:
•The construction of properties generally requires various government and other approvals that may not be received when expected, or at all, which could delay or preclude commencement of construction;
•The development, construction or expansion of healthcare facilities in certain states may require a certificate of need approval prior to commencing such projects or allowing tenants to occupy and operate on the property;
•Opportunities that the Company pursued but later abandoned could result in the expensing of pursuit costs, which could impact the Company’s consolidated results of operations;
•Construction costs could exceed original estimates, which could impact the building’s profitability to the Company;
•Operating expenses could be higher than forecasted;
•Time required to initiate and complete the construction of a property and to lease up a completed property may be greater than originally anticipated, thereby adversely affecting the Company’s cash flow and liquidity;
•Occupancy rates and rents of a completed development or redevelopment property may not be sufficient to make the property profitable to the Company; and
•Favorable capital sources to fund the Company’s development and redevelopment activities may not be available when needed.
The Company may make material acquisitions and undertake developments and redevelopments that may involve the expenditure of significant funds and may not perform in accordance with management’s expectations.
The Company regularly pursues potential transactions to acquire, develop or redevelop real estate assets. Future acquisitions could require the Company to issue equity securities, incur debt or other contingent liabilities or amortize expenses related to other intangible assets, any of which could adversely impact the Company’s consolidated financial condition or results of operations. In addition, equity or debt financing required for such acquisitions may not be available at favorable times or rates.
The Company’s acquired, developed, redeveloped and existing real estate properties may not perform in accordance with management’s expectations because of many factors including the following:
•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.
Further, the Company can give no assurance that acquisition, development and redevelopment opportunities that meet management’s investment criteria will be available when needed or anticipated.
The Company is exposed to risks associated with geographic concentration.
As of December 31, 2025, the Company had investment concentrations of greater than 5% of its total investments in the Dallas, TX (9.5%), Seattle, WA (6.1%), Houston, TX (6.0%), and Charlotte, NC (5.4%) markets. These concentrations increase the exposure to adverse conditions that might affect these markets, including natural disasters, local economic conditions, local real estate market conditions, increased competition, state and local regulation (including property taxes) and other localized events or conditions.
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.
Most of the Company’s properties on or adjacent to hospital campuses are largely dependent on the viability of the health system’s campus where they are located, whether or not the hospital or health system is a tenant in such
properties. The viability of these health systems depends on factors such as the quality and mix of healthcare services provided, competition, payor mix, demographic trends in the surrounding community, market position and growth potential. If one of these hospitals is unable to meet its financial obligations, is unable to compete successfully, or is forced to close or relocate, the Company’s properties on or near such hospital campus could be adversely impacted.
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.
As of December 31, 2025, the Company had 168 properties that were held under ground leases, representing an aggregate gross investment of approximately $4.2 billion. The weighted average remaining term of the Company's ground leases is approximately 60.6 years, including renewal options. The Company’s ground lease agreements with hospitals and health systems typically contain restrictions that limit building occupancy to physicians on the medical staff of an affiliated hospital and prohibit tenants from providing services that compete with the services provided by the affiliated hospital. Ground leases may also contain consent requirements or other restrictions on sale or assignment of the Company’s leasehold interest, including rights of first offer and first refusal in favor of the lessor. These ground lease provisions may limit the Company’s ability to lease, sell, or obtain mortgage financing secured by such properties which, in turn, could adversely affect the income from operations or the proceeds received from a sale. As a ground lessee, the Company is also exposed to the risk of reversion of the property upon expiration of the ground lease term, or an earlier breach by the Company of the ground lease, which may have a material adverse effect on the Company’s consolidated financial condition and results of operations.
The Company may experience uninsured or underinsured losses.
The Company carries comprehensive liability insurance and property insurance covering its owned and managed properties. A portion of the property insurance is provided by a wholly-owned captive insurance company. In addition, tenants under single-tenant leases are required to carry property insurance covering the Company’s interest in the buildings. Some types of losses may be uninsurable or too expensive to insure against. Insurance companies, including the captive insurance company, limit or exclude coverage against certain types of losses, such as losses due to named windstorms, terrorist acts, earthquakes, toxic mold, and losses without direct physical loss, such as business interruptions occurring from pandemics. Accordingly, the Company may not have sufficient insurance coverage against certain types of losses and may experience decreases in the insurance coverage available. Should an uninsured loss or a loss in excess of insured limits occur, the Company could lose all or a portion of the capital it has invested in a property, as well as the anticipated future revenue from the property. In such an event, the Company might remain obligated for any mortgage debt or other financial obligation related to the property. Further, if any of the Company's insurance carriers were to become insolvent, the Company would be forced to replace the existing coverage with another suitable carrier, and any outstanding claims would be at risk for collection. In such an event, the Company cannot be certain that the Company would be able to replace the coverage at similar or otherwise favorable terms.
The Company has obtained title insurance policies for each of its properties, typically in an amount equal to its purchase price. However, the coverage provided by this insurance may be for amounts less than the current or future values of our properties. In such an event, if there is a title defect relating to any of the Company's properties, it could lose some of the capital invested in and anticipated profits from such property.
The Company cannot give assurance that material losses in excess of insurance proceeds will not occur in the future.
Damage from catastrophic weather and other natural events, whether caused by climate change or otherwise, could result in losses to the Company.
Many of our properties are located in areas susceptible to revenue loss, cost increase, or damage caused by severe weather conditions or natural disasters such as wildfires, hurricanes, earthquakes, tornadoes and floods. The Company could experience losses to the extent that such damages exceed insurance coverage, cause an increase in insurance premiums, and/or a decrease in demand for properties located in such areas. In the event that climate change causes such catastrophic weather or other natural events to increase broadly or in localized areas, such costs and damages could increase above historic expectations. In addition, changes in federal and state legislation and regulation on climate change could result in increased capital expenditures to improve energy efficiency of our
existing properties and could require the Company to spend more on development and redevelopment properties without a corresponding increase in revenue.
The Company faces risks associated with security breaches through cyber attacks, cyber intrusions, or otherwise, as well as other significant disruptions of its information technology networks and related systems.
The Company faces risks associated with security breaches, whether through cyber attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to emails, persons inside the Company, or persons with access to systems inside the Company, and other significant disruptions of the Company's information technology ("IT") networks and related systems. The risk of a security breach or disruption, particularly through cyber attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity, and sophistication of attempted attacks and intrusions from around the world have increased. The Company's IT networks and related systems are essential to the operation of its business and its ability to perform day-to-day operations (including managing building systems) and, in some cases, may be critical to the operations of certain of our tenants. Although the Company makes efforts to maintain the security and integrity of these types of IT networks and related systems, it has experienced breaches. While breaches to date have not had a material impact, and we have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that these security measures will be effective or that future attempted security breaches or disruptions would not be successful or damaging.
A security breach or other significant disruption involving the Company's IT network and related systems could:
•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 loss, theft, or misappropriation of Company funds, or funds held by tenants or other parties;
•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 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.
Although the Company carries cyber risk insurance, losses could exceed insurance coverage available and any or all of the foregoing could have a material adverse effect on the Company's consolidated financial condition and results of operations.
The Company has structured and may in the future structure acquisitions of property in exchange for limited partnership units of the OP on terms that could limit its liquidity or flexibility.
The Company has acquired and may in the future acquire properties by issuing limited partnership units of the OP in exchange for a property owner contributing property to the Company. If the Company continues to enter into such transactions in order to induce the contributors of such properties to accept units of the OP rather than cash in exchange for their properties, it may be necessary for the Company to provide additional incentives. For instance, the OP's limited partnership agreement provides that any holder of units may exchange limited partnership units on a one-for-one basis for shares of common stock or, at the Company's option, cash equal to the value of an equivalent number of shares of the Company's common stock. The Company may, however, enter into additional contractual
arrangements with contributors of property under which it would agree to repurchase a contributor’s units for shares of the Company's common stock or cash, at the option of the contributor, at set times. If the contributor required the Company to repurchase units for cash pursuant to such a provision, it would limit the Company's liquidity and, thus, its ability to use cash to make other investments, satisfy other obligations or make distributions to stockholders. Moreover, if the Company were required to repurchase units for cash at a time when it did not have sufficient cash to fund the repurchase, the Company might be required to sell one or more of its properties to raise funds to satisfy this obligation. Furthermore, the Company might agree that if distributions the contributor received as a limited partner in the OP did not provide the contributor with an established return level, then upon redemption of the contributor’s units the Company would pay the contributor an additional amount necessary to achieve that return. Such a provision could further negatively impact our liquidity and flexibility. Finally, in order to allow a contributor of a property to defer taxable gain on the contribution of property to the OP, the Company might agree not to sell a contributed property for a defined period of time or until the contributor exchanged the contributor’s units for cash or shares. Such an agreement would prevent the Company from selling those properties or require the Company to indemnify the contributor for taxes if the Company did sell the properties.
Healthcare Realty Trust is a holding company with no direct operations and, as such, it relies on funds received from the OP to pay liabilities, and the interests of its stockholders will be structurally subordinated to all liabilities and obligations of the OP and its subsidiaries.
Substantially all of Healthcare Realty Trust's assets are held through the OP, which holds substantially all of its assets through subsidiaries. Healthcare Realty Trust does not have, apart from its interest in the OP, any independent operations. Substantially all of Healthcare Realty Trust's cash flow is dependent upon cash distributions from the OP. As a result, Healthcare Realty Trust relies on distributions from the OP to pay any dividends that may be declared on its shares of Class A common stock. Healthcare Realty Trust also relies on distributions from the OP to meet its other obligations, including any tax liability on taxable income allocated to it from the OP. In addition, because Healthcare Realty Trust is a holding company, stockholder claims will be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of the OP and its subsidiaries. In the event of a bankruptcy, liquidation, or reorganization of Healthcare Realty Trust, its assets and those of the OP and its subsidiaries will be available to satisfy the claims of stockholders only after all of Healthcare Realty Trust's and the OP’s and its subsidiaries’ liabilities and obligations have been paid in full.
The Company cannot assure you that it will be able to continue paying dividends at or above the rates previously paid.
The stockholders of the Company may not receive dividends at the same rate they received previously for various reasons, including the following: (i) the Company may not have enough cash to pay such dividends due to changes in the Company's cash requirements, capital spending plans, cash flow or financial position; (ii) decisions on whether, when and in what amounts to make any future distributions will remain at all times entirely at the discretion of the Board of Directors, which reserves the right to change the Company's current dividend practices at any time and for any reason; (iii) reduction of outstanding indebtedness; and (iv) the amount of dividends that the Company's subsidiaries may distribute to the Company may be subject to restrictions imposed by state law, restrictions that may be imposed by state regulators, and restrictions imposed by the terms of any current or future indebtedness that these subsidiaries may incur.
Stockholders of the Company do not have a contractual or other legal right to dividends that have not been authorized by the Board of Directors.
Pandemics and measures intended to prevent their spread or mitigate their severity could have a material adverse effect on the Company's business, results of operations, cash flows and financial condition.
Pandemics can have repercussions across regional and global economies and financial markets. For example, during the COVID-19 pandemic, all of the states and cities in which the Company owns properties, manages properties, and/or has development or redevelopment projects instituted quarantines, restrictions on travel, “shelter in place” rules, restrictions on the types of businesses that may continue to operate, and/or restrictions on the types of construction projects that may continue. As a result, a number of the Company's tenants temporarily closed their offices or clinical space or operated on a reduced basis in response to government requirements or recommendations.
Pandemics can cause and have caused severe economic, market and other disruptions worldwide. There can be no assurance that a similar situation in the future would not affect the Company's access to capital and other sources of funding, which could adversely affect the availability and terms of future borrowings, renewals or refinancings. In addition, the deterioration of economic conditions, including supply chain constraints, that could result from another pandemic may ultimately decrease occupancy levels and average rent per square foot across the Company's portfolio as tenants reduce or defer their spending.
The effect of any new variants of existing viruses or of another pandemic in the future on the Company's operational and financial performance will depend on future developments, including the duration, spread and intensity of the outbreak, the availability and effectiveness of vaccines, and the effect of government requirements or recommendations, all of which are uncertain and difficult to predict.
The Company's success depends, in part, on its ability to attract and retain talented employees. The loss of any one of the Company's key personnel or the inability to maintain appropriate staffing could adversely impact the Company's business.
The success of the Company's business depends, in part, on the leadership and performance of its executive and senior management team and key employees and the ability to maintain appropriate staffing levels across the Company. Failure to attract, retain and motivate highly qualified employees, or failure to develop and implement a viable succession plan, could result in loss of institutional knowledge or important skill sets. Further, an ineffective culture could significantly impact the Company's performance and adversely affect its business. Rising labor costs, increased competition for talent, and a tight labor market may make it difficult for the Company to hire skilled and unskilled employees to meet staffing needs.
Risks relating to our capital structure and financings
The Company has incurred significant debt obligations and may incur additional debt and increase leverage in the future.
As of December 31, 2025, the Company had approximately $4.1 billion of outstanding indebtedness excluding discounts, premiums and debt issuance costs. Covenants under the Fifth Amended and Restated Revolving Credit and Term Loan Agreement dated as of July 25, 2025, among Healthcare Realty Trust, the OP, and Wells Fargo Bank, National Association, as Administrative Agent, and the other lenders that are party thereto, as amended ("Unsecured Credit Facility"), and the indentures governing the OP's senior notes permit the Company to incur substantial, additional debt, and the Company may borrow additional funds, which may include secured borrowings or additional instances of notes by the OP that are fully guaranteed by Healthcare Realty Trust. The Company has approximately $1.3 billion of combined debt maturities in 2026 and 2027. A high level of indebtedness would require the Company to dedicate a substantial portion of its cash flows from operations to service debt, thereby reducing the funds available to implement the Company's business strategy and to make distributions to stockholders. A high level of indebtedness could also:
•limit the Company’s ability to adjust rapidly to changing market conditions in the event of a downturn in general economic conditions or in the real estate and/or healthcare industries;
•impair the Company’s ability to obtain additional debt financing or require potentially dilutive equity to fund obligations and carry out its business strategy; and
•result in a downgrade of the rating of the Company’s debt securities by one or more rating agencies, which would increase the costs of borrowing under the Unsecured Credit Facility and the cost of issuance of new debt securities, among other things.
In addition, from time to time, the Company secures mortgage financing or assumes mortgages to partially fund its investments. If the Company is unable to meet its mortgage payments, then the encumbered properties could be foreclosed upon or transferred to the mortgagee with a consequent loss of income and asset value. A foreclosure on one or more of the Company's properties could have a material adverse effect on the Company’s consolidated financial condition and results of operations.
The Company may not be able to repay, refinance, or extend any or all of our debt at maturity or upon any acceleration. If any refinancing is done at higher interest rates, the increased interest expense could adversely affect the Company's financial condition and results of operations. Any such refinancing could also impose tighter financial ratios and other covenants that restrict the Company's ability to take actions that could otherwise be in its best interest, such as funding new development activity, making opportunistic acquisitions, or paying dividends.
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.
The terms of the Unsecured Credit Facility, the indentures governing the OP’s outstanding senior notes (which are fully and unconditionally guaranteed by Healthcare Realty Trust) and other debt instruments that the Company may enter into in the future are subject to customary financial and operational covenants. These provisions include, among other things: a limitation on the incurrence of additional indebtedness; limitations on mergers, investments, acquisitions, redemptions of capital stock, and transactions with affiliates; and maintenance of specified financial ratios. The Company’s continued ability to incur debt and operate its business is subject to compliance with these covenants, which limit operational flexibility. Breaches of these covenants could result in defaults under applicable debt instruments, even if payment obligations are satisfied. Financial and other covenants that limit the Company’s operational flexibility, as well as defaults resulting from a breach of any of these covenants in its debt instruments, could have a material adverse effect on the Company’s consolidated financial condition and results of operations.
If lenders under the Unsecured Credit Facility fail to meet their funding commitments, the Company’s operations and consolidated financial position would be negatively impacted.
Access to external capital on favorable terms is critical to the Company’s success in growing and maintaining its portfolio. If financial institutions within the Unsecured Credit Facility were unwilling or unable to meet their respective funding commitments to the Company, any such failure would have a negative impact on the Company’s operations, consolidated financial condition and ability to meet its obligations, including the payment of dividends to stockholders.
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.
A REIT is required by the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), to make dividend distributions, thereby retaining less of its capital for growth. As a result, a REIT typically requires new capital to invest in real estate assets. However, there may be times when the Company will have limited access to capital from the equity and/or debt markets. Changes in the Company’s debt ratings could have a material adverse effect on its interest costs and financing sources. The Company’s debt rating can be materially influenced by a number of factors including, but not limited to, acquisitions, investment decisions, and capital management activities. In recent years, the capital and credit markets have experienced volatility and at times have limited the availability of funds. The Company’s ability to access the capital and credit markets may be limited by these or other factors, which could have an impact on its ability to refinance maturing debt, fund dividend payments and operations, acquire healthcare properties and complete development and redevelopment projects. If the Company is unable to refinance or extend principal payments due at maturity of its various debt instruments, its cash flow may not be sufficient to repay maturing debt or make dividend payments to stockholders. If the Company defaults in paying any of its debts or satisfying its debt covenants, it could experience cross-defaults among debt instruments, the debts could be accelerated, and the Company could be forced to liquidate assets for less than the values it would otherwise receive.
Further, the Company obtains credit ratings from various credit-rating agencies based on their evaluation of the Company's credit. These agencies' ratings are based on a number of factors, some of which are not within the Company's control. In addition to factors specific to the Company's financial strength and performance, the rating agencies also consider conditions affecting REITs generally. The Company's credit ratings could be downgraded. If
the Company's credit ratings are downgraded or other negative action is taken, the Company could be required, among other things, to pay additional interest and fees on borrowings under the Unsecured Credit Facility.
Increases in interest rates could have a material adverse effect on the Company's cost of capital.
During 2025, the Federal Reserve mainly kept interest rates constant and in the latter part of the year actually decreased rates by a total of 75 basis points with the easing of inflation. However, if inflation climbs again, the Federal Reserve may again raise interest rates. Any increases in interest rates will increase interest costs on any new debt and existing variable rate debt. Such increases in the cost of capital could adversely impact our ability to finance operations, acquire and develop properties, and refinance existing debt. Additionally, increased interest rates may also result in less liquid property markets, limiting our ability to sell existing assets.
The Company's swap agreements may not effectively reduce its exposure to changes in interest rates.
The Company enters into swap agreements from time to time to manage some of its exposure to interest rate volatility. These swap agreements involve risks, such as the risk that counterparties may fail to honor their obligations under these arrangements. In addition, these arrangements may not be effective in reducing the Company’s exposure to changes in interest rates. When the Company uses forward-starting interest rate swaps, there is a risk that it will not complete the long-term borrowing against which the swap is intended to hedge. If such events occur, the Company’s consolidated financial condition and results of operations may be adversely affected. See Note 10 to the Consolidated Financial Statements for additional information on the Company's interest rate swaps.
The Company has entered into joint venture agreements that limit its flexibility with respect to jointly owned properties and expects to enter into additional such agreements in the future.
As of December 31, 2025, the Company had investments of $453.6 million in unconsolidated joint ventures with unrelated third parties comprised of 61 properties, excluding held for sale properties, and seven parking garages. The Company may acquire, develop, or redevelop additional properties in joint ventures with unrelated third parties. In such investments, the Company is subject to risks that may not be present in its other forms of ownership, including:
•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;
•a joint venture partner's actions might have the result of subjecting the property or the Company to liabilities in excess of those contemplated;
•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 an 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 there 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.
The U.S. federal income tax treatment of the cash that the Company might receive from cash settlement of a forward equity agreement is unclear and could jeopardize the Company's ability to meet the REIT qualification requirements.
The Company has utilized and, in the future, may utilize forward equity agreements to secure pricing for equity capital needed at a later time. The Company currently has no forward equity agreements outstanding. In the event that we enter into forward equity agreements in the future and elect to settle any such forward equity agreement for cash and the settlement price is below the applicable forward equity price, we would be entitled to receive a cash payment from the relevant forward purchaser. Under Section 1032 of the Internal Revenue Code, generally, no gains and losses are recognized by a corporation in dealing with its own shares, including pursuant to a "securities futures contract" (as defined in the Internal Revenue Code, by reference to the Exchange Act). Although we believe that any amount received by us in exchange for our stock would qualify for the exemption under Section 1032 of the Internal
Revenue Code, because it is not entirely clear whether a forward equity agreement qualifies as a "securities futures contract," the U.S. federal income tax treatment of any cash settlement payment we receive is uncertain. In the event that we recognize a significant gain from the cash settlement of a forward equity agreement, we might be unable to satisfy the gross income requirements applicable to REITs under the Internal Revenue Code. In that case, we may be able to rely upon the relief provisions under the Internal Revenue Code in order to avoid the loss of our REIT status. Even if the relief provisions apply, we will be subject to a 100% tax on the greater of (i) the excess of 75% of our gross income (excluding gross income from prohibited transactions) over the amount of such income attributable to sources that qualify under the 75% test or (ii) the excess of 95% of our gross income (excluding gross income from prohibited transactions) over the amount of such gross income attributable to sources that qualify under the 95% test, multiplied in either case by a fraction intended to reflect our profitability. In the event that these relief provisions were not available, we could lose our REIT status under the Internal Revenue Code.
In the event of our bankruptcy or insolvency, any forward equity agreements will automatically terminate, and the Company would not receive the expected proceeds from any forward sale of shares of its common stock.
If we file for or consent to a proceeding seeking a judgment in bankruptcy or insolvency or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or we or a regulatory authority with jurisdiction over us presents a petition for our winding-up or liquidation, and we consent to such a petition, any forward equity agreements that are then in effect will automatically terminate. If any such forward equity agreement so terminates under these circumstances, we would not be obligated to deliver to the relevant forward purchaser any shares of common stock not previously delivered, and the relevant forward purchaser would be discharged from its obligation to pay the applicable forward equity price per share in respect of any shares of common stock not previously settled under the applicable forward equity agreement. Therefore, to the extent that there are any shares of common stock with respect to which any forward equity agreement has not been settled at the time of the commencement of any such bankruptcy or insolvency proceedings, we would not receive the relevant forward equity price per share in respect of those shares of common stock.
Risks relating to government regulations
The Company's property taxes could increase due to reassessment or property tax rate changes.
Real property taxes on the Company's properties may increase as its properties are reassessed by taxing authorities or as property tax rates change. In addition, the Company could incur significant costs associated with an appeal of any of these assessments. For example, a current California law commonly referred to as Proposition 13 generally limits annual real estate tax increases on California properties to 2% of assessed value at the date of acquisition. Accordingly, the assessed value and resulting property tax the Company pays is less than it would be if the properties were assessed at current values. The Company owns 31 properties in California, representing 9.1% of its total revenue. From time to time, proposals have been made to reduce the beneficial impact of Proposition 13, particularly with respect to commercial property, which would include medical office buildings. If such an initiative passed, it could end or reduce the beneficial effect of Proposition 13 for the Company's properties, and property tax expense could have increase substantially, adversely affecting the Company's cash flow from operations and net income.
Trends in the healthcare service industry, including the impact of the One Big Beautiful Bill Act passed during 2025 that is subject of ongoing analysis, may negatively affect the demand for the Company’s properties, lease revenues and the values of its investments.
The healthcare service industry may be affected by the following:
•transition to value-based care and reimbursement of providers;
•competition among healthcare providers;
•consolidation among healthcare providers, health insurers, hospitals and health systems;
•a rise in government-funded health insurance coverage;
•pressure on providers' operating profit margins from lower reimbursement rates, lower admissions growth, and higher expense growth;
•availability of capital;
•credit downgrades;
•liability insurance expense;
•rising pharmaceutical drug expense;
•regulatory and government reimbursement uncertainty related to the Medicare and Medicaid programs;
•a trend toward government regulation of pharmaceutical pricing;
•government regulation of hospitals' and health insurers' pricing transparency;
•federal court decisions on cases challenging the legality of the Affordable Care Act, in whole or in part;
•site-neutral rate-setting for Medicare services across different care settings;
•disruption in patient volume and revenue from pandemics, such as COVID-19;
•trends in the method of delivery of healthcare services, such as telehealth;
•heightened health information technology security standards and the meaningful use of electronic health records by healthcare providers;
•potential tax law changes affecting providers; and
•state and federal regulations that provide for heightened scrutiny of healthcare transactions involving REITs and private equity firms.
These trends, among others, can adversely affect the economic performance of some or all of the tenants and, in turn, negatively affect the lease revenues and the value of the Company’s property investments.
The costs of complying with governmental laws and regulations may adversely affect the Company's results of operations.
All real property and the operations conducted on real property are subject to federal, state, and local laws and regulations relating to environmental protection and human health and safety. Some of these laws and regulations may impose joint and several liability on tenants, owners, or operators for the costs to investigate or remediate contaminated properties, regardless of fault or whether the acts causing the contamination were legal. In addition, the presence of hazardous substances, or the failure to properly remediate these substances, may hinder the Company's ability to sell, rent, or pledge such property as collateral for future borrowings.
Compliance with new laws or regulations or stricter interpretation of existing laws may require the Company to incur significant expenditures. For example, enacted or proposed legislation to address climate change could increase utility and other costs of operating the Company's properties. Future laws or regulations may impose significant environmental liability. Additionally, operations of tenants or other parties in the vicinity of the Company's properties, such as the presence of underground storage tanks, may affect the Company's properties. There are various local, state, and federal fire, health, life-safety, and similar regulations with which the Company may be required to comply and that may subject us to liability in the form of fines or damages for noncompliance. Any expenditures, fines, or damages that the Company must pay would adversely affect its results of operations.
Discovery of previously undetected environmentally hazardous conditions may adversely affect the Company's financial condition and results of operations. Under various federal, state, and local environmental laws and regulations, a current or previous property owner or operator may be liable for the cost to remove or remediate hazardous or toxic substances on such property. These costs could be significant. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. Environmental laws also may impose restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require significant expenditures or prevent the Company from entering into leases with prospective tenants that may be impacted by such laws. Environmental laws provide for sanctions for noncompliance and may be enforced by governmental agencies or private parties. Certain environmental laws and common law principles could be used to impose liability for the release of and exposure to hazardous substances, including asbestos-containing materials. Third parties may seek recovery from real property owners or operators for personal injury or property damage associated with exposure to released hazardous substances. The cost of defending against claims of liability, of complying with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims could adversely affect the Company's financial condition and results of operations.
Qualifying as a REIT involves highly technical and complex provisions of the Internal Revenue Code.
Qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code for which only limited judicial and administrative authorities exist. Even a technical or inadvertent violation could jeopardize the Company’s REIT qualification. The Company’s continued qualification as a REIT will depend on the Company’s satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. In addition, the Company’s ability to satisfy the requirements to qualify as a REIT depends in part on the actions of third parties over which the Company has no control or only limited influence, including in cases where the Company owns an equity interest in an entity that is classified as a partnership for U.S. federal income tax purposes.
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 intends to operate in a manner that will allow it to continue to qualify as a REIT for federal income tax purposes. Although the Company believes that it qualifies as a REIT, it cannot provide any assurance that it will continue to qualify as a REIT for federal income tax purposes. The Company’s continued qualification as a REIT will depend on the satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. The Company’s ability to satisfy the asset tests depends upon the characterization and fair market values of its assets. The Company’s compliance with the REIT income and quarterly asset requirements also depends upon the Company’s ability to successfully manage the composition of the Company’s income and assets on an ongoing basis. Accordingly, there can be no assurance that the Internal Revenue Service (“IRS”) will not contend that the Company has operated in a manner that violates any of the REIT requirements.
If the Company were to fail to qualify as a REIT in any taxable year, the Company would be subject to federal income tax on its taxable income at regular corporate rates and possibly increased state and local taxes (and the Company might need to borrow money or sell assets in order to pay any such tax). Further, dividends paid to the Company’s stockholders would not be deductible by the Company in computing its taxable income. Any resulting corporate tax liability could be substantial and would reduce the amount of cash available for distribution to the Company’s stockholders, which in turn could have an adverse impact on the value of the Company’s common stock. In addition, in such an event the Company would no longer be required to pay dividends to maintain REIT status, which could adversely affect the value of the Company’s common stock. Unless the Company were entitled to relief under certain provisions of the Internal Revenue Code, the Company also would continue to be disqualified from taxation as a REIT for the four taxable years following the year in which the Company failed to qualify as a REIT.
Even if the Company remains qualified for taxation as a REIT, the Company is subject to certain federal, state and local taxes on its income and assets, including taxes on any undistributed taxable income, and state or local income, franchise, property and transfer taxes. These tax liabilities would reduce the Company’s cash flow and could adversely affect the value of the Company’s common stock. For more specific information on state income taxes paid, see Note 15 to the Consolidated Financial Statements.
The Company’s articles of incorporation, as well as provisions of the MGCL, contain limits and restrictions on transferability of the Company’s common stock which may have adverse effects on the value of the Company’s common stock.
In order to qualify as a REIT, no more than 50% of the value of the Company’s outstanding shares may be owned, directly or indirectly, by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities) during the last half of a taxable year. To assist in complying with this REIT requirement, the Company’s articles of incorporation contain provisions restricting share transfers where the transferee would, after such transfer, own more than 9.8% either in number or value of the outstanding stock of the Company. If, despite this prohibition, stock is acquired increasing a transferee’s ownership to over 9.8% in value of the outstanding stock, the stock in excess of this 9.8% in value is deemed to be held in trust for transfer at a price that does not exceed what the purported transferee paid for the stock, and, while held in trust, the stock is not entitled to receive dividends or to vote. In addition, under these circumstances, the Company has the right to redeem such stock.
In addition, certain provisions of the MGCL applicable to the Company may have the effect of inhibiting or deterring a third party from making a proposal to acquire the Company or of delaying or preventing a change of control under circumstances that otherwise could provide Company stockholders with the opportunity to realize a premium over the then-prevailing market price of such shares, including:
•provisions under Subtitle 8 of Title 3 of the MGCL that permit the Board of Directors, without stockholders’ approval and regardless of what is currently provided in the Company's Articles of Incorporation or bylaws, to implement certain takeover defenses;
•“business combination” provisions that, subject to limitations, prohibit certain business combinations, asset transfers and equity security issuances or reclassifications between the Company and an “interested stockholder” (defined generally as any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the Company's outstanding voting stock or an affiliate or associate of the Company who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the Company's then outstanding stock) or an affiliate of an interested stockholder for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter may impose supermajority voting requirements unless certain minimum price conditions are satisfied; and
•“control share” provisions that provide that holders of “control shares” of the Company (defined as shares which, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) have no voting rights except to the extent approved by Company stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
Pursuant to a resolution adopted by the Board of Directors, the Company is prohibited from classifying the Board of Directors under Subtitle 8 unless stockholders entitled to vote generally in the election of directors approve a proposal to repeal such resolution by the affirmative of a majority of the votes cast on the matter. In the case of the business combination provisions of the MGCL, the Board of Directors has adopted a resolution providing that any business combination between the Company and any other person is exempted from this statute, provided that such business combination is first approved by the Board of Directors. This resolution, however, may be altered or repealed in whole or in part at any time. In the case of the control share provisions of the MGCL, the Company has opted out of these provisions pursuant to a provision in its bylaws. The Company may, however, by amendment to its bylaws, opt into the control share provisions of the MGCL. The Company may also choose to adopt other takeover defenses in the future. Any such actions could deter a transaction that may otherwise be in the interest of Company stockholders.
These restrictions on the transfer of the Company’s shares could 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.
To qualify as a REIT for federal income tax purposes, the Company must continually satisfy tests concerning, among other things, the sources of its income, the nature of its assets, the amounts it distributes to its stockholders and the ownership of its stock. The Company may be unable to pursue investments that would be otherwise advantageous to the Company in order to satisfy the source-of-income or distribution requirements for qualifying as a REIT. Thus, compliance with the REIT requirements may hinder the Company’s ability to make certain attractive investments.
The prohibited transactions tax may limit the Company's ability to sell properties.
A REIT's net gain from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property held primarily for sale to customers in the ordinary course of business. The Company may be subject to the prohibited transaction tax equal to 100% of net gain upon the disposition of real property. Although a safe harbor to the characterization of the sale of real property by a REIT as a prohibited transaction is available, there can be no assurance that the Company can comply in all cases with the safe harbor or that it will avoid owning property that may be characterized as held primarily for sale to customers in the ordinary course of
business. Consequently, the Company may choose not to engage in certain sales of its properties or may conduct such sales through a taxable REIT subsidiary, which would be subject to federal and state income taxation.
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.
The present federal income tax treatment of REITs may be modified, possibly with retroactive effect, by legislative, judicial or administrative action at any time, which could affect the federal income tax treatment of an investment in the Company. The federal income tax rules that affect REITs are constantly under review by persons involved in the legislative process, the IRS and the U.S. Treasury Department, which results in statutory changes as well as frequent revisions to regulations and interpretations. Revisions in federal tax laws and interpretations thereof could cause the Company to change its investments and commitments and affect the tax considerations of an investment in the Company. There can be no assurance that new legislation, regulations, administrative interpretations or court decisions will not change the tax laws significantly with respect to the Company’s qualification as a REIT or with respect to the federal income tax consequences of qualification.
New and increased transfer tax rates may reduce the value of the Company’s properties.
In recent years, several cities in which the Company owns assets have increased transfer tax rates. These include Boston, Los Angeles, San Francisco, Seattle, and Washington, D.C. In 2022, Los Angeles increased its transfer tax rate from 0.45% to 5.5% on sales of real properties greater than $10 million in value, effective April 1, 2023. In 2020, San Francisco increased it transfer tax rate to 6% for sales in excess of $25 million in value. Also in 2020, the State of Washington increased its transfer tax rate from 1.28% to 3% on sales in excess of $3 million in value; the combined state and local transfer tax rate in Seattle/King County, Washington is 3.5% on sales above $3 million. As state and municipal governments seek new ways to raise revenue, other jurisdictions may implement new real estate transfer taxes or increase existing transfer tax rates. Increases in such tax rates can impose significant additional transaction costs on sales of commercial real estate and may reduce the value of the Company’s properties for sale by the amount of the new or increased tax.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
The Company annually reviews its overall risk profile with the Audit Committee and full Board of Directors. Assessing, identifying and managing material risks from cybersecurity threats are integrated into the Company’s overall risk management processes.
The Audit Committee of the Company’s Board of Directors has oversight in the management of risks associated with cybersecurity. The Audit Committee is briefed regularly on cybersecurity matters, including meeting with the Company’s head of technology at least annually and receiving a memorandum quarterly regarding cybersecurity. In addition, the Audit Committee discusses cybersecurity with other members of management and the internal audit staff at each quarterly meeting. The Audit Committee reports to the full Board of Directors quarterly regarding cybersecurity.
Management of the Company plays an integral role in assessing and managing risks from cybersecurity threats. The Company has a dedicated technology services department, led by the Company’s head of technology. The Company also has an in-house internal audit staff that is involved in risk management of cybersecurity threats. The Company solicits input from key employees regarding the overall risk environment, including cybersecurity threats. The Company requires all employees to complete cybersecurity training semi-annually and periodically facilitates penetration tests on the Company's systems.
The Company’s head of technology reports to the Company’s Executive Vice President and Chief Operating Officer. In addition, as discussed in more detail below, any cybersecurity incident is reported to the Company’s legal department.
Although the Company’s Executive Vice President and Chief Operating Officer and the members of its legal department do not have a technology services background, we believe that the Company’s head of technology and technology services team possess the requisite background and experience to effectively manage the Company’s cybersecurity needs.
The Company also engages with third parties on an as-needed basis to advise and assist in managing cybersecurity risks. When the Company utilizes third-party services that include web-based platforms or data collection stored on third-party servers, it reviews the service provider’s SOC1 attestation reports on internal controls and inquires regarding controls and procedures utilized by such third parties with respect to cybersecurity of the Company’s data.
The Company has in place a cybersecurity incident response plan. Procedures for addressing cybersecurity incidents include reporting incidents up to senior management, including the Company’s legal department for analysis. If a cybersecurity incident were determined to be material by the Company's legal department, the Company’s Audit Committee would be informed promptly and the Company’s disclosure committee would address appropriate public disclosures. As noted above, management regularly reports to the Audit Committee regarding the current cyber threat environment and the controls and procedures meant to address such risks.
The Company carries cyber risk insurance, but there can be no assurance that losses from a cybersecurity incident would not exceed the insurance coverage.
Although the Company has not experienced a cybersecurity incident that materially affected or, to the Company’s knowledge, is reasonably likely to materially affect the Company, including its business strategy, results of operations or financial condition, the Company has, from time to time, experienced threats to and breaches of its data and systems. 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. These risks are described in more detail under Item 1A. Risk Factors.
Item 2. Properties
In addition to the properties described in Item 1. “Business,” in Note 2 to the Consolidated Financial Statements, and in Schedule III of Item 15 of this Annual Report on Form 10-K, the Company leases office space from unrelated third parties from time to time. The Company owns its corporate headquarters located at 3310 West End Avenue in Nashville, Tennessee.
Item 3. Legal Proceedings
The Company is not aware of any pending or threatened litigation that, if resolved against the Company, would have a material adverse effect on the Company's consolidated financial position, results of operations, or cash flows.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Shares of the Company’s common stock are traded on the New York Stock Exchange under the symbol “HR.” As of December 31, 2025, there were 1,863 stockholders of record.
Future dividends will be declared and paid at the discretion of the Board of Directors. The Company’s ability to pay dividends is dependent upon its ability to generate funds from operations and cash flows, and to make accretive new investments.
Equity Compensation Plan Information
The following table provides information as of December 31, 2025, about the Company’s common stock that may be issued as restricted stock and upon the exercise of options, warrants and rights under the Company’s existing compensation plans, including the Amended and Restated 2006 Incentive Plan.
| PLAN CATEGORY | NUMBER OF SECURITIES <br>TO BE ISSUED <br>upon exercise of outstanding options, warrants, and rights | WEIGHTED AVERAGE EXERCISE PRICE <br>of outstanding options, warrants, and rights | NUMBER OF SECURITIES REMAINING AVAILABLE <br>for future issuance under equity <br>compensation plans (excluding <br>securities reflected in the first column) |
|---|---|---|---|
| Equity compensation plans approved by security holders | — | — | 3,979,387 |
| Equity compensation plans not approved by security holders | — | — | — |
| Total | — | — | 3,979,387 |
Issuer Purchases of Equity Securities
During the year ended December 31, 2025, the Company withheld and canceled shares of Company common stock to satisfy employee tax withholding obligations payable upon the vesting of non-vested shares, as follows:
| PERIOD | TOTAL NUMBER OF SHARES PURCHASED | AVERAGE PRICE PAID <br>per share | TOTAL NUMBER OF SHARES purchased as part of publicly announced plans or programs | MAXIMUM NUMBER (or Approximate DOLLAR VALUE) OF SHARES <br>that may yet be purchased <br>under the plans or programs | |
|---|---|---|---|---|---|
| January 1 - January 31 | 4,029 | $ | 16.27 | — | 236,957,114 |
| February 1 - February 28 | 9,034 | 16.56 | — | 236,957,114 | |
| March 1 - March 31 | — | — | — | 236,957,114 | |
| April 1 - April 30 | 18,877 | 15.83 | — | 236,957,114 | |
| May 1 - May 31 | 4,535 | 14.50 | — | 236,957,114 | |
| June 1 - June 30 | 49,441 | 15.48 | — | 236,957,114 | |
| July 1 - July 31 | 30,479 | 15.81 | — | 236,957,114 | |
| August 1 - August 31 | 96,164 | 16.67 | — | 236,957,114 | |
| September 1 - September 30 | — | — | — | 236,957,114 | |
| October 1 - October 31 | 952 | 17.68 | — | 500,000,000 | |
| November 1 - November 30 | — | — | — | 500,000,000 | |
| December 1 - December 31 | 20,985 | 17.19 | — | 500,000,000 | |
| Total | 234,496 | $ | 16.24 |
Authorization to Repurchase Common Stock
On October 28, 2025, the Company's Board of Directors authorized the repurchase of up to $500.0 million of outstanding shares of the Company's common stock, superseding the previous $300.0 million stock repurchase authorization. The stock repurchase authorization expires on October 27, 2026, and the Company may suspend or terminate repurchases at any time without prior notice. Under the Maryland General Corporation Law, outstanding shares of common stock acquired by a corporation become authorized but unissued shares, which may be re-issued. As of December 31, 2025, the Company had $500.0 million remaining under its current share repurchase authorization.
Subsequent Activity
In January 2026, the Company repurchased 2.9 million shares of its common stock at an average price of $17.27 per share for a total of $50.0 million resulting in $450.0 million of authorized share repurchases remaining.
Stock Performance Graph
The following graph provides a comparison of the Company's cumulative total shareholder return with the Russell 3000 Index and cumulative total returns of FTSE NAREIT All Equity REITs Index for the period from December 31, 2020 through December 31, 2025. The comparison assumes $100 was invested on December 31, 2020, in the Company's common stock and in each of the indexes and assumes reinvestment of dividends, as applicable. The Company's data for periods prior to July 20, 2022, is the stock performance of Healthcare Realty Trust Incorporated (now known as HRTI, LLC) ("Legacy HR"), which merged into Healthcare Trust of America, Inc. (now known as Healthcare Realty Trust Incorporated)(the "Merger").
Item 6. [Reserved]
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Disclosure Regarding Forward-Looking Statements
This report and other materials the Company has filed or may file with the SEC, as well as information included in oral statements or other written statements made, or to be made, by senior management of the Company, contain, or will contain, disclosures that are “forward-looking statements.” Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “target,” “intend,” “plan,” “estimate,” “project,” “continue,” “should,” “could” and other comparable terms. These forward-looking statements are based on the current plans and expectations of management and are subject to a number of risks and uncertainties that could materially affect the Company’s current plans and expectations and future financial condition and results. Such risks and uncertainties as more fully discussed in Item 1A “Risk Factors” of this report and in other reports filed by the Company with the SEC from time to time include, among other things, the following:
Risks relating to our business and operations
•The Company's expected results may not be achieved;
•The Company’s revenues depend on the ability of its tenants under its leases to generate sufficient income from their operations to make rental payments to the Company;
•The Company's results of operations have been and will continue to be impacted negatively by the Prospect Medical bankruptcy;
•Owning real estate and indirect interests in real estate is subject to inherent risks;
•The Company may incur impairment charges on its real estate properties or other assets;
•The Company has properties subject to purchase options that expose it to reinvestment risk and reduction in expected investment returns;
•If the Company is unable to promptly re-let its properties, if the rates upon such re-letting are significantly lower than the previous rates or if the Company is required to undertake significant expenditures or make significant leasing concessions to attract new tenants, then the Company’s business, consolidated financial condition and results of operations would be adversely affected;
•Certain of the Company’s properties are special purpose healthcare facilities and may not be easily adaptable to other uses;
•The Company has, and in the future may have more exposure to fixed rent escalators, which could lag behind inflation and the growth in operating expenses such as real estate taxes, utilities, insurance, and maintenance expense;
•The Company’s real estate investments are illiquid and the Company may not be able to sell properties strategically targeted for disposition;
•The Company is subject to risks associated with the development and redevelopment of properties;
•The Company may make material acquisitions and undertake developments and redevelopments that may involve the expenditure of significant funds and may not perform in accordance with management’s expectations;
•The Company is exposed to risks associated with geographic concentration;
•Many of the Company’s leases are dependent on the viability of associated health systems. 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;
•The Company has structured and may in the future structure acquisitions of property in exchange for limited partnership units of the OP on terms that could limit its liquidity or flexibility;
•Healthcare Realty Trust is a holding company with no direct operations and, as such, it relies on funds received from the OP to pay liabilities, and the interests of its stockholders will be structurally subordinated to all liabilities and obligations of the OP and its subsidiaries
•The Company cannot assure you that it will be able to continue paying dividends at or above the rates previously paid;
•Pandemics and measures intended to prevent their spread or mitigate their severity could have a material adverse effect on the Company's business, results of operations, cash flows and financial condition; and
•The Company's success depends, in part, on its ability to attract and retain talented employees. The loss of any one of the Company's key personnel or the inability to maintain appropriate staffing could adversely impact the Company's business.
Risks relating to our capital structure and financings
•The Company has incurred significant debt obligations and may incur additional debt and increase leverage in the future;
•Covenants in the Company’s debt instruments limit its operational flexibility, and a breach of these covenants could materially affect the Company’s consolidated financial condition and results of operations;
•If lenders under the Unsecured Credit Facility fail to meet their funding commitments, the Company’s operations and consolidated financial position would be negatively impacted;
•The unavailability of equity and debt capital, volatility in the credit markets, increases in interest rates, or changes in the Company’s debt ratings could have an adverse effect on the Company’s ability to meet its debt payments, make dividend payments to stockholders or engage in acquisition and development activity;
•Increases in interest rates could have a material adverse effect on the Company's cost of capital;
•The Company's swap agreements may not effectively reduce its exposure to changes in interest rates;
•The Company has entered into joint venture agreements that limit its flexibility with respect to jointly owned properties and expects to enter into additional such agreements in the future;
•The U.S. federal income tax treatment of the cash that the Company might receive from cash settlement of a forward equity agreement is unclear and could jeopardize the Company's ability to meet the REIT qualification requirements; and
•In the event of our bankruptcy or insolvency, any forward equity agreements will automatically terminate, and the Company would not receive the expected proceeds from any forward sale of shares of its common stock.
Risks relating to government regulations
•The Company's property taxes could increase due to reassessment or property tax rate changes;
•Trends in the healthcare service industry, including the impact of the One Big Beautiful Bill Act passed during 2025 that is subject of ongoing analysis, may negatively affect the demand for the Company’s properties, lease revenues and the values of its investments;
•The costs of complying with governmental laws and regulations may adversely affect the Company's results of operations;
•Qualifying as a REIT involves highly technical and complex provisions of the Internal Revenue Code;
•If the Company fails to remain qualified as a REIT, the Company will be subject to significant adverse consequences, including adversely affecting the value of its common stock;
•The Company’s articles of incorporation, as well as provisions of the MGCL, contain limits and restrictions on transferability of the Company’s common stock which may have adverse effects on the value of the Company’s common stock;
•Complying with the REIT requirements may cause the Company to forego otherwise attractive opportunities;
•The prohibited transactions tax may limit the Company's ability to sell properties;
•New legislation or administrative or judicial action, in each instance potentially with retroactive effect, could make it more difficult or impossible for the Company to qualify as a REIT; and
•New and increased transfer tax rates may reduce the value of the Company’s properties.
The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Stockholders and investors are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in the Company’s filings and reports, including, without limitation, estimates and projections regarding the performance of development projects the Company is pursuing.
Overview
The Company owns and operates properties that facilitate the delivery of healthcare services in primarily outpatient settings. To execute its strategy, the Company engages in a broad spectrum of integrated services including leasing, management, acquisition, financing, development and redevelopment of such properties. The Company seeks to generate stable, growing income and lower the long-term risk profile of its portfolio of properties by focusing on facilities primarily located on or near the campuses of acute care hospitals associated with leading health systems. The Company seeks to reduce financial and operational risk by owning properties in high-growth markets with a broad tenant mix that includes over 30 physician specialties, as well as surgery, imaging, cancer, and diagnostic centers.
This section is organized into the following sections:
•Liquidity and Capital Resources;
•Trends and Matters Impacting Operating Results;
•Results of Operations;
•Non-GAAP Financial Measures and Key Performance Indicators; and
•Application of Critical Accounting Policies to Accounting Estimates.
Liquidity and Capital Resources
The Company monitors its liquidity and capital resources and considers several indicators in its assessment of capital markets for financing acquisitions and other operating activities. The Company considers, among other factors, its leverage ratios and lending covenants, dividend payout percentages, interest rates, underlying treasury rates, debt market spreads and cost of equity capital to compare its operations to its peers and to help identify areas in which the Company may need to focus its attention.
Sources and Uses of Cash
The Company's revenues are derived from its real estate property portfolio based on contractual arrangements with its tenants. These sources of revenue represent the Company's primary source of liquidity to fund its dividends and its operating expenses, including interest incurred on debt, principal payments on debt, general and administrative costs, capital expenditures and other expenses incurred in connection with managing its existing portfolio and investing in additional properties. To the extent additional investments are not funded by these sources, the Company will fund its investment activity generally through equity or debt issuances either in the public or private markets, asset sales and joint venture contributions or through proceeds from the Unsecured Credit Facility.
The Company expects to continue to meet its liquidity needs, including capital for additional investments, tenant improvement allowances, operating and finance lease payments, paying dividends, and funding debt service, through cash on hand, cash flows from operations and the cash flow sources addressed above. See Note 3 to the Consolidated Financial Statements for additional discussion of operating and financing lease payment obligations. See "Trends and Matters Impacting Operating Results" for additional information regarding the Company's sources and uses of cash.
The Company also had unencumbered real estate assets with a gross book value of approximately $10.4 billion at December 31, 2025, of which a portion could serve as collateral for secured mortgage financing. The Company believes that its liquidity and sources of capital are adequate to satisfy its cash requirements. The Company cannot, however, be certain that these sources of funds will be available at a time and upon terms acceptable to the Company in sufficient amounts to meet its liquidity needs.
The Company has exposure to variable interest rates and its common stock price is impacted by the volatility in the stock markets. However, the Company’s leases, which provide its main source of income and cash flow, have terms of approximately one to 20 years and have lease rates that generally increase on an annual basis at fixed rates or based on consumer price indices.
Operating Activities
Cash flows provided by operating activities for the two years ended December 31, 2025 and 2024 were $457.1 million and $501.6 million, respectively. Several items impact cash flows from operating activities including, but not limited to, cash generated from property operations, interest payments and the timing related to the payment of invoices and other expenses and receipt of tenant rent.
The Company may, from time to time, sell properties and redeploy cash from property sales into new investments. To the extent revenues related to the properties being sold exceed income from these new investments, the Company's consolidated results of operations and cash flows could be adversely affected.
See "Trends and Matters Impacting Operating Results" for additional information regarding the Company's operating activities.
Investing Activities
A summary of the significant transactions impacting investing activities for the year ended December 31, 2025 is listed below. See Note 4 to the Consolidated Financial Statements for more detail on these activities.
Capital Funding
In 2025, the Company incurred capital expenditures totaling $308.8 million for the following:
•$136.6 million toward development and redevelopment of properties;
•$90.2 million toward first generation tenant improvements;
•$46.9 million toward second generation tenant improvements; and
•$35.1 million toward capital expenditures.
See "Trends and Matters Impacting Operating Results" below for more detail.
Real Estate Notes Receivable
In 2025, the Company had the following activity on its real estate notes receivables:
•In January 2025, the Company received $14.9 million as payment towards the principal balance of its mortgage loan that matured on December 2, 2024.
•In March 2025, the Company provided seller financing of $5.4 million in connection with the sale of a real estate property in Houston, Texas.
•In March 2025, the Company executed a mezzanine loan receivable agreement with a maximum loan commitment of $8.5 million. As of December 31, 2025, the Company had funded the full $8.5 million under this agreement.
•In April 2025, a mortgage loan receivable of $37.7 million maturing in February 2026 was repaid in full.
•In December 2025, the Company received $5.8 million as payment towards the principal balance of its mortgage loan that matured on December 22, 2024,
•In December 2025, the Company provided seller financing of $6.4 million in connection with the sale of a real estate property in Houston, Texas.
See Note 1 to the Consolidated Financial Statements accompanying this report for more information about real estate notes receivable and allowance for credit losses.
Dispositions
The following table details the Company's asset sales for the year ended December 31, 2025:
| Dollars in thousands | DATE DISPOSED | SALE PRICE | CLOSING ADJUSTMENTS | COMPANY-FINANCED MORTGAGE NOTES | NET PROCEEDS | NET REAL ESTATE INVESTMENT | OTHER | GAIN/(IMPAIR-MENT) | SQUARE FOOTAGE | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Boston, MA | 2/7/2025 | $ | 4,500 | $ | (135) | $ | — | $ | 4,365 | $ | 4,325 | $ | 15 | $ | 25 | 30,304 |
| Denver, CO 1 | 2/14/2025 | 8,600 | (2,144) | — | 6,456 | 7,948 | 113 | (1,605) | 69,715 | |||||||
| Houston, TX 2 | 3/20/2025 | 15,000 | (4,087) | (5,400) | 5,513 | 14,343 | 347 | (3,777) | 127,933 | |||||||
| Boston, MA | 4/30/2025 | 486 | (47) | — | 439 | 60 | 2 | 377 | — | |||||||
| Boston, MA | 5/23/2025 | 3,000 | (36) | — | 2,964 | 2,631 | 27 | 306 | 33,176 | |||||||
| Jacksonville, FL | 6/26/2025 | 8,100 | (11) | — | 8,089 | 23,064 | (529) | (14,446) | 53,169 | |||||||
| Yakima, WA 1 | 6/26/2025 | 31,000 | (2,256) | — | 28,744 | 8,689 | 343 | 19,712 | 91,561 | |||||||
| Houston, TX | 6/27/2025 | 10,500 | (15) | — | 10,485 | 10,250 | 42 | 193 | — | |||||||
| South Bend, IN | 7/15/2025 | 43,100 | (283) | — | 42,817 | 29,481 | (7) | 13,343 | 205,573 | |||||||
| Milwaukee, WI 1 | 7/29/2025 | 42,000 | (913) | — | 41,087 | 40,644 | 270 | 173 | 147,406 | |||||||
| Naples, FL | 7/29/2025 | 19,250 | (2,692) | — | 16,558 | 15,586 | 559 | 413 | 61,359 | |||||||
| New York, NY | 7/30/2025 | 25,000 | (1,290) | — | 23,710 | 15,531 | 364 | 7,815 | 89,893 | |||||||
| Boston, MA | 8/25/2025 | 450 | (45) | — | 405 | 413 | 32 | (40) | 9,010 | |||||||
| Lakeland, FL 3 | 8/27/2025 | 7,325 | (772) | — | 6,553 | 6,899 | 234 | (580) | 31,158 | |||||||
| Salem, OR | 8/29/2025 | 4,000 | (427) | — | 3,573 | 3,482 | 159 | (68) | 21,026 | |||||||
| Milwaukee, WI 1 | 9/29/2025 | 60,000 | (2,203) | — | 57,797 | 61,485 | (2,884) | (804) | 220,747 | |||||||
| Tampa, FL | 9/30/2025 | 22,000 | (778) | — | 21,222 | 6,218 | 646 | 14,358 | 47,962 | |||||||
| Dallas, TX 3 | 9/30/2025 | 58,800 | (1,885) | — | 56,915 | 26,822 | 5,379 | 24,714 | 448,879 | |||||||
| Chicago, IL | 9/30/2025 | 18,700 | (477) | — | 18,223 | 18,417 | (181) | (13) | 56,531 | |||||||
| Columbus, OH 4 | 9/30/2025 | 33,750 | (2,470) | — | 31,280 | 27,884 | 410 | 2,986 | 117,060 | |||||||
| Miami, FL | 9/30/2025 | 62,000 | (1,867) | — | 60,133 | 45,152 | 2,580 | 12,401 | 152,976 | |||||||
| New Haven, CT | 10/16/2025 | 725 | (4) | — | 721 | 612 | 3 | 106 | — | |||||||
| Des Moines, IA | 10/29/2025 | 7,225 | (841) | — | 6,384 | 9,275 | (2,346) | (545) | 152,655 | |||||||
| Jacksonville, FL 1 | 11/17/2025 | 18,600 | (1,065) | — | 17,535 | 17,590 | 463 | (518) | 40,333 | |||||||
| Richmond, VA 5 | 11/18/2025 | 171,000 | (8,772) | — | 162,228 | 57,224 | 13,263 | 91,741 | 405,945 | |||||||
| Boston, MA | 12/8/2025 | 278 | (44) | — | 234 | 283 | 1 | (49) | 10,380 | |||||||
| Atlanta, GA | 12/19/2025 | 3,000 | (981) | — | 2,019 | 3,331 | (1,209) | (103) | — | |||||||
| Multiple 6 | 12/19/2025 | 348,900 | (35,341) | — | 313,559 | 287,121 | 1,413 | 25,025 | 1,522,500 | |||||||
| Memphis, TN | 12/29/2025 | 23,021 | (79) | — | 22,942 | 8,876 | (2,070) | 16,136 | 116,473 | |||||||
| Phoenix, AZ | 12/29/2025 | 22,275 | (756) | — | 21,519 | 17,367 | 1,217 | 2,935 | 89,980 | |||||||
| Phoenix, AZ | 12/29/2025 | 5,225 | (335) | — | 4,890 | 4,927 | 21 | (58) | 89,983 | |||||||
| Houston, TX 7 | 12/30/2025 | 12,500 | (4,559) | (6,400) | 1,541 | 7,631 | 4,811 | (4,501) | 49,319 | |||||||
| Total Dispositions | $ | 1,090,310 | $ | (77,610) | $ | (11,800) | $ | 1,000,900 | $ | 783,561 | $ | 23,488 | $ | 205,652 | 4,493,006 |
1Includes two medical outpatient properties.
2The Company provided seller financing of approximately $5.4 million in connection with this sale.
3Includes four medical outpatient properties.
4Includes three medical outpatient properties.
5Includes six medical outpatient properties.
6The Company sold six MOBs in El Paso, TX, four MOBs in Indianapolis, IN, two MOBs in each of Chicago, IL, Cincinnati, OH, Des Moines, IA, Fort Wayne, IN, Minneapolis, MN and Pittsburgh, PA; and one MOB in each of Detroit, MI, Las Vegas, NV and Salt Lake City, UT to a single buyer in a single transaction.
7The Company provided seller financing of approximately $6.4 million in connection with this sale.
Subsequent Dispositions
On January 14, 2026, the Company disposed of a 60,039 square foot medical outpatient building in Atlanta, Georgia for $21.9 million.
Financing Activities
Common Stock Repurchases
During 2025, the Company did not repurchase any shares of its common stock. As of December 31, 2025, the Company had $500.0 million remaining under its current share repurchase authorization.
Subsequent Repurchase Activity
In January 2026, the Company repurchased 2.9 million shares of its common stock at an average price of $17.27 per share for a total of $50.0 million resulting in $450.0 million of authorized share repurchases remaining.
At-The-Market Equity Offering Program
On December 17, 2025, the Company renewed its ATM equity offering program to sell shares of the Company's common stock from time to time in at-the-market sales transactions. The Company entered into equity distribution agreements with various sales agents having an aggregate offering price of up to $1.0 billion. As of December 31, 2025, there has been no activity under the program.
Debt Activity
Below is a summary of the significant debt financing activity for the year ended December 31, 2025. See Note 9 to the Consolidated Financial Statements for additional information on financing activities.
Mortgage Activity
During the year ended December 31, 2025, the Company repaid in full a mortgage note payable bearing interest at a rate of 4.25% that encumbered a 45,157 square foot property in California.
Senior Notes
During the year ended December 31, 2025, the Company repaid its Senior Notes due 2025 at maturity including $250 million of principal and $4.8 million of accrued interest.
Term Loans
During the year ended December 31, 2025, the Company repaid the $300 million Unsecured Term Loan due January 2026, the $200 million Unsecured Term Loan due January 2026, and the $150 million Unsecured Term Loan due June 2026 and recorded approximately $0.5 million of accelerated amortization expense included in the loss on extinguishment of debt.
Interest Rate Swaps
As of December 31, 2025, the Company had seven outstanding interest rate derivatives totaling $500 million to hedge one-month Secured Overnight Financing Rate (“SOFR”). The following details the amount and rate of each swap as of such date (dollars in thousands):
| EXPIRATION DATE | NOTIONAL AMOUNT | WEIGHTED <br>AVERAGE RATE | ||
|---|---|---|---|---|
| May 2026 | $ | 100,000 | 2.15 | % |
| December 2026 | 150,000 | 3.84 | % | |
| June 2027 | 150,000 | 4.13 | % | |
| December 2027 | 100,000 | 4.13 | % | |
| Total | $ | 500,000 | 3.65 | % |
The following table details the Company's debt balances as of December 31, 2025:
| PRINCIPAL BALANCE | CARRYING BALANCE 1 | WEIGHTED YEARS TO MATURITY 2 | CONTRACTUAL RATE | EFFECTIVE RATE | |||||
|---|---|---|---|---|---|---|---|---|---|
| Senior Notes due 2026 | $ | 600,000 | $ | 595,026 | 0.6 | 3.50 | % | 4.94 | % |
| Senior Notes due 2027 | 500,000 | 492,693 | 1.5 | 3.75 | % | 4.76 | % | ||
| Senior Notes due 2028 | 300,000 | 298,652 | 2.0 | 3.63 | % | 3.85 | % | ||
| Senior Notes due 2030 | 650,000 | 597,188 | 4.1 | 3.10 | % | 5.30 | % | ||
| Senior Notes due 2030 | 299,500 | 297,610 | 4.2 | 2.40 | % | 2.72 | % | ||
| Senior Notes due 2031 | 299,785 | 296,866 | 5.2 | 2.05 | % | 2.25 | % | ||
| Senior Notes due 2031 | 800,000 | 685,874 | 5.2 | 2.00 | % | 5.13 | % | ||
| Total Senior Notes Outstanding | 3,449,285 | 3,263,909 | 2.90 | % | 4.47 | % | |||
| $1.5 billion unsecured credit facility | 120,000 | 120,000 | 4.5 | SOFR + 0.84% | 4.61 | % | |||
| $200 million unsecured term loan | 200,000 | 199,635 | 3.5 | SOFR + 0.94% | 4.81 | % | |||
| $300 million unsecured term loan | 300,000 | 299,055 | 3.0 | SOFR + 0.94% | 4.81 | % | |||
| Mortgage notes payable | 28,904 | 28,824 | 0.6 | 3.94 | % | 4.50 | % | ||
| Total Outstanding Notes and Bonds Payable | $ | 4,098,189 | $ | 3,911,423 | 3.19 | % | 4.52 | % |
1Balances are reflected net of discounts and debt issuance costs and include premiums.
2Includes extension options.
Subsequent Debt Activity
In February 2026, the Company entered into a commercial paper dealer agreement to issue short-term commercial paper notes up to $600.0 million, with maturities up to 364 days. The program is back-stopped by the Unsecured Credit Facility. The notes will be issued at par less a discount representing an interest factor, or if interest bearing, at par.
Debt Covenant Information
The Company’s various debt agreements contain certain representations, warranties, and financial and other covenants customary in such debt agreements. Among other things, these provisions require the Company to maintain certain financial ratios and impose certain limits on the Company’s ability to incur indebtedness and create liens or encumbrances. As of December 31, 2025, the Company was in compliance with the financial covenant provisions under all of its various debt instruments.
As of December 31, 2025, 72.5% of the Company’s principal balances were due after 2027, including extension options. Also, as of December 31, 2025, the Company's incurrence of total debt as defined in the senior notes [debt divided by (total assets less intangibles and accounts receivable)] was approximately 35.8% (cannot be greater than 60%) and debt service coverage [interest expense divided by (net income plus interest expense, taxes, depreciation and amortization, gains and impairments)] was approximately 3.5 times (cannot be less than 1.5 times).
The Company plans to manage its capital structure to maintain compliance with its debt covenants consistent with its current profile. Downgrades in ratings by the rating agencies could have a material adverse impact on the Company’s cost and availability of capital, which could in turn have a material adverse impact on consolidated results of operations, liquidity and/or financial condition.
Supplemental Guarantor Information
The OP has issued unsecured notes described in Note 9 to the Company's Consolidated Financial Statements included in this report. All unsecured notes are fully and unconditionally guaranteed by the Company, and the OP is 98.6% owned by the Company. Effective January 4, 2021, the Securities and Exchange Commission (the “SEC”) adopted amendments to the financial disclosure requirements which permit subsidiary issuers of obligations guaranteed by the parent to omit separate financial statements if the consolidated financial statements of the parent company have been filed, the subsidiary obligor is a consolidated subsidiary of the parent company, the guaranteed security is debt or debt-like, and the security is guaranteed fully and unconditionally by the parent.
Accordingly, as permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, the Company has excluded the summarized financial information for the OP because the assets, liabilities, and results of operations of the OP are not materially
different than the corresponding amounts in the Company's Consolidated Financial Statements and management believes such summarized financial information would be repetitive and would not provide incremental value to investors.
Trends and Matters Impacting Operating Results
Management monitors factors and trends important to the Company and the REIT industry in order to gauge their potential impact on the operations of the Company. Discussed below are some of the factors and trends that management believes may impact the future operations of the Company.
Economic and Market Conditions
Rising interest rates and increased volatility in the capital markets have increased the Company’s cost and availability of debt and equity capital. Limited availability and increases in the cost of capital could adversely impact the Company’s ability to finance operations and acquire and develop properties. To the extent the Company’s tenants experience increased costs or financing difficulties due to the economic and market conditions, they may be unable or unwilling to make payments or perform their obligations when due. Additionally, increased interest rates may also result in less liquid property markets, limiting the Company’s ability to sell existing assets or obtain joint venture capital.
Acquisitions and Dispositions
The Company had no real estate acquisition activity for the year ended December 31, 2025.
The Company disposed of 70 properties in 2025 for sales prices totaling approximately $1.1 billion. These transactions yielded net cash proceeds of approximately $1.0 billion, net of approximately $77.6 million of closing costs and related adjustments, and $11.8 million in Company financed notes. The weighted average capitalization rate for these sales was 6.7%. The Company calculates the capitalization rate for dispositions as the in-place cash net operating income divided by the sales price.
See the Company's discussion of its 2025 disposition activity in Note 4 to the Consolidated Financial Statements.
Development and Redevelopment Activity
The table below details the Company’s activity related to its active development and redevelopment projects as of December 31, 2025. The information included in the table below represents management’s estimates and expectations at December 31, 2025, which are subject to change. The Company’s disclosures regarding certain projections or estimates may not reflect actual results.
| ESTIMATED REMAINING FUNDINGS | ESTIMATED TOTAL INVESTMENT | APPROXIMATE SQUARE FEET | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Dollars in thousands | NUMBER OF PROPERTIES | TOTAL FUNDED DURING THE YEAR | TOTAL AMOUNT FUNDED | |||||||
| Development Activity | ||||||||||
| Raleigh, NC | 1 | $ | 5,500 | $ | 48,474 | $ | 9,526 | $ | 58,000 | 122,991 |
| Fort Worth, TX | 1 | 15,028 | 44,360 | 3,840 | 48,200 | 101,279 | ||||
| Total | $ | 20,528 | $ | 92,834 | $ | 13,366 | $ | 106,200 | 224,270 | |
| Redevelopment Activity | ||||||||||
| Charlotte, NC | 2 | $ | 13,849 | $ | 30,934 | $ | 4,116 | $ | 35,050 | 169,135 |
| Houston, TX | 2 | 14,598 | $ | 27,265 | 2,735 | 30,000 | 314,861 | |||
| White Plains, NY | 1 | 19,105 | $ | 23,534 | 1,366 | 24,900 | 65,851 | |||
| Charlotte, NC | 1 | 188 | $ | 188 | 19,012 | 19,200 | 122,388 | |||
| Washington, DC | 1 | 5,105 | $ | 14,185 | 1,015 | 15,200 | 57,323 | |||
| Seattle, WA | 1 | 58 | $ | 58 | 13,542 | 13,600 | 78,288 | |||
| Raleigh, NC | 1 | 4,479 | $ | 5,028 | 5,772 | 10,800 | 40,400 | |||
| Houston, TX | 1 | — | $ | — | 10,400 | 10,400 | 40,214 | |||
| Denver, CO | 2 | 11 | $ | 11 | 10,189 | 10,200 | 78,691 | |||
| Port St. Lucie, FL | 1 | 156 | $ | 458 | 8,942 | 9,400 | 31,466 | |||
| Dallas, TX | 1 | 469 | $ | 469 | 8,131 | 8,600 | 126,121 | |||
| Denver, CO | 1 | 675 | $ | 675 | 6,625 | 7,300 | 55,978 | |||
| Other | 8 | 18,660 | $ | 19,251 | 77,549 | 96,800 | 849,087 | |||
| Total | 23 | $ | 77,353 | $ | 122,056 | $ | 169,394 | $ | 291,450 | 2,029,803 |
For previously completed development and redevelopment projects, during 2025, the Company funded an additional $38.7 million related to ongoing tenant improvements.
The Company regularly consults with health systems and developers regarding long-term future new development opportunities. In addition, the Company continually evaluates its portfolio for accretive redevelopment opportunities.
Security Deposits and Letters of Credit
As of December 31, 2025, the Company held approximately $36.7 million in letters of credit and security deposits for the benefit of the Company in the event the obligated tenant fails to perform under the terms of its respective lease. Generally, the Company may, at its discretion and upon notification to the tenant, draw upon these instruments if there are any defaults under the leases.
Expiring Leases
The Company expects that approximately 15% of the leases in its portfolio will expire each year. In-place leases have a weighted average lease term of 8.3 years and a weighted average remaining lease term of 4.4 years. Demand for well-located real estate with complementary practice types and services remains consistent, and the Company's 2025 quarterly tenant retention statistics ranged from 77% to 80%. In 2026, the Company has 1,130 leases totaling 3.6 million square feet in its multi-tenant portfolio that are scheduled to expire. See additional information regarding expiring single-tenant leases under the heading "Single-Tenant Leases" below.
The Company seeks contractual rent increases for in-place leases. As of December 31, 2025 and 2024, the Company's contractual rental rate growth averaged 2.90% and 2.83%, respectively, for in-place leases. In addition, the Company continued to see strong quarterly weighted average rental rate growth for renewing leases ("cash leasing spread"). In 2025, cash leasing spreads averaged 2.7%.
In a further effort to maximize revenue growth and reduce its exposure to key expenses such as taxes and utilities, the Company carefully manages its balance of lease types. Gross leases, wherein the Company has full exposure to all operating expenses, comprise 8% of its lease portfolio. Modified gross or base year leases, in which the Company and tenant both pay a share of operating expenses, comprise 30% of the Company's leased portfolio. Net leases, in which tenants pay substantially all operating expenses, total 58% of the leased portfolio. Absolute net leases, in which tenants pay substantially all of the building's operating and capital expenses, comprise 4%.
Prospect Medical
As previously disclosed, Prospect filed petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in January of 2025. Prospect leased approximately 80,912 square feet of space from the Company. In October of 2025, a subsidiary of Hartford Health was selected as the successful bidder for the Prospect assets associated with the Company’s Prospect leases. The Company signed direct leases with Hartford Heath totaling 65,477 square feet effective January 1, 2026 and retained certain sublet in additional spaces. There is no assurance that the Company will be able to timely relet the remaining Prospect leased space that was not assumed by Hartford Health.
Capital Expenditures
Capital expenditures are long-term investments made to maintain and improve the physical and aesthetic attributes of the Company's owned properties. Examples of such improvements include, but are not limited to, material changes to, or the full replacement of, major building systems (exterior facade, building structure, roofs, elevators, mechanical systems, electrical systems, energy management systems, upgrades to existing systems for improved efficiency) and common area improvements (furniture, signage and artwork, bathroom fixtures and finishes, exterior landscaping, parking lots or garages). These additions are capitalized into the gross investment of a property and then depreciated over their estimated useful lives, typically ranging from 7 to 20 years. Capital expenditures specifically do not include recurring maintenance expenses, whether direct or indirect, related to the upkeep and maintenance of major building systems or common area improvements. Capital expenditures also do not include improvements related to a specific tenant suite, unless the improvement is part of a major building system or common area improvement.
The Company invested $35.1 million, or $1.07 per square foot, in capital expenditures in 2025 and $32.5 million, or $0.94 per square foot, in capital expenditures in 2024. As a percentage of cash net operating income, 2025 and 2024 capital expenditures were 4.8% and 4.1%, respectively. For a reconciliation of cash net operating income, see "Same Store Cash NOI" in the "Non-GAAP Financial Measures and Key Performance Indicators" section as part of Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations included in Part II of this report.
Tenant Improvements
The Company may invest in tenant improvements for the purpose of refurbishing or renovating tenant space. The Company categorizes these expenditures into first and second generation tenant improvements. As of December 31, 2025, the Company had commitments of approximately $161.8 million that are expected to be spent on tenant improvements throughout the portfolio, excluding development properties currently under construction.
First Generation Tenant Improvements
First generation tenant improvements totaled $90.2 million and $52.4 million for the years ended December 31, 2025 and 2024, respectively. First generation tenant improvements include build out costs related to suite space in shell condition.
Second Generation Tenant Improvements
Second generation tenant improvements spending totaled $46.9 million in 2025, or 6.4% of total cash net operating income. In 2024, this spending totaled $68.4 million, or 8.7% of total cash net operating income.
If the cost of a tenant improvement project exceeds a tenant improvement allowance, the Company generally offers the tenant the option to finance the excess over the lease term with interest or to reimburse the overage to the Company in a lump sum. In either case, such overages are amortized by the Company as rental income over the term of the lease. Interest earned on tenant overages is included in other operating income in the Company's Consolidated Statements of Operations. The first and second generation tenant overage amount amortized to rent, including interest, totaled approximately $10.0 million in 2025, $7.8 million in 2024, and $8.4 million in 2023.
Second generation tenant improvement commitments in 2025 for renewals averaged $2.22 per square foot per lease year, ranging quarterly from $1.66 to $3.13. In 2024, these commitments averaged $2.14 per square foot per lease year, ranging quarterly from $1.80 to $2.39. In 2023, these commitments averaged $1.78 per square foot per lease year, ranging quarterly from $1.64 to $1.89.
Second generation tenant improvement commitments in 2025 for new leases averaged $6.91 per square foot per lease year, ranging quarterly from $6.08 to $7.60. In 2024, these commitments averaged $7.22 per square foot per lease year, ranging quarterly from $6.93 to $7.34. In 2023, these commitments averaged $5.69 per square foot per lease year, ranging quarterly from $4.44 to $7.11.
Leasing Commissions
In certain markets, the Company may pay leasing commissions to real estate brokers who represent either the Company or prospective tenants, with commissions generally equating to 4% to 6% of the gross lease value for new leases and 2% to 4% of the gross lease value for renewal leases. In addition, the Company pays its leasing employees incentive compensation when leases are executed that meet certain leasing thresholds. External leasing commissions are amortized to property operating expense, and internal leasing costs are amortized to general and administrative expense in the Company's Consolidated Statements of Operations.
In 2025, the Company paid leasing commissions of approximately $54.8 million, or $1.67 per square foot. In 2024, the Company paid leasing commissions of approximately $47.1 million, or $1.37 per square foot. In 2023, the Company paid leasing commissions of approximately $35.9 million, or $0.93 per square foot. As a percentage of total cash net operating income, leasing commissions paid for 2025, 2024 and 2023 were 7.5%, 6.0% and 4.3%, respectively. The amount of leasing commissions amortized over the term of the applicable leases totaled $25.9 million, $21.2 million and $13.8 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Rent Abatements
Rent abatements, which generally take the form of deferred rent, are sometimes used to help induce a potential tenant to lease space in the Company's properties. Such abatements, when made, are amortized by the Company on a straight-line basis against rental income over the lease term. Rent abatements for 2025 totaled approximately $20.9 million, or $0.72 per square foot. Rent abatements for 2024 totaled approximately $16.0 million, or $0.46 per square foot. Rent abatements for 2023 totaled approximately $14.3 million, or $0.37 per square foot.
Single-Tenant Leases
As of December 31, 2025, the Company had a total of 102 single-tenant buildings, with a weighted average lease term of 11.6 years and a weighted average remaining lease term of 5.7 years.
Ten single-tenant buildings have leases that expire in 2026. Four of the buildings have been renewed. The Company is in negotiations with tenants in six of these buildings and expects the leases to be renewed or the building to be backfilled.
Operating Leases
As of December 31, 2025, the Company was obligated to make rental payments under operating lease agreements consisting primarily of ground leases related to 108 real estate investments, excluding those ground leases the Company has prepaid. As of December 31, 2025, the Company had 168 properties totaling 12.4 million square feet that were held under ground leases with a remaining weighted average term of 60.6 years, including renewal options. These ground leases typically have initial terms of 40 to 99 years with expiration dates through 2119.
Purchase Options
The Company had approximately $55.7 million in real estate properties as of December 31, 2025, that were subject to exercisable purchase options. The Company has approximately $1.0 billion in real estate properties that are subject to purchase options that will become exercisable after 2025. Additional information about the amount and basis for determination of the purchase price is detailed in the table below (dollars in thousands):
| YEAR EXERCISABLE | NUMBER OF PROPERTIES | GROSS REAL ESTATE INVESTMENT AS OF DECEMBER 31, 2025 1 | |
|---|---|---|---|
| Current 2 | 3 | $ | 55,723 |
| 2026 | 4 | 132,946 | |
| 2027 | 5 | 142,340 | |
| 2028 | 5 | 135,641 | |
| 2029 | 3 | 82,272 | |
| 2030 | — | — | |
| 2031 | 4 | 111,905 | |
| 2032 | 2 | 24,789 | |
| 2033 | — | — | |
| 2034 | — | — | |
| 2035 | 2 | 43,660 | |
| 2036 and thereafter 3 | 9 | 348,870 | |
| Total | 37 | $ | 1,078,146 |
1Purchase option prices are based on fair market value components that are determined by an appraisal process, except for two properties totaling $62.9 million with stated prices or prices based on fixed capitalization rates.
2These purchase options have been exercisable for an average of 21.5 years.
3Includes two medical outpatient properties that are recorded in the line item Investment in financing receivable, net on the Company's Consolidated Balance Sheet.
Debt Management
The Company maintains a flexible capital structure that allows it to fund new investments and operate its existing portfolio. The Company has approximately $28.9 million of mortgage notes payable, maturing in 2026, most of which were assumed when the Company acquired properties. The Company will repay mortgages with cash on hand or borrowings under the Unsecured Credit Facility. The Company had $1.3 billion of outstanding debt that matures in 2026 and 2027. See additional information in “Liquidity and Capital Resources - Financing Activities” above.
Impact of Inflation
The Company is subject to the risk of inflation as most of its revenues are derived from long-term leases. Most of the Company's leases provide for fixed increases in base rents or increases based on the Consumer Price Index and require the tenant to pay all or some portion of increases in operating expenses. The Company believes that these provisions mitigate the impact of inflation. However, there can be no assurance that the Company's ability to increase rents or recover operating expenses will keep pace with inflation. The Company's leases have a weighted average lease term remaining of approximately 4.4 years. As of December 31, 2025, 96% of the Company's leases provide for fixed base rent increases and 4% provide for Consumer Price Index-based rent increases.
New Accounting Pronouncements
See Note 1 to the Consolidated Financial Statements for information on new accounting standards including both standards that the Company adopted during the year and those that have not yet been adopted. The Company continues to evaluate the impact of the new standards that have not yet been adopted.
Results of Operations
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
The Company’s consolidated results of operations for 2025 compared to 2024 were impacted by developments, dispositions, gain on sales and impairment charges recorded on real estate properties, and capital markets transactions.
Revenues
Rental income decreased $94.7 million, or 7.7%, as a result of the following:
•Dispositions in 2024 and 2025 resulted in a decrease of $130.8 million.
•Leasing activity, including contractual rent increases, resulted in an increase of $28.3 million.
•Developments completed in 2024 and 2025 resulted in an increase of $7.8 million.
Interest income decreased $2.1 million, or 12.9%, for the year ended December 31, 2025, compared to the prior year primarily as a result of the repayment and maturity of note receivables, partially offset by the addition of new mortgages receivables.
Other operating income increased $9.1 million, or 47.3%, for the year ended December 31, 2025, compared to the prior year primarily as a result of income from management fees related to unconsolidated joint ventures and managed properties.
Expenses
Property operating expenses decreased $24.4 million, or 5.1%, from the prior year primarily as a result of the following activity:
•Dispositions in 2024 and 2025 resulted in a decrease of $45.5 million.
•Developments completed in 2024 and 2025 resulted in an increase of $2.0 million.
•Increases in portfolio operating expenses as follows:
◦Administrative, leasing commissions, and other legal expenses of $7.3 million;
◦Compensation expense of $4.8 million;
◦Utilities expense of $3.6 million;
◦Maintenance and repair expense of $2.1 million; and
◦Janitorial expense of $1.3 million.
General and administrative expenses decreased approximately $10.6 million, or 12.7%, from the prior year primarily as a result of the following activity:
•Decrease in payroll and payroll related expenses of approximately $4.1 million.
•Decrease in restructuring and severance-related charges of $3.5 million.
•Decrease in Director fees and non-cash incentive compensation of $1.3 million.
•Other decreases include legal and other administrative costs of $3.0 million.
•Increase in cash incentive compensation expense of $0.9 million.
•Increase in non-cash incentive compensation of $0.4 million.
Depreciation and amortization expense decreased $111.2 million, or 16.5%, from the prior year primarily as a result of the following activity:
•Dispositions in 2024 and 2025 resulted in a decrease of $81.1 million.
•Assets that became fully depreciated resulted in a decrease of $60.1 million.
•Developments completed in 2024 and 2025 resulted in an increase of $2.2 million.
•Various building and tenant improvement expenditures resulted in an increase of $27.8 million.
Other Income (Expense)
Other income (expense), as an expense decreased $355.0 million, or 50.9%, from the prior year mainly due to the following activity:
Gain on Sales of Real Estate Properties
Gains on the sale of real estate properties and other assets for the years ended December 31, 2025 and 2024 totaled $235.4 million and $109.8 million, respectively.
Interest Expense
Interest expense decreased $33.4 million for the year ended December 31, 2025 compared to the prior year. The components of interest expense are as follows:
| CHANGE | |||||||
|---|---|---|---|---|---|---|---|
| Dollars in thousands | 2025 | 2024 | % | ||||
| Contractual interest | $ | 169,014 | $ | 196,392 | (13.9) | % | |
| Net discount/premium accretion | 43,163 | 41,050 | 2,113 | 5.1 | % | ||
| Debt issuance costs amortization | 4,760 | 4,769 | (9) | (0.2) | % | ||
| Amortization of interest rate swap settlement | 53 | 168 | (115) | (68.5) | % | ||
| Amortization of treasury hedge settlement | 427 | 427 | — | — | % | ||
| Fair value derivative | — | 187 | (187) | (100.0) | % | ||
| Interest cost capitalization | (12,123) | (4,295) | (7,828) | 182.3 | % | ||
| Interest on lease liabilities | 3,695 | 3,727 | (32) | (0.9) | % | ||
| Total interest expense | $ | 208,989 | $ | 242,425 | (13.8) | % |
All values are in US Dollars.
Contractual interest decreased $27.4 million, or 13.9%, primarily as a result of the following activity:
•The unsecured term loans accounted for a decrease of approximately $18.5 million.
•The unsecured term loan repayments accounted for a decrease of approximately $15.1 million.
•The Unsecured Credit Facility accounted for an increase of approximately $3.0 million as a result of an increased weighted average balance outstanding.
•Active interest rate swaps accounted for an increase of $9.7 million, while expired interest rate swaps accounted for an increase of $0.3 million.
•Mortgage note repayments, net of assumptions, accounted for a decrease of approximately $0.3 million.
•The repayment of the Senior Note due 2025 accounted for a decrease of $6.5 million.
Debt extinguishment costs
During the year ended December 31, 2025, the Company recorded approximately $0.5 million in debt extinguishment costs related to the Unsecured Credit Facility, which replaced the Company's prior credit facility.
Impairment of Real Estate Assets and Credit Loss Reserves
During the year ended December 31, 2025, the Company recognized impairments totaling $361.1 million related to completed or planned dispositions, changes in holding periods or changes in property use. In addition, the Company recorded $1.6 million in credit loss reserves relating to a mortgage notes receivable and a $1.9 million fair value adjustment for an equity investment in other assets.
Impairment of real estate assets in 2024 totaling approximately $249.9 million related to completed or planned dispositions, changes in holding periods or changes in property use. Additionally, the Company recorded $59.5 million of credit loss reserves on its mortgage note receivables and a $4.1 million fair value adjustment for an equity investment in other assets.
Impairment of Goodwill
There was no goodwill impairment in 2025. During the first quarter of 2024, the Company determined that the carrying value of its single reporting unit exceeded estimated fair value and therefore recorded a $250.5 million full impairment of its goodwill, which is recorded as a non-cash charge in “Impairment of goodwill” in the consolidated
statements of operations. See Note 1 to the Consolidated Financial Statements accompanying this report for more details.
Equity income (loss) from unconsolidated joint ventures
The Company recognized its proportionate share of losses from its unconsolidated joint ventures. The losses are primarily attributable to non-cash depreciation expense. See Note 4 for more details regarding the Company's unconsolidated joint ventures.
Interest and other income (expense)
During 2025, the Company recorded approximately $4.3 million from Accumulated other comprehensive income ("AOCI") to other expense related to ineffectiveness and subsequent termination of eight interest rate swaps. See Note 10 to the Consolidated Financial Statements in this report for more details regarding the Company's derivative accounting.
In addition, the Company recognized income of approximately $0.8 million primarily due to a Federal ERC program (Employee Retention Credit) providing cash payment for employee retention during the COVID-19 pandemic totaling $4.4 million, net of a charge for a merger-related transfer tax charge that was finalized during the fourth quarter of 2025 totaling $3.6 million.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
The Company's discussion regarding the comparison of the year ended December 31, 2024 compared to the year ended December 31, 2023 was previously disclosed beginning on page 38 of the Company's Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 19, 2025, and is incorporated herein by reference.
Non-GAAP Financial Measures and Key Performance Indicators
Management considers certain non-GAAP financial measures and key performance indicators to be useful supplemental measures of the Company's operating performance. A non-GAAP financial measure is generally defined as one that purports to measure financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable measure determined in accordance with GAAP. Set forth below are descriptions of the non-GAAP financial measures management considers relevant to the Company's business and useful to investors, as well as reconciliations of these measures to the most directly comparable GAAP financial measures.
The non-GAAP financial measures and key performance indicators presented herein are not necessarily identical to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. These measures should not be considered as alternatives to net income, as indicators of the Company's financial performance, or as alternatives to cash flow from operating activities as measures of the Company's liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of the Company's needs. Management believes that in order to facilitate a clear understanding of the Company's historical consolidated operating results, these measures should be examined in conjunction with net income and cash flows from operations as presented in the Consolidated Financial Statements and other financial data included elsewhere in this Annual Report on Form 10-K.
Funds from Operations ("FFO"), Normalized FFO and Funds Available for Distribution ("FAD")
FFO and FFO per share are operating performance measures adopted by the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as the most commonly accepted and reported measure of a REIT’s operating performance equal to “net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization, impairment, and after adjustments for unconsolidated partnerships and joint ventures.”
In addition to FFO, the Company presents Normalized FFO and FAD. Normalized FFO is presented by adding to FFO acquisition-related costs, acceleration of debt issuance costs, debt extinguishment costs and other Company-defined normalizing items to evaluate operating performance. FAD is presented by adding to Normalized FFO non-real estate depreciation and amortization, deferred financing fees amortization, share-based compensation expense and provision for bad debts, net; and subtracting straight-line rent income, net of expense, and maintenance capital
expenditures, including second generation tenant improvements, capital expenditures and leasing commissions paid. The Company's definition of these terms may not be comparable to that of other real estate companies as they may have different methodologies for computing these amounts. FFO, Normalized FFO, and FAD should not be considered as an alternative to net income as an indicator of the Company's financial performance or to cash flow from operating activities as an indicator of the Company's liquidity. FFO, Normalized FFO, and FAD should be reviewed in connection with GAAP financial measures.
Management believes FFO, Normalized FFO, FFO per share, Normalized FFO per share and FAD ("Non-GAAP Measures") provide an understanding of the operating performance of the Company’s properties without giving effect to certain significant non-cash items, primarily gains on sales of real estate, impairments and depreciation and amortization expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. The Company believes that by excluding the effect of depreciation, amortization, impairments and gains or losses from sales of real estate, all of which are based on historical costs, and which may be of limited relevance in evaluating current performance, Non-GAAP Measures can facilitate comparisons of operating performance between periods. The Company reports Non-GAAP Measures because these measures are observed by management to also be the predominant measures used by the REIT industry and by industry analysts to evaluate REITs. For these reasons, management deems it appropriate to disclose and discuss these Non-GAAP Measures. However, none of these measures represent cash generated from operating activities determined in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs. Further, these measures should not be considered as an alternative to net income as an indicator of the Company’s operating performance or as an alternative to cash flow from operating activities as a measure of liquidity.
The table below reconciles net income attributable to common stockholders to FFO, Normalized FFO and FAD attributable to common stockholders for the years ended December 31, 2025, 2024, and 2023.
| YEAR ENDED DECEMBER 31, | ||||||
|---|---|---|---|---|---|---|
| Amounts in thousands, except per share data | 2025 | 2024 | 2023 | |||
| Net loss attributable to common stockholders | $ | (246,071) | $ | (654,485) | $ | (278,261) |
| Net loss attributable to common stockholders per diluted share 1 | $ | (0.71) | $ | (1.81) | $ | (0.74) |
| Gain on sales of real estate assets | (235,389) | (104,684) | (77,546) | |||
| Impairment of real estate properties | 361,090 | 249,909 | 149,717 | |||
| Real estate depreciation and amortization | 586,146 | 690,988 | 738,526 | |||
| Non-controlling loss from operating partnership units | (3,497) | (9,149) | (3,426) | |||
| Unconsolidated JV depreciation, amortization and impairment | 27,769 | 20,678 | 18,116 | |||
| FFO adjustments | $ | 736,119 | $ | 847,742 | $ | 825,387 |
| FFO adjustments per common share - diluted | $ | 2.08 | $ | 2.29 | $ | 2.15 |
| FFO attributable to common stockholders | $ | 490,048 | $ | 193,257 | $ | 547,126 |
| FFO attributable to common stockholders per common share - diluted | $ | 1.38 | $ | 0.52 | $ | 1.43 |
| Transaction costs | 2,029 | 3,122 | 2,026 | |||
| Merger-related costs | — | — | (1,952) | |||
| Lease intangible amortization | (1,350) | (2,054) | 860 | |||
| Non-routine tax and legal matters | (118) | 1,077 | 175 | |||
| Debt financing costs 2 | 5,107 | 237 | (62) | |||
| Restructuring and severance-related charges | 26,318 | 29,852 | 1,445 | |||
| Credit losses and gains (losses) on other assets, net 3 | 3,508 | 59,707 | 8,599 | |||
| Impairment of goodwill | — | 250,530 | — | |||
| Merger-related fair value of debt instruments | 42,593 | 40,667 | 42,885 | |||
| Unconsolidated JV normalizing items 4 | 811 | 390 | 389 | |||
| Normalized FFO adjustments | $ | 78,898 | $ | 383,528 | $ | 54,365 |
| Normalized FFO adjustments per common share - diluted | $ | 0.22 | $ | 1.04 | $ | 0.14 |
| Normalized FFO attributable to common stockholders | $ | 568,946 | $ | 576,785 | $ | 601,491 |
| Normalized FFO attributable to common stockholders per common share - diluted | $ | 1.61 | $ | 1.56 | $ | 1.57 |
| Non-real estate depreciation and other amortization, net | 6,114 | 1,478 | 2,566 | |||
| Non-cash interest amortization, net 5 | 5,126 | 5,101 | 4,968 | |||
| Rent reserves, net | 952 | 714 | 3,163 | |||
| Straight-line rent, net | (29,392) | (27,254) | (32,592) | |||
| Stock-based compensation | 13,609 | 14,036 | 13,791 | |||
| Unconsolidated JV non-cash items 6 | (1,420) | (923) | (1,034) | |||
| Normalized FFO adjusted for non-cash items | $ | 563,935 | $ | 569,937 | $ | 592,353 |
| 2nd generation tenant improvements | (47,438) | (69,445) | (66,081) | |||
| Leasing commissions paid | (31,664) | (47,450) | (36,391) | |||
| Building capital | (36,531) | (33,934) | (49,343) | |||
| FAD | $ | 448,302 | $ | 419,108 | $ | 440,538 |
| FFO weighted average common shares outstanding - diluted 7 | 354,454 | 369,767 | 383,381 |
1Potential common shares are not included in diluted earnings per share when a loss exists as the effect would be antidilutive.
2For the year ended December 31, 2025, includes loss on debt extinguishment, loss on derivatives, and legal fees related to the Unsecured Credit Facility, which replaced the Company's prior credit facility.
3For the year ended December 31, 2025, includes $1.6 million credit loss reserves on two mortgage note receivables and a $1.9 million loss on other assets included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations. For the year ended December 31, 2024, includes $59.6 million in credit loss reserves, net of recoveries on four notes receivable included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations, $5.1 million gain on sale of other assets included in "Gains on sales of real estate and other assets" on the Statement of Operations, $4.1 million loss on other asset included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations, and a $1.1 million straight line rent reversal included in "Rental income" on the Statement of Operations. For the year ended December 31, 2023, includes a $5.2 million credit allowance for a mezzanine loan included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations and $3.4 million reserve included in “Rental Income” on the Statement of Operations for previously deferred rent and straight line rent for three skilled nursing facilities.
4Includes the Company's proportionate share of normalizing items related to unconsolidated joint ventures such as lease intangibles and transaction costs.
5Includes the amortization of deferred financing costs, discounts and premiums, and non-cash financing receivable amortization.
6Includes the Company's proportionate share of straight-line rent, net related to unconsolidated joint ventures.
7The Company utilizes the treasury stock method which includes the dilutive effect of nonvested share-based awards outstanding of 426,098, 556,201 and 397,168 for the years ended December 31, 2025, 2024, and 2023, respectively.
Cash Net Operating Income ("NOI") and Same Store Cash NOI
Cash NOI and Same Store Cash NOI are key performance indicators. Management considers these to be supplemental measures that allow investors, analysts and Company management to measure unlevered property-level operating results. The Company defines Cash NOI as rental income, interest from financing receivables less property operating expenses. Cash NOI excludes non-cash items such as above and below market lease intangibles, straight-line rent, lease inducements, financing receivable amortization, tenant improvement amortization and leasing commission amortization. The Company also excludes cash lease termination fees. Cash NOI is historical and not necessarily indicative of future results.
Same Store Cash NOI compares Cash NOI for stabilized properties. Stabilized properties are properties that have been included in operations for the duration of the year-over-year comparison period presented. Accordingly, stabilized properties exclude properties that were recently acquired or disposed of, properties classified as held for sale or intended for sale, properties undergoing redevelopment, and newly-redeveloped or developed properties.
The Company utilizes the redevelopment classification for properties where management has approved a change in strategic direction for such properties through the application of additional resources including an amount of capital expenditures significantly above routine maintenance and capital improvement expenditures.
Any recently acquired property will be included in the same store pool once the Company has owned the property for eight full quarters. Newly-developed or redeveloped properties will be included in the same store pool eight full quarters after substantial completion.
The following table reflects the Company's Same Store Cash NOI for the years ended December 31, 2025 and 2024.
| NUMBER OF PROPERTIES | GROSS INVESTMENT<br>at December 31, 2025 | SAME STORE CASH NOI for the year ended December 31 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Dollars in thousands | 2025 | 2024 | |||||||
| Same store properties | 473 | $ | 9,172,301 | $ | 601,925 | $ | 573,072 | ||
| Joint venture same store properties | 28 | $ | 313,552 | $ | 16,622 | $ | 17,117 |
The following tables reconcile net loss to Same Store NOI and the same store property metrics to the total owned real estate portfolio for the years ended December 31, 2025 and 2024:
Reconciliation of Same Store Cash NOI
| YEAR ENDED DECEMBER 31, | ||||
|---|---|---|---|---|
| Dollars in thousands | 2025 | 2024 | ||
| Net loss | $ | (249,485) | $ | (663,904) |
| Other expense | 342,392 | 697,381 | ||
| General and administrative expense | 72,569 | 83,121 | ||
| Depreciation and amortization expense | 563,966 | 675,152 | ||
| Other expenses 1 | 32,210 | 23,446 | ||
| Straight-line rent, net | (23,752) | (26,115) | ||
| Joint venture properties | 33,503 | 24,219 | ||
| Other revenue 2 | (39,792) | (31,967) | ||
| Cash NOI | 731,611 | 781,333 | ||
| Cash NOI not included in same store | (113,064) | (191,144) | ||
| Same store cash NOI | 618,547 | 590,189 | ||
| Same store joint venture properties | (16,622) | (17,117) | ||
| Same store cash NOI (excluding JVs) | $ | 601,925 | $ | 573,072 |
1.Includes transaction costs, rent reserves, above and below market ground lease intangible amortization, leasing commission amortization, non-cash adjustments for financing receivables, and ground lease straight-line rent.
2.Includes management fee income, interest, above and below market lease intangible amortization, lease inducement amortization, lease termination fees, deferred financing cost amortization and principal related to investment in financing receivable, and tenant improvement overage amortization.
Reconciliation of Same Store Properties
| AS OF DECEMBER 31, 2025 | ||||||
|---|---|---|---|---|---|---|
| Dollars and square feet in thousands | PROPERTY COUNT | GROSS INVESTMENT 1 | SQUARE <br>FEET | OCCUPANCY | ||
| Same store properties | 473 | $ | 9,172,301 | 26,303 | 92.2 | % |
| Joint venture same store properties | 28 | 313,552 | 1,532 | 90.1 | % | |
| Wholly owned and joint venture acquisitions | 30 | 183,779 | 2,193 | 95.3 | % | |
| Wholly owned and joint venture re/development completions | 4 | 139,279 | 332 | 60.8 | % | |
| Wholly owned and joint venture re/developments | 27 | 796,431 | 2,371 | 70.0 | % | |
| Total | 562 | $ | 10,605,342 | 32,731 | 90.4 | % |
| Joint venture properties | 63 | 608,367 | 4,113 | 89.7 | % | |
| Total wholly-owned real estate properties | 499 | $ | 9,996,975 | 28,618 | 90.5 | % |
1Excludes assets held for sale, construction in progress, land held for development, corporate property and financing lease right-of-use assets unrelated to an imputed lease arrangement as a result of a sale leaseback transaction.
Application of Critical Accounting Policies to Accounting Estimates
The Company’s Consolidated Financial Statements are prepared in accordance with GAAP and the rules and regulations of the SEC. In preparing the Consolidated Financial Statements, management is required to exercise judgment and make assumptions that impact the carrying amount of assets and liabilities and the reported amounts of revenues and expenses reflected in the Consolidated Financial Statements.
Management routinely evaluates the estimates and assumptions used in the preparation of its Consolidated Financial Statements. These regular evaluations consider historical experience and other reasonable factors and use the seasoned judgment of management personnel. Management has reviewed the Company’s critical accounting policies with the Audit Committee of the Board of Directors.
Management believes the following paragraphs in this section describe the application of critical accounting policies and estimates by management to arrive at the critical accounting estimates reflected in the Consolidated Financial Statements. The Company’s accounting policies are more fully discussed in Note 1 to the Consolidated Financial Statements.
Principles of Consolidation
The Company’s Consolidated Financial Statements include the accounts of the Company, its wholly owned subsidiaries, joint ventures, and partnerships where the Company controls the operating activities. All material intercompany accounts and transactions have been eliminated.
Capitalization of Costs
GAAP generally allows for the capitalization of various types of costs. The rules and regulations on capitalizing costs and the subsequent depreciation or amortization of those costs versus expensing them in the period incurred vary depending on the type of costs and the reason for capitalizing the costs.
Direct costs of development and redevelopment projects generally include construction costs, professional services such as architectural and legal costs, travel expenses, and land acquisition costs as well as other types of fees and expenses. These costs are capitalized as part of the basis of an asset to which such costs relate. Indirect costs include capitalized interest and overhead costs. Indirect costs are capitalized during construction and on the unoccupied space in a property for up to one year after the space is ready for its intended use. Capitalized interest is calculated using the weighted average interest rate of the Company's unsecured debt or the interest rate on project specific debt, if applicable. The Company’s overhead costs are based on overhead load factors that are charged to a project based on direct time incurred. The Company computes the overhead load factors annually for its employees who are involved in the projects. The overhead load factors are computed to absorb that portion of indirect employee costs (payroll and benefits, training, and similar costs) that are attributable to the productive time the employee incurs working directly on projects. The employees who work on these projects maintain and report their hours, by project. Employee costs that are administrative, such as vacation time, sick time, or general and administrative time, are expensed in the period incurred.
Acquisition-related costs include finder’s fees, advisory, legal, accounting, valuation, other professional or consulting fees, and certain general and administrative costs. Acquisition-related costs are expensed in the period incurred for acquisitions accounted for as a business combination under Accounting Standards Codification Topic 805, Business Combinations. These costs associated with asset acquisitions are capitalized in accordance with GAAP.
Management’s judgment is also exercised in determining whether costs that have been previously capitalized to a project should be reserved for or written off if or when the project is abandoned or circumstances otherwise change that would call the project’s viability into question. The Company follows a standard and consistently applied policy of classifying pursuit activity as well as reserving for these types of costs based on their classification.
The Company classifies its pursuit projects into two categories relating to development. The first category includes pursuits of developments that have a remote chance of producing new business. Costs for these projects are expensed in the period incurred. The second category includes those pursuits of developments that are either probable or highly probable to result in a project or contract. Since the Company believes it is probable that these pursuits will result in a project or contract, it capitalizes these costs in full and records no reserve.
Each quarter, all capitalized pursuit costs are again reviewed for viability or a change in classification, and a management decision is made as to whether any additional reserve is deemed necessary. If necessary and considered appropriate, management would record an additional reserve at that time. Capitalized pursuit costs, net of the reserve, are carried in other assets in the Company’s Consolidated Balance Sheets, and any reserve recorded is charged to acquisition and pursuit costs on the Consolidated Statements of Operations. All pursuit costs will ultimately be written off to expense or capitalized as part of the constructed real estate asset.
As of December 31, 2025 and 2024, the Company's Consolidated Balance Sheets include capitalized pursuit costs relating to potential developments totaling $5.0 million and $4.9 million, respectively. The Company expensed costs related to the pursuit of acquisitions and dispositions totaling $1.0 million, $1.7 million and $0.8 million for the years ended December 31, 2025, 2024 and 2023, respectively. In addition, the Company expensed costs related to the pursuit of developments totaling $1.0 million, $1.1 million, and $0.8 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Valuation of Long-Lived Assets Held and Used, Unconsolidated Joint Ventures, Intangible Assets and Goodwill
Long-Lived Assets Held and Used
The Company assesses the potential for impairment of identifiable intangible assets and long-lived assets, primarily real estate properties, whenever events occur or a change in circumstances indicates that the carrying value might not be recoverable. Important factors that could cause management to review for impairment 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 useful 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 of those assets subject to purchase options and those impacted by casualties, such as tornadoes and hurricanes.
In addition, at least annually, the Company assesses whether there were indicators, including property operating performance, changes in anticipated holding period and general market conditions, that the value of the Company’s investments, including unconsolidated joint ventures, may have been impaired. The investment’s value would have been impaired only if management’s estimate of the fair value of the Company’s investment was less than its carrying value. To the extent impairment had occurred, a loss would have been recognized for the excess of its carrying amount over its fair value.
The Company may, from time to time, be approached by a third party with an interest in purchasing one or more of the Company's operating real estate properties that were otherwise not for sale. Alternatively, the Company may explore disposing of an operating real estate property but without specific intent to sell the property and without the property meeting the criteria to be classified as held for sale (see discussion below). In such cases, the Company and a potential buyer typically negotiate a letter of intent followed by a purchase and sale agreement that includes a due diligence timeline for completion of customary due diligence procedures. Anytime throughout this period the transaction could be terminated by the parties. The Company views the execution of a purchase and sale agreement as a circumstance that warrants an impairment assessment and must include its best estimates of the impact of a potential sale in the recoverability test discussed in more detail below.
A property value is considered impaired only if management's estimate of current and projected (undiscounted and unleveraged) operating cash flows of the property is less than the net carrying value of the property. These estimates of future cash flows include only those that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the property based on its estimated remaining useful life. These estimates, including the useful life determination which can be affected by any potential sale of the property, are based on management's assumptions about its use of the property. Therefore, significant judgment is involved in estimating the current and projected cash flows.
When the Company executes a purchase and sale agreement for a held and used property, the Company performs the cash flow estimation described above. This assessment gives consideration to all available information, including an assessment of the likelihood the potential transaction will be consummated under the terms and conditions set forth in the purchase and sale agreement. Management will re-evaluate the recoverability of the property if and when significant changes occur as the transaction proceeds toward closing. Normally sale transactions will close within 15 to 30 days after the due diligence period expires. Upon expiration of the due diligence period, management will again re-evaluate the recoverability of the property, updating its assessment based on the status of the potential sale.
Whenever management determines that the carrying value of an asset that has been tested may not be recoverable, then an impairment charge would be recognized to the extent the current carrying value exceeds the current fair value of the asset. Significant judgment is also involved in making a determination of the estimated fair value of the asset.
The Company also performs an annual goodwill impairment review. The Company's reviews are typically performed as of December 31 of each year. In 2025, a review was not necessary as the Company's goodwill asset had a zero balance. During the first quarter of 2024, the Company experienced a sustained decline in the price per share of its common stock, which was identified as an indicator of goodwill impairment. As a result, a goodwill evaluation was performed. As of the measurement date, the Company's current operations are carried out through a single reporting unit that had a carrying value of approximately $12.0 billion. The Company determined that the carrying value
exceeded estimated fair value and therefore an impairment of goodwill was recorded. The Company recorded a $250.5 million full impairment of its goodwill, which is recorded as a non-cash charge in “Impairment of goodwill” in the Consolidated Statement of Operations for the year ended December 31, 2024.
Long-Lived Assets to be Disposed of by Planned Sale
From time-to-time management affirmatively decides to sell certain real estate properties under a plan of sale. The Company reclassifies the property or disposal group as held for sale when all the following criteria for a qualifying plan of sale are met:
•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.
A property or disposal group classified as held for sale is initially measured at the lower of its carrying amount or fair value less estimated costs to sell. An impairment charge is recognized for any initial adjustment of the property's or disposal group's carrying amount to its fair value less estimated costs to sell in the period the held for sale criteria are met. The fair value less estimated costs to sell the property (disposal group) should be assessed each reporting period it remains classified as held for sale. Depreciation ceases as long as a property is classified as held for sale.
If circumstances arise that were previously considered unlikely and a subsequent decision not to sell a property classified as held for sale were to occur, the property is reclassified as held and used. The property is measured at the time of reclassification at the lower of its (a) carrying amount before it was classified as held for sale, adjusted for any depreciation expense or impairment losses that would have been recognized had the property been continuously classified as held and used or (b) fair value at the date of the subsequent decision not to sell. The effect of any required adjustment is reflected in income from continuing operations at the date of the decision not to sell.
The Company recorded impairment charges totaling $361.1 million and $249.9 million, respectively, for the years ended December 31, 2025 and December 31, 2024, related to real estate properties sold and properties with changes in the expected holding periods.
Valuation of Asset Acquisitions
As described in more detail in Note 1 to the Consolidated Financial Statements, when the Company acquires real estate properties with in-place leases, the cost of the acquisition must be allocated between the acquired tangible real estate assets “as if vacant” and any acquired intangible assets. Such intangible assets could include above- (or below-) market in-place leases and at-market in-place leases, which could include the opportunity costs associated with absorption period rentals, direct costs associated with obtaining new leases such as tenant improvements, leasing commissions and customer relationship assets. With regard to the elements of estimating the “as if vacant” values of the property and the intangible assets, including the absorption period, occupancy increases during the absorption period, tenant improvement amounts, and leasing commission percentages, the Company uses the same absorption period and occupancy assumptions for similar property types. Any remaining excess purchase price is then allocated to the tangible and intangible assets based on their relative fair values. The identifiable tangible and intangible assets are then subject to depreciation and amortization.
Depreciation of Real Estate Assets and Amortization of Related Intangible Assets
As of December 31, 2025, the Company had gross investments of approximately $9.1 billion in depreciable real estate assets and related intangible assets. When real estate assets and related intangible assets are acquired or placed in service, they must be depreciated or amortized. Management’s judgment involves determining which depreciation method to use, estimating the economic life of the building and improvement components of real estate assets, and estimating the value of intangible assets acquired when real estate assets are purchased that have in-place leases.
With respect to the building components, there are several depreciation methods available under GAAP. Some methods record relatively more depreciation expense on an asset in the early years of the asset’s economic life, and relatively less depreciation expense on the asset in the later years of its economic life. The straight-line method of depreciating real estate assets is the method the Company follows because, in the opinion of management, it is the method that most accurately and consistently allocates the cost of the asset over its estimated life. The Company assigns a useful life to its owned properties based on many factors, including the age and condition of the property when acquired.
Revenue Recognition
The Company's primary source of revenue is rental income derived from non-cancelable leases. When a lease is executed, the terms and conditions of the lease are assessed to determine the appropriate accounting classification. As of December 31, 2025, with the exception of one finance lease, all of the Company's leases, where the Company is the lessor, are classified as operating leases. Operating leases are recognized on the straight-line basis over the term of the related lease, including periods where a tenant is provided a rent concession. Operating expense recoveries, which include reimbursements for building specific operating expenses, are recognized as revenue in the period in which the related expenses are incurred. The Company generally expects that collectability is probable at lease commencement. If the assessment of collectability 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 it is determined not to be probable of collection. In addition to the lease-specific collectability 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 also recognizes certain revenue based on the guidance in Topic 606 and is based on the five-step model to account for revenue arising from contracts with customers. The Company's primary source of revenue associated with Topic 606 relates to parking revenue and management fee income.
Derivative Instruments
Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the derivative instrument with the recognition of the changes in the fair-value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transaction in a cash flow hedge. The accounting for a derivative requires that the Company make judgments in determining the nature of the derivatives and their effectiveness, including ones regarding the likelihood that a forecasted transaction will take place. These judgments could materially affect our consolidated financial statements.
The Company may enter into a derivative instrument to manage interest rate risk from time to time. When a derivative instrument is initiated, the Company will assess its intended use of the derivative instrument and may elect a hedging relationship and apply hedge accounting. As required by the accounting literature, the Company will formally document the hedging relationship for all derivative instruments prior to or contemporaneous with entering into the derivative instrument.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk in the form of changing interest rates on its debt. Management uses regular monitoring of market conditions and analysis techniques to manage this risk.
As of December 31, 2025, $3.3 billion of the Company’s $3.9 billion carrying value of debt bore interest at fixed rates, excluding the interest rate swaps.
The following table provides information regarding the sensitivity of certain of the Company’s financial instruments, as described above, to market conditions and changes resulting from changes in interest rates. For purposes of this analysis, sensitivity is demonstrated based on hypothetical 10% changes in the underlying market interest rates.
| IMPACT ON EARNINGS AND CASH FLOW | ||||||||
|---|---|---|---|---|---|---|---|---|
| Dollars in thousands | OUTSTANDING <br>PRINCIPAL BALANCE <br>as of Dec. 31, 2025 | CALCULATED <br>ANNUAL INTEREST | ASSUMING 10% <br>INCREASE <br>in market interest rates | ASSUMING 10% <br>DECREASE<br>in market interest rates | ||||
| Variable Rate Debt | ||||||||
| Unsecured Credit Facility | $ | 120,000 | $ | 4,524 | $ | (452) | $ | 452 |
| Unsecured Term Loan due 2027 | 200,000 | 7,745 | (775) | 775 | ||||
| Unsecured Term Loan due 2028 | 300,000 | 11,618 | (1,162) | 1,162 | ||||
| $ | 620,000 | $ | 23,887 | $ | (2,389) | $ | 2,389 |
The Company has outstanding interest rate swaps to help mitigate its risk related to variable rate debt. As of December 31, 2025, the Company had $500.0 million of interest rate swaps at a weighted average rate of 3.65%. See Note 10 to the Consolidated Financial Statements for more information regarding the Company's interest rate swaps.
| FAIR VALUE | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Dollars in thousands | CARRYING VALUE<br><br>as of Dec. 31, 2025 1 | DEC. 31, 2025 1 | ASSUMING 10% <br>INCREASE <br>in market interest rates | ASSUMING 10% <br>DECREASE<br>in market interest rates | DEC. 31, 2024 | |||||
| Fixed Rate Debt | ||||||||||
| Senior Notes due 2025 | $ | — | $ | — | $ | — | $ | — | $ | 250,605 |
| Senior Notes due 2026 | 595,026 | 606,164 | 605,811 | 606,493 | 595,052 | |||||
| Senior Notes due 2027 | 492,693 | 506,079 | 505,358 | 506,790 | 494,909 | |||||
| Senior Notes due 2028 | 298,653 | 300,739 | 300,160 | 301,308 | 290,349 | |||||
| Senior Notes due 2030 | 597,188 | 624,006 | 621,642 | 626,339 | 590,648 | |||||
| Senior Notes due 2030 | 297,610 | 274,335 | 273,254 | 275,389 | 258,718 | |||||
| Senior Notes due 2031 | 296,866 | 261,216 | 259,950 | 262,451 | 244,270 | |||||
| Senior Notes due 2031 | 685,873 | 707,455 | 704,018 | 710,818 | 659,624 | |||||
| Mortgage Notes Payable | 28,824 | 28,766 | 28,751 | 28,782 | 44,251 | |||||
| Total Fixed Rate Debt | $ | 3,292,733 | $ | 3,308,760 | $ | 3,298,944 | $ | 3,318,370 | $ | 3,428,426 |
1Balances 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.
Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
Stockholders and Board of Directors
Healthcare Realty Trust Incorporated
Nashville, Tennessee
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Healthcare Realty Trust Incorporated (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, equity and redeemable non-controlling interests, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedules (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated February 13, 2026, expressed an unqualified opinion thereon.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Real Estate Impairments - Fair Value Measurements
The Company recorded total real estate investments, net, of approximately $7.9 billion as of December 31, 2025. As described in Notes 1 and 6 to the consolidated financial statements, the Company assesses the potential for impairment of 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. A real estate property is considered no longer recoverable when undiscounted cash flows expected to be generated by the property are less than its carrying value. When management determines that the carrying value of a real estate property may not be fully recoverable, management measures and records an impairment charge based on the estimated fair value of the property or the estimated fair value less costs to sell the property using certain assumptions that may include, among others, revenue growth rates, discount rates, and terminal capitalization rates. For the year ended December 31,
2025, the Company recorded impairment charges totaling $361.1 million related to completed or planned dispositions, changes in holding periods, or other events or changes in circumstances.
We identified the fair value measurement of certain impaired real estate properties as a critical audit matter. Judgments are required to be made by management when measuring the fair value of these real estate properties, including the assumptions of the revenue growth rates, discount rates, and terminal capitalization rates used in the discounted cash flow model. Auditing these elements involved especially challenging auditor judgment due to the nature and extent of audit effort required to address this matter, including the extent of specialized skills or knowledge needed.
The primary procedures we performed to address the critical audit matter included utilizing valuation professionals with specialized skill or knowledge, who assisted in:
•Assessing the reasonableness of revenue growth rates for certain real estate properties by comparing to independent market data.
•Assessing the reasonableness of discount rates and terminal capitalization rates for certain real estate properties by comparing to comparable market transaction details.
/s/ BDO USA, P.C.
We have served as the Company's auditor since 2005.
Nashville, Tennessee
February 13, 2026
Healthcare Realty Trust Incorporated
Consolidated Balance Sheets
Amounts in thousands, except per share data
| ASSETS | ||||
|---|---|---|---|---|
| DECEMBER 31, | ||||
| 2025 | 2024 | |||
| Real estate properties | ||||
| Land | $ | 1,060,254 | $ | 1,143,468 |
| Buildings and improvements | 8,514,165 | 9,707,066 | ||
| Lease intangibles | 455,254 | 664,867 | ||
| Personal property | 7,056 | 9,909 | ||
| Investment in financing receivables, net | 123,249 | 123,671 | ||
| Financing lease right-of-use assets | 75,083 | 77,343 | ||
| Construction in progress | — | 31,978 | ||
| Land held for development | 57,535 | 52,408 | ||
| Total real estate investments | 10,292,596 | 11,810,710 | ||
| Less accumulated depreciation | (2,397,795) | (2,483,656) | ||
| Total real estate investments, net | 7,894,801 | 9,327,054 | ||
| Cash and cash equivalents | 26,172 | 68,916 | ||
| Assets held for sale, net | 143,580 | 12,897 | ||
| Operating lease right-of-use assets | 204,906 | 261,438 | ||
| Investments in unconsolidated joint ventures | 453,607 | 473,122 | ||
| Other assets, net | 487,795 | 507,496 | ||
| Total assets | $ | 9,210,861 | $ | 10,650,923 |
| LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, AND STOCKHOLDERS' EQUITY | ||||
| DECEMBER 31, | ||||
| 2025 | 2024 | |||
| Liabilities | ||||
| Notes and bonds payable | $ | 3,911,423 | $ | 4,662,771 |
| Accounts payable and accrued liabilities | 211,071 | 222,510 | ||
| Liabilities of properties held for sale | 15,160 | 1,283 | ||
| Operating lease liabilities | 162,922 | 224,499 | ||
| Financing lease liabilities | 73,130 | 72,346 | ||
| Other liabilities | 160,530 | 161,640 | ||
| Total liabilities | 4,534,236 | 5,345,049 | ||
| Commitments and contingencies (See Footnote 14) | ||||
| Redeemable non-controlling interests | 3,252 | 4,778 | ||
| Stockholders' equity | ||||
| Preferred stock, $0.01 par value; 200,000 shares authorized; none issued and outstanding | — | — | ||
| Common stock, $0.01 par value; 1,000,000 shares authorized; 351,603 and 350,532 shares issued and outstanding at December 31, 2025 and 2024, respectively. | 3,516 | 3,505 | ||
| Additional paid-in capital | 9,137,257 | 9,118,229 | ||
| Accumulated other comprehensive loss | (5,174) | (1,168) | ||
| Cumulative net income attributable to common stockholders | 128,238 | 374,309 | ||
| Cumulative dividends | (4,646,944) | (4,260,014) | ||
| Total stockholders’ equity | 4,616,893 | 5,234,861 | ||
| Non-controlling interest | 56,480 | 66,235 | ||
| Total equity | 4,673,373 | 5,301,096 | ||
| Total liabilities, redeemable non-controlling interests, and stockholders' equity | $ | 9,210,861 | $ | 10,650,923 |
See accompanying notes.
Healthcare Realty Trust Incorporated
Consolidated Statements of Operations
Amounts in thousands, except per share data
| YEAR ENDED DECEMBER 31, | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | 2023 | ||||
| Revenues | ||||||
| Rental income | $ | 1,138,056 | $ | 1,232,776 | $ | 1,309,184 |
| Interest income | 14,275 | 16,383 | 17,134 | |||
| Other operating | 28,215 | 19,157 | 17,451 | |||
| 1,180,546 | 1,268,316 | 1,343,769 | ||||
| Expenses | ||||||
| Property operating | 449,075 | 473,444 | 500,437 | |||
| General and administrative | 72,569 | 83,121 | 58,405 | |||
| Transaction costs | 2,029 | 3,122 | 2,026 | |||
| Merger-related costs | — | — | (1,952) | |||
| Depreciation and amortization | 563,966 | 675,152 | 730,709 | |||
| 1,087,639 | 1,234,839 | 1,289,625 | ||||
| Other income (expense) | ||||||
| Gain on sales of real estate properties and other assets | 235,389 | 109,753 | 77,546 | |||
| Interest expense | (208,989) | (242,425) | (258,584) | |||
| (Loss) gain on extinguishment of debt | (451) | (237) | 62 | |||
| Impairment of real estate properties and credit loss reserves | (364,598) | (313,547) | (154,912) | |||
| Impairment of goodwill | — | (250,530) | — | |||
| Equity loss from unconsolidated joint ventures | (188) | (135) | (1,682) | |||
| Interest and other (expense) income, net | (3,555) | (260) | 1,343 | |||
| (342,392) | (697,381) | (336,227) | ||||
| Net loss | (249,485) | (663,904) | (282,083) | |||
| Net loss attributable to non-controlling interests | 3,414 | 9,419 | 3,822 | |||
| Net loss attributable to common stockholders | $ | (246,071) | $ | (654,485) | $ | (278,261) |
| Basic earnings per common share | $ | (0.71) | $ | (1.81) | $ | (0.74) |
| Diluted earnings per common share | $ | (0.71) | $ | (1.81) | $ | (0.74) |
| Weighted average common shares outstanding - basic | 349,798 | 365,553 | 378,928 | |||
| Weighted average common shares outstanding - diluted | 349,798 | 365,553 | 378,928 |
See accompanying notes.
Healthcare Realty Trust Incorporated
Consolidated Statements of Comprehensive Loss
Amounts in thousands
| YEAR ENDED DECEMBER 31, | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | 2023 | ||||
| Net loss | $ | (249,485) | $ | (663,904) | $ | (282,083) |
| Other comprehensive loss | ||||||
| Interest rate swaps | ||||||
| Reclassification adjustment for losses (gains) included in net income (interest expense) | 1,043 | (13,137) | (14,488) | |||
| (Losses) gains arising during the period on interest rate swaps | (2,531) | 22,809 | 1,463 | |||
| (Losses) gains on settlement of interest rate swaps arising during the period | (2,571) | — | — | |||
| (4,059) | 9,672 | (13,025) | ||||
| Comprehensive loss | (253,544) | (654,232) | (295,108) | |||
| Less: Comprehensive loss attributable to non-controlling interests | 3,551 | 9,337 | 3,966 | |||
| Comprehensive loss attributable to common stockholders | $ | (249,993) | $ | (644,895) | $ | (291,142) |
See accompanying notes.
Healthcare Realty Trust Incorporated
Consolidated Statements of Equity and Redeemable Non-Controlling Interests
Amounts in thousands, except per share data
| Common <br>Stock | Additional <br>Paid-In <br>Capital | Accumulated <br>Other <br>Comprehensive <br>Income (Loss) | Cumulative <br>Net Income | Cumulative <br>Dividends | Total <br>Stockholders’ <br>Equity | Non-<br>controlling <br>Interests | Total <br>Equity | Redeemable Non-controlling Interests | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at December 31, 2022 | $ | 3,806 | $ | 9,587,637 | $ | 2,140 | $ | 1,307,055 | $ | (3,329,562) | $ | 7,571,076 | $ | 108,742 | $ | 7,679,818 | $ | 2,014 |
| Issuance of stock, net of costs | — | 130 | — | — | — | 130 | — | 130 | — | |||||||||
| Common stock redemption | (1) | (2,234) | — | — | — | (2,235) | — | (2,235) | — | |||||||||
| Conversion of OP Units to common stock | 2 | 2,774 | — | — | — | 2,776 | (2,776) | — | — | |||||||||
| Share-based compensation | 3 | 14,285 | — | — | — | 14,288 | — | 14,288 | — | |||||||||
| Net loss | — | — | — | (278,261) | — | (278,261) | (3,822) | (282,083) | — | |||||||||
| Reclassification adjustments for gains included in net income (interest expense) | — | — | (14,315) | — | — | (14,315) | (173) | (14,488) | — | |||||||||
| Gain on interest rate swaps and treasury locks | — | — | 1,434 | — | — | 1,434 | 29 | 1,463 | — | |||||||||
| Contributions from redeemable non-controlling interests | — | — | — | — | — | — | — | — | 1,889 | |||||||||
| Adjustments to redemption value of redeemable non-controlling interests | — | — | — | — | — | — | — | — | (35) | |||||||||
| Dividends to common stockholders<br><br>($1.24 per share) | — | — | — | — | (472,231) | (472,231) | (5,748) | (477,979) | — | |||||||||
| Balance at December 31, 2023 | 3,810 | 9,602,592 | (10,741) | 1,028,794 | (3,801,793) | 6,822,662 | 96,252 | 6,918,914 | 3,868 | |||||||||
| Issuance of stock, net of costs | — | 104 | — | — | — | 104 | — | 104 | — | |||||||||
| Common stock redemption | (5) | (8,692) | — | — | — | (8,697) | — | (8,697) | — | |||||||||
| Conversion of OP Units to common stock | 3 | 3,409 | — | — | — | 3,412 | (3,412) | — | — | |||||||||
| Share-based compensation | 5 | 31,819 | — | — | — | 31,824 | — | 31,824 | — | |||||||||
| Common stock repurchases | (308) | (510,115) | — | — | — | (510,423) | — | (510,423) | — | |||||||||
| Redemption of non-controlling interest | — | — | — | — | — | — | (11,930) | (11,930) | — | |||||||||
| Net (loss) gain | — | — | — | (654,485) | — | (654,485) | (9,436) | (663,921) | 17 | |||||||||
| Reclassification adjustments for gains included in net income (interest expense) | — | — | (12,954) | — | — | (12,954) | (183) | (13,137) | — | |||||||||
| Gains arising during the period on interest rate swaps | — | — | 22,527 | — | — | 22,527 | 282 | 22,809 | — | |||||||||
| Contributions from redeemable non-controlling interests | — | — | — | — | — | — | — | — | 13 | |||||||||
| Adjustments to redemption value of redeemable non-controlling interests | — | (888) | — | — | — | (888) | — | (888) | 880 | |||||||||
| Dividends to common stockholders<br><br>($1.24 per share) | — | — | — | — | (458,221) | (458,221) | (5,338) | (463,559) | — | |||||||||
| Balance at December 31, 2024 | 3,505 | 9,118,229 | (1,168) | 374,309 | (4,260,014) | 5,234,861 | 66,235 | 5,301,096 | 4,778 | |||||||||
| Common stock redemption | (2) | (4,066) | — | — | — | (4,068) | — | (4,068) | — | |||||||||
| Conversion of OP Units to common stock | 2 | 332 | — | — | — | 334 | (334) | — | — | |||||||||
| Share-based compensation | 11 | 22,376 | — | — | — | 22,387 | — | 22,387 | — | |||||||||
| Redemption of non-controlling interest | — | — | — | — | — | — | (834) | (834) | — | |||||||||
| Net (loss) gain | — | — | — | (246,071) | — | (246,071) | (3,498) | (249,569) | 84 | |||||||||
| Reclassification adjustments for losses included in net income (interest expense) | — | — | 1,029 | — | — | 1,029 | 14 | 1,043 | — | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Losses arising during the period on interest rate swaps | — | — | (5,035) | — | — | (5,035) | (67) | (5,102) | — | |||||||||
| Adjustments to redemption value of redeemable non-controlling interests | — | 386 | — | — | — | 386 | — | 386 | (1,610) | |||||||||
| Dividends to common stockholders and distributions to non-controlling interest holders ($1.10 per share) | — | — | — | — | (386,930) | (386,930) | (5,036) | (391,966) | — | |||||||||
| Balance at December 31, 2025 | $ | 3,516 | $ | 9,137,257 | $ | (5,174) | $ | 128,238 | $ | (4,646,944) | $ | 4,616,893 | $ | 56,480 | $ | 4,673,373 | $ | 3,252 |
See accompanying notes.
Healthcare Realty Trust Incorporated
Consolidated Statements of Cash Flows
Amounts in thousands
| YEAR ENDED DECEMBER 31, | ||||||
|---|---|---|---|---|---|---|
| OPERATING ACTIVITIES | 2025 | 2024 | 2023 | |||
| Net loss | $ | (249,485) | $ | (663,904) | $ | (282,083) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 563,966 | 675,152 | 730,709 | |||
| Other amortization | 47,201 | 47,165 | 45,181 | |||
| Share-based compensation | 22,387 | 31,824 | 14,288 | |||
| Amortization of straight-line rent receivable (lessor) | (27,106) | (29,996) | (38,676) | |||
| Amortization of straight-line rent on operating leases (lessee) | 3,354 | 3,880 | 6,084 | |||
| Loss on derivatives | 4,301 | — | — | |||
| Gain on sales of real estate properties and other assets | (235,389) | (109,753) | (77,546) | |||
| Loss (gain) on extinguishment of debt | 451 | 237 | (62) | |||
| Impairment of real estate properties and credit loss reserves | 364,598 | 313,547 | 154,912 | |||
| Impairment of goodwill | — | 250,530 | — | |||
| Equity loss from unconsolidated joint ventures | 188 | 135 | 1,682 | |||
| Distributions from unconsolidated joint ventures | 21,515 | 10,498 | 17,880 | |||
| Non-cash interest from financing and real estate notes receivable | (1,082) | (1,833) | (1,654) | |||
| Changes in operating assets and liabilities: | ||||||
| Other assets, including right-of-use-assets | (31,463) | (34,547) | (55,946) | |||
| Accounts payable and accrued liabilities | (25,513) | 5,199 | (18,775) | |||
| Other liabilities | (828) | 3,483 | 3,826 | |||
| Net cash provided by operating activities | 457,095 | 501,617 | 499,820 | |||
| INVESTING ACTIVITIES | ||||||
| Acquisitions of real estate | (100) | — | (49,171) | |||
| Development of real estate | (12,622) | (70,338) | (41,058) | |||
| Additional long-lived assets | (330,153) | (248,981) | (231,026) | |||
| Funding of mortgages and notes receivable | (8,500) | (5,505) | (26,803) | |||
| Investments in unconsolidated joint ventures | (2,188) | — | (3,824) | |||
| Investment in financing receivable | (502) | (511) | (1,801) | |||
| Proceeds from sales of real estate properties and additional long-lived assets | 1,004,622 | 1,221,083 | 701,434 | |||
| Contributions from redeemable non-controlling interests | — | 13 | 1,389 | |||
| Proceeds from insurance recovery | 2,000 | — | — | |||
| Proceeds from notes receivable repayments | 58,271 | 5,162 | — | |||
| Net cash provided by investing activities | 710,828 | 900,923 | 349,140 | |||
| FINANCING ACTIVITIES | ||||||
| Borrowings on unsecured credit facility | 1,449,000 | 1,289,000 | 694,000 | |||
| Repayments on unsecured credit facility | (1,329,000) | (1,289,000) | (1,079,000) | |||
| Repayment on term loans | (650,140) | (350,000) | — | |||
| Repayments of notes and bonds payable | (266,375) | (25,473) | (19,143) | |||
| Dividends paid | (386,919) | (457,853) | (472,242) | |||
| Net proceeds from issuance of common stock | — | 104 | 130 | |||
| Common stock redemptions | (4,007) | (8,881) | (2,298) | |||
| Common stock repurchases | — | (510,423) | — | |||
| Distributions to non-controlling interest holders | (4,927) | (5,473) | (5,123) | |||
| Redemption of non-controlling interest | (834) | (744) | — | |||
| Settlement of interest rate swaps | (4,329) | — | — | |||
| Debt issuance and assumption costs | (13,083) | (563) | (529) | |||
| Payments made on finance leases | (53) | (17) | (17) | |||
| Net cash used in financing activities | (1,210,667) | (1,359,323) | (884,222) | |||
| (Decrease) increase in cash and cash equivalents | (42,744) | 43,217 | (35,262) | |||
| Cash and cash equivalents cash at beginning of period | 68,916 | 25,699 | 60,961 | |||
| Cash and cash equivalents at end of period | $ | 26,172 | $ | 68,916 | $ | 25,699 |
See accompanying notes.
Healthcare Realty Trust Incorporated
Consolidated Statements of Cash Flows, cont.
Amounts in thousands
| YEAR ENDED DECEMBER 31, | ||||||
|---|---|---|---|---|---|---|
| Supplemental Cash Flow Information | 2025 | 2024 | 2023 | |||
| Interest paid | $ | 176,550 | $ | 202,503 | $ | 216,033 |
| Mortgage notes payable assumed in connection with acquisition of real estate, net | $ | — | $ | — | $ | 5,284 |
| Invoices accrued for construction, tenant improvements and other capitalized costs | $ | 55,757 | $ | 39,969 | $ | 31,469 |
| Capitalized interest | $ | 12,123 | $ | 4,295 | $ | 2,961 |
| Mortgage notes receivable taken in connection with sale of real estate | $ | 11,800 | $ | 9,630 | $ | 51,000 |
| Non-controlling interest in sale of real estate | $ | — | $ | 11,185 | $ | — |
| Contribution of real estate properties into unconsolidated joint venture | $ | — | $ | 172,666 | $ | — |
See accompanying notes.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- Summary of Significant Accounting Policies
Business Overview
Healthcare Realty Trust Incorporated 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. As of December 31, 2025, the Company had gross investments of approximately $10.3 billion in 502 consolidated real estate properties, developments, redevelopments, financing receivables, financing lease right-of-use assets, land held for development and corporate property, excluding held for sale assets. In addition, as of December 31, 2025, the Company had a weighted average ownership interest of approximately 30% in 61 real estate properties, excluding held for sale assets, held in unconsolidated joint ventures. See Note 4 below for more details regarding the Company's unconsolidated joint ventures. The Company’s consolidated real estate properties are located in 27 states and total approximately 29.0 million square feet. The Company provided leasing and property management services to 93% of its portfolio nationwide as of December 31, 2025.
The Company is structured as an umbrella partnership REIT under which substantially all of its business is conducted through the operating partnership, Healthcare Realty Holdings, L.P. (the “OP”), the day-to-day management of which is exclusively controlled by the Company. As of December 31, 2025, the Company owned 98.6% of the issued and outstanding units of the OP (“OP Units”), with other investors owning the remaining 1.4% of OP Units.
Any references to square footage, property count or occupancy percentage, and any amounts derived from these values in these notes to the Company's Consolidated Financial Statements, are outside the scope of our independent registered public accounting firm’s audit.
Principles of Consolidation
The Company’s Consolidated Financial Statements include the accounts of the Company, its wholly owned subsidiaries, and joint ventures and partnerships where the Company controls the operating activities. GAAP requires the Company to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). ASC Topic 810 broadly defines a VIE as an entity in which either (i) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. The Company identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity. The Company consolidates its investment in a VIE when it determines that it is the VIE’s primary beneficiary, with any minority interests reflected as non-controlling interests or redeemable non-controlling interests in the accompanying Consolidated Financial Statements.
The Company may change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk, the disposition of all or a portion of an interest held by the primary beneficiary, or changes in facts and circumstances that impact the power to direct activities of the VIE that most significantly impacts economic performance. The Company performs this analysis on an ongoing basis.
For property holding entities not determined to be VIEs, the Company consolidates such entities in which it owns 100% of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest. All intercompany balances and transactions are eliminated in consolidation. For entities in which the Company owns less than 100% of the equity interest, the Company consolidates the entity if it has the direct or indirect ability to control the entities’ activities based upon the terms of the respective entities’ ownership agreements.
The OP is 98.6% owned by the Company. Holders of operating partnership units (“OP Units”) are considered to be non-controlling interest holders in the OP and their ownership interests are reflected as equity on the accompanying Consolidated Balance Sheets. Further, a portion of the earnings and losses of the OP are allocated to non-controlling
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
interest holders based on their respective ownership percentages. Upon conversion of OP Units to common stock, any difference between the fair value of the common stock issued and the carrying value of the OP Units converted to common stock is recorded as a component of equity. As of December 31, 2025, there were approximately 4.9 million, or 1.4% of OP Units issued and outstanding held by non-controlling interest holders. Additionally, the Company is the primary beneficiary of this VIE. Accordingly, the Company consolidates its interests in the OP.
As of December 31, 2025 and December 31, 2024, the Company had two and three, respectively, consolidated VIEs in addition to the OP, consisting of joint venture investments in which the Company is the primary beneficiary of the VIE based on the combination of operational control and the rights to receive residual returns or the obligation to absorb losses arising from the joint ventures. Accordingly, such joint ventures have been consolidated, and the table below summarizes the balance sheets of consolidated VIEs, excluding the OP, in the aggregate as of December 31, 2025 and 2024:
| DECEMBER 31, | ||||
|---|---|---|---|---|
| (dollars in thousands) | 2025 | 2024 | ||
| Assets: | ||||
| Total real estate investments, net | $ | 103,092 | $ | 103,933 |
| Cash and cash equivalents | 3,599 | 159 | ||
| Other assets, net | 7,083 | 4,053 | ||
| Total assets | $ | 113,774 | $ | 108,145 |
| Liabilities: | ||||
| Notes and bonds payable | $ | 73,468 | $ | 60,170 |
| Accounts payable and accrued liabilities | 1,678 | 2,786 | ||
| Other liabilities | 651 | 45 | ||
| Total liabilities | $ | 75,797 | $ | 63,001 |
As of December 31, 2025, the Company had three unconsolidated VIEs consisting of two notes receivables and one joint venture. The Company does not have the power or economic interests to direct the activities of these VIEs on a stand-alone basis, and therefore it was determined that the Company was not the primary beneficiary. As a result, the Company accounts for the two notes receivables at amortized cost and the joint venture arrangement under the equity method. See below for additional information regarding the Company's unconsolidated VIEs:
| (dollars in thousands) ORIGINATION DATE | LOCATION | SOURCE | CARRYING AMOUNT | MAXIMUM EXPOSURE TO LOSS | ||
|---|---|---|---|---|---|---|
| 2022 | Texas 1 | Equity method | $ | 51,816 | $ | 51,816 |
| 2024 | Texas 2 | Note receivable | $ | 9,691 | $ | 16,729 |
| 2024 | Texas 2 | Note receivable | $ | 1 | $ | 4,500 |
1Includes investments in seven properties.
2The Company provided seller financing and entered into a mortgage loan and a mezzanine loan in connection with a property disposition.
As of December 31, 2025, the Company's unconsolidated joint venture arrangements were accounted for using the equity method of accounting as the Company exercised significant influence over but did not control these entities. See Note 4 for more details regarding the Company's unconsolidated joint ventures.
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 and assumptions. Management makes significant estimates regarding revenue recognition, purchase price
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
allocations to record investments in real estate, impairments, collectability of tenant receivables, and fair value measurements, as applicable.
Reclassifications
Certain reclassifications have been made on the Company's Consolidated Statement of Cash Flows to conform to the current year presentation. Previously, the Company's borrowings and repayments on the Company's unsecured credit facility were presented in a net line in the financing activities on the Company's Consolidated Statement of Cash Flows. These amounts are now presented as separate lines in the financing activities on the Company's Consolidated Statement of Cash Flows.
Segment Reporting
The Company owns, leases, acquires, manages, finances, develops and redevelops outpatient and other healthcare-related properties. The Company is managed as one operating segment, rather than multiple operating segments, for internal reporting purposes and for internal decision-making and discloses its operating results in a single reportable segment. The Company's chief operating decision makers (“CODM”), represented by the Company's Chief Executive Officer, the Chief Financial Officer and the Chief Operating Officer, review financial information and assess the consolidated operations of the Company in order to make strategic decisions such as allocation of capital expenditures and other significant expenses. See Note 17 for additional information on segment reporting.
Real Estate Properties
Real estate properties are recorded at cost if acquired in a transaction that is an asset acquisition or at fair value if acquired in a transaction that is a business combination under ASC 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.
During 2025 and 2024, the Company eliminated against accumulated depreciation approximately $220.8 million and $112.3 million, respectively, of fully amortized real estate intangibles that were initially recorded as a component of certain real estate acquisitions. During 2025 and 2024, approximately $2.5 million and $3.0 million of fully depreciated tenant and capital improvements that were no longer in service were eliminated against accumulated depreciation.
Depreciation expense of real estate properties for the three years ended December 31, 2025, 2024 and 2023 was $451.9 million, $507.1 million and $518.6 million, respectively. Depreciation and amortization of real estate assets in place as of December 31, 2025, is provided for on a straight-line basis over the asset’s estimated useful life:
| Land improvements | 2.0 to 39.0 years |
|---|---|
| Buildings and improvements | 3.3 to 49.0 years |
| Lease intangibles (including ground lease intangibles) | 1.0 to 99.0 years |
| Personal property | 3.0 to 10.0 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 space in a property for up to one year after the space is ready for it intended use, at which time the capitalization of interest must cease.
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 useful life has ended; the expiration of a significant portion of leases in a property; or significant negative economic trends or negative industry trends for the Company or its tenants. In addition, the Company reviews for possible impairment, those assets subject to purchase options
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
and those impacted by casualty losses, such as tornadoes and hurricanes. A property value is considered impaired only if management's estimate of current and projected (undiscounted and unleveraged) operating cash flows of the property is less than the net carrying value of the property. These estimates of future cash flows include only those that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the property. These estimates, including the useful life determination which can be affected by any potential sale of the property, are based on management's assumptions about its use of the property. Therefore, significant judgment is involved in estimating the current and projected cash flows. 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. See Note 6 for additional information on impairment.
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 cost and allocated based on 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 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 Company would also evaluate any renewal options associated with that lease to determine if the intangible should include those periods. 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 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.
These assets (above- or below-market lease, tenant improvement, 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 relative 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-place leases. The at-market, in-place lease intangibles are amortized to depreciation and amortization expense over the weighted average remaining term of the leases, and customer relationship assets are amortized to depreciation and 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
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, which are binding agreements, are categorized as level one inputs.
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 from accumulated other comprehensive income (loss) into earnings once the underlying hedged transaction is recognized in earnings. As of December 31, 2025 and 2024, the Company had $5.2 million and $1.2 million recorded in accumulated other comprehensive loss, respectively, related to forward starting interest rate swaps entered into and settled during 2015 and 2020 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 years ended December 31, 2025 or 2024.
Cash and cash equivalents are held in bank accounts and overnight investments. The Company maintains its bank deposits with large financial institutions in amounts that often exceed federally-insured limits. The Company has not experienced any losses in such accounts.
Intangible Assets
Identifiable intangible assets of the Company are comprised of 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.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
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 or other stock-based awards, including units in the OP, pursuant to the Company's Amended and Restated 2006 Incentive Plan, dated April 29, 2021 (the "Incentive Plan"). The Company recognizes share-based payments to employees and directors in the Consolidated Statements of Operations on a straight-line basis over the requisite service period based on the fair value of the award on the measurement date. The Company recognizes the impact of forfeitures as they occur. See Note 12 for details on the Company’s share-based awards.
Accumulated Other Comprehensive (Loss) Income
Certain items must be included in comprehensive (loss) income, including items such as foreign currency translation adjustments, minimum pension liability adjustments, changes in the fair value of derivative instruments and unrealized gains or losses on available-for-sale securities. As of December 31, 2025, the Company’s accumulated other comprehensive (loss) income 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 forward starting swaps and treasury hedges. 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.
Revenue that is accounted for under Topic 606 is segregated on the Company’s Consolidated Statements of Operations in the Other operating line item. This line item includes parking income, management fee income and other miscellaneous income. Below is a detail of the amounts by category:
| YEAR ENDED DECEMBER 31, | ||||||
|---|---|---|---|---|---|---|
| in thousands | 2025 | 2024 | 2023 | |||
| Type of Revenue | ||||||
| Parking income | $ | 8,604 | $ | 9,329 | $ | 9,903 |
| Management fee income/other 1 | 19,611 | 9,828 | 7,548 | |||
| $ | 28,215 | $ | 19,157 | $ | 17,451 |
1 Includes the recovery of certain expenses under the financing receivable as outlined in the management agreement.
The Company’s two major types of revenue that are accounted for under Topic 606 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. In most cases, the revenue is due and payable on a monthly basis. The Company had a receivable balance of $2.4 million, $1.9 million and $1.9 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Management fee income includes property management services provided to third parties and certain of the properties in the Company's unconsolidated joint ventures and is 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. Management fee income also includes amounts paid to the Company for its asset management services for certain of its unconsolidated joint ventures. Internal management fee income, where the Company manages its owned properties, is eliminated in consolidation.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
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 Operations. For lessors, the 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.
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 lessor practical expedient allowing the Company to not separate these components when certain conditions are met. The combined component is accounted for under Accounting Standards Codification, Topic 842.
The components of rental income are as follows:
| YEAR ENDED DECEMBER 31, | ||||||
|---|---|---|---|---|---|---|
| in thousands | 2025 | 2024 | 2023 | |||
| Property operating income | $ | 1,110,950 | $ | 1,202,780 | $ | 1,270,508 |
| Straight-line rent | 27,106 | 29,996 | 38,676 | |||
| Rental income | $ | 1,138,056 | $ | 1,232,776 | $ | 1,309,184 |
Federal Income Taxes
The Company believes it has qualified to be taxed as a REIT and intends at all times to continue 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. As a REIT, the Company is generally not subject to federal income tax on net income it distributes to its stockholders, but may be subject to certain state and local taxes and fees. See Note 15 for further discussion.
If the Company fails to qualify as a REIT in any taxable year, it will be subject to U.S. federal income taxes on its taxable income and will not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for four years following the year during which the qualification is lost unless the IRS grants it relief under certain statutory provisions. Such an event could have a material adverse effect on its business, financial condition, results of operations and net cash available for dividend distributions to its stockholders.
The Company conducts substantially all of its operations through the OP. As a partnership, the OP generally is not liable for federal income taxes. The income and loss from the operations of the OP is included in the tax returns of its partners, including the Company, who are responsible for reporting their allocable share of the partnership income and loss. Accordingly, no provision for income tax has been made in the accompanying consolidated financial statements.
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, 2025.
Federal tax returns for the years 2022, 2023, 2024 and 2025 are currently subject to examination by taxing authorities.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
State Income Taxes
The Company must pay certain state income taxes and the provisions for such taxes are generally included in general and administrative expenses on the Company’s Consolidated Statements of Operations. 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 rental income in the Company’s Consolidated Statements of Operations.
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 Operations. See Note 5 for more details 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.
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. Additionally, net income (loss) allocated to OP units has been included in the numerator and common stock related to redeemable OP units have been included in the denominator for the purpose of computing diluted earnings per share. See Note 13 for the calculations of earnings per share.
Redeemable Non-Controlling Interests
The Company accounts for redeemable equity securities in accordance with Accounting Standards Update ("ASU") 2009-04 Liabilities (Topic 480): Accounting for Redeemable Equity Instruments, which requires that equity securities contingently redeemable at the option of the holder, not solely within our control, be classified outside permanent stockholders’ equity. The Company classifies redeemable equity securities as redeemable non-controlling interests in the accompanying Consolidated Balance Sheet. Accordingly, the Company records the carrying amount at the greater of the initial carrying amount (increased or decreased for the non-controlling interest’s share of net income or loss and distributions) or the redemption value. The Company measures the redemption value and records an adjustment to the carrying value of the equity securities as a component of redeemable non-controlling interest. As of December 31, 2025, the Company had redeemable non-controlling interests of $3.3 million.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
Investments in Leases - Financing Receivables, Net
In accordance with ASC Topic 842: Leases, for transactions in which the Company enters into a contract to acquire an asset and leases it back to the seller (i.e., a sale-leaseback transaction), control of the asset is not considered to have transferred when the seller-lessee has a purchase option. As a result, the Company does not recognize the underlying real estate asset but instead recognizes a financial asset in accordance with ASC Topic 310: Receivables. See below for additional information regarding the Company's financing receivables as of December 31, 2025 and 2024.
| (dollars in thousands) ORIGINATION DATE | LOCATION | INTEREST RATE | CARRYING VALUE as of DECEMBER 31, 2025 | CARRYING VALUE as of DECEMBER 31, 2024 | ||
|---|---|---|---|---|---|---|
| May 2021 | Poway, CA | 5.62% | $ | 117,260 | $ | 116,304 |
| November 2021 | Columbus, OH | 6.48% | 5,989 | 7,367 | ||
| $ | 123,249 | $ | 123,671 |
Real Estate Notes Receivable
Real estate notes receivable consists of mezzanine and other real estate loans, which are generally collateralized by a pledge of the borrower’s ownership interest in the respective real estate owner, a mortgage or deed of trust, and/or corporate guarantees. Real estate notes receivable are intended to be held-to-maturity and are recorded at amortized cost, net of unamortized loan origination costs and fees and allowance for credit losses. As of December 31, 2025, real estate notes receivable, net, which are included in Other assets, net on the Company's Consolidated Balance Sheets totaled $87.0 million.
| (dollars in thousands) | ORIGINATION | MATURITY | STATED INTEREST RATE | MAXIMUM LOAN COMMITMENT | OUTSTANDING as of <br>DECEMBER 31, 2025 | INTEREST RECEIVABLE (OTHER ASSETS) | ALLOWANCE FOR CREDIT LOSSES | FAIR VALUE DISCOUNT AND FEES | CARRYING VALUE as of DECEMBER 31, 2025 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mezzanine loans | ||||||||||||||||
| Arizona | 12/21/2023 | 12/20/2026 | 9.00 | % | $ | 6,000 | $ | 6,000 | $ | 38 | $ | — | $ | — | $ | 6,038 |
| Texas | 10/03/2024 | 10/02/2029 | 11.00 | % | 4,500 | 1 | — | — | — | 1 | ||||||
| Wisconsin 1 | 3/20/2025 | 3/19/2030 | 13.00 | % | 8,500 | 8,500 | 459 | — | — | 8,959 | ||||||
| 19,000 | 14,501 | 497 | — | — | 14,998 | |||||||||||
| Mortgage loans 2 | ||||||||||||||||
| California | 3/30/2023 | 3/29/2026 | 6.50 | % | 45,000 | 45,000 | 189 | — | — | 45,189 | ||||||
| Florida | 12/28/2023 | 12/28/2026 | 9.00 | % | 7,700 | 5,256 | — | — | — | 5,256 | ||||||
| Texas | 10/03/2024 | 10/02/2029 | 7.50 | % | 16,729 | 9,629 | 62 | — | — | 9,691 | ||||||
| Texas 3 | 3/20/2025 | 3/19/2030 | 6.75 | % | 5,400 | 5,400 | 31 | — | — | 5,431 | ||||||
| Texas 4 | 12/30/2025 | 12/31/2026 | 6.75 | % | 6,400 | 6,400 | 1 | — | — | 6,401 | ||||||
| 81,229 | 71,685 | 283 | — | — | 71,968 | |||||||||||
| $ | 100,229 | $ | 86,186 | $ | 780 | $ | — | $ | — | $ | 86,966 |
1Outstanding principal and interest due upon maturity.
2Excludes a mortgage loan where the Company received $14.9 million against a $31.2 million loan balance and fully reserved the remainder of $16.8 million. The loan was guaranteed by an individual and while the Company is seeking to collect on the guaranty, there can be no assurance of any recovery.
3In March 2025, the Company provided seller financing of $5.4 million in connection with the sale of a real estate property in Houston, TX.
4In December 2025, the Company provided seller financing of $6.4 million in connection with the sale of a real estate property in Houston, TX.
Allowance for Credit Losses
Pursuant to ASC Topic 326, Financial Instruments - Credit Losses, the Company adopted a policy to evaluate current expected credit losses at the inception of loans qualifying for treatment under ASC Topic 326. The Company utilizes a probability of default method approach for estimating current expected credit losses and evaluates the liquidity and creditworthiness of its borrowers on a quarterly basis to determine whether any updates to the future expected losses recognized upon inception are necessary. The Company’s evaluation considers industry and economic conditions, credit enhancements, liquidity, and other factors. The determination of the credit allowance is based on a quarterly evaluation of all outstanding loans, including general economic conditions and estimated collectability of loan payments. The Company evaluates the collectability of loan receivables based on a combination of credit quality
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
indicators, including, but not limited to, payment status, historical loan charge-offs, financial strength of the borrower and guarantors, and nature, extent, and value of the underlying collateral. A loan is considered to have deteriorated credit quality when, based on current information and events, it is probable that the Company will be unable to collect all amounts due as scheduled according to the contractual terms of the loan agreement. For those loans identified as having deteriorated credit quality, the amount of credit loss is determined on an individual basis. Placement on non-accrual status may be required. Consistent with this definition, all loans on non-accrual status are deemed to have deteriorated credit quality. To the extent circumstances improve and the risk of collectability is diminished, the loan may return to income accrual status. While a loan is on non-accrual status, any cash receipts are applied against the outstanding principal balance.
In 2025, the Company determined the risk of credit loss on one of its mortgage notes receivable was no longer remote and recorded a credit loss reserve of $1.6 million, which was subsequently written off. As of December 31, 2025, the Company no longer has a position in connection with this loan.
In 2024, the Company determined that an allowance of $46.8 million was needed on two mezzanine loans to cover the entire carrying amount for these loans. In fourth quarter of 2024, the underlying project was sold and the Company received $4.0 million as consideration for its mezzanine loan interests.
Additionally, in 2024 the Company determined the risk of credit loss on one of its mortgage notes receivable was no longer remote and recorded a credit loss reserve of $16.8 million, including $0.5 million of accrued interest. The Company utilized the level 1 fair value hierarchy, which included an executed purchase and sale agreement on the underlying collateral of the mortgage loan, to determine the amount of credit loss reserve.
The following table summarizes the Company's allowance for credit losses on real estate notes receivable:
| Dollars in thousands | TWELVE MONTHS ENDED DECEMBER 31, 2025 | TWELVE MONTHS ENDED DECEMBER 31, 2024 | ||
|---|---|---|---|---|
| Allowance for credit losses, beginning of period | $ | 16,801 | $ | 5,196 |
| Credit loss reserves | 1,571 | 59,563 | ||
| Recoveries | — | (4,000) | ||
| Write-off | (1,571) | (43,958) | ||
| Allowance for credit losses, end of period | $ | 16,801 | $ | 16,801 |
Interest Income
Income from Lease Finance Receivables
The Company recognized the related income from two financing receivables totaling $8.0 million, $8.4 million and $8.3 million, respectively, for the years ended December 31, 2025, 2024 and 2023, based on an imputed interest rate over the terms of the applicable lease. As a result, the interest recognized from the financing receivable in any particular period will not equal the cash payments from the lease agreement in that period.
Acquisition costs incurred in connection with entering into the financing receivable are treated as loan origination fees. These costs are classified with the financing receivable and are included in the balance of the net investment. Amortization of these amounts will be recognized as a reduction to Interest income over the life of the lease.
Income from Real Estate Notes Receivable
For the years ended December 31, 2025, 2024 and 2023, the Company recognized interest income of $6.3 million, $8.0 million and $8.8 million, respectively, related to real estate notes receivable. The Company recognizes interest income on an accrual basis unless the Company has determined that collectability of contractual amounts is not reasonably assured, at which point the note is placed on non-accrual status. The Company did not have any loans on non-accrual status as of December 31, 2025.
New Accounting Pronouncements
On November 4, 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which will require entities to provide more detailed information in the notes to the financial statements related to certain expense captions on the face of the income statement. The ASU aims to increase transparency and provide investors with more detailed information about the nature of expenses reported on the face of the income statement. The new standard does not change the requirements for the presentation of expenses on the face of the income statement.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
Under this ASU, entities are required to disaggregate, in a tabular format, expense captions presented on the face of the income statement — excluding earnings or losses from equity method investments — if they include any of the following expense categories: purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation or depletion. For any remaining items within each relevant expense caption, entities must provide a qualitative description of the nature of those expenses. The new ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact of the adoption of this ASU on its consolidated financial statements and compliance with these new disclosure requirements will begin with the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2027.
On November 25, 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements, which amends certain aspects of the hedge accounting guidance in ASC 815. The update improves the application of hedge accounting in the following areas; (i) similar risk assessment for cash flow hedges, (ii) hedging interest payments on choose-your-rate debt, (iii) cash flow hedges on non-financial forecasted transactions, (iv) net written options as hedging instruments and (v) provide for additional flexibility in measuring hedge effectiveness.
The standard is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted and applied prospectively. The Company is currently evaluating the impact of the adoption of this ASU may have on its consolidated financial statements.
On December 8, 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, to provide clarity on the current interim reporting requirements and the applicability of ASC 270. The new guidance creates a comprehensive list of interim disclosures required under GAAP and incorporates a disclosure principal that requires disclosures at interim periods when an event or change that has a material effect on an entity has occurred since the last annual reporting period. Some examples that may require disclosure under this new principal include changes in (i) accounting principles or estimates, (ii) status of long-term contracts, (iii) capitalization, such as new borrowings or financing modifications, and (iv) reporting entity resulting from business combinations or disposals.
The amendments are effective for interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted, and the guidance can be applied prospectively or retrospectively. The Company is currently evaluating the impact of the adoption of this ASU may have on its interim consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
- Property Investments
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 consolidated investments at December 31, 2025.
| Dollars in thousands | NUMBER OF PROPERTIES | LAND | BUILDINGS AND IMPROVEMENTS | LEASE INTANGIBLES | PERSONAL PROPERTY | TOTAL | ACCUMULATED DEPRECIATION | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Dallas, TX | 36 | $ | 73,030 | $ | 851,579 | $ | 24,481 | $ | 541 | $ | 949,631 | $ | (225,919) |
| Seattle, WA | 24 | 43,312 | 563,636 | 4,920 | 695 | 612,563 | (210,965) | ||||||
| Houston, TX | 24 | 57,251 | 514,114 | 35,348 | 357 | 607,070 | (120,217) | ||||||
| Charlotte, NC | 31 | 33,173 | 483,755 | 23,597 | 143 | 540,668 | (157,273) | ||||||
| Phoenix, AZ | 33 | 28,913 | 428,078 | 20,690 | 2 | 477,683 | (71,204) | ||||||
| Denver, CO | 24 | 45,638 | 395,089 | 23,035 | 616 | 464,378 | (117,569) | ||||||
| Raleigh, NC | 26 | 56,706 | 369,535 | 24,188 | 23 | 450,452 | (69,561) | ||||||
| Atlanta, GA | 23 | 36,940 | 364,406 | 15,739 | 106 | 417,191 | (98,267) | ||||||
| Nashville, TN | 10 | 21,146 | 314,583 | 7,568 | 748 | 344,045 | (128,484) | ||||||
| Boston, MA | 13 | 115,549 | 219,953 | 31,828 | 60 | 367,390 | (70,977) | ||||||
| Tampa, FL | 17 | 28,987 | 311,061 | 20,820 | 24 | 360,892 | (59,354) | ||||||
| Indianapolis, IN | 35 | 49,245 | 262,450 | 17,949 | 13 | 329,657 | (58,192) | ||||||
| Los Angeles, CA | 15 | 49,770 | 272,041 | 438 | 340 | 322,589 | (139,900) | ||||||
| Austin, TX | 11 | 21,601 | 224,897 | 10,472 | 37 | 257,007 | (49,954) | ||||||
| New York, NY | 13 | 64,542 | 169,128 | 22,505 | 4 | 256,179 | (32,180) | ||||||
| Miami, FL | 10 | 20,323 | 215,441 | 10,515 | 103 | 246,382 | (76,732) | ||||||
| Washington, DC | 9 | 5,270 | 235,670 | 3,799 | 68 | 244,807 | (71,092) | ||||||
| San Francisco, CA | 6 | 49,181 | 185,080 | 9,915 | 52 | 244,228 | (70,269) | ||||||
| Orlando, FL | 7 | 9,793 | 171,976 | 13,279 | — | 195,048 | (33,608) | ||||||
| Hartford, CT | 25 | 29,199 | 140,739 | 16,006 | 33 | 185,977 | (30,162) | ||||||
| Other (32 markets) | 107 | 203,774 | 1,790,017 | 118,162 | 191 | 2,112,144 | (490,164) | ||||||
| 499 | 1,043,343 | 8,483,228 | 455,254 | 4,156 | 9,985,981 | (2,382,043) | |||||||
| Investment in financing receivables, net | 1 | — | — | — | 123,249 | — | |||||||
| Financing lease right-of-use assets | 1 | — | — | — | — | 75,083 | — | ||||||
| Land held for development | — | — | — | — | — | 57,535 | — | ||||||
| Corporate property | 1 | 16,911 | 30,937 | — | 2,900 | 50,748 | (15,752) | ||||||
| Total real estate investments | 502 | $ | 1,060,254 | $ | 8,514,165 | $ | 455,254 | $ | 7,056 | $ | 10,292,596 | $ | (2,397,795) |
- Leases
Lessor Accounting Under ASC 842
The Company’s properties generally are leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through 2052. Some leases provide tenants with fixed rent renewal terms while others have market rent renewal terms. Some leases provide the lessee, during the term of the lease, with an option or right of first refusal to purchase the leased property. The Company’s single-tenant net leases generally require the lessee to pay minimum rent and all taxes (including property tax), insurance, maintenance and other operating costs associated with the leased property.
The Company's leases typically have escalators that are either based on a stated percentage or an index such as the CPI. In addition, most of the Company's leases include nonlease components, such as reimbursement of operating expenses as additional rent, or include the reimbursement of expected operating expenses as part of the lease payment. The Company adopted an accounting policy to combine lease and nonlease components. Rent escalators
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
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 years ended December 31, 2025, 2024 and 2023 was $1.1 billion, $1.2 billion and $1.3 billion, respectively.
Future minimum lease payments under the non-cancelable operating leases, excluding any reimbursements, as of December 31, 2025 were as follows:
| In thousands | ||
|---|---|---|
| 2026 | $ | 763,752 |
| 2027 | 681,288 | |
| 2028 | 579,445 | |
| 2029 | 485,714 | |
| 2030 | 384,798 | |
| 2031 and thereafter | 1,499,975 | |
| $ | 4,394,972 |
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, 2025, 2024 and 2023.
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 gross investments of approximately $55.7 million in three real estate properties as of December 31, 2025 that were subject to purchase options that were exercisable.
Lessee Accounting Under ASC 842
As of December 31, 2025, the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. Contracts evaluated and treated as leases are those that convey the right to control the use of identified assets for a period of time in exchange for consideration. ASC 842 requires the recording of these leases based on the aggregate future cash flows, discounted utilizing the implicit rate in the lease, or, if not readily determinable, based upon the lessee's incremental borrowing rate, to which the Company utilizes market inputs that are both similar to the Company's credit profile and corresponding term of the leases. As of December 31, 2025, the Company had 168 properties totaling 12.4 million square feet that were held under ground leases. Some of the ground leases include fixed rent renewal terms and others have market rent renewal terms. The ground leases typically have initial terms of 40 to 99 years with expiration dates through 2119. Any rental increases related to the Company’s ground leases are generally either stated or based on the CPI. The Company had 60 prepaid ground leases as of December 31, 2025. The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $1.4 million, $1.4 million and $1.3 million for the years ended December 31, 2025, 2024 and 2023, respectively.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
The Company’s future lease payments (primarily for its 108 non-prepaid ground leases) as of December 31, 2025 were as follows:
| In thousands | OPERATING | FINANCING | ||
|---|---|---|---|---|
| 2026 | $ | 9,305 | $ | 2,066 |
| 2027 | 9,438 | 2,105 | ||
| 2028 | 9,557 | 2,137 | ||
| 2029 | 9,598 | 2,169 | ||
| 2030 | 9,471 | 2,204 | ||
| 2031 and thereafter | 422,051 | 379,720 | ||
| Total undiscounted lease payments | $ | 469,420 | $ | 390,401 |
| Discount | (306,498) | (317,271) | ||
| Lease liabilities | $ | 162,922 | $ | 73,130 |
The following table provides details of the Company's total lease expense for the years ended December 31, 2025 and 2024:
| YEAR ENDED DECEMBER 31 | ||||||
|---|---|---|---|---|---|---|
| In thousands | 2025 | 2024 | ||||
| Operating lease cost | ||||||
| Operating lease expense | $ | 17,640 | $ | 18,076 | ||
| Variable lease expense | 5,268 | 4,939 | ||||
| Finance lease cost | ||||||
| Amortization of right-of-use assets | 1,480 | 1,533 | ||||
| Interest on lease liabilities | 3,695 | 3,727 | ||||
| Total lease expense | $ | 28,083 | $ | 28,275 | ||
| Other information | ||||||
| Operating cash outflows related to operating leases | $ | 16,238 | $ | 15,545 | ||
| Operating cash outflows related to financing leases | $ | 2,235 | $ | 2,107 | ||
| Financing cash outflows related to financing leases | $ | 53 | $ | 17 | ||
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | — | $ | 3,855 | ||
| Weighted-average remaining lease term (excluding renewal options) - operating leases | 40.1 | 44.1 | ||||
| Weighted-average remaining lease term (excluding renewal options) - finance leases | 56.9 | 57.8 | ||||
| Weighted-average discount rate - operating leases | 5.6 | % | 5.7 | % | ||
| Weighted-average discount rate - finance leases | 5.0 | % | 5.0 | % |
- Acquisitions, Dispositions and Mortgage Repayments
Acquisition Activity
The Company had no real estate acquisition activity for the years ended December 31, 2025 and 2024.
Unconsolidated Joint Ventures
As of December 31, 2025, the Company had a weighted average ownership interest of approximately 30% in 61 real estate properties, excluding held for sale assets, held in unconsolidated joint ventures. The Company recognizes distributions from unconsolidated joint ventures utilizing the nature of distribution approach and classifies the distributions based on the nature of the underlying activity that generated the distribution. The distributions from unconsolidated joint ventures for the years ended December 31, 2025 and 2024 were classified as operating activities.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
The Company's investment in and loss recognized for the years ended December 31, 2025 and 2024 related to its unconsolidated joint ventures accounted for under the equity method are shown in the table below:
| DECEMBER 31, | ||||
|---|---|---|---|---|
| Dollars in thousands | 2025 | 2024 | ||
| Investments in unconsolidated joint ventures, beginning of period | $ | 473,122 | $ | 311,511 |
| New investments during the period | 2,188 | 172,244 | ||
| Equity loss recognized during the period | (188) | (135) | ||
| Owner distributions | (21,515) | (10,498) | ||
| Investments in unconsolidated joint ventures, end of period | $ | 453,607 | $ | 473,122 |
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
2025 Real Estate Asset Dispositions
The following table details the Company's dispositions for the year ended December 31, 2025:
| Dollars in thousands | DATE DISPOSED | SALE PRICE | CLOSING ADJUSTMENTS | COMPANY-FINANCED MORTGAGE NOTES | NET PROCEEDS | NET REAL ESTATE INVESTMENT | OTHER | GAIN/(IMPAIR-MENT) | SQUARE FOOTAGE | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Boston, MA | 2/7/2025 | $ | 4,500 | $ | (135) | $ | — | $ | 4,365 | $ | 4,325 | $ | 15 | $ | 25 | 30,304 |
| Denver, CO 1 | 2/14/2025 | 8,600 | (2,144) | — | 6,456 | 7,948 | 113 | (1,605) | 69,715 | |||||||
| Houston, TX 2 | 3/20/2025 | 15,000 | (4,087) | (5,400) | 5,513 | 14,343 | 347 | (3,777) | 127,933 | |||||||
| Boston, MA | 4/30/2025 | 486 | (47) | — | 439 | 60 | 2 | 377 | — | |||||||
| Boston, MA | 5/23/2025 | 3,000 | (36) | — | 2,964 | 2,631 | 27 | 306 | 33,176 | |||||||
| Jacksonville, FL | 6/26/2025 | 8,100 | (11) | — | 8,089 | 23,064 | (529) | (14,446) | 53,169 | |||||||
| Yakima, WA 1 | 6/26/2025 | 31,000 | (2,256) | — | 28,744 | 8,689 | 343 | 19,712 | 91,561 | |||||||
| Houston, TX | 6/27/2025 | 10,500 | (15) | — | 10,485 | 10,250 | 42 | 193 | — | |||||||
| South Bend, IN | 7/15/2025 | 43,100 | (283) | — | 42,817 | 29,481 | (7) | 13,343 | 205,573 | |||||||
| Milwaukee, WI 1 | 7/29/2025 | 42,000 | (913) | — | 41,087 | 40,644 | 270 | 173 | 147,406 | |||||||
| Naples, FL | 7/29/2025 | 19,250 | (2,692) | — | 16,558 | 15,586 | 559 | 413 | 61,359 | |||||||
| New York, NY | 7/30/2025 | 25,000 | (1,290) | — | 23,710 | 15,531 | 364 | 7,815 | 89,893 | |||||||
| Boston, MA | 8/25/2025 | 450 | (45) | — | 405 | 413 | 32 | (40) | 9,010 | |||||||
| Lakeland, FL 3 | 8/27/2025 | 7,325 | (772) | — | 6,553 | 6,899 | 234 | (580) | 31,158 | |||||||
| Salem, OR | 8/29/2025 | 4,000 | (427) | — | 3,573 | 3,482 | 159 | (68) | 21,026 | |||||||
| Milwaukee, WI 1 | 9/29/2025 | 60,000 | (2,203) | — | 57,797 | 61,485 | (2,884) | (804) | 220,747 | |||||||
| Tampa, FL | 9/30/2025 | 22,000 | (778) | — | 21,222 | 6,218 | 646 | 14,358 | 47,962 | |||||||
| Dallas, TX 3 | 9/30/2025 | 58,800 | (1,885) | — | 56,915 | 26,822 | 5,379 | 24,714 | 448,879 | |||||||
| Chicago, IL | 9/30/2025 | 18,700 | (477) | — | 18,223 | 18,417 | (181) | (13) | 56,531 | |||||||
| Columbus, OH 4 | 9/30/2025 | 33,750 | (2,470) | — | 31,280 | 27,884 | 410 | 2,986 | 117,060 | |||||||
| Miami, FL | 9/30/2025 | 62,000 | (1,867) | — | 60,133 | 45,152 | 2,580 | 12,401 | 152,976 | |||||||
| New Haven, CT | 10/16/2025 | 725 | (4) | — | 721 | 612 | 3 | 106 | — | |||||||
| Des Moines, IA | 10/29/2025 | 7,225 | (841) | — | 6,384 | 9,275 | (2,346) | (545) | 152,655 | |||||||
| Jacksonville, FL 1 | 11/17/2025 | 18,600 | (1,065) | — | 17,535 | 17,590 | 463 | (518) | 40,333 | |||||||
| Richmond, VA 5 | 11/18/2025 | 171,000 | (8,772) | — | 162,228 | 57,224 | 13,263 | 91,741 | 405,945 | |||||||
| Boston, MA | 12/8/2025 | 278 | (44) | — | 234 | 283 | 1 | (49) | 10,380 | |||||||
| Atlanta, GA | 12/19/2025 | 3,000 | (981) | — | 2,019 | 3,331 | (1,209) | (103) | — | |||||||
| Multiple 6 | 12/19/2025 | 348,900 | (35,341) | — | 313,559 | 287,121 | 1,413 | 25,025 | 1,522,500 | |||||||
| Memphis, TN | 12/29/2025 | 23,021 | (79) | — | 22,942 | 8,876 | (2,070) | 16,136 | 116,473 | |||||||
| Phoenix, AZ | 12/29/2025 | 22,275 | (756) | — | 21,519 | 17,367 | 1,217 | 2,935 | 89,980 | |||||||
| Phoenix, AZ | 12/29/2025 | 5,225 | (335) | — | 4,890 | 4,927 | 21 | (58) | 89,983 | |||||||
| Houston, TX 7 | 12/30/2025 | 12,500 | (4,559) | (6,400) | 1,541 | 7,631 | 4,811 | (4,501) | 49,319 | |||||||
| Total Dispositions | $ | 1,090,310 | $ | (77,610) | $ | (11,800) | $ | 1,000,900 | $ | 783,561 | $ | 23,488 | $ | 205,652 | 4,493,006 |
1Includes two medical outpatient properties.
2The Company provided seller financing of approximately $5.4 million in connection with this sale.
3Includes four medical outpatient properties.
4Includes three medical outpatient properties.
5Includes six medical outpatient properties.
6The Company sold six MOBs in El Paso, TX, four MOBs in Indianapolis, IN, two MOBs in each of Chicago, IL, Cincinnati, OH, Des Moines, IA, Fort Wayne, IN, Minneapolis, MN and Pittsburgh, PA; and one MOB in each of Detroit, MI, Las Vegas, NV and Salt Lake City, UT to a single buyer in a single transaction.
7The Company provided seller financing of approximately $6.4 million in connection with this sale.
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
2024 Real Estate Asset Dispositions
The following table details the Company's dispositions and joint venture dispositions for the year ended December 31, 2024:
| Dollars in thousands | DATE DISPOSED | SALE PRICE | CLOSING COSTS & CREDITS | COMPANY-FINANCED MORTGAGE NOTES | NET CONSIDERATION | NET REAL ESTATE INVESTMENT | OTHER | GAIN/(IMPAIR-MENT) | SQUARE FOOTAGE | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Albany, NY | 4/1/24 | $ | 725 | $ | (60) | $ | — | $ | 665 | $ | 765 | $ | (82) | $ | (18) | 14,800 |
| San Angelo, TX | 4/12/24 | 5,085 | (128) | — | 4,957 | 4,917 | 66 | (26) | 24,580 | |||||||
| Houston, TX | 5/20/24 | 250 | (9) | — | 241 | 713 | (520) | 48 | 37,040 | |||||||
| Multiple 1 | 5/23/24 | 284,348 | (14,270) | — | 270,078 | 254,176 | 25,836 | (9,934) | 556,274 | |||||||
| Denver, CO | 5/30/24 | 19,000 | (628) | — | 18,372 | 18,522 | 165 | (315) | 37,130 | |||||||
| Austin, TX 1 | 6/6/24 | 54,858 | (1,575) | — | 53,283 | 27,964 | 623 | 24,696 | 129,879 | |||||||
| Minneapolis, MN | 6/21/24 | 1,082 | (144) | — | 938 | 303 | 43 | 592 | 50,291 | |||||||
| Raleigh, NC 2 | 6/28/24 | 99,518 | (2,835) | — | 96,683 | 86,810 | 906 | 8,967 | 309,424 | |||||||
| Albany, NY | 8/2/24 | 6,300 | (847) | — | 5,453 | 5,528 | 486 | (561) | 180,000 | |||||||
| Charlotte, NC | 8/6/24 | 26,670 | (395) | — | 26,275 | 14,853 | 613 | 10,809 | 90,633 | |||||||
| Charleston, SC | 8/13/24 | 14,500 | (589) | — | 13,911 | 11,488 | 1 | 2,422 | 46,711 | |||||||
| Multiple 1 | 8/23/24 | 118,000 | (8,615) | — | 109,385 | 113,956 | 548 | (5,119) | 266,782 | |||||||
| Multiple 3 | 8/27/24 | 177,250 | (7,085) | — | 170,165 | 169,545 | 5,363 | (4,743) | 473,003 | |||||||
| Austin, TX | 9/13/24 | 42,281 | (1,257) | — | 41,024 | 14,561 | 425 | 26,038 | 76,246 | |||||||
| Raleigh, NC | 9/26/24 | 1,813 | (27) | — | 1,786 | 1,694 | 50 | 42 | 5,934 | |||||||
| Houston, TX 4 | 10/3/24 | 12,000 | (1,001) | (9,630) | 1,369 | 11,266 | 295 | (563) | 140,012 | |||||||
| Greensboro, NC | 10/9/24 | 12,514 | (21) | — | 12,493 | 10,152 | 296 | 2,045 | 35,373 | |||||||
| Des Moines, IA | 10/15/24 | 31,750 | (1,320) | — | 30,430 | 13,869 | 1,662 | 14,899 | 95,486 | |||||||
| Albany, NY | 10/15/24 | 9,500 | (521) | — | 8,979 | 7,823 | 1,193 | (37) | 80,676 | |||||||
| Salt Lake City, UT 5 | 10/24/24 | 30,712 | (8,962) | — | 21,750 | 26,899 | (9,406) | 4,257 | 112,192 | |||||||
| Miami, FL | 10/25/24 | 36,789 | (706) | — | 36,083 | 35,925 | (209) | 367 | 102,186 | |||||||
| Miami, FL 6 | 10/25/24 | 17,767 | (718) | — | 17,049 | 14,650 | (210) | 2,609 | 60,761 | |||||||
| Cleveland, OH | 12/10/24 | 1,000 | (157) | — | 843 | 1,454 | 57 | (668) | 31,152 | |||||||
| Boise, ID 7 | 12/12/24 | 18,350 | (2,003) | — | 16,347 | 17,562 | 345 | (1,560) | 83,078 | |||||||
| Multiple 1 | 12/18/24 | 310,250 | (6,767) | — | 303,483 | 321,437 | 6,616 | (24,570) | 766,622 | |||||||
| Atlanta, GA | 12/20/24 | 15,900 | (1,318) | — | 14,582 | 13,344 | 635 | 603 | 42,921 | |||||||
| Los Angeles, CA 7 | 12/20/24 | 64,000 | (4,805) | — | 59,195 | 47,322 | 1,676 | 10,197 | 162,554 | |||||||
| Tampa, FL | 12/27/24 | 37,500 | (402) | — | 37,098 | 41,556 | (1,962) | (2,496) | 95,896 | |||||||
| Wichita Falls, TX | 12/27/24 | 600 | (130) | — | 470 | 2,530 | 14 | (2,074) | 25,133 | |||||||
| Total dispositions | $ | 1,450,312 | $ | (67,295) | $ | (9,630) | $ | 1,373,387 | $ | 1,291,584 | $ | 35,525 | $ | 55,907 | 4,132,769 |
1The Company contributed the following medical outpatient properties to a joint venture in which the Company retained 20% ownership: one in each of Raleigh, NC, New York, NY, Philadelphia, PA, Atlanta, GA, Austin, TX, Miami, FL, Denver, CO, Memphis, TN, Indianapolis, IN, and Honolulu, HI; two MOBs in Los Angeles; three MOBs in Houston, TX and Dallas, TX; and five in Seattle, WA. Sale price and square footage reflect the total sale price paid by the joint venture and total square footage of the property. The net proceeds to the Company related to these dispositions totaled $584.9 million.
2The Company sold seven MOBs in Greensboro, NC and two non-clustered single-tenant MOBs in Raleigh, NC to a single buyer in a single transaction.
3The Company contributed the following medical outpatient properties to a joint venture in which the Company retained 20% ownership: two in each of Nashville, TN and Denver, CO; one in each of Dallas, TX, San Antonio, TX and Atlanta, GA. Sale price and square footage reflect the total sale price paid by the joint venture and total square footage of the property. The net proceeds to the Company related to these dispositions totaled $148.9 million.
4The Company provided seller financing of approximately $9.6 million in connection with this sale.
5The Company sold an MOB that was included in a consolidated joint venture in which the Company held a 63% ownership interest. Proceeds include the Company's pro-rata share of the purchase price as well as amounts due to the Company by the joint venture.
6Includes two properties.
7Includes three properties.
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
- Held for Sale
The Company had 18 properties and one land parcel classified as assets held for sale as of December 31, 2025. The Company had three properties classified as assets held for sale as of December 31, 2024.
The table below reflects the assets and liabilities classified as held for sale as of December 31, 2025 and 2024.
| DECEMBER 31, | ||||
|---|---|---|---|---|
| Dollars in thousands | 2025 | 2024 | ||
| Balance Sheet data | ||||
| Land | $ | 21,193 | $ | 10,859 |
| Building and improvements | 161,365 | 3,410 | ||
| Lease intangibles | 7,822 | 3,286 | ||
| Personal property | 101 | — | ||
| 190,481 | 17,555 | |||
| Accumulated depreciation | (55,908) | (5,275) | ||
| Real estate assets held for sale, net 1 | 134,573 | 12,280 | ||
| Operating lease right-of-use assets | 3,641 | — | ||
| Other assets, net | 5,366 | 617 | ||
| Assets held for sale, net | $ | 143,580 | $ | 12,897 |
| Accounts payable and accrued liabilities | $ | 4,514 | $ | 694 |
| Operating lease liabilities | 6,792 | — | ||
| Other liabilities | 3,854 | 589 | ||
| Liabilities of assets held for sale | $ | 15,160 | $ | 1,283 |
1Net real estate assets held for sale include the impact of $121.7 million and $24.1 million of impairment charges for the years ended December 31, 2025 and 2024, respectively.
Subsequent Dispositions
On January 14, 2026, the Company disposed of a 60,039 square foot medical office building in Atlanta, Georgia for $21.9 million.
This property was classified as held for sale as of December 31, 2025.
- Impairment Charges - Long-Lived Assets
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, which indicate that the recorded value might not be fully recoverable.
The Company recorded impairment charges totaling $361.1 million related to completed or planned dispositions, changes in holding periods or changes in property use for the year ended December 31, 2025. The Company recorded impairment charges totaling $249.9 million as a result of completed and planned disposition activity for the year ended December 31, 2024. Both level 1 and level 3 fair value techniques were used to derive these impairment charges.
As of December 31, 2025, 18 real estate properties totaling $134.3 million were measured at fair value using level 3 fair value hierarchy. The level 3 fair value techniques included using discounted cash flow models, brokerage estimates, letters of intent, and unexecuted purchase and sale agreements, less estimated closing costs, and are non-binding in nature. The determination of fair value using the discounted cash flow model technique requires the use of estimates and assumptions related to revenue and expense growth rates, terminal capitalization rates, discount rates, capital expenditures and working capital levels.
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
- Other Assets
Other assets consist primarily of real estate notes receivable, straight-line rent receivables, prepaid assets, intangible assets, accounts receivable and additional long-lived assets. Items included in "Other assets, net" on the Company’s Consolidated Balance Sheets as of December 31, 2025 and 2024 are detailed in the table below:
| Dollars in thousands | December 31, 2025 | December 31, 2024 | ||
|---|---|---|---|---|
| Prepaid assets | $ | 179,179 | $ | 154,957 |
| Real estate notes receivable, net | 86,966 | 127,624 | ||
| Straight-line rent receivables | 137,415 | 124,970 | ||
| Accounts receivable, net 1 | 32,809 | 36,495 | ||
| Above-market intangible assets, net | 19,108 | 32,230 | ||
| Interest rate swap assets | 488 | 5,263 | ||
| Project costs | 5,131 | 4,903 | ||
| Additional long-lived assets, net | 2,776 | 4,197 | ||
| Net investment in lease | 2,227 | 2,168 | ||
| Investment in securities 2 | — | 1,936 | ||
| Debt issuance costs, net | 11,638 | 1,758 | ||
| Customer relationship intangible assets, net | 1,313 | 1,011 | ||
| Other | 8,745 | 9,984 | ||
| $ | 487,795 | $ | 507,496 |
1The amounts for December 31, 2025 and 2024 are net of allowance for doubtful accounts of $7.3 million and $9.5 million, respectively.
2This amount represents the value of the Company's preferred stock investment in a data analytics platform. In 2025, a fair value measurement impairment of $1.9 million was recorded on this investment and is included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations.
- Intangible Assets and Liabilities
The Company has several types of intangible assets and liabilities included in its Consolidated Balance Sheets, including, debt issuance costs, above-, below-, and at-market lease intangibles, and customer relationship intangibles. For additional details on the Company's debt issuance costs, see Note 9 to the Consolidated Financial Statements. The Company’s intangible assets and liabilities, including assets held for sale and certain debt issuance costs, as of December 31, 2025 and 2024 consisted of the following:
| GROSS BALANCE <br>at December 31, | ACCUMULATED AMORTIZATION <br>at December 31, | WEIGHTED AVG.<br>REMAINING LIFE<br>in years | BALANCE SHEET CLASSIFICATION | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Dollars in millions | 2025 | 2024 | 2025 | 2024 | ||||||
| Credit facility debt issuance costs | $ | 19.4 | $ | 6.9 | $ | 7.8 | $ | 5.2 | 3.6 | Other assets, net |
| Above-market lease intangibles (lessor) | 46.2 | 74.8 | 27.1 | 42.3 | 3.8 | Other assets, net | ||||
| Customer relationship intangibles (lessor) | 2.9 | 2.1 | 1.6 | 1.1 | 17.6 | Other assets, net | ||||
| Below-market lease intangibles (lessor) | (69.1) | (98.3) | (38.7) | (53.1) | 5.1 | Other liabilities | ||||
| At-market lease intangibles | 463.1 | 668.2 | 276.7 | 353.9 | 6.9 | Real estate properties | ||||
| $ | 462.5 | $ | 653.7 | $ | 274.5 | $ | 349.4 | 6.7 |
For the years ended December 31, 2025, 2024 and 2023, the Company recognized approximately $112.8 million, $167.7 million, and $214.8 million of intangible amortization, respectively.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
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, 2025:
| Dollars in millions | FUTURE AMORTIZATION OF INTANGIBLES, NET | |
|---|---|---|
| 2026 | $ | 61.8 |
| 2027 | 38.9 | |
| 2028 | 22.9 | |
| 2029 | 13.8 | |
| 2030 | 9.0 |
- Notes and Bonds Payable
| BALANCE AS OF DECEMBER 31, 1 | MATURITY DATES 2 | CONTRACTUAL INTEREST RATES | EFFECTIVE INTEREST RATES | PRINCIPAL PAYMENTS | INTEREST PAYMENTS | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Dollars in thousands | 2025 | 2024 | |||||||||
| $1.5B Unsecured Credit Facility 3 | $ | 120,000 | $ | — | 7/29 | SOFR + 0.84% | 4.61 | % | At maturity | Monthly | |
| $200M Unsecured Term Loan 4 | — | 199,896 | 1/26 | SOFR + 1.04% | 4.91 | % | At maturity | Monthly | |||
| $150M Unsecured Term Loan 5 | — | 149,790 | 6/26 | SOFR + 1.04% | 4.91 | % | At maturity | Monthly | |||
| $300M Unsecured Term Loan 6 | — | 299,981 | 1/26 | SOFR + 1.04% | 4.91 | % | At maturity | Monthly | |||
| $200M Unsecured Term Loan | 199,635 | 199,641 | 7/27 | SOFR + 0.94% | 4.81 | % | At maturity | Monthly | |||
| $300M Unsecured Term Loan | 299,055 | 298,708 | 1/28 | SOFR + 0.94% | 4.81 | % | At maturity | Monthly | |||
| Senior Notes due 2025 7 | — | 249,868 | 5/25 | 3.88 | % | 4.12 | % | At maturity | Semi-annual | ||
| Senior Notes due 2026 | 595,026 | 586,824 | 8/26 | 3.50 | % | 4.94 | % | At maturity | Semi-annual | ||
| Senior Notes due 2027 | 492,693 | 488,104 | 7/27 | 3.75 | % | 4.76 | % | At maturity | Semi-annual | ||
| Senior Notes due 2028 | 298,653 | 298,029 | 1/28 | 3.63 | % | 3.85 | % | At maturity | Semi-annual | ||
| Senior Notes due 2030 | 597,188 | 586,028 | 2/30 | 3.10 | % | 5.30 | % | At maturity | Semi-annual | ||
| Senior Notes due 2030 | 297,610 | 297,190 | 3/30 | 2.40 | % | 2.72 | % | At maturity | Semi-annual | ||
| Senior Notes due 2031 | 296,866 | 296,343 | 3/31 | 2.05 | % | 2.25 | % | At maturity | Semi-annual | ||
| Senior Notes due 2031 | 685,873 | 667,233 | 3/31 | 2.00 | % | 5.13 | % | At maturity | Semi-annual | ||
| Mortgage notes payable | 28,824 | 45,136 | 4/26-12/26 | 3.60%-4.50% | 3.71%-6.88% | Monthly | Monthly | ||||
| $ | 3,911,423 | $ | 4,662,771 |
1Balance is presented net of discounts and issuance costs and inclusive of premiums, where applicable.
2Maturity date does not include extension options.
3As of December 31, 2025, the Company had $1.4 billion available to be drawn on the Unsecured Credit Facility.
4In January 2025, the Company repaid $25 million of the principal balance. In July 2025, the Company repaid $23.6 million of the principal balance. In October 2025, the Company repaid the remaining principal balance of $151.4 million in full.
5In July 2025, the Company repaid $28.5 million of the principal balance. On December 17, 2025, the Company repaid the remaining principal balance of $121.5 million in full.
6In January 2025, the Company repaid $10 million of the principal balance. In July 2025, the Company repaid $21.3 million of the principal balance. In November 2025, the Company repaid the remaining principal balance of $268.7 million in full.
7In May 2025, the Company repaid its Senior Notes due 2025 at maturity consisting of $250 million of principal and $4.8 million of accrued interest.
The Company’s various debt agreements contain certain representations, warranties, and financial and other covenants customary in such debt agreements. Among other things, these provisions require the Company to maintain certain financial ratios and impose certain limits on the Company’s ability to incur indebtedness and create liens or encumbrances. As of December 31, 2025, the Company was in compliance with its financial covenant provisions under its various debt instruments.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
Unsecured Credit Facility
On July 25, 2025 and as amended on January 9, 2026, the Company entered into the Fifth Amended and Restated Revolving Credit and Term Loan Agreement (the “Unsecured Credit Facility”) with Wells Fargo Bank, National Association, as Administrative Agent; Wells Fargo Securities, LLC and JPMorgan Chase Bank, N.A. as Joint Book Runners; Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A., PNC Capital Markets LLC, U.S. Bank National Association, The Bank of Nova Scotia, and BofA Securities, Inc., as Joint Lead Arrangers; and the other lenders named therein. The New Credit Facility provides for (i) a $1.5 billion unsecured revolving credit facility (the “Revolver”) and (ii) five individual unsecured term loan tranches. At closing, $73.4 million of term loans were repaid. The OP is the borrower under the Unsecured Credit Facility (in such capacity, the “Borrower”). A summary of the principal terms of the Unsecured Credit Facility and the Unsecured Credit Facility's effect on the Company's existing revolving credit term loan facilities is as follows:
•The Unsecured Credit Facility replaced the Company's prior revolving credit and term loan facility evidenced by that certain Fourth Amended and Restated Revolving Credit and Term Loan Agreement dated as of July 20, 2022 by and among the Company, the OP, Wells Fargo Bank, National Association, as Administrative Agent, and the other lenders identified therein, as amended (the “Prior Credit Facility”). All outstanding obligations due under the Prior Credit Facility were reallocated to the lenders under the Unsecured Credit Facility.
•The Company’s $1.5 billion Revolver was continued with a maturity extension from October 31, 2025 to July 25, 2029, with two six-month extension options. The Revolver includes a sublimit of $120 million for letters of credit.
•The previously funded $200 million term loan was continued with a maturity date of January 31, 2026 and three extension options totaling 16 months.
•The previously funded $150 million term loan was continued with a maturity date of June 1, 2026, with two extension options of six months each.
•The previously funded $300 million term loan was continued with a maturity date of October 31, 2025, with four extension options totaling 24 months.
•The previously funded $200 million term loan was continued with a maturity date of July 20, 2027, with two extension options of 12 months each.
•The previously funded $300 million term loan was continued with a maturity date of January 20, 2028, with one extension option of 12 months.
Revolving loans outstanding under the Unsecured Credit Facility bear interest at a floating rate equal to the daily simple Secured Overnight Financing Rate ("SOFR"), term SOFR or base rates, as applicable, plus an applicable margin. The applicable margin is determined based on the Borrower’s credit ratings and ranges from 0.725% per annum to 1.40% per annum (currently 0.84% per annum). Term loans outstanding under the Unsecured Credit Facility bear interest at a rate equal to Term SOFR rates plus an applicable margin. The applicable margin is determined based on the Borrower’s credit ratings and ranges from 0.80% per annum to 1.60% per annum (currently 0.94% or 1.04% per annum). In addition, the Borrower pays a facility fee on the Revolver commitments at a rate per annum determined based on the Borrower’s credit ratings and ranging from 0.125% per annum to 0.30% per annum (currently 0.20% per annum).
Except as set forth above, the principal terms of the Unsecured Credit Facility are substantially consistent with the terms of the Prior Credit Facility. Specifically, the Unsecured Credit Facility contains representations and warranties and affirmative and negative covenants that are customary for facilities of this size and type. These covenants include, among others: limitations on the incurrence of additional indebtedness; limitations on mergers, investments and acquisitions; limitations on dividends and redemptions of capital stock; limitations on transactions with affiliates; and requirements to comply with certain financial covenants, including a maximum consolidated leverage ratio, a maximum consolidated secured leverage ratio, a maximum consolidated unencumbered leverage ratio, a minimum fixed charge coverage ratio and a minimum unsecured coverage ratio.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
Subsequent Activity
In February 2026, the Company entered into a commercial paper dealer agreement to issue short-term commercial paper notes up to $600.0 million, with maturities up to 364 days. The program is back-stopped by the Unsecured Credit Facility. The notes will be issued at par less a discount representing an interest factor, or if interest bearing, at par.
Senior Notes
The following table summarizes the Company’s aggregate Senior notes principal balance as of December 31, 2025 and 2024.
| DECEMBER 31, | ||||
|---|---|---|---|---|
| Dollars in thousands | 2025 | 2024 | ||
| Senior notes principal balance | $ | 3,449,285 | $ | 3,699,285 |
| Unaccreted discount | (181,552) | (224,759) | ||
| Debt issuance costs | (3,824) | (4,907) | ||
| Senior notes carrying amount | $ | 3,263,909 | $ | 3,469,619 |
Changes in Debt Structure
On May 1, 2025, the Company repaid its Senior Notes due 2025 at maturity consisting of $250 million of principal and $4.8 million of accrued interest.
Term Loans
The following table summarizes the Company’s aggregate term loan principal balances as of December 31, 2025 and 2024.
| DECEMBER 31, | ||||
|---|---|---|---|---|
| Dollars in thousands | 2025 | 2024 | ||
| Term loan principal balances | $ | 500,000 | $ | 1,150,000 |
| Debt issuance costs | (1,310) | (1,984) | ||
| Term Loans carrying amount | $ | 498,690 | $ | 1,148,016 |
Changes in Debt Structure
During the year ended December 31, 2025, the Company repaid the $300 million Unsecured Term Loan due January 2026, the $200 million Unsecured Term Loan due January 2026, and the $150 million Unsecured Term Loan due June 2026 and recorded approximately $0.5 million of accelerated amortization expense included in the loss of extinguishment of debt.
Mortgage Notes Payable
The following table summarizes the Company’s aggregate mortgage notes principal balance as of December 31, 2025 and 2024.
| DECEMBER 31, | ||||
|---|---|---|---|---|
| Dollars in thousands | 2025 | 2024 | ||
| Mortgage notes payable principal balance | $ | 28,904 | $ | 45,278 |
| Unamortized premium | — | 140 | ||
| Unaccreted discount | (39) | (134) | ||
| Debt issuance costs | (41) | (148) | ||
| Mortgage notes payable carrying amount | $ | 28,824 | $ | 45,136 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
The following table details the Company’s mortgage notes payable, with related collateral.
| ORIGINAL BALANCE | EFFECTIVE INTEREST RATE 3 | MATURITY <br>DATE | COLLATERAL 4 | PRINCIPAL AND<br><br>INTEREST PAYMENTS 5 | INVESTMENT IN COLLATERAL <br>at December 31, | BALANCE <br>at December 31, | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Dollars in millions | 2025 | 2025 | 2024 | |||||||||||
| Life Insurance Co. 1 | $ | 16.5 | 3.57 | % | 12/25 | MOB,OFC | Monthly/7-yr amort. | $ | 37.2 | $ | — | $ | 15.4 | |
| Financial Services 2 | 11.5 | 3.71 | % | 4/26 | MOB | Monthly/10-yr amort. | 42.5 | 6.9 | 7.4 | |||||
| Life Insurance Co. 3 | 6.0 | 6.88 | % | 4/26 | MOB | Monthly/7-yr amort. | 12.1 | 5.2 | 5.2 | |||||
| Life Insurance Co. | 19.2 | 4.08 | % | 12/26 | MOB | Monthly/10-yr amort. | 44.9 | 16.7 | 17.1 | |||||
| $ | 136.7 | $ | 28.8 | $ | 45.1 |
1The Company repaid this loan in full in December 2025.
2In December 2025, the Company extended the maturity date to April 2026.
3The contractual interest rates for the three outstanding mortgage notes ranged from 3.6% to 4.5% as of December 31, 2025.
4MOB-Medical outpatient building; OFC-Office
5Payable in monthly installments of principal and interest with the final payment due at maturity (unless otherwise noted).
Other Long-Term Debt Information
Future maturities of the Company’s notes and bonds payable as of December 31, 2025, were as follows:
| Dollars in thousands | PRINCIPAL MATURITIES | NET ACCRETION/<br><br>AMORTIZATION 1 | DEBT<br><br>ISSUANCE COSTS 2 | NOTES AND <br>BONDS PAYABLE | % | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2026 | $ | 628,904 | $ | (41,837) | $ | (1,719) | $ | 585,348 | 15.0 | % |
| 2027 | 700,000 | (36,192) | (1,608) | 662,200 | 16.9 | % | ||||
| 2028 | 600,000 | (35,179) | (704) | 564,117 | 14.4 | % | ||||
| 2029 | 120,000 | (37,025) | (674) | 82,301 | 2.1 | % | ||||
| 2030 | 949,500 | (26,131) | (402) | 922,967 | 23.6 | % | ||||
| 2031 and thereafter | 1,099,785 | (5,227) | (68) | 1,094,490 | 28.0 | % | ||||
| $ | 4,098,189 | $ | (181,591) | $ | (5,175) | $ | 3,911,423 | 100.0 | % |
1Includes discount accretion and premium amortization related to the Company’s Senior Notes and two mortgage notes payable.
2Excludes approximately $11.6 million in debt issuance costs related to the Company's Unsecured Credit Facility included in other assets, net.
- Derivative Financial Instruments
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings.
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During 2025, 2024, and 2023, 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
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
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.
During the year ended December 31, 2025, the Company reclassified $4.3 million of AOCI into "Interest and other (expense) income, net" on the Company's Consolidated Statements of Operations related to ineffective hedged transactions on eight interest rate swaps, which were previously designated as cash flow hedges of interest rate risk, due to debt repayments. The Company terminated interest rate swaps with notional values totaling $575 million, in connection with the repayment of the $300 million Unsecured Term Loan due January 2026, the $200 million Unsecured Term Loan due January 2026, and the $150 million Unsecured Term Loan due June 2026. The Company paid $4.3 million related to the termination of interest rate swaps due to debt repayments, which is included in financing activities on the Company's Consolidated Statements of Cashflows.
As of December 31, 2025, the Company had interest rate derivatives that were designated as cash flow hedges of interest rate risk. The table below presents the notional value and weighted average rates of the Company's derivative financial instruments as of December 31, 2025 and 2024:
| NOTIONAL VALUE AS OF | WEIGHTED AVERAGE RATE | NOTIONAL VALUE AS OF | WEIGHTED AVERAGE RATE | ||||||
|---|---|---|---|---|---|---|---|---|---|
| EXPIRATION | DECEMBER 31, 2025 | EXPIRATION | DECEMBER 31, 2024 | ||||||
| May 2026 | $ | 100,000 | 2.15 | % | May 2026 | $ | 275,000 | 3.74 | % |
| June 2026 | — | — | % | June 2026 | 150,000 | 3.83 | % | ||
| December 2026 | 150,000 | 3.84 | % | December 2026 | 150,000 | 3.84 | % | ||
| June 2027 | 150,000 | 4.13 | % | June 2027 | 200,000 | 4.27 | % | ||
| December 2027 | 100,000 | 4.13 | % | December 2027 | 300,000 | 3.93 | % | ||
| $ | 500,000 | 3.65 | % | $ | 1,075,000 | 3.92 | % |
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, 2025 and 2024.
| AS OF DECEMBER 31, 2025 | AS OF DECEMBER 31, 2024 | |||||
|---|---|---|---|---|---|---|
| Dollars in thousands | BALANCE SHEET LOCATION | FAIR <br>VALUE | BALANCE SHEET LOCATION | FAIR <br>VALUE | ||
| Interest rate swaps 2019 | Other Assets | $ | 488 | Other Assets | $ | 2,493 |
| Interest rate swaps 2022 | Other Assets | — | Other Assets | 2,250 | ||
| Interest rate swaps 2022 | Other Liabilities | (3,928) | Other Liabilities | (853) | ||
| Interest rate swaps 2023 | Other Assets | — | Other Assets | 521 | ||
| Interest rate swaps 2023 | Other Liabilities | — | Other Liabilities | (3,310) | ||
| Total derivatives designated as hedging instruments | $ | (3,440) | $ | 1,101 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
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) ("AOCI") as of December 31, 2025 and 2024 related to the Company's outstanding interest rate swaps.
| AMOUNT OF GAIN/(LOSS) RECOGNIZED <br>IN AOCI ON DERIVATIVE <br>for the year ended December 31, | AMOUNT OF (GAIN)/LOSS RECLASSIFIED <br>FROM AOCI INTO INCOME <br>for the year ended December 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Dollars in thousands | 2025 | 2024 | 2025 | 2024 | ||||||
| Interest rate swaps 2019 | $ | 122 | $ | — | Interest expense | $ | (2,127) | $ | — | |
| Interest rate swaps 2022 | (2,653) | 15,237 | Interest expense | (902) | (10,317) | |||||
| Interest rate swaps 2023 | — | 7,572 | Interest expense | — | (3,416) | |||||
| Settled treasury hedges | — | — | Interest expense | 427 | 428 | |||||
| Settled interest rate swaps | (2,571) | — | Interest expense | (656) | 168 | |||||
| Settled interest rate swaps | — | — | Other expense | 4,301 | — | |||||
| Total | $ | (5,102) | $ | 22,809 | Total | $ | 1,043 | $ | (13,137) |
The Company estimates that an additional $2.4 million will be reclassified from AOCI as a net 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, 2025. 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 Assets | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| GROSS AMOUNTS <br>of recognized assets | GROSS AMOUNTS OFFSET <br>in the Consolidated <br>Balance Sheets | NET AMOUNTS OF ASSETS <br>presented in the Consolidated Balance Sheets | GROSS AMOUNTS NOT OFFSET <br>in the Consolidated Balance Sheets | |||||||||||||||||||||||||||
| FINANCIAL INSTRUMENTS | CASH <br>COLLATERAL | NET <br>AMOUNT | ||||||||||||||||||||||||||||
| Derivatives | $ | 488 | $ | — | $ | 488 | $ | (488) | $ | — | $ | — | Offsetting of Derivative Liabilities | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||||||
| GROSS AMOUNTS <br>of recognized liabilities | GROSS AMOUNTS OFFSET <br>in the Consolidated <br>Balance Sheets | NET AMOUNTS OF LIABILITIES <br>presented in the Consolidated Balance Sheets | GROSS AMOUNTS NOT OFFSET <br>in the Consolidated Balance Sheets | |||||||||||||||||||||||||||
| FINANCIAL INSTRUMENTS | CASH <br>COLLATERAL | NET <br>AMOUNT | ||||||||||||||||||||||||||||
| Derivatives | $ | (3,928) | $ | — | $ | (3,928) | $ | 488 | $ | — | $ | (3,440) |
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 Company 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, 2025, 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 $4.0 million. As of December 31, 2025, the Company has not posted any collateral related to these agreements and was not in breach of any agreement provisions.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
- Stockholders’ Equity
Common Stock
The Company had no preferred shares outstanding and had common shares outstanding for the years ended December 31, 2025, 2024, and 2023 as follows:
| YEAR ENDED DECEMBER 31, | |||
|---|---|---|---|
| 2025 | 2024 | 2023 | |
| Balance, beginning of year | 350,532,006 | 380,964,433 | 380,589,894 |
| Issuance of common stock | — | 8,623 | 8,627 |
| Conversion of OP units to common stock | 22,228 | 194,767 | 190,544 |
| Shares repurchased | — | (30,794,250) | — |
| Non-vested share-based awards, net of withheld shares and forfeitures | 1,048,904 | 158,433 | 175,368 |
| Balance, end of year | 351,603,138 | 350,532,006 | 380,964,433 |
At-The-Market Equity Offering Program
On December 17, 2025, the Company renewed its ATM equity offering program to sell shares of the Company's common stock from time to time in at-the-market sales transactions. The Company entered into equity distribution agreements with various sales agents having an aggregate offering price of up to $1.0 billion. As of December 31, 2025, there has been no activity under the program.
Dividends Declared
During 2025, the Company declared and paid common stock dividends aggregating $1.10 per share ($0.31 per share for the first and second quarter and $0.24 per share for the third and fourth quarter).
On February 12, 2026, the Company declared a quarterly common stock dividend in the amount of $0.24 per share payable on March 11, 2026, to stockholders of record on February 24, 2026.
Common Stock Repurchases
On October 28, 2025, the Company's Board of Directors authorized the repurchase of up to $500.0 million of outstanding shares of the Company's common stock, superseding the previous $300.0 million stock repurchase authorization. The stock repurchase authorization expires on October 27, 2026, and the Company may suspend or terminate repurchases at any time without prior notice. Under the Maryland General Corporation Law, outstanding shares of common stock acquired by a corporation become authorized but unissued shares, which may be re-issued. As of December 31, 2025, the Company had $500.0 million remaining under its current share repurchase authorization.
Subsequent Activity
In January 2026, the Company repurchased 2.9 million shares of its common stock at an average price of $17.27 per share for a total of $50.0 million resulting in $450.0 million remaining under its current share repurchase authorization.
Accumulated Other Comprehensive (Loss) Income
The following table represents the changes in accumulated other comprehensive (loss) income during the years ended December 31, 2025 and 2024:
| INTEREST RATE SWAPS <br>as of December 31, | ||||
|---|---|---|---|---|
| Dollars in thousands | 2025 | 2024 | ||
| Beginning balance | $ | (1,168) | $ | (10,741) |
| Other comprehensive income (loss) before reclassifications | (5,035) | 22,527 | ||
| Amounts reclassified from accumulated other comprehensive (loss) income | 1,029 | (12,954) | ||
| Net current-period other comprehensive income (loss) | (4,006) | 9,573 | ||
| Ending balance | $ | (5,174) | $ | (1,168) |
The following table represents the details regarding the reclassifications from accumulated other comprehensive (loss) income during the year ended December 31, 2025 (dollars in thousands):
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
| DETAILS ABOUT ACCUMULATED OTHER COMPREHENSIVE <br>INCOME (LOSS) COMPONENTS | AMOUNT RECLASSIFIED <br>from accumulated other comprehensive income (loss) | AFFECTED LINE ITEM <br>in the statement where net <br>income is presented | |
|---|---|---|---|
| Amounts reclassified from accumulated other comprehensive income (loss) related to settled interest rate swaps | $ | (229) | Interest Expense |
| Amounts reclassified from accumulated other comprehensive income (loss) related to settled interest rate swaps | 4,301 | Interest and other (expense) income, net | |
| Amounts reclassified from accumulated other comprehensive income (loss) related to current interest rate swaps | (3,029) | Interest Expense | |
| $ | 1,043 |
- Stock and Other Incentive Plans
Stock Incentive Plan
The Company's Incentive Plan permits the grant of incentive awards to its employees and directors in any of the following forms: options, stock appreciation rights, restricted stock, restricted or deferred stock units, performance awards, dividend equivalents, or other stock-based awards, including units in the OP. As of December 31, 2025 and 2024, the Company had share-based awards available for grant under the Incentive Plan of 3,979,387 and 6,140,496 shares, respectively. Non-vested shares issued to employees under the 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. Once the shares have been issued, the recipient has the right to receive dividends and the right to vote the shares through the vesting period. Compensation expense, included in general and administrative expense, recognized during the years ended December 31, 2025, 2024 and 2023 from the amortization of the value of shares over the vesting period issued to employees and directors was $22.4 million, $31.8 million and $14.6 million, respectively. Included in these amounts for 2025 and 2024, is accelerated amortization of awards in connection with the termination without cause of certain of the Company's officers totaling $8.8 million and $17.8 million, respectively. The following table represents expected amortization of the Company's non-vested shares issued as of December 31, 2025:
| Dollars in millions | FUTURE AMORTIZATION <br>of non-vested shares | |
|---|---|---|
| 2026 | $ | 11.5 |
| 2027 | 9.6 | |
| 2028 | 2.9 | |
| 2029 | 0.6 | |
| 2030 and thereafter | 0.3 | |
| Total | $ | 24.9 |
Executive Incentive Plan
The Compensation Committee has adopted an executive incentive plan pursuant to the Incentive Plan (the "Executive Incentive Plan") to provide specific award criteria with respect to incentive awards made under the Incentive Plan subject to the discretion of the Compensation Committee. 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, non-vested stock, restricted stock units ("RSUs"), and units in the OP ("OP Units").
For 2025, 2024 and 2023, compensation expense, included in general and administrative expense, resulting from the amortization of the Executive Incentive Plan non-vested shares and RSU grants to officers was approximately $15.1 million, $16.8 million, and $9.0 million, respectively. Included in these amounts for 2025 and 2024, is accelerated amortization of outstanding non-vested stock and RSU awards in connection with the termination without cause of certain of the Company's officers totaling $6.0 million and $8.5 million, respectively. Details of equity awards that have been issued under this plan are as follows:
Restricted Stock
•During the first quarter of 2025, the Company granted non-vested stock awards to its named executive officers and other members of senior management with an aggregate grant date fair value of $6.9 million,
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
which consisted of an aggregate of 414,611 non-vested shares of common stock with a three-year vesting period.
•During the second quarter of 2025, the Company granted non-vested stock awards to its named executive officers and other members of senior management with an aggregate grant date fair value of $7.8 million, which consisted of an aggregate of 499,323 non-vested shares of common stock with vesting periods ranging from three to four years.
•During the third quarter of 2025, the Company granted non-vested stock awards to members of its senior management with an aggregate grant date fair value of $0.5 million, which consisted of an aggregate of 27,946 non-vested shares of common stock with a three-year vesting period.
•During the fourth quarter of 2025, the Company granted non-vested stock awards to members of its senior management with an aggregate grant date fair value of $0.5 million, which consisted of an aggregate of 24,482 non-vested shares of common stock with an approximate two-year vesting period.
Restricted Stock Units
•On February 11, 2025, the Company granted an aggregate of 275,735 RSUs to members of senior management, subject to a three-year performance period, with an aggregate grant date fair value of $5.4 million.
•During the second quarter of 2025, the Company granted an aggregate of 16,038 RSUs to members of senior management, subject to a three-year performance period, with an aggregate grant date fair value of $0.3 million.
The RSUs vest based on relative total shareholder return ("TSR") performance and were valued using independent specialists. The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $19.47 for the RSU grants using the following assumptions:
| Volatility | 28.0 |
|---|---|
| Dividend assumption | Accrued |
| Expected term | 3 years |
| Risk-free rate | 4.35 |
| Stock price (per share) | 16.17 |
All values are in US Dollars.
LTIP Series C Units
On February 11, 2025, the Company granted an aggregate of 166,976 LTIP-C units in the OP to its named executive officers subject to a three-year performance period with an aggregate grant date fair value of $1.6 million.
The LTIP-C units in the OP vest based on relative TSR performance and were valued using independent specialists. The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $9.88 for the February 2025 grant using the following assumptions:
| Volatility | 28.0 |
|---|---|
| Dividend assumption | Accrued |
| Expected term | 3 years |
| Risk-free rate | 4.35 |
| Stock price (per share) | 16.17 |
All values are in US Dollars.
The Company records amortization expense based on the Monte Carlo simulation throughout the performance period.
On April 15, 2025, the Company granted 347,770 LTIP-C units in the OP to its newly appointed Chief Executive Officer subject to a three-year performance period with an aggregate grant date fair value of $3.4 million.
The LTIP-C units in the OP vest based on relative TSR performance and were valued using independent specialists. The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $9.83 for the April 2025 grant using the following assumptions:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
| Volatility | 27.0 |
|---|---|
| Dividend assumption | Accrued |
| Expected term | 3 years |
| Risk-free rate | 3.80 |
| Stock price (per share) | 15.70 |
All values are in US Dollars.
The Company records amortization expense based on the Monte Carlo simulation throughout the performance period.
For 2025, compensation expense resulting from the amortization of LTIP-C units awarded to officers was approximately $2.6 million. The Company accelerated the amortization of outstanding LTIP-C awards in connection with the termination without cause of certain of its officers, totaling $0.8 million.
Officer Incentive Program
In 2025 the Company granted a performance-based award to certain non-executive officers totaling approximately $0.7 million, which was granted in the form of 45,277 non-vested shares. The shares have vesting periods of three years.
For 2025, 2024 and 2023, compensation expense resulting from the amortization of these non-vested share grants awarded to officers was approximately $0.9 million, $0.5 million, and $0.6 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 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 2025, 2024 and 2023, the Company issued 17,338 shares, 29,902 shares and 31,792 shares, respectively, to its officers through the salary deferral plan. For 2025, 2024 and 2023, compensation expense resulting from the amortization of non-vested share grants to officers was approximately $0.5 million, $1.1 million, and $0.9 million, respectively.
Non-employee Directors Incentive Plan
The Company grants non-vested share-based awards to its non-employee directors under the Incentive Plan. The directors’ awards typically have a one-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. For 2025, 2024 and 2023, compensation expense resulting from the amortization of non-vested share-based grants to directors was approximately $1.9 million, $2.4 million, and $2.1 million, respectively.
•During the second quarter of 2025, the Company granted non-vested stock awards to certain of its independent directors, with a grant date fair value of $1.1 million, which consisted of an aggregate of 72,144 non-vested shares, with a one-year vesting period.
•During the second quarter of 2025, the Company also granted LTIP Series D units in the OP to certain of its independent directors, with a grant fair value of $0.5 million, which consisted of an aggregate of 34,586 non-vested units, with a one-year vesting period.
Other Grants
The Company also issued grants to certain members of senior management resulting in compensation expense for 2025, 2024, and 2023 totaling $1.4 million, $2.2 million, and $0.8 million respectively.
In 2024, the Company granted 69,022 non-vested shares to its interim Chief Executive Officer with a grant date fair value of $1.2 million with vesting the earlier of the appointment of a permanent CEO or one-year. In 2025, the Company accelerated the amortization of $0.9 million.
The Company also issued one-time non-vested share grants related to executive management transition in 2016. In 2024, the Company accelerated the amortization of these outstanding awards, including in connection with the termination without cause of its CEO and CFO, totaling $1.6 million.
The following table represents the summary of non-vested share-based awards (including restricted stock, RSUs, LTIP-C units and LTIP-D units) under the Incentive Plans and related information for the years ended December 31, 2025, 2024, and 2023:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
| YEAR ENDED DECEMBER 31, | ||||||
|---|---|---|---|---|---|---|
| Dollars in thousands, except per share data | 2025 | 2024 | 2023 | |||
| Share-based awards, beginning of year | 1,799,737 | 2,615,562 | 2,090,060 | |||
| Granted 1 | 1,942,226 | 1,732,484 | 1,164,359 | |||
| Vested | (959,869) | (2,284,767) | (403,266) | |||
| Change in awards based on performance assessment 2 | (21,758) | (47,202) | (205,668) | |||
| Forfeited | (194,899) | (216,340) | (29,923) | |||
| Share-based awards, end of year | 2,565,437 | 1,799,737 | 2,615,562 | |||
| Weighted-average grant date fair value of | ||||||
| Share-based awards, beginning of year | $ | 22.30 | $ | 25.56 | $ | 30.35 |
| Share-based awards granted during the year | $ | 14.76 | $ | 15.49 | $ | 18.70 |
| Share-based awards vested during the year | $ | 17.83 | $ | 21.43 | $ | 28.38 |
| Share-based awards change in performance assessment during the year | $ | 29.16 | $ | 20.21 | $ | 29.05 |
| Stock-based awards forfeited during the year | $ | 13.84 | $ | 16.87 | $ | 31.16 |
| Share-based awards, end of year | $ | 17.89 | $ | 22.30 | $ | 25.56 |
| Grant date fair value of shares granted during the year | $ | 28,661 | $ | 26,844 | $ | 22,171 |
1LTIP-C units are issued at the maximum possible value of the award and are reflected as such in this table until the performance period has been satisfied and the exact number of awards are determinable.
2The Company's RSUs that are based on operating performance metrics are evaluated on the probability of those performance metrics being achieved. During 2023, the Company determined that the operating performance goals related to the RSUs issued in 2022 are not probable of being achieved and reversed all of the outstanding amortization expense for that grant. In addition, the Company lowered the probability of achieving the operating performance goals related to the RSUs issued in 2023.
The vesting periods for the non-vested shares granted during 2025 ranged from one to eight years with a weighted-average amortization period remaining as of December 31, 2025 of approximately 2.7 years.
During 2025, 2024 and 2023, the Company withheld 234,496 shares, 485,209 shares and 126,085 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 up to $2,800 per employee, subject to certain limitations. The Company’s matching contributions were approximately $1.3 million for 2025, $1.4 million for 2024 and $1.5 million for 2023.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
- Earnings Per Share
The Company uses the two-class method of computing net earnings per common share. The Company's non-vested share-based awards 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 years ended December 31, 2025, 2024, and 2023.
| YEAR ENDED DECEMBER 31, | ||||||
|---|---|---|---|---|---|---|
| Dollars in thousands, except per share data | 2025 | 2024 | 2023 | |||
| Weighted average common shares outstanding | ||||||
| Weighted average common shares outstanding | 351,350,200 | 367,444,706 | 380,850,967 | |||
| Non-vested shares | (1,552,450) | (1,891,650) | (1,923,096) | |||
| Weighted average common shares outstanding - basic | 349,797,750 | 365,553,056 | 378,927,871 | |||
| Weighted average common shares outstanding - basic | 349,797,750 | 365,553,056 | 378,927,871 | |||
| Dilutive effect of OP Units | — | — | — | |||
| Weighted average common shares outstanding - diluted | 349,797,750 | 365,553,056 | 378,927,871 | |||
| Net loss | $ | (249,485) | $ | (663,904) | $ | (282,083) |
| Income allocated to participating securities | (2,217) | (3,122) | (2,504) | |||
| Loss attributable to non-controlling interest | 3,414 | 9,419 | 3,822 | |||
| Adjustment to loss attributable to non-controlling interest for legally outstanding restricted units | (193) | (2,798) | (851) | |||
| Net loss applicable to common stockholders - basic and diluted | $ | (248,481) | $ | (660,405) | $ | (281,616) |
| Basic earnings per common share - net loss | $ | (0.71) | $ | (1.81) | $ | (0.74) |
| Diluted earnings per common share - net loss | $ | (0.71) | $ | (1.81) | $ | (0.74) |
The effect of OP Units redeemable for 4,230,433 shares of common stock for the year ended December 31, 2025, was excluded from the calculation of diluted loss per common share because the effect was anti-dilutive as a result of the loss from continuing operations incurred during the year.
- Commitments and Contingencies
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, 2025, the Company had commitments of approximately $161.8 million that are expected to be spent on tenant improvements throughout the portfolio, excluding development properties currently under construction.
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 land held for development included 17 parcels as of December 31, 2025 and 15 parcels as of December 31, 2024. The Company’s investments in land held for development totaled approximately $57.5 million as of December 31, 2025 and $52.4 million as of December 31, 2024. The current land held for development is located adjacent to certain of the Company's existing medical office buildings in Colorado, Connecticut, Florida, Georgia, New York, North Carolina, Tennessee, Texas, and Washington.
Security Deposits and Letters of Credit
As of December 31, 2025, the Company held approximately $36.7 million in letters of credit and security deposits for the benefit of the Company in the event the obligated tenant fails to perform under the terms of its respective lease. Generally, the Company may, at its discretion and upon notification to the tenant, draw upon these instruments if there are any defaults under the leases.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
- Other Data
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 $10.0 billion, $11.1 billion and $12.6 billion as of December 31, 2025, 2024 and 2023, respectively.
Characterization of Distributions (unaudited)
Distributions in excess of earnings and profits generally constitute a return of capital. The table below gives the characterization of the distributions of the Company’s common stock for the years ended December 31, 2025, 2024 and 2023.
For the years ended December 31, 2025, 2024 and 2023, there were no preferred shares outstanding. As such, no dividends were distributed related to preferred shares for those periods.
| YEAR ENDED DECEMBER 31, | ||||||
|---|---|---|---|---|---|---|
| Dollars in per share amounts | 2025 | 2024 | 2023 | |||
| Tax Treatment of Dividends | ||||||
| Ordinary income 1 | $ | 0.4801 | $ | 0.4335 | $ | 0.5482 |
| Return of capital | 0.2544 | 0.7558 | 0.5031 | |||
| Capital gain | 0.3655 | 0.0507 | 0.1887 | |||
| Common stock distributions | $ | 1.1000 | $ | 1.2400 | $ | 1.2400 |
1Reporting year ordinary income is also Code Section 199A eligible per The Tax Cut and Jobs Act of 2017 as made permanent by the OBBBA.
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 Operations.
The State of Texas gross margins tax on gross receipts from operations is disclosed in the table below as an income tax.
State income tax expense and state income tax payments for the years ended December 31, 2025, 2024 and 2023 are detailed in the table below:
| YEAR ENDED DECEMBER 31, | ||||||
|---|---|---|---|---|---|---|
| Dollars in thousands | 2025 | 2024 | 2023 | |||
| State income tax expense | ||||||
| Texas gross margins tax | $ | 1,175 | $ | 1,674 | $ | 1,206 |
| Other | 106 | 126 | 133 | |||
| Total state income tax expense | $ | 1,281 | $ | 1,800 | $ | 1,339 |
| State income tax payments, net of refunds and collections | $ | 1,256 | $ | 1,787 | $ | 1,324 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
- Fair Value of Financial Instruments
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 (level 1 inputs) due to the short-term maturity of these investments.
•Real estate notes receivable - Real estate notes receivable is recorded in other assets on the Company's Consolidated Balance Sheets. Fair value is estimated using cash flow analyses, based on current interest rates for similar types of arrangements using level 2 inputs in the hierarchy. However, the fair value of one note receivable at December 31, 2024, was determined utilizing the fair value of the receivable's collateral, which was determined based on an executed purchase and sale agreement of the underlying collateral, and therefore was classified as level 1 inputs in the hierarchy.
•Borrowings under the unsecured credit facility and the Term Loans - The carrying amount approximates fair value because the borrowings are based on variable market interest rates.
•Senior Notes and Mortgage 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.
•Interest rate swap agreements - Interest rate swap agreements are recorded in other assets/liabilities on the Company's Consolidated Balance Sheets at fair value. Fair value is estimated by utilizing pricing models, level 2 inputs, which consider forward yield curves and discount rates. See Note 10 for additional information.
The table below details the fair value and carrying values for our other financial instruments as of December 31, 2025 and 2024.
| December 31, 2025 | December 31, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| Dollars in millions | CARRYING VALUE | FAIR VALUE | CARRYING VALUE | FAIR VALUE | ||||
| Notes and bonds payable 1, 2 | $ | 3,911.4 | $ | 3,928.8 | $ | 4,662.8 | $ | 4,578.4 |
| Real estate notes receivable | $ | 87.0 | $ | 86.5 | $ | 127.2 | $ | 122.4 |
1Level 2 – model-derived valuations in which significant inputs and significant value drivers are observable in active markets.
2Fair value for senior notes includes accrued interest as of December 31, 2025 and December 31, 2024.
- Segment Reporting
The Company is a REIT that owns, leases, acquires, invests in joint ventures, manages, finances, develops and redevelops its medical outpatient properties and reports the operating results in the accompanying Consolidated Financial Statements as one reportable segment. The CODM assesses performance and allocates resources based on consolidated net income (loss) as reported on the Company's Consolidated Statements of Operations. The Company uses net income (loss) to monitor expected versus actual results to assess the segment's performance. The measure of the Company's reportable segment assets is reported on the Company's Consolidated Balance Sheets as total assets.
Pursuant to ASU 2023-07, Segment Reporting (Topic 280), public entities are required to disclose more detailed information about significant reportable segment expenses that are regularly provided to the CODM.
The table below details the significant expenses for the years ended December 31, 2025, 2024 and 2023.
| YEAR ENDED DECEMBER 31, | ||||||
|---|---|---|---|---|---|---|
| Dollars in thousands | 2025 | 2024 | 2023 | |||
| Significant Segment Expenses: | ||||||
| Property taxes | $ | 114,536 | $ | 126,692 | $ | 137,634 |
| Personnel | 92,067 | 92,935 | 94,775 | |||
| Utilities | 91,882 | 97,889 | 101,840 | |||
| Maintenance | 104,264 | 110,962 | 117,969 | |||
| Totals | $ | 402,749 | $ | 428,478 | $ | 452,218 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.
The following schedule reconciles net income to segment expenses.
| YEAR ENDED DECEMBER 31, | ||||||
|---|---|---|---|---|---|---|
| Dollars in thousands | 2025 | 2024 | 2023 | |||
| Revenue | $ | 1,180,546 | $ | 1,268,316 | $ | 1,343,769 |
| Property taxes | (114,536) | (126,692) | (137,634) | |||
| Personnel | (92,067) | (92,935) | (94,775) | |||
| Utilities | (91,882) | (97,889) | (101,840) | |||
| Maintenance | (104,264) | (110,962) | (117,969) | |||
| Other segment expenses 1 | (118,895) | (128,087) | (106,624) | |||
| Transaction costs | (2,029) | (3,122) | (2,026) | |||
| Merger-related costs | — | — | 1,952 | |||
| Depreciation and amortization | (563,966) | (675,152) | (730,709) | |||
| Gain on sales of real estate properties and other assets | 235,389 | 109,753 | 77,546 | |||
| Interest expense | (208,989) | (242,425) | (258,584) | |||
| (Loss) gain on extinguishment of debt | (451) | (237) | 62 | |||
| Impairment of real estate properties and credit loss reserves | (364,598) | (313,547) | (154,912) | |||
| Impairment of goodwill | — | (250,530) | — | |||
| Equity loss from unconsolidated joint ventures | (188) | (135) | (1,682) | |||
| Interest and other (expense) income, net | (3,555) | (260) | 1,343 | |||
| Net loss | $ | (249,485) | $ | (663,904) | $ | (282,083) |
1.Other segment expenses are primarily related to administrative costs, travel, legal, technology, and insurance.
- Related-Party Transactions
In the ordinary course of conducting its business, the Company enters into agreements with affiliates in relation to the management and leasing of its real estate assets, including real estate assets owned through joint ventures.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that the information required to be disclosed is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow for timely decisions regarding required disclosure.
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.
Changes in Internal Control over Financial Reporting
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the year ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Management’s Annual Report on Internal Control Over Financial Reporting
The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. The Company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025 using the principles and other criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on that assessment, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2025. The Company’s independent registered public accounting firm, BDO USA, P.C., has also issued an attestation report on the effectiveness of the Company’s internal control over financial reporting included herein.
Report of
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Stockholders and Board of Directors
Healthcare Realty Trust Incorporated
Nashville, Tennessee
Opinion on Internal Control over Financial Reporting
We have audited Healthcare Realty Trust Incorporated’s (the “Company’s”) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, equity and redeemable non-controlling interests, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedules and our report dated February 13, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ BDO USA, P.C.
Nashville, Tennessee
February 13, 2026
Item 9B. Other Information
During the year ended December 31, 2025, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading agreement" or "non-Rule 10b5-1 trading agreement," as each term is defined in Item 408(a) of Regulation S-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
Item 10. Directors, Executive Officers and Corporate Governance
Directors
Information with respect to the Company’s directors, set forth in the Company’s Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 19, 2026, under the caption “Election of Directors,” is incorporated herein by reference.
Executive Officers
The executive officers of the Company are:
| NAME | AGE | POSITION |
|---|---|---|
| Peter A. Scott | 46 | President and Chief Executive Officer |
| Daniel Gabbay | 46 | Executive Vice President and Chief Financial Officer |
| Andrew E. Loope | 57 | Executive Vice President, General Counsel and Secretary |
| Ryan E. Crowley | 43 | Executive Vice President and Chief Investment Officer |
| Robert E. Hull | 53 | Executive Vice President and Chief Operating Officer |
Mr. Scott was appointed President and Chief Executive Officer effective April 15, 2025. He was elected to the board of directors of the Company on May 20, 2025. Prior to joining the Company, Mr. Scott was Chief Financial Officer of Healthpeak Properties, Inc. since February 2017. From 2014 to 2017, he served as a Managing Director in the Real Estate Investment Banking Group at Barclays. From 2002 to 2014, he served in various positions of increasing responsibility at various financial services firms.
Mr. Gabbay was appointed as Executive Vice President and Chief Financial Officer effective January 12, 2026. Prior to joining the Company and since 2024 he served as a Managing Director in the Real Estate Investment Banking Group of RBC Capital Markets (“RBC”), with primary coverage responsibility of the healthcare REIT sector. Prior to joining RBC, he served as a Managing Director in the Real Estate Investment Banking Group at Barclays. He began his career at Lehman Brothers in 2001.
Mr. Loope was appointed as Executive Vice President, General Counsel, and Secretary effective January 1, 2025, after serving as Senior Vice President, Corporate Counsel, and Secretary. Prior to joining the Company in 2008, Mr. Loope was an attorney in the corporate and securities group of the law firm Waller Lansden Dortch & Davis, LLP (now Holland & Knight LLP) in Nashville, Tennessee.
Mr. Crowley was appointed as Executive Vice President and Chief Investment Officer effective October 1, 2024 and has been employed by the Company since 2006. He served as Senior Vice President, Investments from November 2021 until September 30, 2024. Prior to that, he served as First Vice President, Investments.
Mr. Hull was appointed Executive Vice President and Chief Operating Officer effective October 1, 2024 and has been employed by the company since 2004. He Served as Executive Vice President - Investments from January 1, 2017 until September 30, 2024. He served as Senior Vice President - Investments from March 2011 until January 2017, managing the Company's development and acquisition activity. Prior to that, Mr. Hull served in various capacities on the Company's investments team. Before joining the Company, Mr. Hull worked in the senior living and commercial banking industries.
Code of Ethics
The Company has adopted a Code of Business Conduct and Ethics (the “Code of Ethics”) that applies to its principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions, as well as all directors, officers and employees of the Company. The Code of Ethics is posted on the Company’s website (www.healthcarerealty.com) and is available in print free of charge to any stockholder who requests a copy. Interested parties may address a written request for a printed copy of the Code of Ethics to: Investor Relations, Healthcare Realty Trust Incorporated, 3310 West End Avenue, Suite 700, Nashville, Tennessee 37203. The Company intends to satisfy the disclosure requirement regarding any amendment to, or a waiver of, a provision of the
Code of Ethics for the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions by posting such information on the Company’s website.
Insider Trading Policy
The Company has adopted an insider trading policy governing the buying, selling, or other transfers of its securities by its directors, officers, and employees that the Company believes is reasonably designed to promote compliance with federal and state securities laws and any listing standards applicable to the Company. It is the Company’s policy to comply with all applicable securities laws and regulations (including appropriate approvals by the Company’s board of directors, if required) when engaging in transactions in the Company’s securities.
Section 16(a) Compliance
Information with respect to compliance with Section 16(a) of the Exchange Act set forth in the Company’s Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 19, 2026, under the caption “Security Ownership of Certain Beneficial Owners and Management – Delinquent Section 16(a) Reports,” is incorporated herein by reference.
Stockholder Recommendation of Director Candidates
Information with respect to the Company’s policy relating to stockholder recommendations of director candidates is set forth in the Company’s Proxy Statement relating to the Annual Meeting of Stockholders to be held on May 19, 2026, under the caption “Stockholder Recommendation or Nomination of Director Candidates,” and is incorporated herein by reference.
Audit Committee
Information relating to the Company’s Audit Committee, its members and the Audit Committee’s financial experts, set forth in the Company’s Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 19, 2026, under the caption “Committee Membership,” is incorporated herein by reference.
Item 11. Executive Compensation
Information relating to executive compensation, set forth in the Company’s Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 19, 2026, under the captions “Compensation Discussion and Analysis,” “Executive Compensation,” “Compensation Committee Interlocks and Insider Participation,” “Compensation Committee Report” and “Director Compensation,” is incorporated herein by reference, except with respect to the disclosure under the heading "Executive Compensation - Pay Versus Performance."
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information relating to the security ownership of management and certain beneficial owners, set forth in the Company’s Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 19, 2026 under the caption “Security Ownership of Certain Beneficial Owners and Management,” is incorporated herein by reference.
Information relating to securities authorized for issuance under the Company’s equity compensation plans, set forth in Item 5 of this report under the caption “Equity Compensation Plan Information,” is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information relating to certain relationships and related transactions, and director independence, set forth in the Company’s Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 19, 2026 under the
captions “Certain Relationships and Related Transactions” and “Corporate Governance – Independence of Directors,” is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
Our independent registered public accounting firm is BDO USA, P.C., Nashville, TN, PCAOB ID#243.
Information relating to the fees paid to the Company’s accountants, set forth in the Company’s Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 19, 2026, under the caption “Ratification of Appointment of Independent Registered Public Accounting Firm,” is incorporated herein by reference.
Item 15. Exhibits and Financial Statement Schedules
Index to Historical Financial Statements, Financial Statement Schedules and Exhibits
1. Financial Statements
The following financial statements of Healthcare Realty Trust Incorporated are included in Item 8 of this Annual Report on Form 10-K.
•Consolidated Balance Sheets – December 31, 2025 and December 31, 2024.
•Consolidated Statements of Operations for the years ended December 31, 2025, December 31, 2024 and December 31, 2023.
•Consolidated Statements of Comprehensive Loss for the years ended December 31, 2025, December 31, 2024 and December 31, 2023.
•Consolidated Statements of Equity and Redeemable Non-Controlling Interests for the years ended December 31, 2025, December 31, 2024 and December 31, 2023.
•Consolidated Statements of Cash Flows for the years ended December 31, 2025, December 31, 2024 and December 31, 2023.
•Notes to Consolidated Financial Statements.
2. Financial Statement Schedules
| Schedule II | — | Valuation and Qualifying Accounts for the years ended December 31, 2025, 2024, and 2023 | 102 |
|---|---|---|---|
| Schedule III | — | Real Estate and Accumulated Depreciation as of December 31, 2025, 2024, and 2023 | 103 |
| Schedule IV | — | Mortgage Loans on Real Estate Assets as of December 31, 2025, 2024, and 2023 | 105 |
All other schedules are omitted because they are either not applicable, not required, or because the information is included in the consolidated financial statements or notes thereto.
3. Exhibits
1Filed as an exhibit to the Company's (File No. 001-35568) Form 10-Q for the quarter ended June 30, 2023 filed with the SEC on August 8, 2023 and hereby incorporated by reference.
2Filed as an exhibit to the Company's (File No. 001-35568) Form 8-K filed with the SEC on April 29, 2020 and hereby incorporated by reference.
3Filed as an exhibit to the Company's (File No. 001-35568) Registration Statement on Form S-3 (Registration No. 333-273784) filed with the SEC on August 8, 2023 and hereby incorporated by reference.
4Filed as an exhibit to the Company's (File No. 001-35568) Form 8-K filed with the SEC on July 26, 2022 and hereby incorporated by reference.
5Filed as an exhibit to the Company's (File No. 001-35568) Form 8-K filed with the SEC on July 12, 2016 and hereby incorporated by reference.
6Filed as an exhibit to the Company's (File No. 001-35568) Form 8-K filed with the SEC on June 13, 2017 and hereby incorporated by reference.
7Filed as an exhibit to the Company's (File No. 001-35568) Form 8-K filed with the SEC on September 16, 2019 and hereby incorporated by reference.
8Filed as an exhibit to the Company's (File No. 001-35568) Form 8-K filed with the SEC on September 28, 2020 and hereby incorporated by reference.
9Filed as an exhibit to Legacy HR's (File No. 001-11852) Form 10-K for the year ended December 31, 2015 filed with the SEC on February 16, 2016 and hereby incorporated by reference.
10Filed as an exhibit to Legacy HR's (File No. 001-11852) Form 10-K for the year ended December 31, 2019 filed with the SEC on February 12, 2020 and hereby incorporated by reference.
11Filed as an exhibit to Legacy HR's (File No. 001-11852) Form 10-K for the year ended December 31, 2021 filed with the SEC on February 22, 2022 and hereby incorporated by reference.
12Filed as an exhibit to Legacy HR's (File No. 001-11852) Form 8-K filed with the SEC on February 2, 2016 and hereby incorporated by reference.
13Filed as an exhibit to Legacy HR's (File No. 001-11852) Form 10-Q for the quarter ended June 30, 2021 filed with the SEC on August 4, 2021 and hereby incorporated by reference.
14Filed as an exhibit to the Company's (File No. 001-35568) Form 8-K filed with the SEC on August 5, 2022 and hereby incorporated by reference.
15Filed as an exhibit to the Company's (File No. 001-35568) Form 8-K filed with the SEC on May 18, 2012 and hereby incorporated by reference.
16Filed as an exhibit to the Company's (File No. 001-35568) Form 8-K filed with the SEC on December 22, 2010 and hereby incorporated by reference.
17Filed as an exhibit to the Company's (File No. 001-35568) Form 10-K for the year ended December 31, 2016 filed with the SEC on February 21, 2017 and hereby incorporated by reference.
18Included as Appendix A to the Company's (File No. 001-35568) Definitive Proxy Statement on Schedule 14A filed with the SEC on April 30, 2021 and hereby incorporated by reference.
19Filed as an exhibit to the Company's (File No. 001-35568) Form 10-K for the year ended December 31, 2022 filed with the SEC on March 1, 2023 and hereby incorporated by reference.
20Filed as an exhibit to the Company's (File No. 001-35568) Form 10-Q for the quarter ended September 20, 2024 filed with the SEC on October 30, 2024 and hereby incorporated by reference.
21Filed as an exhibit to the Company's (File No. 001-35568) Form 8-K/A filed with the SEC on December 9, 2024 and hereby incorporated by reference.
22Filed as an exhibit to the Company's (File No. 001-35568) Form 8-K filed with the SEC on December 9, 2024 and hereby incorporated by reference.
23Filed as an exhibit to the Company's (File No. 001-35568) Form 10-K for the year ended December 31, 2023 filed with the SEC on February 16, 2024 and hereby incorporated by reference
24Filed as an exhibit to the Company's (File No. 001-35568) Form 10-K for the year ended December 31, 2024 filed with the SEC on February 19, 2025 and hereby incorporated by reference.
25Filed as an exhibit to the Company's (File No. 001-35568) Form 10-Q for the quarter ended March 31, 2025 filed with the SEC on May 1, 2025 and hereby incorporated by reference.
26Filed as an exhibit to the Company's (File No. 001-35568) Form 8-K filed with the SEC on July 31, 2025, and hereby incorporated by reference.
Executive Compensation Plans and Arrangements
The following is a list of all executive compensation plans and arrangements filed as exhibits to this Annual Report on Form 10-K:
1.Amended and Restated Employment Agreement, dated January 1, 2017, between Robert E. Hull and Healthcare Realty Trust Incorporated (now known as HRTI, LLC) (filed as Exhibit 10.2)
2.Amendment No. 1 to Amended and Restated Employment Agreement, dated February 12, 2020, between Robert E. Hull and Healthcare Realty Trust Incorporated (now known as HRTI, LLC) (filed as Exhibit 10.3)
3.Amendment No. 2 to Amended and Restated Employment Agreement, dated February 22, 2022, between Robert E. Hull and Healthcare Realty Trust Incorporated (now known as HRTI, LLC) (filed as Exhibit 10.4)
4.Amended and Restated Employment Agreement between Healthcare Realty Trust Incorporated (now known as HRTI, LLC) and Julie F. Wilson, dated July 1, 2021 (filed as Exhibit 10.5)
5.Executive Incentive Program, dated August 1, 2022 (filed as Exhibit 10.6)
6.Form of LTIP Award Agreement (Executive Version) (filed as Exhibit 10.7)
7.Form of LTIP Award Agreement (Director Version) (filed as Exhibit 10.8)
8.Form of Restricted Stock Award Certificate (filed as Exhibit 10.10)
9.The Company's Amended and Restated 2006 Incentive Plan, dated April 29, 2021 (filed as Exhibit 10.11)
10.Form of LTIP Award Agreement (filed as Exhibit 10.12)
11.Amendment No. 3 to Amended and Restated Employment Agreement, dated October 1, 2024, between Robert E. Hull and Healthcare Realty Trust Incorporated (filed as Exhibit 10.13)
12.Amendment No. 1 to Amended and Restated Employment Agreement, dated October 1, 2024, between Julie F. Wilson and Healthcare Realty Trust Incorporated (filed as Exhibit 10.14)
13.Amended and Restated Employment Agreement, dated October 1, 2024, between Ryan E. Crowley and Healthcare Realty Trust Incorporated (filed as Exhibit 10.15)
14.Letter Agreement dated December 8, 2024, between Constance B. Moore and Healthcare Realty Trust Incorporated (filed as Exhibit 10.16)
15.Amended and Restated Employment Agreement, dated December 8, 2024, between Austen B. Helfrich and Healthcare Realty Trust Incorporated (filed as Exhibit 10.17)
16.Amended and Restated Employment Agreement, dated December 8, 2024, between Andrew E. Loope and Healthcare Realty Trust Incorporated (filed as Exhibit 10.18)
17.Employment Agreement, dated as of April 1, 2025 and effective as of April 15, 2025, between Peter A. Scott and Healthcare Realty Trust Incorporated (filed as Exhibit 10.20)
18.Employment Agreement, dated as of January 7, 2026 and effective as of January 12, 2026, between Daniel Gabbay and Healthcare Realty Trust Incorporated (filed herewith)
Item 16. Form 10-K Summary
None.
SIGNATURES AND SCHEDULES
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| HEALTHCARE REALTY TRUST INCORPORATED | |
|---|---|
| By: | /s/ PETER A. SCOTT |
| Peter A. Scott | |
| President, Chief Executive Officer, and Director | |
| February 13, 2026 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| SIGNATURE | TITLE | DATE |
|---|---|---|
| /s/ Peter A. Scott | President, Chief Executive Officer and Director | February 13, 2026 |
| Peter A. Scott | (Principal Executive Officer) | |
| /s/ Daniel Gabbay | Executive Vice President and Chief Financial Officer | February 13, 2026 |
| Daniel Gabbay | (Principal Financial Officer) | |
| /s/ Amanda L. Callaway | Senior Vice President and Chief Accounting | February 13, 2026 |
| Amanda L. Callaway | Officer (Principal Accounting Officer) | |
| /s/ Thomas N. Bohjalian | Chairman | February 13, 2026 |
| Thomas N. Bohjalian | ||
| /s/ David B. Henry | Director | February 13, 2026 |
| David B. Henry | ||
| /s/ Jay P. Leupp | Director | February 13, 2026 |
| Jay P. Leupp | ||
| /s/ Constance B. Moore | Director | February 13, 2026 |
| Constance B. Moore | ||
| /s/ Glenn J. Rufrano | Director | February 13, 2026 |
| Glenn J. Rufrano | ||
| /s/ Donald C. Wood | Director | February 13, 2026 |
| Donald C. Wood |
Schedule II – Valuation and Qualifying Accounts for the years ended December 31, 2025, 2024 and 2023
| Dollars in thousands | ADDITIONS AND DEDUCTIONS | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| DESCRIPTION | BALANCE <br>AT BEGINNING OF PERIOD | CHARGED/(CREDITED) TO COSTS AND EXPENSES | CHARGED <br>TO OTHER ACCOUNTS | UNCOLLECTIBLE ACCOUNTS WRITTEN-OFF | BALANCE <br>AT END OF PERIOD | ||||||
| 2025 | Accounts receivable allowance | $ | 9,536 | $ | 1,322 | $ | — | $ | 3,559 | $ | 7,299 |
| 2024 | Accounts receivable allowance | $ | 8,404 | $ | 2,094 | $ | — | $ | 962 | $ | 9,536 |
| 2023 | Accounts receivable allowance | $ | 3,954 | $ | 5,119 | $ | — | $ | 669 | $ | 8,404 |
Schedule III – Real Estate and Accumulated Depreciation as of December 31, 2025
| Dollars in thousands | LAND 1 | BUILDINGS, IMPROVEMENTS,<br><br>LEASE INTANGIBLES AND CIP 1 | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| MARKET | NUMBER OF PROP. | INITIAL INVESTMENT | COST CAPITALIZED subsequent to acquisition | TOTAL | INITIAL INVESTMENT | 2<br>COST CAPITALIZED subsequent to acquisition | TOTAL | 1<br>PERSONAL PROPERTY | 3, 4, 6 <br>TOTAL PROPERTY | 1, 4, 6 ACCUMULATED DEPRECIATION | 5 ENCUMBRANCES | DATE ACQUIRED | DATE CONST. | ||||||||||
| Dallas, TX | 36 | $ | 59,646 | $ | 13,383 | $ | 73,029 | $ | 704,073 | $ | 171,987 | $ | 876,060 | $ | 541 | $ | 949,630 | $ | 225,919 | $ | — | 2003-2023 | 1979-2025 |
| Seattle, WA | 24 | 39,291 | 4,021 | 43,312 | 456,416 | 112,140 | 568,556 | 695 | 612,563 | 210,965 | — | 2008-2022 | 1970-2018 | ||||||||||
| Houston, TX | 24 | 47,156 | 10,095 | 57,251 | 465,761 | 83,701 | 549,462 | 357 | 607,070 | 120,217 | — | 2007-2022 | 1980-2018 | ||||||||||
| Charlotte, NC | 31 | 25,635 | 7,538 | 33,173 | 431,082 | 76,269 | 507,351 | 143 | 540,667 | 157,273 | — | 2008-2020 | 1961-2018 | ||||||||||
| Phoenix, AZ | 34 | 21,120 | 8,052 | 29,172 | 418,645 | 38,256 | 456,901 | 2 | 486,075 | 76,144 | — | 2007-2017 | 1971-2006 | ||||||||||
| Denver, CO | 24 | 36,449 | 9,189 | 45,638 | 340,321 | 77,803 | 418,124 | 616 | 464,378 | 117,569 | — | 2007-2022 | 1978-2020 | ||||||||||
| Raleigh, NC | 26 | 46,572 | 10,134 | 56,706 | 364,458 | 29,265 | 393,723 | 23 | 450,452 | 69,561 | — | 2010-2022 | 1977-2020 | ||||||||||
| Atlanta, GA | 24 | 31,501 | 8,394 | 39,895 | 361,282 | 26,866 | 388,148 | 106 | 428,149 | 99,647 | — | 2008-2022 | 1974-2014 | ||||||||||
| Nashville, TN | 10 | 18,801 | 2,345 | 21,146 | 226,850 | 95,301 | 322,151 | 748 | 344,045 | 128,484 | 6,938 | 2004-2022 | 1976-2022 | ||||||||||
| Boston, MA | 13 | 106,648 | 8,901 | 115,549 | 298,384 | (46,602) | 251,782 | 60 | 367,391 | 70,977 | — | 2012-2016 | 1860-2011 | ||||||||||
| Tampa, FL | 17 | 21,892 | 7,095 | 28,987 | 299,697 | 32,184 | 331,881 | 24 | 360,892 | 59,354 | — | 1994-2023 | 1975-2015 | ||||||||||
| Indianapolis, IN | 35 | 41,590 | 7,655 | 49,245 | 250,644 | 29,755 | 280,399 | 13 | 329,657 | 58,192 | — | 2007-2019 | 1988-2013 | ||||||||||
| Los Angeles, CA | 15 | 47,027 | 2,743 | 49,770 | 197,758 | 74,721 | 272,479 | 340 | 322,589 | 139,900 | 16,674 | 1994-2020 | 1964-2003 | ||||||||||
| Austin, TX | 11 | 16,719 | 4,882 | 21,601 | 205,284 | 30,085 | 235,369 | 37 | 257,007 | 49,954 | — | 2013-2022 | 1986-2015 | ||||||||||
| New York, NY | 13 | 58,719 | 5,823 | 64,542 | 160,873 | 30,760 | 191,633 | 4 | 256,179 | 32,180 | — | 2014-2019 | 1920-1988 | ||||||||||
| Miami, FL | 13 | 19,200 | 3,162 | 22,362 | 193,569 | 38,643 | 232,212 | 103 | 254,677 | 79,038 | — | 1994-2020 | 1954-2009 | ||||||||||
| Washington, DC | 9 | 3,756 | 1,515 | 5,271 | 187,478 | 51,990 | 239,468 | 68 | 244,807 | 71,092 | — | 2004-2021 | 1959-2011 | ||||||||||
| San Francisco, CA | 6 | 48,443 | 737 | 49,180 | 164,349 | 30,646 | 194,995 | 52 | 244,227 | 70,269 | — | 2015-2022 | 1912-2014 | ||||||||||
| Orlando, FL | 7 | 6,734 | 3,059 | 9,793 | 176,080 | 9,175 | 185,255 | — | 195,048 | 33,608 | — | 1998-2017 | 1994-2009 | ||||||||||
| Hartford, CT | 25 | 23,996 | 5,203 | 29,199 | 151,860 | 4,885 | 156,745 | 33 | 185,977 | 30,162 | — | 2016-2019 | 1955-2017 | ||||||||||
| Other (32 markets) | 120 | 176,307 | 43,408 | 219,715 | 1,969,776 | 85,200 | 2,054,976 | 292 | 2,274,983 | 537,446 | 5,212 | 1993-2023 | |||||||||||
| Total real estate | 517 | 897,202 | 167,334 | 1,064,536 | 8,024,640 | 1,083,030 | 9,107,670 | 4,257 | 10,176,463 | 2,437,951 | 28,824 | ||||||||||||
| Land held for develop. | — | 57,535 | — | 57,535 | — | — | — | — | 57,535 | — | |||||||||||||
| Financing lease right-of-use assets | 1 | — | — | — | — | — | — | — | 75,083 | — | — | ||||||||||||
| Investment in financing receivables, net | 1 | — | — | — | — | — | — | — | 123,249 | — | — | ||||||||||||
| Corporate Property | 1 | 16,869 | 42 | 16,911 | 11,656 | 19,281 | 30,937 | 2,900 | 50,748 | 15,752 | — | ||||||||||||
| Total properties | 520 | $ | 971,606 | $ | 167,376 | $ | 1,138,982 | $ | 8,036,296 | $ | 1,102,311 | $ | 9,138,607 | $ | 7,157 | $ | 10,483,078 | $ | 2,453,703 | $ | 28,824 |
1Includes eighteen assets held for sale as of December 31, 2025 with gross real estate investments of approximately $190.5 million.
2Includes the impact of any impairment on real estate charges recorded
3Total properties as of December 31, 2025 have an estimated aggregate total cost of $10.0 billion for federal income tax purposes.
4Depreciation is provided for on a straight-line basis on buildings and improvements over 3.3 to 49.0 years, lease intangibles over 1.0 to 99.0 years, personal property over 3.0 to 10.0 years, and land improvements over 2.0 to 39.0 years.
5Includes debt issuance costs and unaccreted discount totaling $0.1 million as of December 31, 2025.
6Rollforward of Total Property and Accumulated Depreciation, including assets held for sale, for the year ended December 31, 2025, 2024 and 2023 follows:
| YEAR ENDED DEC. 31, 2025 | YEAR ENDED DEC. 31, 2024 | YEAR ENDED DEC. 31, 2023 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Dollars in thousands | TOTAL PROPERTY | ACCUMULATED DEPRECIATION | TOTAL PROPERTY | ACCUMULATED DEPRECIATION | TOTAL PROPERTY | ACCUMULATED DEPRECIATION | ||||||
| Beginning balance | $ | 11,828,265 | $ | 2,488,931 | $ | 13,408,713 | $ | 2,227,766 | $ | 14,076,475 | $ | 1,645,271 |
| Additions during the period | ||||||||||||
| Real estate acquired | — | — | — | — | 54,024 | 2,322 | ||||||
| Other improvements | 33,844 | 328,130 | 53,748 | 549,160 | 28,521 | 668,069 | ||||||
| Land held for development | — | — | — | — | — | |||||||
| Construction in progress | 10,344 | — | 69,598 | — | 49,901 | — | ||||||
| Investment in financing receivable, net | (422) | — | 1,541 | — | 2,366 | — | ||||||
| Financing lease right-of-use assets, net | (2,261) | — | (4,865) | — | (1,616) | — | ||||||
| Corporate Properties | — | — | — | — | — | — | ||||||
| Retirement/dispositions | ||||||||||||
| Real estate | (1,386,692) | (363,358) | (1,700,470) | (287,995) | (800,958) | (87,896) | ||||||
| Ending balance | $ | 10,483,078 | $ | 2,453,703 | $ | 11,828,265 | $ | 2,488,931 | $ | 13,408,713 | $ | 2,227,766 |
Schedule IV – Mortgage Loans on Real Estate Assets as of December 31, 2025
| Dollars in thousands | Final Maturity Date | Payment Terms | Prior Liens | Face Amount | Carrying Amount | Principal Amount of Loans Subject to Delinquent Principal or Interest | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Mortgage loan on real estate located in: 1 | |||||||||||
| California | % | 3/29/2026 | (2) | $ | — | $ | 45,000 | $ | 45,189 | $ | — |
| Florida | % | 12/28/2026 | (3) | — | 5,256 | 5,256 | — | ||||
| Texas | % | 12/31/2026 | (2) | — | 6,400 | 6,401 | — | ||||
| Texas | % | 10/02/2029 | (2) | — | 9,629 | 9,691 | — | ||||
| Texas | % | 3/19/2030 | (2) | — | 5,400 | 5,431 | — | ||||
| Mezzanine loans on real estate located in: | |||||||||||
| Arizona | % | 12/20/2026 | (2) | — | 6,000 | 6,038 | — | ||||
| Texas | % | 10/02/2029 | (2) | — | 1 | 1 | — | ||||
| Wisconsin | % | 3/19/2030 | (4) | — | 8,500 | 8,959 | — | ||||
| Total real estate notes receivable | $ | — | $ | 86,186 | $ | 86,966 | $ | — | |||
| 1 Excludes a mortgage loan where the Company received 14.9 million against a 31.2 million loan balance and fully reserved the remainder of 16.8 million. The loan was guaranteed by an individual and while the Company is seeking to collect on the guaranty, there can be no assurance of any recovery. | |||||||||||
| 2 Interest only payments due with principal and any unpaid interest due on the maturity date. | |||||||||||
| 3 Monthly installment payments of principal and interest. | |||||||||||
| 4 Capitalized interest through maturity, with outstanding principal and accrued interest due on the maturity date. |
All values are in US Dollars.
The following shows changes in the carrying amounts of mortgage loans on real estate assets during the years ended December 31, 2025, 2024 and 2023:
| Year Ended December 31, | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | 2023 | ||||
| Balance as of the beginning of the year | $ | 127,624 | $ | 173,614 | $ | 99,643 |
| Additions: | ||||||
| Fair value real estate notes assumed | — | — | — | |||
| New real estate notes | 20,300 | 9,630 | 58,700 | |||
| Draws on existing real estate notes | — | 5,505 | 19,103 | |||
| Accretion of fees and other items | 497 | 3,600 | 1,364 | |||
| Deductions: | ||||||
| Collection of real estate loans | (59,884) | (5,162) | — | |||
| Deferred fees and other items | — | — | — | |||
| Allowance for credit loss | (1,571) | (59,563) | (5,196) | |||
| Balance as of the end of the year | $ | 86,966 | $ | 127,624 | $ | 173,614 |
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.
104
exhibit101firstamendment
Exhibit 10.1 1 FIRST AMENDMENT TO FIFTH AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT THIS FIRST AMENDMENT TO FIFTH AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT (this “Amendment”) dated as of January 8, 2026 by and among HEALTHCARE REALTY HOLDINGS, L.P., a limited partnership formed under the laws of Delaware (the “Borrower”), HEALTHCARE REALTY TRUST INCORPORATED, a corporation formed under the laws of Maryland (“Parent”), each of the Lenders party hereto and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent (the “Administrative Agent”). WHEREAS, the Borrower, Parent, the Lenders, the Administrative Agent and certain other parties have entered into that certain Fifth Amended and Restated Revolving Credit and Term Loan Agreement dated as of July 25, 2025 (as amended and as in effect immediately prior to the effectiveness of this Amendment, the “Existing Credit Agreement”); and WHEREAS, the Borrower, Parent, the Required Lenders, the Required Revolving Lenders and the Administrative Agent desire to amend certain provisions of the Existing Credit Agreement on the terms and conditions contained herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereto agree as follows: Section 1. Amendment to Credit Agreement. Upon the satisfaction of each of the conditions set forth in Section 2 of this Amendment, the parties hereto agree that Existing Credit Agreement (other than the Exhibits and Schedules thereto) is amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the underlined text (indicated textually in the same manner as the following example: underlined text) as set forth in Annex A attached hereto. Section 2. Conditions Precedent. The effectiveness of this Amendment is subject to receipt by the Administrative Agent of each of the following in form and substance satisfactory to the Administrative Agent: (a) a counterpart of this Amendment duly executed by the Borrower, the Parent, the Administrative Agent, the Required Lenders and the Required Revolving Lenders; (b) such other documents, instruments and agreements as the Administrative Agent may reasonably request; and (c) evidence that all fees and expenses due and payable to the Administrative Agent, any of the Lenders and any of their respective Affiliates, required to be paid on the effective date of this Amendment, have been paid. Section 3. Representations. The Borrower represents and warrants to the Administrative Agent and the Lenders that: (a) Corporate and Governmental Authorization; No Contravention. The execution and delivery by the Borrower of this Amendment and the performance by the Borrower of its obligations hereunder and under the Credit Agreement as amended by this Amendment are within the corporate power of the Borrower, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official or other Person (except for any such action or filing that has been taken and is in full force and effect) and do not contravene, or
- 2 - constitute a default under, any provision of applicable law or regulation or of the Organization Documents of the Borrower or of any material agreement, judgment, injunction, order, decree or other material instrument binding upon the Borrower or result in the creation or imposition of any Lien on any asset of the Borrower other than Liens created pursuant to the Credit Documents. (b) Binding Effect. This Amendment and the Credit Agreement as amended by this Amendment constitute valid and binding agreements of the Borrower, enforceable against the Borrower in accordance with their terms. (c) No Default. No Default or Event of Default has occurred and is continuing as of the date hereof nor will exist immediately after giving effect to this Amendment. Section 4. Reaffirmation of Representations. The Borrower hereby repeats and reaffirms all representations and warranties made by the Borrower to the Administrative Agent and the Lenders in the Credit Agreement as amended by this Amendment and the other Credit Documents on and as of the date hereof with the same force and effect as if such representations and warranties were set forth in this Amendment in full. Section 5. Certain References. Each reference to the Credit Agreement in any of the Credit Documents shall be deemed to be a reference to the Credit Agreement as amended by this Amendment. This Amendment is a Credit Document. Section 6. Costs and Expenses. The Borrower shall reimburse the Administrative Agent for all reasonable out-of-pocket costs and expenses (including Attorney Costs) incurred by the Administrative Agent in connection with the preparation, negotiation and execution of this Amendment and the other agreements and documents executed and delivered in connection herewith. Section 7. Benefits. This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. Section 8. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT TAKING INTO ACCOUNT CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION). Section 9. Effect; Ratification. Except as expressly herein amended, the terms and conditions of the Credit Agreement and the other Credit Documents remain in full force and effect. The amendments contained herein shall be deemed to have prospective application only. The Credit Agreement is hereby ratified and confirmed in all respects. Nothing in this Amendment shall limit, impair or constitute a waiver of the rights, powers or remedies available to the Administrative Agent or the Lenders under the Credit Agreement or any other Credit Document. Section 10. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original and shall be binding upon all parties, their successors and assigns. Section 11. No Novation. THE PARTIES HERETO HAVE ENTERED INTO THIS AMENDMENT SOLELY TO AMEND THE TERMS OF THE EXISTING CREDIT AGREEMENT. THE PARTIES DO NOT INTEND THIS AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY TO BE, AND THIS AMENDMENT AND THE TRANSACTIONS
- 3 - CONTEMPLATED HEREBY SHALL NOT BE CONSTRUED TO BE, A NOVATION OF ANY OF THE OBLIGATIONS OWING BY THE BORROWER UNDER OR IN CONNECTION WITH THE EXISTING CREDIT AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS (AS DEFINED IN THE EXISTING CREDIT AGREEMENT). Section 12. Definitions. All capitalized terms not otherwise defined herein are used herein with the respective definitions given them in the Credit Agreement. [Signatures on Next Page]
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement to be executed as of the date first above written. HEALTHCARE REALTY HOLDINGS, L.P. By: /s/ Andrew E. Loope_______________ Name: Andrew E. Loope Title: Executive Vice President, General Counsel, and Secretary HEALTHCARE REALTY TRUST INCORPORATED By: /s/ Andrew E. Loope_______________ Name: Andrew E. Loope Title: Executive Vice President, General Counsel, and Secretary [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent, a L/C Issuer, a Lender and a Revolving Lender By: /s/ Brendan Magrady__________________ Name: Brendan Magrady Title: Vice President [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] JPMORGAN CHASE BANK, N.A., as a L/C Issuer, a Lender and a Revolving Lender By: /s/ Jason Baeten__________________ Name: Jason Baeten Title: Executive Director [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] PNC BANK, NATIONAL ASSOCIATION, as a Lender and a Revolving Lender By: /s/ Andrew T. White__________________ Name: Andrew T. White Title: Senior Vice President [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] U.S. BANK NATIONAL ASSOCIATION, as a Lender and a Revolving Lender By: /s/ Germaine R. Korhone__________________ Name: Germaine R. Korhone Title: Senior Vice President [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] THE BANK OF NOVA SCOTIA, as a Lender and a Revolving Lender By: /s/ Robb Gass__________________ Name: Robb Gass Title: Managing Director [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] BANK OF AMERICA, N.A., as a Lender and a Revolving Lender By: /s/ Grant Griffith__________________ Name: Grant Griffith Title: Associate [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] FIFTH THIRD BANK, NATIONAL ASSOCIATION, as a Lender and a Revolving Lender By: /s/ John Kang__________________ Name: John Kang Title: Executive Director [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] TRUIST BANK, as a Lender and a Revolving Lender By: /s/ Tim Conway__________________ Name: Tim Conway Title: Vice President [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] MIZUHO BANK, LTD., as a Lender and a Revolving Lender By: /s/ Donna DeMagistris__________________ Name: Donna DeMagistris Title: Managing Director [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] REGIONS BANK, as a Lender and a Revolving Lender By: /s/ William Chalmers__________________ Name: William Chalmers Title: Senior Vice President [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] MUFG BANK, LTD., as a Lender and a Revolving Lender By: /s/ Andrew Moore__________________ Name: Andrew Moore Title: Authorized Signatory [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] ROYAL BANK OF CANADA, as a Lender and a Revolving Lender By: /s/ Edward McKenna__________________ Name: Edward McKenna Title: Authorized Signatory [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] BARCLAYS BANK PLC, as a Lender and a Revolving Lender By: /s/ Charlene Saldanha__________________ Name: Charlene Saldanha Title: Director [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] MORGAN STANLEY BANK, N.A., as a Lender and a Revolving Lender By: /s/ Gretell Merlo__________________ Name: Gretell Merlo Title: Authorized Signatory [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, as a Lender and a Revolving Lender By: /s/ Michael Ubriaco__________________ Name: Michael Ubriaco Title: Director By: /s/ Jill Wong________________________ Name: Jill Wong Title: Director [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] CITIBANK, N.A., as a Lender and a Revolving Lender By: /s/ Christopher J. Albano__________________ Name: Christopher J. Albano Title: Authorized Signatory [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] FIRST HORIZON BANK, as a Lender and a Revolving Lender By: /s/ Stephen Taylor__________________ Name: Stephen Taylor Title: Vice President [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] CAPITAL ONE, NATIONAL ASSOCIATION, as a Lender By: /s/ Melissa DeVito__________________ Name: Melissa DeVito Title: Authorized Signer [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] ASSOCIATED BANK, NATIONAL ASSOCIATION, as a Lender and a Revolving Lender By: /s/ Mitchell Vega__________________ Name: Mitchell Vega Title: Senior Vice President [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] HANCOCK WHITNEY BANK, as a Lender and a Revolving Lender By: /s/ James Erwin__________________ Name: James Erwin Title: SVP [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] PINNACLE BANK, A TENNESSEE BANK, as a Lender and a Revolving Lender By: /s/ Todd Carter__________________ Name: Todd Carter Title: Senior Vice President [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] RENASANT BANK, as a Lender and a Revolving Lender By: /s/ Nathan Keller__________________ Name: Nathan Keller Title: Senior Managing Director [Signatures Continued on Next Page]
[Signature Page to First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement for Healthcare Realty Holdings, L.P.] FIRST INDEPENDENCE BANK, as a Lender By: /s/ Andrew Harper__________________ Name: Andrew Harper Title: Chief Credit Officer
ANNEX A AMENDED CREDIT AGREEMENT [See attached]
00EGAL02/46150133v10LEGAL02/47543734v6 Execution Version Conformed through First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement dated as of January 9, 2026 Loan Number: 1021328 CUSIP Number: 42220UA3C FIFTH AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT Dated as of July 25, 2025 by and among HEALTHCARE REALTY HOLDINGS, L.P., as Borrower, HEALTHCARE REALTY TRUST INCORPORATED, as Parent, THE FINANCIAL INSTITUTIONS PARTY HERETO AND THEIR ASSIGNEES UNDER SECTION 9.07, as Lenders, WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent, and JPMORGAN CHASE BANK, N.A., PNC BANK, NATIONAL ASSOCIATION, U.S. BANK NATIONAL ASSOCIATION, THE BANK OF NOVA SCOTIA, and BANK OF AMERICA, N.A., as Co-Syndication Agents FIFTH THIRD BANK, NATIONAL ASSOCIATION, TRUIST BANK MIZUHO BANK, LTD., REGIONS BANK, MUFG BANK, LTD., ROYAL BANK OF CANADA, BARCLAYS BANK PLC, MORGAN STANLEY SENIOR FUNDING, INC., CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, and CITIBANK, N.A., as Documentation Agents WELLS FARGO SECURITIES, LLC and JPMORGAN CHASE BANK, N.A., as Joint Book Runners WELLS FARGO SECURITIES, LLC, JPMORGAN CHASE BANK, N.A., PNC CAPITAL MARKETS LLC, U.S. BANK NATIONAL ASSOCIATION, THE BANK OF NOVA SCOTIA, and BOFA SECURITIES, INC., as Joint Lead Arrangers
TABLE OF CONTENTS Article and Section Page ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1 1.01 Defined Terms. 1 1.02 Interpretive Provisions. 33 1.03 Accounting Terms. 34 1.04 Rounding. 34 1.05 References to Agreements and Laws. 34 1.06 Times of Day. 35 1.07 Letter of Credit Amounts. 35 1.08 Rates. 35 1.09 Divisions. 35 ARTICLE II COMMITMENTS AND EXTENSIONS OF CREDIT 35 2.01 Borrowings and Commitments. 35 2.02 Borrowings, Conversions and Continuations. 37 2.03 Letters of Credit. 38 2.04 [Reserved]. 43 2.05 Repayment of Loans. 43 2.06 Prepayments. 43 2.07 Termination or Reduction of Commitments. 44 2.08 Interest. 44 2.09 Fees. 45 2.10 Computation of Interest and Fees. 47 2.11 Payments Generally; Administrative Agent’s Clawback. 47 2.12 Sharing of Payments. 49 2.13 Evidence of Debt. 50 2.14 Defaulting Lenders. 50 2.15 Extensions of Termination Date. 54 2.16 Increase in Commitments. 57 2.17 Expiration Date of Letters of Credit Past Revolving Termination Date. 59 2.18 Pro Rata Treatment. 59 2.19 Reallocations on Closing Date. 59 ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY 63 3.01 Taxes. 63 3.02 Illegality. 67 3.03 Changed Circumstances. 67 3.04 Increased Cost; Capital Adequacy. 70 3.05 Compensation for Losses. 71 3.06 Mitigation Obligations; Replacement of Lenders. 72 3.07 Treatment of Affected Loans. 73 3.08 Survival Losses. 74 ARTICLE IV 74 CONDITIONS PRECEDENT TO EXTENSIONS OF CREDIT 74 4.01 Conditions to Initial Extensions of Credit. 74 4.02 Conditions to Extensions of Credit. 76 ARTICLE V 77 -i- LEGAL02/47543734v6
REPRESENTATIONS AND WARRANTIES 77 5.01 Corporate Existence and Power. 77 5.02 Corporate and Governmental Authorization; No Contravention. 77 5.03 Binding Effect. 78 5.04 Litigation. 78 5.05 Compliance with ERISA. 78 5.06 Environmental Matters. 78 5.07 Material Subsidiaries and Specified Affiliates. 80 5.08 Not an Investment Company. 80 5.09 Margin Stock. 80 5.10 Compliance with Laws. 80 5.11 Absence of Liens. 81 5.12 Indebtedness. 81 5.13 Contingent Liabilities. 81 5.14 Investments. 81 5.15 Solvency. 81 5.16 Taxes. 81 5.17 REIT Status. 81 5.18 Specified Affiliates. 82 5.19 Financial Condition. 82 5.20 No Material Adverse Effect. 82 5.21 Accuracy and Completeness of Information. 82 5.22 Anti-Corruption Laws and Sanctions; Anti-Money Laundering Laws. 83 ARTICLE VI COVENANTS 83 6.01 Information. 83 6.02 Payment of Obligations. 86 6.03 Maintenance of Property; Insurance. 87 6.04 Conduct of Business and Maintenance of Existence. 87 6.05 Compliance with Laws. 87 6.06 Inspection of Property, Books and Records. 88 6.07 Negative Pledge. 88 6.08 Consolidations and Mergers. 90 6.09 Creation of Subsidiaries. 90 6.10 Incurrence and Existence of Debt. 90 6.11 Transactions with Affiliates. 91 6.12 Use of Proceeds. 91 6.13 Organization Documents. 92 6.14 [Reserved]. 92 6.15 [Reserved]. 92 6.16 Financial Covenants. 92 6.17 Specified Affiliates. 93 6.18 REIT Status. 93 6.19 Leases. 93 6.20 Favorable Treatment. 93 6.21 Limitations on Parent. 93 6.22 Limitation on Certain Agreements. 94 ARTICLE VII 94 EVENTS OF DEFAULT AND REMEDIES 94 7.01 Events of Default. 94 7.02 Application of Funds. 96 ARTICLE VIII ADMINISTRATIVE AGENT 98 00EGAL02/46150133v10LEGAL02/47543734v6
8.01 Appointment and Authorization. 98 8.02 Wells Fargo as Lender. 99 8.03 Approvals of Lenders. 100 8.04 Notice of Events of Default. 100 8.05 Administrative Agent’s Reliance. 100 8.06 Lender Credit Decision. 101 8.07 Successor Administrative Agent and Successor Sustainability Structuring Agent. 102 8.08 Titled Agents. 103 8.09 Indemnification of Administrative Agent. 103 8.10 Erroneous Payments. 104 8.11 [Reserved]. 106 8.12 Sustainability Structuring Agent. 106 ARTICLE IX MISCELLANEOUS 106 9.01 Amendments, Etc. 106 9.02 Notices and Other Communications. 111 9.03 No Waiver; Cumulative Remedies. 113 9.04 Attorney Costs, Expenses and Taxes. 114 9.05 Indemnification by the Borrower; Limitation of Liability. 114 9.06 Payments Set Aside. 115 9.07 Successors and Assigns. 115 9.08 Confidentiality. 119 9.09 Set-off. 120 9.10 Interest Rate Limitation. 121 9.11 Counterparts. 121 9.12 Integration; Effectiveness. 121 9.13 Survival of Representations and Warranties. 122 9.14 Severability. 122 9.15 [Reserved]. 122 9.16 GOVERNING LAW. 122 9.17 WAIVER OF RIGHT TO TRIAL BY JURY. 123 9.18 No Conflict. 123 9.19 USA PATRIOT Act Notice. 123 9.20 No Advisory or Fiduciary Responsibility. 124 9.21 Termination; Survival 124 9.22 Entire Agreement. 125 9.23 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. 125 9.24 Effect of Existing Credit Agreement. 126 9.25 Acknowledgement Regarding Any Supported QFCs. 126 SCHEDULES 2.01 Lenders and Commitments 2.03 Existing Letters of Credit 5.04 Litigation 5.06 Environmental Matters 5.07 Material Subsidiaries and Specified Affiliates 5.10 Compliance with Laws 5.12 Indebtedness 5.13 Contingent Liabilities 5.14 Investments 9.02 Notice Addresses 00EGAL02/46150133v10LEGAL02/47543734v6
EXHIBITS 1.01-2 Form of Disbursement Instruction Agreement 2.02 Form of Loan Notice 2.13-1 Form of Revolving Note 2.13-3 Form of HTA-1 Term Loan Note 2.13-4 Form of HTA-2 Term Loan Note 2.13-5 [Reserved] 2.13-6 Form of 2022 Term Loan Note 2.13-7 Form of HR-1 Term Loan Note 2.13-8 Form of HR-2 Term Loan Note 3.01-1 – 3.01-4 Forms of U.S. Tax Compliance 6.01 Form of Compliance Certificate 6.20 Form of Guaranty 9.07 Form of Assignment and Assumption 00EGAL02/46150133v10LEGAL02/47543734v6
THIS FIFTH AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT (this “Credit Agreement”) dated as of July 25, 2025 by and among HEALTHCARE REALTY HOLDINGS, L.P., a limited partnership formed under the laws of the State of Delaware (the “Borrower”), HEALTHCARE REALTY TRUST INCORPORATED, a Maryland corporation (the “Parent”), each of the financial institutions initially a signatory hereto together with their successors and assignees under Section 9.07 (the “Lenders”), WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent (the “Administrative Agent”) and the other parties hereto. WHEREAS, certain of the Lenders and other financial institutions made available to the Borrower revolving and term loan credit facilities on the terms and conditions contained in that certain Fourth Amended and Restated Revolving Credit and Term Loan Agreement dated as of July 20, 2022 (as at any time amended and as in effect immediately prior to the date hereof, the “Existing Credit Agreement”) by and among the Borrower, the Parent, certain of the Lenders, the other financial institutions party thereto and the Administrative Agent; and WHEREAS, the Borrower, the Parent, the Administrative Agent, the L/C Issuers and the Lenders (a) desire to amend and restate the terms of the Existing Credit Agreement and, in connection therewith, the Administrative Agent, the L/C Issuers and the Lenders wish to make available to the Borrower revolving and term loan credit facilities in the aggregate principal amount of $2,541,608,333.34 consisting of (i) a revolving credit facility in the aggregate principal amount of $1,500,000,000.00, with a $120,000,000.00 letter of credit subfacility, (ii) a previously funded term loan facility in the aggregate outstanding principal amount of $151,375,000.00 (the “HR-1 Term Loans” under the Existing Credit Agreement), (iii) a previously funded term loan facility in the aggregate outstanding principal amount of $121,500,000.00 (the “HR-2 Term Loans” under the Existing Credit Agreement), (iv) a previously funded term loan facility in the aggregate outstanding principal amount of $268,733,333.34 (the “HTA-1 Term Loans” under the Existing Credit Agreement), (v) a previously funded term loan facility in the aggregate outstanding principal amount of $200,000,000.00 (the “HTA-2 Term Loans” under the Existing Credit Agreement) and (vi) a previously funded term loan facility in the aggregate outstanding principal amount of $300,000,000.00 (the “New 5.5-Year Term Loan” under the Existing Credit Agreement), in each case, on the terms and conditions contained herein and (b) agree that each Departing Lender shall not be a Lender hereunder as more specifically set forth in Section 2.19(g) of this Agreement; and NOW, THEREFORE, in consideration of these premises and the mutual covenants and agreements contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1.01 Defined Terms. As used in this Credit Agreement, the following terms have the meanings set forth below: “2022 Term Loan” means as provided in Section 2.01(e). “2022 Term Loan Extension” means as provided in Section 2.15(f). “2022 Term Loan Extension Request” means as provided in Section 2.15(f). -1- LEGAL02/47543734v6
“2022 Term Loan Lender” means a Lender with a 2022 Term Loan. “2022 Term Loan Note” means the promissory notes substantially in the form of Exhibit 2.13-6, if any, given to each Lender with a 2022 Term Loan to evidence the 2022 Term Loans of such Lender, as amended, restated, modified, supplemented, extended, renewed or replaced. “2022 Term Loan Termination Date” means January 20, 2028, or such later date to which the 2022 Term Loan Termination Date may be extended pursuant to Section 2.15. “Acquisition” means the purchase or acquisition by any Person of (a) more than 50% of the Capital Stock with ordinary voting power of another Person or (b) all or any substantial portion of the property (other than Capital Stock) of another Person, whether or not involving a merger or consolidation with such Person. “Additional Lender” means as provided in Section 2.16(b). “Adjusted Daily Simple SOFR” means, for purposes of any calculation, the rate per annum equal to (a) Daily Simple SOFR for such calculation plus (b) the SOFR Adjustment. “Adjusted Term SOFR” means, for purposes of any calculation, the rate per annum equal to (a) Term SOFR for such calculation plus (b) the SOFR Adjustment. “Administrative Agent” means Wells Fargo as contractual representative of the L/C Issuers and the Lenders, or any successor Administrative Agent. “Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 9.02, or such other address or account as the Administrative Agent may from time to time notify the Borrower and the Lenders. “Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent. “Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution. “Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. In no event shall the Administrative Agent, any L/C Issuer or any Lender be deemed to be an Affiliate of the Borrower. “Agent-Related Persons” means the Related Parties of the Administrative Agent. “Aggregate Commitments” means the Commitments of all the Revolving Lenders. “Aggregate Revolving Committed Amount” means as provided in Section 2.01. “Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Parent, the Borrower or the Subsidiaries from time to time concerning or relating to bribery or corruption, including, without limitation, the United States Foreign Corrupt Practices Act of 1977 and the rules and regulations thereunder and the U.K. Bribery Act 2010 and the rules and regulations thereunder. -2- LEGAL02/47543734v6
-3- LEGAL02/47543734v6 0.30% 0.000% Term Loans: Pricing Level 0.15% Debt Ratings (or their equivalents) 1 Term Loans that are SOFR Loans Term Loans that are Base Rate Loans Debt Ratings (or their equivalents) 3 A-/A3 or better 1 BBB/Baa2 A-/A3 or better “Anti-Money Laundering Laws” means all laws, statutes, regulations or obligatory government orders, decrees, ordinances or rules applicable to the Parent, the Borrower, the Subsidiaries or Affiliates of any of the foregoing related to terrorism financing or money laundering, including any applicable provision of the Patriot Act and The Currency and Foreign Transactions Reporting Act (also known as the “Bank Secrecy Act,” 31 U.S.C. §§ 5311-5330 and 12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959). “Applicable Percentage” means, for any day, the applicable rate per annum set forth below opposite the applicable Debt Rating: Revolving Loans: 0.800% 0.850% 0.000% 0.725% 0.000% Revolving Loans that are SOFR Loans and Letter of Credit Fees 2 0.20% BBB+/Baa1 0.000% 0.850% 0.000% 4 0.125% 3 BBB-/Baa3 BBB/Baa2 Revolving Loans that are Base Rate Loans 0.950% 1.050% 0.000% 0.050% 4 0.25% BBB-/Baa3 2 1.200% 0.200% Facility Fee 5 BBB+/Baa1 5 BB+/Ba1 and below BB+/Ba1 and below Pricing Level 1.600% 1.400% 0.600% 0.775% 0.400% The Borrower will maintain a Debt Rating at all times with at least two (2) Ratings Services, and the Borrower may, at its option, obtain a third Debt Rating from another Ratings Service. The applicable Pricing Level will be determined by reference to the Debt Ratings; provided that: (a) if Debt Ratings are provided by two (2) Ratings Services and the Debt Ratings by the Rating Services indicate different Pricing Levels, then (A) if they are only one level apart, the applicable Pricing Level shall be determined by reference to the higher or better Debt Rating and shall be set at the Pricing Level indicated thereby, and (B) if they are more than one level apart, the applicable Pricing Level shall be determined by reference to the lower (or worse) Debt Rating and shall be set at one Pricing Level above the Pricing Level that would be indicated by the lower Debt Rating (e.g., if the Debt Rating by one of the Rating Services is A- and the Debt Rating by another of the Rating Services is Baa3, the Applicable Percentage would be set at Pricing Level 3), (b) if Debt Ratings are provided by three (3) or more Ratings Services acceptable to the Administrative Agent and the Debt Ratings indicate different Pricing Levels, then (A) if the two highest (or best) Debt Ratings are only one level apart, the applicable Pricing Level shall be
determined by reference to the higher or better Debt Rating and shall be set at the Pricing Level indicated thereby, and (B) otherwise, the applicable Pricing Level shall be determined by reference to the lower of the two (2) highest (or best) Debt Ratings and shall be set at the Pricing Level indicated thereby, and (c) if a Debt Rating is not provided by at least two (2) Ratings Services, or if no Debt Rating is available, then the Applicable Percentage shall be Pricing Level 5. The Applicable Percentage shall be determined and adjusted on the first Business Day following the date of any change in the Debt Rating. Adjustments in the Applicable Percentage shall be effective as to all Extensions of Credit, existing and prospective, from the date of adjustment. Determinations by the Administrative Agent of the applicable Pricing Level shall be conclusive absent manifest error. The Administrative Agent shall promptly notify the Lenders of changes in the Applicable Percentage. Notwithstanding the foregoing, (i) for the period from the Closing Date until the earlier of (x) April 7, 2026, and (y) the date that a sustainability notice with respect to sustainability pricing established pursuant to a KPI Metrics Amendment is delivered with respect to the fiscal year ending December 31, 2025, the Applicable Percentage in the pricing grid above shall be reduced by 0.01% and (ii) thereafter, if a KPI Metrics Amendment has become effective, the KPI Metrics Pricing Provisions set forth therein shall apply, otherwise, the unadjusted pricing in the applicable grid above shall apply until the date (if such date occurs) that such KPI Metrics Amendment shall become effective. “Approved Bank” means as provided in the definition of “Cash Equivalents”. “Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. “Arrangers” means WFS, JPMorgan Chase Bank (or any Affiliate of JPMorgan Chase Bank designated by it), PNC Capital Markets LLC, U.S. Bank National Association, The Bank of Nova Scotia and BofA Securities, Inc., in their capacities as joint lead arrangers. “Asset Sale” means any sale, lease or other disposition (including any such transaction effected by way of merger, amalgamation or consolidation) by the Parent, the Borrower or any of the Subsidiaries or Specified Affiliates subsequent to the date hereof of any asset (including stock), including without limitation any sale-leaseback transaction, whether or not involving a Capital Lease, but excluding (a) any sale, lease or other disposition in the ordinary course of business of real property which is the subject of mortgage liens permitted hereunder, (b) any sale, lease or other disposition of raw materials, supplies or other nonfixed assets in the ordinary course of business, (c) any sale, lease or other disposition of surplus, obsolete or worn out machinery, equipment, molds or other manufacturing equipment in the ordinary course of business to the extent that the aggregate book value of all of such assets sold, leased or otherwise disposed of in a fiscal year does not exceed $5,000,000, (d) any sale or other disposition in the ordinary course of business of readily marketable securities, (e) any disposition of cash not prohibited hereunder, and (f) the issuance of any shares of stock in any Specified Affiliate to any officer, director or employee of the Parent or the Borrower. “Assignment and Assumption” means an Assignment and Assumption substantially in the form of Exhibit 9.07. “Assignee Group” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor. -4- LEGAL02/47543734v6
“Attorney Costs” means and includes all fees, expenses and disbursements of any law firm or other external counsel. “Attributable Principal Amount” means (a) in the case of Capital Leases, the amount of Capital Lease obligations determined in accordance with GAAP, (b) in the case of Synthetic Leases, an amount determined by capitalization of the remaining lease payments thereunder as if it were a Capital Lease determined in accordance with GAAP, (c) in the case of Securitization Transactions, the outstanding principal amount of such financing, after taking into account reserve amounts and making appropriate adjustments, determined by the Administrative Agent in its reasonable judgment and (d) in the case of Sale and Leaseback Transactions, the present value (discounted in accordance with GAAP at the debt rate implied in the applicable lease) of the obligations of the lessee for rental payments during the term of such lease). “Available Tenor” means, as of any date of determination and with respect to any then-current Benchmark, as applicable, (a) if such Benchmark is a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an Interest Period pursuant to this Credit Agreement or (b) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark, in each case, as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 3.03(c)(iv). “Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution. “Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings). “Base Rate” means, at any time, the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.50% and (c) Adjusted Daily Simple SOFR on such day plus 1.00%; each change in the Base Rate shall take effect simultaneously with the corresponding change or changes in the Prime Rate, the Federal Funds Rate or Adjusted Daily Simple SOFR, as applicable (provided that clause (c) shall not be applicable during any period in which Adjusted Daily Simple SOFR is unavailable or unascertainable). Notwithstanding the foregoing, in no event shall the Base Rate be less than 1.00%. “Base Rate Loan” means a Loan that bears interest based on the Base Rate. “Benchmark” means, initially, Adjusted Daily Simple SOFR or Adjusted Term SOFR; provided that if a Benchmark Transition Event has occurred with respect to Adjusted Daily Simple SOFR or Adjusted Term SOFR, as applicable, or the applicable then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 3.03(c). “Benchmark Replacement” means, with respect to any Benchmark Transition Event for any then-current Benchmark, the sum of: (a) the alternate benchmark rate that has been selected by the -5- LEGAL02/47543734v6
Administrative Agent and the Borrower as the replacement for such Benchmark giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to such then-current Benchmark for Dollar-denominated syndicated credit facilities and (b) the related Benchmark Replacement Adjustment; provided that, if such Benchmark Replacement as so determined would be less than the Floor, such Benchmark Replacement will be deemed to be the Floor for the purposes of this Credit Agreement and the other Credit Documents. “Benchmark Replacement Adjustment” means, with respect to any replacement of any then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Available Tenor (if applicable), the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (b) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities. “Benchmark Replacement Date” means the earlier to occur of the following events with respect to any then-current Benchmark: (a) in the case of clause (a) or (b) of the definition of “Benchmark Transition Event,” the later of (i) the date of the public statement or publication of information referenced therein and (ii) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors (if applicable) of such Benchmark (or such component thereof); or (b) in the case of clause (c) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be non-representative; provided, that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (c) and even if any Available Tenor (if applicable) of such Benchmark (or such component thereof) continues to be provided on such date. For the avoidance of doubt, if the applicable then-current Benchmark has any Available Tenors, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (a) or (b) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof). “Benchmark Transition Event” means the occurrence of one or more of the following events with respect to any then-current Benchmark: (a) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors (if applicable) of such Benchmark (or such component thereof), permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that -6- LEGAL02/47543734v6
will continue to provide any Available Tenor (if applicable) of such Benchmark (or such component thereof); (b) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the FRB, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors (if applicable) of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor (if applicable) of such Benchmark (or such component thereof); or (c) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors (if applicable) of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative. For the avoidance of doubt, if the applicable then-current Benchmark has any Available Tenors, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof). “Benchmark Transition Start Date” means, in the case of a Benchmark Transition Event, the earlier of (a) the applicable Benchmark Replacement Date and (b) if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the 90th day prior to the expected date of such event as of such public statement or publication of information (or if the expected date of such prospective event is fewer than 90 days after such statement or publication, the date of such statement or publication). “Benchmark Unavailability Period” means, with respect to any then-current Benchmark, the period (if any) (x) beginning at the time that a Benchmark Replacement Date with respect to such Benchmark has occurred if, at such time, no Benchmark Replacement has replaced such Benchmark for all purposes hereunder and under any Credit Document in accordance with Section 3.03(c) and (y) ending at the time that a Benchmark Replacement has replaced such Benchmark for all purposes hereunder and under any Credit Document in accordance with Section 3.03(c). “Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation. “Beneficial Ownership Regulation” means 31 CFR § 1010.230. “Bond Hedge Transaction” means any call or capped call option (or substantively equivalent derivative transaction) on the common stock or other common equity interests of the Parent purchased by the Parent or the Borrower in connection with the issuance of any Convertible Indebtedness that is permitted to be incurred pursuant to this Agreement and is settled in common stock (or other common equity interests) of the Parent; provided that the purchase price for such Bond Hedge Transaction, less the proceeds received by the Parent, the Borrower or their respective Subsidiaries from the sale of any related -7- LEGAL02/47543734v6
Warrant Transaction, does not exceed the net proceeds received by the Parent, the Borrower or their respective Subsidiaries from the sale of such Convertible Indebtedness. “Borrower” means as provided in the recitals hereto. “Borrower Materials” means as provided in Section 6.01. “Borrowing” means a borrowing consisting of simultaneous Loans of the same Type and Class and, in the case of Term SOFR Loans, having the same Interest Period. “Business Day” means any day (other than a Saturday, Sunday or legal holiday) on which banks in San Francisco, California and New York, New York, are open for the conduct of their commercial banking business; provided that, when used in connection with an amount that bears interest at a rate based on SOFR or any direct or indirect calculation or determination involving SOFR, the term “Business Day” means any such day that is also a U.S. Government Securities Business Day. “Capital Lease” means a lease that would be capitalized on a balance sheet of the lessee prepared in accordance with GAAP, subject to Section 1.03 below. “Capital Stock” means (a) in the case of a corporation, capital stock, (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (c) in the case of a partnership, partnership interests (whether general or limited), (d) in the case of a limited liability company, membership interests and (e) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. “Cash Collateralize” means, to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the L/C Issuers or the Lenders, as collateral for L/C Obligations or obligations of Lenders to fund participations in respect of L/C Obligations, cash or deposit account balances or, if the Administrative Agent and the L/C Issuers shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to the Administrative Agent and the L/C Issuers. “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support. “Cash Equivalents” means (a) securities issued or directly and fully guaranteed or insured by (i) the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than twelve (12) months from the date of acquisition, (b) time deposits and certificates of deposit of (i) any Lender or (ii) any domestic commercial bank of recognized standing having capital and surplus in excess of $500,000,000 (each an “Approved Bank”), in each case with maturities of not more than 270 days from the date of acquisition, (c) commercial paper and variable or fixed rate notes issued by any Approved Bank (or by the parent company thereof) and maturing within six (6) months of the date of acquisition, (d) repurchase agreements entered into by any Person with a bank or trust company (including any of the Lenders) or recognized securities dealer having capital and surplus in excess of $500,000,000 for direct obligations issued by or fully guaranteed by the United States in which such Person shall have a perfected first priority security interest (subject to no other Liens) and having, on the date of purchase thereof, a fair market value of at least 100% of the amount of the repurchase obligations and (e) Investments (classified in accordance with GAAP as current assets) in money market investment programs registered under the Investment Company Act of 1940, as amended, that are administered by reputable financial institutions having capital of at least $500,000,000 and the portfolios of which are limited to Investments of the character described in the foregoing subclauses hereof. -8- LEGAL02/47543734v6
“CERCLA” means as provided in Section 5.06. “CERCLIS” means as provided in Section 5.06. “Change in Law” means, with respect to any Lender, any change effective after the Closing Date in Law (including without limitation, Regulation D of the Board of Governors of the Federal Reserve System) or the adoption or making after such date of any interpretation, directive or request applying to a class of banks, including such Lender, of or under any Law (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) by any Governmental Authority or monetary authority charged with the interpretation or administration thereof or compliance by any Lender with any request or directive regarding capital adequacy or liquidity. Notwithstanding anything herein to the contrary, (a) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (b) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted, implemented or issued. “Change of Control” means the occurrence of any of the following events: (a) any Person or two (2) or more Persons acting in concert shall have acquired beneficial ownership, directly or indirectly, of, or shall have acquired by contract or otherwise, voting stock of the Parent (or other securities convertible into such voting stock) representing 50% or more of the combined voting power of all voting stock of the Parent; (b) during any period of up to twelve (12) consecutive months, individuals who at the beginning of such twelve (12) month period were directors of the Parent (together with any new director whose election by the Parent’s Board of Directors or whose nomination for election by the Parent’s shareholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors of the Parent then in office; and (c) the Parent shall cease to be the general partner of the Borrower or shall cease to Control the Borrower. As used herein, “beneficial ownership” shall have the meaning provided in Rule 13d-3 of the SEC under the Securities Exchange Act of 1934. “Class” means (a) when used in reference to any Loan, whether such Loan is a Revolving Loan, a HR-1 Term Loan, a HR-2 Term Loan, a HTA-1 Term Loan, a HTA-2 Term Loan, a 2022 Term Loan or an Incremental Term Loan tranche and (b) when used with respect to a Lender, refers to whether such Lender is a Revolving Lender, a HR-1 Term Loan Lender, a HR-2 Term Loan Lender, a HTA-1 Term Loan Lender, a HTA-2 Term Loan Lender, a 2022 Term Loan Lender or a Lender holding Loans under an Incremental Term Loan tranche. “Closing Date” means the date hereof. “Commitment” means, with respect to each Lender, the commitment of such Lender to make Revolving Loans and to share in the Revolving Obligations hereunder up to such Lender’s Credit Percentage in respect of its Revolving Committed Amount. “Commitment Period” means the period from and including the Closing Date to the earlier of (a) the Revolving Termination Date or (b) the date on which the Commitments shall have been terminated as provided herein. “Compliance Certificate” means as provided in Section 6.01(c). “Confidential Information” means as provided in Section 9.08. -9- LEGAL02/47543734v6
“Conforming Changes” means, with respect to either the use or administration of an initial Benchmark or the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period” or any similar or analogous definition (or the addition of a concept of “interest period”), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of Section 3.05 and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of any such rate exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Credit Agreement and the other Credit Documents). “Consolidated EBITDA” means, for any period for the Consolidated Group, the sum of (a) net income attributable to common stockholders (or its equivalent) plus (b) to the extent deducted in determining net income attributable to common stockholders (or its equivalent), (i) Consolidated Interest Expense, (ii) the amount of income taxes (or minus the amount of tax benefits) and (iii) depreciation and amortization adjusted to exclude the effect (if any) of (c) extraordinary or nonrecurring items, including without limitation: gains and losses from the sale of operating properties; non-cash impairment charges; gains and losses on early extinguishment of Indebtedness; severance and other restructuring charges; and transaction costs of acquisitions not permitted to be capitalized pursuant to GAAP, in each case on a consolidated basis determined in accordance with GAAP. Except as otherwise expressly provided, the applicable period shall be for the four (4) consecutive fiscal quarters ending as of the date of determination. “Consolidated Fixed Charge Coverage Ratio” means the ratio of Consolidated EBITDA to Consolidated Fixed Charges. “Consolidated Fixed Charges” means, for any period for the Consolidated Group, the sum of (a) Consolidated Interest Expense plus (b) current scheduled principal payments of Funded Debt (including, for purposes hereof, current scheduled reductions in commitments, but excluding any “balloon” payment or final payment at maturity that is significantly larger than the scheduled payments that preceded it) for the period of four (4) consecutive fiscal quarters beginning the day after the date of determination plus (c) dividends and distributions on preferred stock, if any, and redemptions and repurchases thereof, in each case on a consolidated basis determined in accordance with GAAP. Except as otherwise expressly provided, the applicable period shall be for the four (4) consecutive fiscal quarters ending as of the date of determination. “Consolidated Group” means the Parent and its Consolidated Subsidiaries, as determined in accordance with GAAP. “Consolidated Interest Expense” means, for any period for the Consolidated Group, all interest expense and letter of credit fee expense, on a consolidated basis in accordance with GAAP, but including, in any event, the interest component under Capital Leases and the implied interest component under Securitization Transactions, but excluding the non-cash portion of interest expense attributable to Indebtedness convertible by its express terms into Capital Stock. Except as otherwise expressly provided, -10- LEGAL02/47543734v6
the applicable period shall be for the four (4) consecutive fiscal quarters ending as of the date of determination. “Consolidated Leverage Ratio” means the ratio of Consolidated Total Debt to Consolidated Total Capital. “Consolidated Secured Debt” means the aggregate principal amount of all Indebtedness of the Consolidated Group secured by a Lien on any property owned or leased by them. “Consolidated Secured Leverage Ratio” means the ratio of Consolidated Secured Debt to Consolidated Total Capital. “Consolidated Subsidiary” means at any date any Subsidiary or other entity the accounts of which would be consolidated with those of the Parent in its consolidated financial statements if such statements were prepared as of such date. For purposes of this Credit Agreement, Specified Affiliates of the Parent shall be classified as Consolidated Subsidiaries. “Consolidated Tangible Net Worth” means, for the Consolidated Group, (a) the sum of (i) stockholders’ equity on a consolidated basis plus (ii) accumulated depreciation determined in accordance with GAAP, but with no upward adjustments due to any revaluation of assets, minus (b) all Intangible Assets (excluding intangible assets in accordance with FASB ASC 805); provided, however, that to the extent that the aggregate amount of Consolidated Tangible Net Worth attributable to the following would exceed 35.0% of Consolidated Tangible Net Worth, such excess shall be excluded: (A) unconsolidated joint ventures or other non-Subsidiary enterprises in the same or closely related lines of business; (B) Capital Stock of Persons other than consolidated Subsidiaries and Investments described in the immediately preceding clause (A), (C) unimproved real estate; (D) construction projects and (E) Mortgage Receivables. “Consolidated Total Capital” means the sum of (a) Consolidated Tangible Net Worth plus (b) Consolidated Total Debt. “Consolidated Total Debt” means all Indebtedness of the Consolidated Group determined on a consolidated basis. “Consolidated Unencumbered EBITDA” means the portion of Consolidated EBITDA that is generated by Consolidated Unencumbered Realty. “Consolidated Unencumbered Interest Expense” means the portion of Consolidated Interest Expense that is not attributable to Consolidated Secured Debt. “Consolidated Unencumbered Leverage Ratio” means the ratio of Consolidated Unsecured Debt to Consolidated Unencumbered Realty. “Consolidated Unencumbered Realty” means, for the Consolidated Group, the book value of all realty (prior to deduction for accumulated depreciation) minus the book value of real property (prior to deduction for accumulated depreciation) which is subject to mortgage Liens described in clause (c) of Section 6.07 or mortgage Liens arising out of the refinancing, extension, renewal or refunding of any Indebtedness permitted hereunder secured by a mortgage Lien initially permitted under clause (c) of Section 6.07. To the extent that the aggregate amount of Consolidated Unencumbered Realty attributable to the following would exceed 20.0% of Consolidated Unencumbered Realty, such excess shall be excluded: (a) construction projects; (b) unimproved real estate; (c) realty owned or leased by a Subsidiary -11- LEGAL02/47543734v6
that is not a Wholly Owned Subsidiary (other than realty owned or leased by a Subsidiary that is not a Wholly Owned Subsidiary but for which the Parent exclusively controls, directly or indirectly, the sale and financing of such realty); and (d) realty not located in the United States of America. “Consolidated Unsecured Coverage Ratio” means the ratio of Consolidated Unencumbered EBITDA to Consolidated Unencumbered Interest Expense. “Consolidated Unsecured Debt” means the portion of Consolidated Total Debt that is not Consolidated Secured Debt. “Convertible Indebtedness” means all Convertible Notes and Convertible Note Guarantees. “Convertible Indebtedness Parties” means the Borrower, the Parent and any of their respective Subsidiaries. “Convertible Note Guarantees” means unsecured Indebtedness of any Convertible Indebtedness Party that is in the form of guarantees of Convertible Notes of another Convertible Indebtedness Party. “Convertible Notes” means unsecured Indebtedness of any Convertible Indebtedness Party that is either (a) convertible into, or exchangeable for, common stock or other common equity interests of the Parent (and cash in lieu of any fractional share of common stock or other common equity interest) and/or cash (in an amount determined by reference to the price or value of such common stock or other common equity interest); or (b) sold as units with call options, warrants or rights to purchase (or substantially equivalent derivative transactions) that are exercisable for common stock or other common equity interests of the Parent and/or cash (in an amount determined by reference to the price or value of such common stock or other common equity interest). For purposes of this definition, upon any recapitalization, business combination event or other event that causes such common stock or common equity interest to be exchanged for, or to represent solely the right to receive, other securities, cash, or other assets, references to “common stock” and “common equity” will in the preceding sentence will be deemed to refer to such other securities, cash or other assets. “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto. “Co-Syndication Agents” means JPMorgan Chase Bank, PNC Bank, National Association, U.S. Bank National Association, The Bank of Nova Scotia and Bank of America, N.A. “Credit Agreement” means as set forth in the introductory paragraph hereof. “Credit Documents” means this Credit Agreement, the Notes, each Issuer Document, the Guaranties, if any, the Fee Letters, the Letters of Credit and the Compliance Certificates. “Credit Parties” means, collectively, the Borrower and the Guarantors, if any. “Credit Percentage” means, at any time, (a) as to each Revolving Lender, a fraction (expressed as a percentage carried to the ninth decimal place), the numerator of which is such Lender’s Revolving Committed Amount and the denominator of which is the Aggregate Revolving Committed Amount; (b) as to each HTA-1 Term Loan Lender, a fraction (expressed as a percentage carried to the ninth decimal place), the numerator of which is such Lender’s outstanding principal amount of HTA-1 Term Loans and the denominator of which is the aggregate outstanding principal amount of all HTA-1 Term Loans; (c) as -12- LEGAL02/47543734v6
to each HTA-2 Term Loan Lender, a fraction (expressed as a percentage carried to the ninth decimal place), the numerator of which is such Lender’s outstanding principal amount of HTA-2 Term Loans and the denominator of which is the aggregate outstanding principal amount of all HTA-2 Term Loans; (d) [reserved], (e) as to each 2022 Term Loan Lender, a fraction (expressed as a percentage carried to the ninth decimal place), the numerator of which is such 2022 Term Loan Lender’s 2022 Term Loan and the denominator of which is the aggregate outstanding principal amount of all 2022 Term Loans, (f) as to each HR-1 Term Loan Lender, a fraction (expressed as a percentage carried to the ninth decimal place), the numerator of which is such Lender’s outstanding principal amount of HR-1 Term Loans and the denominator of which is the aggregate outstanding principal amount of all HR-1 Term Loans and (g) as to each HR-2 Term Loan Lender, a fraction (expressed as a percentage carried to the ninth decimal place), the numerator of which is such Lender’s outstanding principal amount of HR-2 Term Loans and the denominator of which is the aggregate outstanding principal amount of all HR-2 Term Loans. The initial Credit Percentages are set forth on Schedule 2.01. “Daily Simple SOFR” means, for any day (a “Simple SOFR Rate Day”), a rate per annum equal to the greater of (a) SOFR for the day (such day, a “SOFR Determination Day”) that is two U.S. Government Securities Business Days prior to (A) if such Simple SOFR Rate Day is a U.S. Government Securities Business Day, such Simple SOFR Rate Day or (B) if such Simple SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such Simple SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website; provided that if by 5:00 p.m. on the second (2nd) U.S. Government Securities Business Day immediately following any SOFR Determination Day, SOFR in respect of such SOFR Determination Day has not been published on the SOFR Administrator’s Website and a Benchmark Replacement Date with respect to Daily Simple SOFR has not occurred, then SOFR for such SOFR Determination Day will be SOFR as published in respect of the first preceding U.S. Government Securities Business Day for which such SOFR was published on the SOFR Administrator’s Website; provided further that SOFR as determined pursuant to this proviso shall be utilized for purposes of calculation of Daily Simple SOFR for no more than three (3) consecutive Simple SOFR Rate Days and (b) the Floor. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower. “Daily Simple SOFR Loan” means any Loan bearing interest at a rate based on Adjusted Daily Simple SOFR (other than pursuant to the Adjusted Daily Simple SOFR component of the definition of “Base Rate”). “Debt Rating” means the rating by a Ratings Service for the Borrower’s senior unsecured (non-credit enhanced) long-term debt. “Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally. “Default” means any event, act or condition that, with notice, the passage of time, or both, would constitute an Event of Default. “Defaulting Lender” means, subject to Section 2.14(f), any Lender that (a) has failed to (i) fund all or any portion of its Loans within 2 Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in -13- LEGAL02/47543734v6
such writing) has not been satisfied, or (ii) pay to the Administrative Agent, the L/C Issuers or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit) within 2 Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent, the L/C Issuers in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within 3 Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States of America or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.14(f)) upon delivery of written notice of such determination to the Borrower, the L/C Issuers and each Lender. “Default Rate” means (a) with respect to any principal of any Loan or any Reimbursement Obligation, the rate otherwise applicable plus an additional two percent (2.0%) per annum and (b) with respect to any other Obligation, a rate per annum equal to the Base Rate as in effect from time to time plus the Applicable Percentage for Base Rate Loans plus two percent (2.0%). “Departing Lenders” means each Lender under and as defined in the Existing Credit Agreement who is not consenting to the amendment and restatement of the Existing Credit Agreement evidenced hereby and who will not continue as a “Lender” under this Agreement after the Closing Date. “Disbursement Instruction Agreement” means an agreement substantially in the form of Exhibit 1.01-2 to be executed and delivered by the Borrower, as the same may be amended, restated or modified from time to time with the prior written approval of the Administrative Agent. “Dollar” or “$” means the lawful currency of the United States. “EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent. -14- LEGAL02/47543734v6
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway. “EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any credit institution or investment firm established in any EEA Member Country. “Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 9.07(b)(iii), (v), (vi) and (vii) (subject to such consents, if any, as may be required under Section 9.07(b)(iii)). “Environmental Laws” means any and all federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder. “ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Internal Revenue Code (and Sections 414(m) and (o) of the Internal Revenue Code for purposes of provisions relating to Section 412 of the Internal Revenue Code). “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition that could reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate. “Erroneous Payment” means as provided in Section 8.10(a). “Erroneous Payment Deficiency Assignment” means as provided in Section 8.10(d). “Erroneous Payment Impacted Class” means as provided in Section 8.10(d). “Erroneous Payment Return Deficiency” means as provided in Section 8.10(d). “EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor thereto), as in effect from time to time. -15- LEGAL02/47543734v6
“Event of Acceleration” means any of the events or conditions set forth in Sections 7.01(g), (h) or (i) with respect to the Parent or the Borrower. “Event of Default” means as provided in Section 7.01. “Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a Law in effect on the date on which (i) such Lender acquires such interest in such Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 3.06) or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 3.01, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Lending Office, (c) Taxes attributable to such Recipient’s failure to comply with Section 3.01(g) and (d) any U.S. federal withholding Taxes imposed under FATCA. “Existing Credit Agreement” has the meaning provided in the second WHEREAS clause of this Credit Agreement. “Existing Letters of Credit” means the letters of credit issued and outstanding under the Existing Credit Agreement and set forth on Schedule 2.03. “Extended Letter of Credit” means as provided in Section 2.03(b). “Extended Commitment” means any Class of Commitments the maturity of which shall have been extended pursuant to Section 9.01(i). “Extended Revolving Loans” means any Revolving Loans made pursuant to the Extended Commitments. “Extended Term Loans” means any Class of Term Loans the maturity of which shall have been extended pursuant to Section 9.01(i). “Extension” has the meaning given that term in Section 9.01(i). “Extension Amendment” means an amendment to this Agreement (which may, at the option of the Administrative Agent and the Borrower, be in the form of an amendment and restatement of this Agreement) among Parent, the Borrower, the applicable extending Lenders, the Administrative Agent and, to the extent required by Section 9.01(i) the L/C Issuers implementing an Extension in accordance with Section 9.01(i), and acknowledged or reaffirmed by each Subsidiary Guarantor. “Extension of Credit” means (i) any Borrowing and (ii) any L/C Credit Extension. “Extension Offer” has the meaning given that term in Section 9.01(i). “Facility Fee” means as provided in Section 2.09(a). -16- LEGAL02/47543734v6
“FATCA” means Sections 1471 through 1474 of the Internal Revenue Code, as of the date of this Credit Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code. “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that if such rate is not so published for any day which is a Business Day, the Federal Funds Rate for such day shall be the average of the quotation for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by the Administrative Agent. “Federal Reserve Bank of New York’s Website” means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org, or any successor source. “Fee Letters” means (i) the letter agreement dated as of May 29, 2025, among the Borrower, the Parent, WFS and Wells Fargo, and (ii) each other fee letter entered into in connection with this Agreement by and between the Parent, the Borrower and any Arranger, in each case as amended and modified from time to time. “First HR-1 Extension” means as provided in Section 2.15(d). “First HTA-1 Extension” means as provided in Section 2.15(b). “Floor” means a rate of interest equal to 0%. “Foreign Lender” means (a) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes. For purposes of this definition, the United States, each state thereof and the District of Columbia shall be deemed to constitute a single jurisdiction. “Fourth HTA-1 Extension” means as provided in Section 2.15(b). “FRB” means the Board of Governors of the Federal Reserve System of the United States. “Fronting Exposure” means, at any time there is a Defaulting Lender, with respect to any L/C Issuer, such Defaulting Lender’s Credit Percentage (in respect of its Revolving Committed Amount) of the outstanding L/C Obligations other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof. “Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities. “Funded Debt” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP: -17- LEGAL02/47543734v6
(a) all obligations for borrowed money, whether current or long-term (including the Obligations hereunder), and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments; (b) all purchase money indebtedness (including indebtedness and obligations in respect of conditional sales and title retention arrangements, except for customary conditional sales and title retention arrangements with suppliers that are entered into in the ordinary course of business) and all indebtedness and obligations in respect of the deferred purchase price of property or services (other than trade accounts payable incurred the ordinary course of business and payable on customary trade terms); (c) all direct obligations under letters of credit (including standby and commercial), bankers’ acceptances and similar instruments (including bank guaranties, surety bonds, comfort letters, keep-well agreements and capital maintenance agreements) to the extent such instruments or agreements support financial, rather than performance, obligations; (d) the Attributable Principal Amount of Capital Leases and Synthetic Leases; (e) the Attributable Principal Amount of Securitization Transactions; (f) all preferred stock and comparable equity interests providing for mandatory redemption, sinking fund or other like payments; (g) Support Obligations in respect of Funded Debt of another Person; and (h) Funded Debt of any partnership or joint venture or other similar entity in which such Person is a general partner or joint venturer, and, as such, has personal liability for such obligations, but only to the extent there is recourse to such Person for payment thereof. For purposes hereof, the amount of Funded Debt shall be determined based on the outstanding principal amount in the case of borrowed money indebtedness under clause (a) and purchase money indebtedness and the deferred purchase obligations under clause (b), based on the maximum amount available to be drawn in the case of letter of credit obligations and the other obligations under clause (c), and based on the amount of Funded Debt that is the subject of the Support Obligations in the case of Support Obligations under clause (g). “GAAP” means generally accepted accounting principles in effect in the United States applied on a consistent basis as set forth in (a) the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants, (b) statements and pronouncements of the Financial Accounting Standards Board and (c) interpretations of the SEC (including published staff interpretations), in each case subject to the provisions of Section 1.03. Accounting principles are applied on a “consistent basis” when the accounting principles applied in a current period are comparable in all material respects to those accounting principles applied in a preceding period, except to the extent that new accounting standards have been adopted by such organizations applicable as of the current period. “Governmental Authority” means any national, state or local government (whether domestic or foreign), any political subdivision thereof or any other governmental, quasi-governmental, judicial, public or statutory instrumentality, authority, body, agency, bureau or entity (including, without limitation, the Federal Deposit Insurance Corporation, the Comptroller of the Currency or the Federal Reserve Board, any central bank or any comparable authority) or any arbitrator with authority to bind a party at law. -18- LEGAL02/47543734v6
“Guarantor” means any party that may give a guaranty of the loans and obligations hereunder in substantially the form of Exhibit 6.20 or other form reasonably satisfactory to the Administrative Agent and the Required Lenders, in each case as amended, supplemented or otherwise modified from time to time. “Guaranties” means, collectively, those guaranty agreements, if any, given in respect of the loans and obligations owing under this Credit Agreement, as amended, supplemented or otherwise modified from time to time. “Hazardous Substance” means any toxic or hazardous substance, including petroleum and its derivatives regulated under the Environmental Laws. “HR-1 Term Loans” means as provided in Section 2.01(f). “HR-1 Term Loan Extension” means as provided in Section 2.15(d). “HR-1 Term Loan Extension Request” means as provided in Section 2.15(d). “HR-1 Term Loan Note” means the promissory notes substantially in the form of Exhibit 2.13-7, if any, given to each Lender with a HR-1 Term Loan to evidence the HR-1 Term Loans of such Lender, as amended, restated, modified, supplemented, extended, renewed or replaced. “HR-1 Term Loan Lender” means a Lender with an outstanding HR-1 Term Loan. “HR-1 Term Loan Termination Date” means January 31, 2026, or such later date to which the HR-1 Term Loan Termination Date may be extended pursuant to Section 2.15. “HR-2 Term Loans” means as provided in Section 2.01(g). “HR-2 Term Loan Extension” means as provided in Section 2.15(d). “HR-2 Term Loan Extension Request” means as provided in Section 2.15(d). “HR-2 Term Loan Note” means the promissory notes substantially in the form of Exhibit 2.13-8, if any, given to each Lender with a HR-2 Term Loan to evidence the HR-2 Term Loans of such Lender, as amended, restated, modified, supplemented, extended, renewed or replaced. “HR-2 Term Loan Lender” means a Lender with an outstanding HR-2 Term Loan. “HR-2 Term Loan Termination Date” means June 1, 2026, or such later date to which the HR-2 Term Loan Termination Date may be extended pursuant to Section 2.15. “HTA-1 Term Loans” means as provided in Section 2.01(b). “HTA-1 Term Loan Extension” means as provided in Section 2.15(b). “HTA-1 Term Loan Extension Request” means as provided in Section 2.15(b). “HTA-1 Term Loan Note” means the promissory notes substantially in the form of Exhibit 2.13-3, if any, given to each Lender with a HTA-1 Term Loan to evidence the HTA-1 Term Loans of such Lender, as amended, restated, modified, supplemented, extended, renewed or replaced. -19- LEGAL02/47543734v6
“HTA-1 Term Loan Lender” means a Lender with an outstanding HTA-1 Term Loan. “HTA-1 Term Loan Termination Date” means October 31, 2025, or such later date to which the HTA-1 Term Loan Termination Date may be extended pursuant to Section 2.15. “HTA-2 Term Loans” means as provided in Section 2.01(c). “HTA-2 Term Loan Extension” means as provided in Section 2.15(c). “HTA-2 Term Loan Extension Request” means as provided in Section 2.15(c). “HTA-2 Term Loan Note” means the promissory notes substantially in the form of Exhibit 2.13-4, if any, given to each Lender with a HTA-2 Term Loan to evidence the HTA-2 Term Loans of such Lender, as amended, restated, modified, supplemented, extended, renewed or replaced. “HTA-2 Term Loan Lender” means a Lender with an outstanding HTA-2 Term Loan. “HTA-2 Term Loan Termination Date” means July 20, 2027, or such later date to which the HTA-2 Term Loan Termination Date may be extended pursuant to Section 2.15. “Increase Effective Date” means as provided in Section 2.16(c). “Incremental Increases” means as provided in Section 2.16(a). “Incremental Term Loan” means as provided in Section 2.16(a). “Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP: (a) all Funded Debt; (b) all contingent obligations under letters of credit (including standby and commercial), bankers’ acceptances and similar instruments (including bank guaranties, surety bonds, comfort letters, keep-well agreements and capital maintenance agreements) to the extent such instruments or agreements support financial, rather than performance, obligations; (c) net obligations under any Swap Contract; (d) Support Obligations in respect of Indebtedness of another Person; and (e) Indebtedness of any partnership or joint venture or other similar entity in which such Person is a general partner or joint venturer, and, as such, has personal liability for such obligations, but only to the extent there is recourse to such Person for payment thereof. For purposes hereof, the amount of Indebtedness shall be determined based on Swap Termination Value in the case of net obligations under Swap Contracts under clause (c) and based on the outstanding principal amount of the Indebtedness that is the subject of the Support Obligations in the case of Support Obligations under clause (d). “Indemnified Liabilities” means as provided in Section 9.05. -20- LEGAL02/47543734v6
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Credit Party under any Credit Document and (b) to the extent not otherwise described in the immediately preceding clause (a), Other Taxes. “Indemnitees” means as provided in Section 9.05. “Individual Subsidiary Test” means as provided in the definition of “Material Subsidiaries” in this Section 1.01. “Intangible Assets” means all assets consisting of goodwill, patents, trade names, trademarks, copyrights, franchises, experimental expense, organization expense, unamortized debt discount and expense, deferred assets (other than prepaid insurance and prepaid taxes), the excess of cost of shares acquired over book value of related assets and such other assets as are properly classified as “intangible assets” in accordance with GAAP, but excluding, for purposes hereof, leasehold intangible assets and fair value adjustments of debt assumed recorded by a Person in connection with such Person’s acquisition of real estate operations in accordance with FASB ASC 805. “Interest Payment Date” means, (a) as to any Base Rate Loan or Daily Simple SOFR Loan, the first Business Day of each month and the Termination Date with respect to the applicable Class of Loans and (b) as to any Term SOFR Loan, the first Business Day of each month, the last Business Day of each Interest Period for such Loan, the date of repayment of principal of such Loan and the applicable Termination Date with respect to the applicable Class of Loans. If an Interest Payment Date falls on a date that is not a Business Day, such Interest Payment Date shall be deemed to be the immediately succeeding Business Day. “Interest Period” means, as to any Term SOFR Loan, the period commencing on the date such Term SOFR Loan is disbursed or converted to or continued as a Term SOFR Loan and ending on the date one (1), three (3) or six (6) months thereafter, in each case as selected by the Borrower in its Notice of Borrowing or Notice of Conversion/Continuation and subject to availability; provided that: (a) the Interest Period shall commence on the date of advance of or conversion to any Term SOFR Loan and, in the case of immediately successive Interest Periods, each successive Interest Period shall commence on the date on which the immediately preceding Interest Period expires; (b) if any Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided that if any Interest Period would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the immediately preceding Business Day; (c) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the relevant calendar month at the end of such Interest Period, and no Interest Period shall extend beyond the Termination Date applicable to such Class of Loans; and (d) no tenor that has been removed from this definition pursuant to Section 3.03(c)(iv) shall be available for specification in any Notice of Borrowing or Notice of Conversion/Continuation. “Internal Revenue Code” means the Internal Revenue Code of 1986. “Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Capital Stock of another Person, (b) a loan, advance or capital contribution to, guaranty or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person, or (c) the purchase or other acquisition (in one -21- LEGAL02/47543734v6
transaction or a series of transactions) of assets of another Person that constitute a business unit. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment. “IRS” means the United States Internal Revenue Service. “ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance). “Issuer Documents” means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by any L/C Issuer and the Borrower (or any Subsidiary) or in favor of such L/C Issuer and relating to such Letter of Credit. “Joint Book Runners” means WFS and JPMorgan Chase Bank, in their capacities as joint book runners. “JPMorgan Chase Bank” means JPMorgan Chase Bank, N.A., together with its successors. “KPIs” means as provided in Section 9.01(j). “KPI Metrics Amendment” means as provided in Section 9.01(j). “KPI Metrics Applicable Rate Adjustments” means as provided in Section 9.01(j). “KPI Metrics” means as provided in Section 9.01(j). “KPI Metrics Pricing Provisions” means as provided in Section 9.01(j). “Laws” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law. “L/C Committed Amount” means as provided in Section 2.03(a). “L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the renewal or increase of the amount thereof. “L/C Customary Charges” means as provided in Section 2.09(d)(ii). “L/C Disbursements” means as provided in Section 2.14(b). “L/C Fronting Fee” means as provided in Section 2.09(d)(ii). “L/C Issuer” means each of Wells Fargo and JPMorgan Chase Bank, in their respective capacities as an issuer of Letters of Credit pursuant to Section 2.03. “L/C Issuer Fees” means as provided in Section 2.09(d)(ii). -22- LEGAL02/47543734v6
“L/C Obligations” means, as at any date of determination, the Stated Amount of all outstanding Letters of Credit plus the aggregate unpaid principal amount of all Reimbursement Obligations. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.07. For all purposes of this Credit Agreement, (i) a Lender (other than a Lender that is the L/C Issuer for the applicable Letter of Credit) shall be deemed to hold an L/C Obligation in an amount equal to its participation interest under Section 2.03 in the related Letter of Credit, and the Lender that is the L/C Issuer for such Letter of Credit shall be deemed to hold an L/C Obligation in an amount equal to its retained interest in the related Letter of Credit after giving effect to the acquisition by the other Lenders of their participation interests under such Section and (ii) if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn. “Lender” means each of the Persons identified as a “Lender” on the signature pages hereto (and includes the Revolving Lenders and the Term Loan Lenders and, as appropriate, the L/C Issuers) and each Person who joins as a Lender pursuant to the terms hereof, together with their respective successors and assigns. For the avoidance of doubt, the term “Lenders” excludes the Departing Lenders. “Lender-Related Person” means as provided in Section 9.05. “Lending Office” means, as to any Lender, the office or offices of such Lender set forth in such Lender’s Administrative Questionnaire or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent. “Letter of Credit” means each standby letter of credit issued hereunder. “Letter of Credit Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by a L/C Issuer. “Letter of Credit Collateral Account” means a special deposit account maintained by the Administrative Agent, for the benefit of the Administrative Agent, the L/C Issuers and the Lenders, and under the sole dominion and control of the Administrative Agent. “Letter of Credit Fee” means as provided in Section 2.09(d)(i). “Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, and any Capital Lease having substantially the same economic effect as any of the foregoing). “Loan” means any Revolving Loan or any Term Loan and the Base Rate Loans and SOFR Loans comprising such Loans. “Loan Notice” means a notice of (a) a Borrowing of Loans, (b) a conversion of Loans from one Type to the other, or (c) a continuation of Term SOFR Loans, which, if in writing, shall be substantially in the form of Exhibit 2.02. “Master Agreement” means as provided in the definition of “Swap Contract”. -23- LEGAL02/47543734v6
“Material Acquisition” means any Acquisition (whether by direct purchase, merger or otherwise and whether in one or more related transactions) by the Borrower or any Subsidiary in which the purchase price of the assets acquired exceeds an amount equal to 10.0% of consolidated total assets as of the last day of the most recently ended fiscal quarter prior to the consummation of such Acquisition of the Parent for which financial statements are publicly available. “Material Adverse Effect” means a material adverse effect on (i) the financial condition, operations, business, assets or liabilities of the Consolidated Group taken as a whole, (ii) the ability of the Parent, the Borrower or any other Credit Party to perform any material obligation under the Credit Documents, or (iii) the rights and remedies of the Administrative Agent and the Lenders under the Credit Documents. “Material Subsidiary” means any Subsidiary of the Parent or the Borrower with net assets or revenues in excess of 1.5% of the Parent’s consolidated net assets or revenues for the most recently ended quarterly period for which financial statements are available (the “Individual Subsidiary Test”); provided, however, that the aggregate net assets and revenues of the Material Subsidiaries shall equal at least 90% of the Parent’s consolidated net assets and revenues for the most recently ended quarterly period for which financial statements are available. In the event that the aggregate net assets and revenues of Subsidiaries meeting the Individual Subsidiary Test do not equal 90% of the Parent’s consolidated net assets and revenues, then the Subsidiaries that do not meet the Individual Subsidiary Test (starting with the largest Subsidiary based on net assets and revenue and working down in each case to the next largest Subsidiary based on net assets and revenue) that are necessary to make the aggregate net assets and revenues of the Material Subsidiaries equal at least 90% of the net assets and revenues of the Parent for the most recently ended quarterly period for which financial statements are available, shall be included in the definition of Material Subsidiaries. “Maximum Rate” means as provided in Section 9.10. “Mortgage Receivable” means a promissory note secured by a mortgage, deed of trust, deed to secure debt or similar security instrument made by a Person owning an interest in real estate granting a Lien on such interest in real estate as security for the payment of Indebtedness of which the Parent, the Borrower or a Subsidiary is the holder and retains the rights of collection of all payments thereunder. “Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five (5) plan years, has made or been obligated to make contributions. “Non-Defaulting Lender” means a Lender that is not a Defaulting Lender. “Notes” means the Revolving Notes, the HTA-1 Term Loan Notes, the HTA-2 Term Loan Notes, the 2022 Term Loan Notes, the HR-1 Term Loan Notes and the HR-2 Term Loan Notes. “Obligations” means, without duplication, (i) the aggregate principal balance of, and all accrued and unpaid interest on, all Loans (ii) all Reimbursement Obligations and other L/C Obligations and (iii) all other advances to, and debts, liabilities, obligations, covenants and duties of, any Credit Party arising under any Credit Document or otherwise with respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising including, without limitation, fee and indemnification obligations and including interest and fees that accrue after the commencement by or against any Credit Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in -24- LEGAL02/47543734v6
such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding. For the avoidance of doubt, “Obligations” shall not include any obligations under any Swap Contract. “OFAC” means the Office of Foreign Assets Control of the U.S. Department of the Treasury. “Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity. “Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Credit Document, or sold or assigned an interest in any Loan or Credit Document). “Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Credit Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.06(b)). “Outstanding Amount” means (a) with respect to Revolving Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any Borrowings and prepayments or repayments of Revolving Loans occurring on such date; and (b) with respect to any L/C Obligations on any date, the aggregate outstanding amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the amount of the L/C Obligations as of such date. “Parent” means as provided in the recitals hereto. “Participant” means as provided in Section 9.07(d). “Patriot Act” means the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)). “Payment Recipient” has the meaning assigned thereto in Section 8.10(a). “PBGC” means the Pension Benefit Guaranty Corporation. “PCB” means as provided in Section 5.06(b). “Pension Plan” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA -25- LEGAL02/47543734v6
Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five (5) plan years. “Person” means an individual, corporation, partnership, limited liability company, association, trust or unincorporated organization, or a government or any agency or political subdivision thereof. “Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by the Borrower or, with respect to any such plan that is subject to Section 412 of the Internal Revenue Code or Title IV of ERISA, any ERISA Affiliate. “Platform” means as provided in Section 6.01. “Prime Rate” means, at any time, the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate. Each change in the Prime Rate shall be effective as of the opening of business on the day such change in such prime rate occurs. The parties hereto acknowledge that the rate announced publicly by the Administrative Agent as its prime rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks. “Public Lender” means as provided in Section 6.01. “Ratings Service” means any nationally recognized rating agency reasonably acceptable to the Administrative Agent. “Recipient” means (a) the Administrative Agent, (b) any Lender and (c) any L/C Issuer, as applicable. “Register” means as provided in Section 9.07(c). “Regulation T” means Regulation T of the Board of Governors of the Federal Reserve System, as in effect from time to time. “Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time. “Regulation X” means Regulation X of the Board of Governors of the Federal Reserve System, as in effect from time to time. “Reimbursement Obligation” means the absolute, unconditional and irrevocable obligation of the Borrower to reimburse an L/C Issuer for any drawing honored by such L/C Issuer under a Letter of Credit. “REIT” means a real estate investment trust as defined in Sections 856-860 of the Internal Revenue Code. “Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, counsel, advisors and attorneys-in-fact of such Person and of such Person’s Affiliates. “Release” means as provided in Section 5.06(a). -26- LEGAL02/47543734v6
“Relevant Governmental Body” means the FRB or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the FRB or the Federal Reserve Bank of New York, or any successor thereto. “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty-day notice period has been waived. “Request for Extension of Credit” means (a) with respect to a Borrowing of Loans or the conversion or continuation of Loans, a Loan Notice and (b) with respect to a L/C Credit Extension, a Letter of Credit Application. “Required Class Lenders” means, as of any date of determination, with respect to any Class of Lenders (other than Required Revolving Lenders), Lenders having more than 50% of the aggregate Commitments of such Class plus the outstanding Loans (if any) of all Lenders of such Class or, if the Commitments of such Class have terminated, holding more than 50% of the aggregate principal amount of the outstanding Loans of such Class; provided that (i) in determining such percentage at any given time, all then existing Defaulting Lenders will be disregarded and excluded and (ii) at all times when two or more Lenders that are not Affiliates of one another (excluding Defaulting Lenders) are party to this Credit Agreement, the term “Required Class Lenders” shall in no event mean less than two Lenders in such Class. “Required Lenders” means, as of any date of determination, Lenders having more than 50% of (a) the Aggregate Commitments or, if the Commitments have been terminated or reduced to zero, Lenders holding in the aggregate more than 50% of the Revolving Loans and L/C Obligations and (b) the outstanding principal amount of the Term Loans; provided that (i) in determining such percentage at any given time, all then existing Defaulting Lenders will be disregarded and excluded and (ii) at all times when two or more Lenders (excluding Defaulting Lenders) are party to this Credit Agreement, the term “Required Lenders” shall in no event mean less than two Lenders that are not Affiliates of one another. For purposes of this definition, a Lender shall be deemed to hold a L/C Obligation to the extent such Lender has acquired a participation therein under the terms of this Credit Agreement and has not failed to perform its obligations in respect of such participation. “Required Revolving Lenders” means, as of any date of determination, Lenders holding more than 50% of the (a) Aggregate Commitments or (b) if the Commitments have been terminated or reduced to zero, Lenders holding in the aggregate more than 50% of the Revolving Loans and L/C Obligations; provided that (i) in determining such percentage at any given time, all then existing Defaulting Lenders will be disregarded and excluded and (ii) at all times when two or more Lenders (excluding Defaulting Lenders) having Commitments are party to this Credit Agreement, the term “Required Revolving Lenders” shall in no event mean less than two Lenders that are not Affiliates of one another having Commitments. For purposes of this definition, a Lender shall be deemed to hold a L/C Obligation to the extent such Lender has acquired a participation therein under the terms of this Credit Agreement and has not failed to perform its obligations in respect of such participation. “Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority. “Responsible Officer” means, for purposes of certifying or confirming matters related to Organization Documents, incumbency and like matters, the secretary or assistant secretary, and for other purposes, the chief executive officer, president, chief financial officer, treasurer, assistant treasurer, chief accounting officer or other executive officer or senior vice president of a Credit Party. Any document delivered hereunder that is signed by a Responsible Officer of a Credit Party shall be conclusively -27- LEGAL02/47543734v6
presumed to have been authorized by all necessary corporate, limited liability company, partnership and/or other action on the part of such Credit Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Credit Party. “Revolving Committed Amount” means, with respect to each Revolving Lender, the amount of such Revolving Lender’s Commitment. The initial Revolving Committed Amounts are set forth on Schedule 2.01. “Revolving Credit Exposure” means, as to any Lender at any time, the aggregate principal amount at such time of its outstanding Revolving Loans and such Lender’s participation in L/C Obligations at such time. “Revolving Credit Increase” means as provided in Section 2.16(a). “Revolving Credit Increase Lender” means as provided in Section 2.16(d). “Revolving Extension” means as provided in Section 2.15(a). “Revolving Extension Request” means as provided in Section 2.15(a). “Revolving Lender” means any Lender holding a Commitment and/or an outstanding Revolving Loan or other Revolving Credit Exposure. “Revolving Loans” means as set forth in Section 2.01. “Revolving Note” means the promissory notes substantially in the form of Exhibit 2.13-1, if any, given to each Lender to evidence the Revolving Loans of such Lender, as amended, restated, modified, supplemented, extended, renewed or replaced. “Revolving Obligations” means the Revolving Loans and the L/C Obligations. “Revolving Termination Date” means July 25, 2029, or such later date to which the Revolving Termination Date may be extended pursuant to Section 2.15. “Sale and Leaseback Transaction” means, with respect to the Parent, the Borrower or any Subsidiary, any arrangement, directly or indirectly, with any person whereby the Parent, the Borrower or such Subsidiary shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property being sold or transferred. “Sanctioned Country” means at any time, a country or territory which is itself the subject or target of any Sanctions (including, as of the Closing Date, Cuba, Iran, North Korea, Sudan, Syria, the Crimea, Zaporizhzhia and Kherson Regions of Ukraine, and the so-called Donetsk People’s Republic or Luhansk People’s Republic regions of Ukraine). “Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC (including, without limitation, OFAC’s Specially Designated Nationals and Blocked Persons List and OFAC’s Consolidated Non-SDN List), the U.S. Department of State, the United Nations Security Council, the European Union, His Majesty’s Treasury of the United Kingdom, or other relevant sanctions authority, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons described in -28- LEGAL02/47543734v6
clauses (a) and (b), including a Person that is deemed by OFAC to be a Sanctions target based on the ownership of such legal entity by Sanctioned Peron(s). “Sanctions” means any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and anti-terrorism laws, including but not limited to those imposed, administered or enforced from time to time by the U.S. government (including those administered by OFAC or the U.S. Department of State), the United Nations Security Council, the European Union, His Majesty’s Treasury of the United Kingdom, or other relevant sanctions authority with jurisdiction over any Lender, the Parent, the Borrower, any of the Subsidiaries or any Affiliates of any of the foregoing. “SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions. “Second HR-1 Extension” means as provided in Section 2.15(d). “Second HTA-1 Extension” means as provided in Section 2.15(b). “Securitization Receivables” means as provided in the definition of “Securitization Transaction”. “Securitization Subsidiary” means as provided in the definition of “Securitization Transaction”. “Securitization Transaction” means any financing or factoring or similar transaction (or series of such transactions) entered by any member of the Consolidated Group pursuant to which such member of the Consolidated Group may sell, convey or otherwise transfer, or grant a security interest in, accounts, payments, receivables, rights to future lease payments or residuals or similar rights to payment (the “Securitization Receivables”) to a special purpose subsidiary or affiliate (a “Securitization Subsidiary”) or any other Person. “SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator. “SOFR Adjustment” means, (a) with respect to HR-1 Term Loans, HTA-1 Term Loans and HR-2 Term Loans, a percentage equal to 0.10% per annum and (b) with respect to Revolving Loans, HTA-2 Term Loans and 2022 Term Loans, a percentage equal to 0.00% per annum. “SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate). “SOFR Loans” means a Daily Simple SOFR Loan or a Term SOFR Loan. “Solvent” means, with respect to any person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured and (c) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. -29- LEGAL02/47543734v6
“Specified Affiliate” means any corporation, association or other business entity formed for the purpose of earning income not qualified as “rents from real property” under applicable provisions of the Internal Revenue Code, in which the Parent directly or indirectly owns substantially all of the economic interest, but less than 10% of the voting interests, and the remaining economic and voting interests are subject to restrictions requiring that ownership of such interests be held by officers, directors or employees of the Parent or the Borrower. “SPTs” means as provided in Section 9.01(j). “Stated Amount” means the amount available to be drawn by a beneficiary under a Letter of Credit from time to time, as such amount may be increased or reduced from time to time in accordance with the terms of such Letter of Credit; provided, however, with respect to any Letter of Credit that, by its terms or the terms of any application related thereto, provides for one or more automatic increases in the Stated Amount thereof, the Stated Amount of such Letter of Credit shall be deemed to be the maximum Stated Amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum Stated Amount is in effect at such time. “Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise provided, “Subsidiary” shall refer to a Subsidiary of the Parent. “Subsidiary Guarantor” means any Subsidiary of the Parent which is a Guarantor. “Support Obligations” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person. The amount of any Support Obligations shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Support Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. “Sustainability Adjustment Limitations” means as set forth in Section 9.01(j). “Sustainability Linked Loan Principles” means the Sustainability Linked Loan Principles (as published in March, 2025 by the Loan Market Association, Asia Pacific Loan Market Association and Loan Syndications & Trading Association). -30- LEGAL02/47543734v6
“Sustainability Structuring Agent” means Wells Fargo Securities, LLC as sustainability structuring agent under this agreement, or any successor Sustainability Structuring Agent. “Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, that are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement. “Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination values determined in accordance therewith, such termination values, and (b) for any date prior to the date referenced in clause (a), the amounts determined as the mark-to-market values for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender). “Synthetic Lease” means any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing arrangement that is considered borrowed money indebtedness for tax purposes but is classified as an operating lease under GAAP. “Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto. “Term Loan” means a HTA-1 Term Loan, HTA-2 Term Loan, 2022 Year Term Loan, HR-1 Term Loan, HR-2 Term Loan or any Incremental Term Loan made pursuant to Section 2.16, and as the context may require, “Term Loans” means a HTA-1 Term Loan, HTA-2 Term Loan, 2022 Term Loan, HR-1 Term Loan, HR-2 Term Loan and any Incremental Term Loan made pursuant to Section 2.16. “Term Loan Lender” means any Lender holding a an outstanding Term Loan. “Term SOFR” means, for any calculation, the Term SOFR Reference Rate for a tenor comparable to the applicable Interest Period on the day (such day, the “Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. on any Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not -31- LEGAL02/47543734v6
more than three (3) U.S. Government Securities Business Days prior to such Term SOFR Determination Day; provided, further, that if Term SOFR determined as provided above (including pursuant to the proviso under clause (a) or clause (b) above) shall ever be less than the Floor, then Term SOFR shall be deemed to be the Floor. “Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion). “Term SOFR Loan” means a Loan that bears interest at a rate based on Term SOFR. “Term SOFR Reference Rate” means the forward-looking term rate based on SOFR. “Termination Date” means (a) with respect to the Commitment and the Revolving Loans and any other Revolving Credit Exposure, the Revolving Termination Date, (b) with respect to the HTA-1 Term Loans, the HTA-1 Term Loan Termination Date, (c) with respect to the HTA-2 Term Loans, the HTA-2 Term Loan Termination Date, (d) [reserved], (e) with respect to the 2022 Term Loans, the 2022 Term Loan Termination Date, (f) with respect to the HR-1 Term Loans, the HR-1 Term Loan Termination Date, (g) with respect to the HR-2 Term Loans, the HR-2 Term Loan Termination Date and (h) with respect to any other Class of Loans, the “Termination Date” specified for such Class of Loans in the Credit Documents establishing such Class of Loans. “Third HR-1 Extension” means as provided in Section 2.15(d). “Third HTA-1 Extension” means as provided in Section 2.15(b). “Type” means with respect to a Revolving Loan, its character as a Base Rate Loan, a Daily Simple SOFR Loan or a Term SOFR Loan. “UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms. “UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution. “Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark Replacement Adjustment. “Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Internal Revenue Code for the applicable plan year. “United States” or “U.S.” means the United States of America. “U.S. Bank” means U.S. Bank National Association, together with its successors. -32- LEGAL02/47543734v6
“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities; provided, that for purposes of notice requirements in Sections 2.02, 2.03, 2.04, 2.06 and 2.07, in each case, such day is also a Business Day. “U.S. Tax Compliance Certificate” means as provided in Section 3.01(g)(ii)(B)(III). “Warrant Transaction” means any call option or warrant on, or right to purchase (or substantively equivalent derivative transaction), the common stock or other common equity interests of the Parent sold by the Parent substantially concurrently with any purchase by the Parent, the Borrower or their respective Subsidiaries of a related Bond Hedge Transaction and settled in common shares of the Parent, cash or a combination thereof. “Wells Fargo” means Wells Fargo Bank, National Association, together with its successors. “WFS” means Wells Fargo Securities, LLC, together with its successors. “Wholly Owned” means, with respect to any direct or indirect Subsidiary of any Person, that 100% of the Capital Stock with ordinary voting power issued by such Subsidiary (other than directors’ qualifying shares and investments by foreign nationals mandated by applicable Law) is beneficially owned, directly or indirectly, by such Person. “Withholding Agent” means (a) the Borrower and (b) the Administrative Agent, as applicable. “Write-Down and Conversion Powers” means (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers. 1.02 Interpretive Provisions. With reference to this Credit Agreement and each other Credit Document, unless otherwise provided herein or in such other Credit Document: (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. (b) (i) The words “herein”, “hereto”, “hereof” and “hereunder” and words of similar import when used in any Credit Document shall refer to such Credit Document as a whole and not to any particular provision thereof. (ii) Unless otherwise provided or required by context, Article, Section, Exhibit and Schedule references are to the Credit Document in which such reference appears. -33- LEGAL02/47543734v6
(iii) The term “including” is by way of example and not limitation. (iv) The term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form. (c) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”; and the word “through” means “to and including”. (d) Section headings herein and in the other Credit Documents are included for convenience of reference only and shall not affect the interpretation of this Credit Agreement or any other Credit Document. (e) The word “will” shall be construed to have the same meaning and effect as the word “shall”. (f) Unless the context requires otherwise, (i) any reference to any Person shall be construed to include such Person’s successors and assigns and (ii) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. 1.03 Accounting Terms. (a) All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Credit Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time (including giving effect to Accounting Standards Codification 842 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) (and related interpretations) (collectively “ASC 842”)); provided, however, if the effect of ASC 842 on the financial reporting of the Parent would be material, GAAP shall be applied herein without giving effect to ASC 842 (i) to the extent any lease (or similar arrangement conveying the right to use) would be required to be treated as a Capital Lease thereunder where such lease (or similar arrangement) would have been treated as an operating lease under GAAP as in effect immediately prior to the effectiveness of the Accounting Standards Codification 842 and (ii) to the extent that any liability relating to a ground lease and the corresponding right of use asset would be required to be listed on the Parent’s balance sheet as a result of Accounting Standards Codification 842; provided, further, that the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Credit Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made in accordance with GAAP and made without giving effect to ASC 842, if applicable, except as otherwise specifically prescribed herein. (b) The Borrower will provide a written summary of changes in GAAP that are material to the Borrower or in the consistent application thereof with each annual and quarterly Compliance Certificate delivered in accordance with Section 6.01(c); provided, however, that the furnishing of filings of the Parent’s quarterly reports on Form 10-Q and annual reports on Form 10-K, as filed with the SEC, shall satisfy this delivery requirement to the extent such summaries, consistent with FASB ASC 235-10, Notes to Financial Statements, are contained in such filings. If at any time any change in GAAP -34- LEGAL02/47543734v6
or in the consistent application thereof would affect the computation of any financial ratio or requirement set forth in any Credit Document, and either the Borrower or the Required Lenders shall object in writing to determining compliance based on such change, then such computations shall continue to be made on a basis consistent with the most recent financial statements delivered pursuant to Section 6.01(a) or (b) as to which no such objection has been made. 1.04 Rounding. Any financial ratios required to be maintained by the Parent and the Borrower pursuant to this Credit Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number). 1.05 References to Agreements and Laws. Unless otherwise expressly provided herein, (a) references to Organization Documents, agreements (including the Credit Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Credit Document; and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law. 1.06 Times of Day. Unless otherwise provided, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable). 1.07 Letter of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the Stated Amount of such Letter of Credit in effect at such time. 1.08 Rates. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, (a) the continuation of, administration of, submission of, calculation of or any other matter related to SOFR, Adjusted Daily Simple SOFR, Daily Simple SOFR, the Term SOFR Reference Rate, Adjusted Term SOFR or Term SOFR, or any component definition thereof or rates referred to in the definition thereof, or with respect to any alternative, successor or replacement rate thereto (including any Benchmark Replacement), including whether the composition or characteristics of any such alternative, successor or replacement rate (including any Benchmark Replacement), as it may or may not be adjusted pursuant to Section 3.03(c), will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as, SOFR, Adjusted Daily Simple SOFR, Daily Simple SOFR, the Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR or any other Benchmark prior to its discontinuance or unavailability, or (b) the effect, implementation or composition of any Conforming Changes. The Administrative Agent and its Affiliates or other related entities may engage in transactions that affect the calculation of SOFR, Adjusted Daily Simple SOFR, Daily Simple SOFR, the Term SOFR Reference Rate, Adjusted Term SOFR, or Term SOFR, any alternative, successor or replacement rate (including any Benchmark Replacement) or any relevant adjustments thereto and such -35- LEGAL02/47543734v6
transactions may be adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain SOFR, Adjusted Daily Simple SOFR, Daily Simple SOFR, the Term SOFR Reference Rate, Adjusted Term SOFR or Term SOFR, or any other Benchmark, any component definition thereof or rates referred to in the definition thereof, in each case pursuant to the terms of this Credit Agreement, and shall have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service. 1.09 Divisions. For all purposes under the Credit Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its equity interests at such time. ARTICLE II COMMITMENTS AND EXTENSIONS OF CREDIT 2.01 Borrowings and Commitments. (a) Revolving Loans. Subject to the terms and conditions set forth herein, during the Commitment Period, each Revolving Lender severally agrees to make revolving credit loans in Dollars (the “Revolving Loans”) to the Borrower on any Business Day; provided that after giving effect to any such Revolving Loan, (i) with regard to the Revolving Lenders collectively, the aggregate principal amount of Revolving Obligations shall not exceed ONE BILLION FIVE HUNDRED MILLION AND 00/100 DOLLARS ($1,500,000,000.00) (as such amount may be increased or decreased in accordance with the provisions hereof, the “Aggregate Revolving Committed Amount”), and (ii) with regard to each Lender individually, such Lender’s Credit Percentage of Revolving Obligations shall not exceed its respective Revolving Committed Amount. Revolving Loans may consist of Base Rate Loans, Daily Simple SOFR Loans, Term SOFR Loans or a combination thereof, as the Borrower may request, and may be repaid and reborrowed in accordance with the provisions hereof. (b) HTA-1 Term Loans. The parties hereto acknowledge that certain term loans (the “HTA-1 Term Loans”) were advanced prior to the date hereof and are outstanding under the Existing Credit Agreement. Such term loans shall be continued as, and shall constitute, HTA-1 Term Loans hereunder. The outstanding principal balance of the HTA-1 Term Loans on the Closing Date is TWO HUNDRED SIXTY-EIGHT MILLION SEVEN HUNDRED THIRTY-THREE THOUSAND THREE HUNDRED THIRTY-THREE AND 34/100 DOLLARS ($268,733,333.34) and the amount of each HTA-1 Term Loan Lender’s HTA-1 Term Loans outstanding as of the Closing Date are set forth on Schedule 2.01. Once repaid, the HTA-1 Term Loans cannot be reborrowed. (c) HTA-2 Term Loans. The parties hereto acknowledge that certain term loans (the “HTA-2 Term Loans”) were advanced prior to the date hereof and are outstanding under the Existing Credit Agreement. The outstanding principal balance of the HTA-2 Term Loans on the Closing Date is TWO HUNDRED MILLION AND 00/100 DOLLARS ($200,000,000.00) and the amount of each HTA-2 Term Loan Lender’s HTA-2 Term Loans outstanding as of the Closing Date are set forth on Schedule 2.01. Once repaid, the HTA-2 Term Loans cannot be reborrowed. -36- LEGAL02/47543734v6
(d) [Reserved]. (e) 2022 Term Loans. The parties hereto acknowledge that certain term loans (referenced as the “New 5.5 Year Term Loans” under the Existing Credit Agreement and referred to herein as the “2022 Term Loans”) were advanced prior to the date hereof and are outstanding under the Existing Credit Agreement. The outstanding principal balance of the 2022 Term Loans on the Closing Date is THREE HUNDRED MILLION AND 00/100 DOLLARS ($300,000,000.00) and the amount of each 2022 Term Loan Lender’s 2022 Term Loans outstanding as of the Closing Date are set forth on Schedule 2.01. Once repaid, the 2022 Term Loans cannot be reborrowed. (f) HR-1 Term Loans. The parties hereto acknowledge that certain term loans (the “HR-1 Term Loans”) were advanced prior to the date hereof and are outstanding under the Existing Credit Agreement. The outstanding principal balance of the HR-1 Term Loans on the Closing Date is ONE HUNDRED FIFTY-ONE MILLION THREE HUNDRED SEVENTY-FIVE THOUSAND AND 00/100 DOLLARS ($151,375,000.00) and the amount of each HR-1 Term Loan Lender’s HR-1 Term Loans outstanding as of the Closing Date are set forth on Schedule 2.01. Once repaid, the HR-1 Term Loans cannot be reborrowed. (g) HR-2 Term Loans. The parties hereto acknowledge that certain term loans (the “HR-2 Term Loans”) were advanced prior to the date hereof and are outstanding under the Existing Credit Agreement. The outstanding principal balance of the HR-2 Term Loans on the Closing Date is ONE HUNDRED TWENTY-ONE MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($121,500,000.00) and the amount of each HR-2 Term Loan Lender’s HR-2 Term Loans outstanding as of the Closing Date are set forth on Schedule 2.01. Once repaid, the HR-2 Term Loans cannot be reborrowed. 2.02 Borrowings, Conversions and Continuations. (a) Each Borrowing, each conversion of Loans from one Type to the other, and each continuation of Term SOFR Loans shall be made upon the Borrower’s irrevocable notice to the Administrative Agent, which may be given by telephone. Each such notice must be received by the Administrative Agent not later than (i) with respect to Term SOFR Loans, 1:00 p.m. three (3) Business Days prior to, or (ii) with respect to Base Rate Loans and Daily Simple SOFR Loans, 11:00 a.m. on, the requested date of any Borrowing, conversion or continuation of Loans. Each telephonic notice by the Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Except as provided in Section 2.03(e), each Borrowing, conversion or continuation shall be in a principal amount of (i) with respect to Term SOFR Loans, $2,000,000 or a whole multiple of $1,000,000 in excess thereof or (ii) with respect to Base Rate Loans and Daily Simple SOFR Loans, $500,000 or a whole multiple of $100,000 in excess thereof. Each Loan Notice (whether telephonic or written) shall specify (i) whether such request is for a Borrowing, conversion or continuation, (ii) the requested date of such Borrowing, or such conversion or continuation (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed, converted or continued, and (v) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Loan in a Loan Notice, then the applicable Loans shall be made as Base Rate Loans. If the Borrower fails to select in a timely manner a new Interest Period for any Term SOFR Loan in accordance with this Section, such Loan will automatically, on the last day of the current Interest Period therefor, continue as a Term SOFR Loan with an Interest Period of one (1) month; provided, however that if an Event of Default exists, such Loan will automatically, on the last day of the current Interest Period therefor, convert into a Base Rate Loan notwithstanding the Borrower’s -37- LEGAL02/47543734v6
failure to comply with any of the terms of this Section. If the Borrower requests a Borrowing of, conversion to, or continuation of, Term SOFR Loans in any Loan Notice, but fails to specify an Interest Period, the Interest Period will be deemed to be one (1) month. (b) Following receipt of a Loan Notice with respect to a Borrowing, the Administrative Agent shall promptly notify each Lender of the amount of its Credit Percentage of the applicable Loans, Type and Interest Period, if applicable, of the Loan to be made by such Lender. Each Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than (i) with respect to Term SOFR Loans, 3:00 p.m. and (ii) with respect to Base Rate Loans and Daily Simple SOFR Loans, 4:00 p.m., on the Business Day specified in the applicable Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Extension of Credit, Section 4.01), the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrower on the books of the Administrative Agent with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with the Disbursement Instruction Agreement. Promptly after receipt of a Loan Notice requesting a conversion or continuation of Loans, the Administrative Agent shall notify each Lender of the proposed conversion or continuation and the terms thereof, including any automatic conversion to a Base Rate Loan or continuation of Term SOFR Loans. (c) Except as otherwise provided herein, without the consent of the Required Lenders, (i) a Term SOFR Loan may be continued or converted only on the last day of an Interest Period for such Term SOFR Loan and (ii) any conversion into, or continuation as, a SOFR Loan may be made only if the conditions to Extensions of Credit in Section 4.02 have been satisfied. During the existence of an Event of Default, (i) no Loan may be requested as, converted to or continued as a SOFR Loan and (ii) at the request of the Required Lenders, any outstanding SOFR Loan shall be converted immediately to a Base Rate Loan. (d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Interest Period for Term SOFR Loans upon determination of such interest rate. The determination of Adjusted Daily Simple SOFR or Adjusted Term SOFR by the Administrative Agent shall be conclusive in the absence of manifest error. (e) After giving effect to all Borrowings, all conversions of Loans from one Type to the other, and all continuations of Loans as the same Type, there shall not be more than twenty (20) Interest Periods in effect. 2.03 Letters of Credit. (a) Letters of Credit. Subject to the terms and conditions of this Credit Agreement, each L/C Issuer, on behalf of the Lenders, agrees to issue for the account of the Borrower (which may be issued in support of obligations of any Subsidiary of the Borrower) during the period from and including the Closing Date to, but excluding, the date 30 days prior to the Revolving Termination Date, one or more standby letters of credit (each a “Letter of Credit”) up to a maximum aggregate Stated Amount at any one time outstanding not to exceed $120,000,000 as such amount may be reduced from time to time in accordance with the terms hereof (the “L/C Committed Amount”); provided, that an L/C Issuer shall not be obligated to issue any Letter of Credit if, after giving effect to such issuance, the aggregate Stated Amount of the outstanding Letters of Credit issued by such L/C Issuer would exceed the lesser of (x) one-half of the L/C Committed Amount and (y) the Commitment of such L/C Issuer in its capacity as a Lender. The parties hereto agree that the Existing Letters of Credit shall be deemed to be Letters of Credit for all purposes of this Credit Agreement. -38- LEGAL02/47543734v6
An L/C Issuer shall not be under any obligation to issue, amend or extend any Letter of Credit if: (i) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such L/C Issuer from issuing, amending or extending such Letter of Credit, or request that such L/C Issuer refrain from issuing, amending or extending such Letter of Credit, or any law applicable to such L/C Issuer shall prohibit, the issuance, amendment or extension of letters of credit generally or such Letter of Credit in particular, or any such order, judgment or decree, or law shall impose upon such L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital or liquidity requirement (for which such L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon such L/C Issuer any unreimbursed loss, cost or expense that was not applicable on the Closing Date and that such L/C Issuer in good faith deems material to it; or (ii) the issuance, amendment or extension of such Letter of Credit would violate one or more policies of such L/C Issuer applicable to letters of credit generally. (b) Terms of Letters of Credit. At the time of issuance, the amount, form, terms and conditions of each Letter of Credit, and of any drafts or acceptances thereunder, shall be subject to approval by the applicable L/C Issuer and the Borrower. Notwithstanding the foregoing, in no event may (i) the expiration date of any Letter of Credit extend beyond the Revolving Termination Date, or (ii) any Letter of Credit have an initial duration in excess of one year; provided, however, a Letter of Credit may contain a provision providing for the automatic extension of the expiration date in the absence of a notice of non-renewal from the applicable L/C Issuer but in no event shall any such provision permit the extension of the expiration date of such Letter of Credit beyond the Revolving Termination Date. Notwithstanding the foregoing, a Letter of Credit may, as a result of its express terms or as the result of the effect of an automatic extension provision, have an expiration date of not more than one year beyond the Revolving Termination Date (any such Letter of Credit being referred to as an “Extended Letter of Credit”) so long as the Borrower delivers to the Administrative Agent for the benefit of the applicable L/C Issuer and the Lenders no later than 30 days prior to the Revolving Termination Date, Cash Collateral for such Letter of Credit for deposit into the Letter of Credit Collateral Account in an amount equal to the Stated Amount of such Letter of Credit; provided, that the obligations of the Borrower under this Section in respect of Extended Letters of Credit shall survive the termination of this Credit Agreement and shall remain in effect until no Extended Letters of Credit remain outstanding. If the Borrower fails to provide Cash Collateral with respect to any Extended Letter of Credit by the date 30 days prior to the Revolving Termination Date, such failure shall be treated as a drawing under such Extended Letter of Credit (in an amount equal to the maximum Stated Amount of such Letter of Credit), which shall be reimbursed (or participations therein funded) by the Lenders in accordance with the immediately following subsections (i) and (j), with the proceeds being utilized to provide Cash Collateral for such Letter of Credit. The initial Stated Amount of each Letter of Credit shall be at least $500,000 (or such lesser amount as may be acceptable to the applicable L/C Issuer, the Administrative Agent and the Borrower). (c) Requests for Issuance of Letters of Credit. The Borrower shall give an L/C Issuer and the Administrative Agent written notice at least five (5) Business Days prior to the requested date of issuance of a Letter of Credit, such notice to describe in reasonable detail the proposed terms of such Letter of Credit and the nature of the transactions or obligations proposed to be supported by such Letter of Credit, and in any event shall set forth with respect to such Letter of Credit the proposed (i) initial Stated Amount, (ii) beneficiary, and (iii) expiration date. The Borrower shall also execute and deliver such customary applications and agreements for standby letters of credit, and other forms as requested from time to time by the applicable L/C Issuer. Provided the Borrower has given the notice prescribed by the -39- LEGAL02/47543734v6
first sentence of this subsection and delivered such applications and agreements referred to in the preceding sentence, subject to the other terms and conditions of this Credit Agreement, including the satisfaction of any applicable conditions precedent set forth in Article IV, the applicable L/C Issuer shall issue the requested Letter of Credit on the requested date of issuance for the benefit of the stipulated beneficiary but in no event shall such L/C Issuer be required to issue the requested Letter of Credit prior to the date five (5) Business Days (or such shorter time period as may be acceptable to the applicable L/C Issuer) following the date on which such L/C Issuer has received all of the items, if any, required to be delivered to it under this subsection. An L/C Issuer shall not at any time be obligated to issue any Letter of Credit if such issuance would conflict with, or cause such L/C Issuer or any Lender to exceed any limits imposed by, any Law. References herein to “issue” and derivations thereof with respect to Letters of Credit shall also include extensions or modifications of any outstanding Letters of Credit, unless the context otherwise requires. Upon the written request of the Borrower, the applicable L/C Issuer shall deliver to the Borrower a copy of each Letter of Credit issued by it within a reasonable time after the date of issuance thereof. To the extent any term of an Issuer Document is inconsistent with a term of the Credit Agreement, the term of the Credit Agreement shall control. The Borrower shall examine the copy of any Letter of Credit or any amendment to a Letter of Credit that is delivered to it by the applicable L/C Issuer and, in the event of any claim of noncompliance with the Borrower’s instructions or other irregularity, the Borrower will promptly (but in any event, within 10 Business Days after the later of (x) receipt by the beneficiary of such Letter of Credit of the original of, or amendment to, such Letter of Credit, as applicable and (y) receipt by the Borrower of a copy of such Letter of Credit or amendment, as applicable) notify such L/C Issuer. The Borrower shall be conclusively deemed to have waived any such claim against the applicable L/C Issuer and its correspondents unless such notice is given as aforesaid. (d) Reimbursement Obligations. Upon receipt by an L/C Issuer from the beneficiary of a Letter of Credit of any demand for payment under such Letter of Credit, such L/C Issuer shall promptly notify the Borrower and the Administrative Agent of the amount to be paid by such L/C Issuer as a result of such demand and the date on which payment is to be made by such L/C Issuer to such beneficiary in respect of such demand; provided, however, that an L/C Issuer’s failure to give, or delay in giving, such notice shall not discharge the Borrower in any respect from the applicable Reimbursement Obligation. The Borrower hereby absolutely, unconditionally and irrevocably agrees to pay and reimburse each L/C Issuer for the amount of each demand for payment under each Letter of Credit issued by such L/C Issuer at or prior to the date on which payment is to be made by such L/C Issuer to the beneficiary thereunder, without presentment, demand, protest or other formalities of any kind (other than as provided in this subsection). Upon receipt by an L/C Issuer of any payment in respect of any Reimbursement Obligation, such L/C Issuer shall promptly pay to the Administrative Agent for the account of each Lender that has acquired a participation therein under the second sentence of the immediately following subsection (i) such Lender’s Credit Percentage in respect of its Revolving Committed Amount of such payment. (e) Manner of Reimbursement. Upon its receipt of a notice referred to in the immediately preceding subsection (d), the Borrower shall advise the Administrative Agent and the applicable L/C Issuer whether or not the Borrower intends to borrow hereunder to finance its obligation to reimburse such L/C Issuer for the amount of the related demand for payment and, if it does, the Borrower shall submit a timely request for such borrowing as provided in the applicable provisions of this Credit Agreement. If the Borrower fails to so advise the Administrative Agent and the applicable L/C Issuer, or if the Borrower fails to reimburse the applicable L/C Issuer for a demand for payment under a Letter of Credit by the date of such payment, the failure of which the applicable L/C Issuer shall promptly notify the Administrative Agent, then (i) if the applicable conditions contained in Article IV would permit the making of Revolving Loans, the Borrower shall be deemed to have requested a borrowing of Revolving Loans (which shall be Base Rate Loans) in an amount equal to the unpaid Reimbursement Obligation and the Administrative Agent shall give each Lender prompt notice of the amount of the Revolving Loan to be made available to the Administrative Agent not later than 12:00 noon and (ii) if such conditions would -40- LEGAL02/47543734v6
not permit the making of Revolving Loans, the provisions of subsection (j) of this Section shall apply. The limitations set forth in the second sentence of Section 2.02 shall not apply to any borrowing of Base Rate Loans under this subsection. (f) Effect of Letters of Credit on Commitments. Upon the issuance by an L/C Issuer of a Letter of Credit and until such Letter of Credit shall have expired or been cancelled, the Commitment of each Lender shall be deemed to be utilized for all purposes of this Credit Agreement in an amount equal to the product of (i) such Lender’s Credit Percentage in respect of its Revolving Committed Amount and (ii) the sum of (A) the Stated Amount of such Letter of Credit plus without duplication, (B) any related Reimbursement Obligations then outstanding. (g) L/C Issuers’ Duties Regarding Letters of Credit; Unconditional Nature of Reimbursement Obligations. In examining documents presented in connection with drawings under Letters of Credit and making payments under Letters of Credit issued by an L/C Issuer against such documents, such L/C Issuer shall only be required to use the same standard of care as it uses in connection with examining documents presented in connection with drawings under letters of credit in which it has not sold participations and making payments under such letters of credit. The Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, none of the L/C Issuers, the Administrative Agent or any of the Lenders shall be responsible for (unless resulting from gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final, non-appealable judgment), and the Borrower’s obligations in respect of Letters of Credit shall not be affected in any manner by, (i) the form, validity, sufficiency, accuracy, genuineness or legal effects of any document submitted by any party in connection with the application for and issuance of or any drawing honored under any Letter of Credit even if such document should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit, or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) failure of the beneficiary of any Letter of Credit to comply fully with conditions required in order to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, facsimile, electronic mail, telecopy or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit, or of the proceeds thereof; (vii) the misapplication by the beneficiary of any Letter of Credit, or of the proceeds of any drawing under any Letter of Credit; or (viii) any consequences arising from causes beyond the control of the L/C Issuers, the Administrative Agent or the Lenders. None of the above shall affect, impair or prevent the vesting of any of the L/C Issuers’, the Administrative Agent’s or any Lender’s rights or powers hereunder. Any action taken or omitted to be taken by an L/C Issuer under or in connection with any Letter of Credit issued by such L/C Issuer, if taken or omitted in the absence of gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final, non-appealable judgment), shall not create against such L/C Issuer any liability to the Borrower, the Administrative Agent or any Lender. In this connection, the obligation of the Borrower to reimburse an L/C Issuer for any drawing made under any Letter of Credit issued by such L/C Issuer, and to repay any Revolving Loan made pursuant to the second sentence of the immediately preceding subsection (e), shall be absolute, unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Credit Agreement and any other applicable Issuer Document under all circumstances whatsoever, including without limitation, the following circumstances: (A) any lack of validity or enforceability of any Issuer Document or any term or provisions therein; (B) any amendment or waiver of or any consent to departure from all or any of the Issuer Documents; (C) the existence of any claim, setoff, defense or other right which the Borrower may have at any time against such L/C Issuer, any other L/C Issuer, the Administrative Agent, any Lender, any beneficiary of a Letter of Credit or any other Person, whether in -41- LEGAL02/47543734v6
connection with this Credit Agreement, the transactions contemplated hereby or in the Issuer Documents or any unrelated transaction; (D) any breach of contract or dispute between the Borrower, such L/C Issuer, any other L/C Issuer, the Administrative Agent, any Lender or any other Person; (E) any demand, statement or any other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein or made in connection therewith being untrue or inaccurate in any respect whatsoever; (F) any non-application or misapplication by the beneficiary of a Letter of Credit or of the proceeds of any drawing under such Letter of Credit; (G) payment by such L/C Issuer under any Letter of Credit against presentation of a draft or certificate which does not comply with the terms of such Letter of Credit; and (H) any other act, omission to act, delay or circumstance whatsoever that might, but for the provisions of this Section, constitute a legal or equitable defense to or discharge of the Borrower’s Reimbursement Obligations. Notwithstanding anything to the contrary contained in this Section or Section 9.05, but not in limitation of the Borrower’s unconditional obligation to reimburse an L/C Issuer for any drawing made under a Letter of Credit as provided in this Section and to repay any Revolving Loan made pursuant to the second sentence of the immediately preceding subsection (e), the Borrower shall have no obligation to indemnify the Administrative Agent, an L/C Issuer or any Lender in respect of any liability incurred by the Administrative Agent, an L/C Issuer or such Lender arising solely out of the gross negligence or willful misconduct of the Administrative Agent, such L/C Issuer or such Lender in respect of a Letter of Credit as determined by a court of competent jurisdiction in a final, non-appealable judgment. Except as otherwise provided in this Section, nothing in this Section shall affect any rights the Borrower may have with respect to the gross negligence or willful misconduct of the Administrative Agent, an L/C Issuer or any Lender with respect to any Letter of Credit. (h) Amendments, Etc. The issuance by an L/C Issuer of any amendment, supplement or other modification to any Letter of Credit issued by such L/C Issuer shall be subject to the same conditions applicable under this Credit Agreement to the issuance of new Letters of Credit (including, without limitation, that the request therefor be made through the applicable L/C Issuer and the Administrative Agent), and no such amendment, supplement or other modification shall be issued unless either (i) the respective Letter of Credit affected thereby would have complied with such conditions had it originally been issued hereunder in such amended, supplemented or modified form or (ii) the Administrative Agent and the applicable Lenders, if any, required by Section 9.01 shall have consented thereto. In connection with any such amendment, supplement or other modification, the Borrower shall pay the fees, if any, payable under Section 2.09(d)(ii)(B). (i) Lenders’ Participation in Letters of Credit. Immediately upon (i) the Closing Date with respect to all Existing Letters of Credit and (ii) the date of issuance by an L/C Issuer of any Letter of Credit, each Lender shall be deemed to have absolutely, irrevocably and unconditionally purchased and received from the applicable L/C Issuer, without recourse or warranty, an undivided interest and participation to the extent of such Lender’s Credit Percentage in respect of its Revolving Committed Amount of the liability of such L/C Issuer with respect to such Letter of Credit and each Lender thereby shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety, and shall be unconditionally obligated to such L/C Issuer to pay and discharge when due, to the extent and in the manner set forth in the immediately following subsection (j) below, such Lender’s Credit Percentage in respect of its Revolving Committed Amount of such L/C Issuer’s liability under such Letter of Credit. In addition, upon the making of each payment by a Lender to the Administrative Agent for the account of an L/C Issuer in respect of any Letter of Credit issued by it pursuant to the immediately following subsection (j), such Lender shall, automatically and without any further action on the part of such L/C Issuer, the Administrative Agent or such Lender, acquire (i) a participation in an amount equal to such payment in the Reimbursement Obligation owing to such L/C Issuer by the Borrower in respect of such Letter of Credit and (ii) a participation in a percentage equal to such Lender’s Credit Percentage in respect of its Revolving Committed Amount in any interest or other amounts payable by the Borrower in respect -42- LEGAL02/47543734v6
of such Reimbursement Obligation (other than the Fees payable to such L/C Issuer pursuant to Section 2.09(d)(ii)). (j) Payment Obligation of Lenders. Each Lender severally agrees to pay to the Administrative Agent, for the account of each L/C Issuer, on written demand in immediately available funds in Dollars the amount of such Lender’s Credit Percentage in respect of its Revolving Committed Amount of each drawing paid by such L/C Issuer under each Letter of Credit issued by it to the extent such amount is not reimbursed by the Borrower pursuant to the immediately preceding subsection (d); provided, however, that in respect of any drawing under any Letter of Credit, the maximum amount that any Lender shall be required to fund, whether as a Revolving Loan or as a participation, shall not exceed such Lender’s Credit Percentage in respect of its Revolving Committed Amount of such drawing except as otherwise provided in Section 2.14(d). If the notice referenced in the second sentence of Section 2.03(e) is received by a Lender not later than 12:00 noon, then such Lender shall make such payment available to the Administrative Agent not later than 2:00 p.m. on the date of demand therefor; otherwise, such payment shall be made available to the Administrative Agent not later than 12:00 noon on the next succeeding Business Day. Each Lender’s obligation to make such payments to the Administrative Agent under this subsection, and the Administrative Agent’s right to receive the same for the account of the applicable L/C Issuer, shall be absolute, irrevocable and unconditional and shall not be affected in any way by any circumstance whatsoever, including without limitation, (i) the failure of any other Lender to make its payment under this subsection, (ii) the financial condition of the Borrower or any other Credit Party, (iii) the existence of any Default or Event of Default, including any Event of Default described in Section 7.01(g) or (h), (iv) the termination of the Commitments or (v) the delivery of Cash Collateral in respect of any Extended Letter of Credit. Each such payment to the Administrative Agent for the account of the applicable L/C Issuer shall be made without any offset, abatement, withholding or deduction whatsoever. (k) Information to Lenders. Promptly following any change in Letters of Credit outstanding, the applicable L/C Issuer shall deliver to the Administrative Agent, which shall promptly deliver the same to each Lender and the Borrower, a notice describing the aggregate amount of all Letters of Credit issued by such L/C Issuer outstanding at such time. Upon the request of the Administrative Agent from time to time, an L/C Issuer shall promptly deliver any other information reasonably requested by the Administrative Agent (or a Lender through the Administrative Agent) with respect to such Letters of Credit then outstanding. Other than as set forth in this subsection, the L/C Issuers and the Administrative Agent shall have no duty to notify the Lenders regarding the issuance or other matters regarding Letters of Credit issued hereunder. The failure of any L/C Issuer or the Administrative Agent to perform its requirements under this subsection shall not relieve any Lender from its obligations under the immediately preceding subsection (j). (l) Extended Letters of Credit. Each Lender confirms that its obligations under the immediately preceding subsections (i) and (j) shall be reinstated in full and apply if the delivery of any Cash Collateral in respect of an Extended Letter of Credit is subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise. 2.04 [Reserved]. 2.05 Repayment of Loans. (a) Revolving Loans. The Borrower shall repay to the Lenders on the Revolving Termination Date the aggregate principal amount of Revolving Loans outstanding on such date. -43- LEGAL02/47543734v6
(b) [Reserved]. (c) Term Loans. The Borrower shall repay to the Term Loan Lenders in a Class on the applicable Termination Date for such Class the aggregate principal amount of Term Loans of such Class outstanding on such date. No scheduled payments on the principal amount of the Term Loans shall be required prior to the applicable Termination Date for each such Class of Term Loans. 2.06 Prepayments. (a) Voluntary Prepayments. The Loans (subject to clauses (b) and (c) below) may be repaid in whole or in part without premium or penalty (except, in the case of Loans other than Base Rate Loans and Daily Simple SOFR Loans, amounts payable pursuant to Section 3.05); provided that (A) notice thereof must be received by the Administrative Agent by (I) 1:00 p.m. at least three (3) Business Days prior to the date of prepayment with respect to Term SOFR Loans, (II) 1:00 p.m. at least one (1) Business Day prior to the date of prepayment with respect to Base Rate Loans and (III) noon on the date of prepayment with respect to Daily Simple SOFR Loans, and (B) any such prepayment shall be in the same minimum amounts as provided for Borrowings in Section 2.02(a), or, in each case, the entire remaining principal amount thereof, if less. Each such notice of voluntary repayment hereunder shall be irrevocable and shall specify the date and amount of prepayment and the Loans and Types of Loans which are to be prepaid; provided, that such notice of repayment (i) in connection with a refinancing of the entire outstanding principal amount of, and all accrued but unpaid interest on, the Loans may be contingent upon the closing of such refinancing; or (ii) may state that it is conditioned upon such other specified transaction, in which case such notice may be revoked by the Borrower by written notice to the Administrative Agent prior to the specified due date of such prepayment. The Administrative Agent will give prompt notice to the applicable Lenders of any prepayment on the Loans and the Lender’s interest therein. Prepayments of SOFR Loans hereunder shall be accompanied by accrued interest thereon and prepayments of Term SOFR Loans hereunder shall be accompanied by breakage amounts, if any, under Section 3.05. (b) Mandatory Prepayments on Revolving Obligations. If at any time (i) the aggregate principal amount of Revolving Obligations shall exceed the Aggregate Revolving Committed Amount, or (ii) the aggregate principal amount of L/C Obligations shall exceed the L/C Committed Amount, the Borrower shall immediately prepay the Revolving Loans and/or provide Cash Collateral to the L/C Obligations in an amount equal to such excess; provided, however, that Cash Collateral will not be provided to the L/C Obligations hereunder until the Revolving Loans have been paid to or below the Aggregate Revolving Committed Amount. Such prepayments will not serve to reduce the Aggregate Revolving Committed Amount or L/C Committed Amount. (c) Application. Within each Loan, prepayments will be applied first ratably to Base Rate Loans and Daily Simple SOFR Loans, then ratably to Term SOFR Loans. In addition: (i) Voluntary Prepayments. Voluntary prepayments shall be applied as specified by the Borrower. Voluntary prepayments on the Revolving Obligations will be paid by the Administrative Agent to the Lenders ratably in accordance with Section 2.18 (except for Defaulting Lenders where their share will be held as provided in Section 2.14 hereof). (ii) Mandatory Prepayments. Amounts paid under the preceding subsection (b) shall be applied to pay all amounts of principal outstanding on the Loans and any Reimbursement Obligations pro rata in accordance with Section 2.18 and if any Letters of Credit are outstanding at such time, the remainder, if any, shall be deposited into the Letter of Credit Collateral Account for application to any Reimbursement Obligations. If the Borrower is required to pay any -44- LEGAL02/47543734v6
outstanding Term SOFR Loans by reason of this Section prior to the end of the applicable Interest Period therefor, the Borrower shall pay all amounts due under Section 3.05. 2.07 Termination or Reduction of Commitments. The Commitments hereunder may be permanently reduced in whole or in part by notice from the Borrower to the Administrative Agent; provided that (a) any such notice thereof must be received by 11:00 a.m. at least five (5) Business Days prior to the date of reduction or termination; (b) any such prepayment shall be in a minimum principal amount of $5,000,000 and integral multiples of $1,000,000 in excess thereof; and (c) the Commitments may not be reduced to an amount less than the Revolving Obligations then outstanding. The Administrative Agent will give prompt notice to the applicable Lenders of any such reduction in such Commitments. Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Revolving Lender according to its Credit Percentage thereof. All applicable commitment or other fees accrued until the effective date of any reduction or termination of the Aggregate Commitments shall be paid on the effective date of such reduction or termination. 2.08 Interest. (a) Subject to the provisions of clause (b) below, (i) each Class of Loans that is a Term SOFR Loan shall bear interest on the outstanding principal amount thereof for the Interest Period at a rate per annum equal to Adjusted Term SOFR for such Interest Period plus the Applicable Percentage for such Class of Loans; (ii) each Class of Loans that is a Daily Simple SOFR Loan shall bear interest on the outstanding principal amount thereof at a rate per annum equal to Adjusted Daily Simple SOFR for such Interest Period plus the Applicable Percentage for such Class of Loans; and (iii) each Class of Loans that is a Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing or conversion date at a rate per annum equal to the Base Rate plus the Applicable Percentage for such Class of Loans. (b) (i) If any amount payable by the Borrower under any Credit Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Law. (ii) After the occurrence and during the continuance of an Event of Default under Section 7.01(a), (g) or (h), the Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Law. (iii) After the occurrence and during the continuance of an Event of Default other than under Section 7.01(a), (g) or (h), upon the request of the Required Lenders, the Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Law. (iv) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand. (c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law. -45- LEGAL02/47543734v6
2.09 Fees. (a) Facility Fee. From and after the Closing Date, the Borrower agrees to pay the Administrative Agent for the ratable benefit of the Revolving Lenders (other than a Defaulting Lender which shall be dealt with as provided in Section 2.14 hereof) a commitment fee (the “Facility Fee”) for each calendar quarter, prorated for partial quarters, in an amount equal to the amount denoted under the heading “Facility Fee” as set forth in the definition of “Applicable Percentage” herein multiplied by the actual daily amount of the Aggregate Commitments regardless of usage. The Facility Fee shall accrue at all times during the Commitment Period (and thereafter so long as Revolving Obligations shall remain outstanding (other than regarding Letters of Credit supported by Cash Collateral as set forth herein)), including periods during which the conditions to Extensions of Credit in Section 4.02 may not be met, and shall be payable quarterly in arrears on the first Business Day of each of April, July, October and January, commencing with the first such date to occur after the Closing Date, and on the Revolving Termination Date (and, if applicable, thereafter on demand). The Administrative Agent shall distribute the Facility Fee to the Revolving Lenders pro rata in accordance with the respective Commitments of the Revolving Lenders. (b) [Reserved]. (c) Upfront and Other Fees. The Borrower agrees to pay to (i) the Administrative Agent for the benefit of the Lenders the upfront and other fees provided in the Fee Letters and (ii) the Sustainability Structuring Agent such fees (if any) as may be otherwise agreed to in writing by the Borrower and the Sustainability Structuring Agent from time to time. (d) Letter of Credit Fees. (i) Letter of Credit Fee. The Borrower agrees to pay to the Administrative Agent for the ratable benefit of the Lenders (other than a Defaulting Lender which shall be dealt with as provided in Section 2.14 hereof) a fee (the “Letter of Credit Fee”) equal to the Applicable Percentage for SOFR Loans that are Revolving Loans per annum times the daily maximum amount available to be drawn under each such Letter of Credit (whether or not such maximum amount is then in effect under such Letters of Credit) from the date of issuance to the date such Letter of Credit either expires or terminates. The Letter of Credit Fee shall be computed on a quarterly basis in arrears and shall be payable quarterly in arrears on the first Business Day of each of April, July, October and January, commencing on the first such date to occur after the Closing Date, and on the date such Letter of Credit either expires or terminates (and, if applicable, thereafter on demand). (ii) L/C Issuer Fees. In addition to the Letter of Credit Fee, the Borrower agrees to pay to each L/C Issuer for its own account without sharing by the other Lenders (A) a fronting fee (the “L/C Fronting Fee”) of 0.125% the amount of each Letter of Credit issued by such L/C Issuer (but in no event shall the amount of such fee in respect of any Letter of Credit be less than $500), and (B) customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of such L/C Issuer (“L/C Customary Charges”; together with the L/C Fronting Fee, the “L/C Issuer Fees”) with respect to the issuance, amendment, transfer, administration, cancellation and conversion of, and drawings under, such Letters of Credit. The L/C Fronting Fee shall be due and payable in full on the date of issuance of such Letter of Credit. The L/C Customary Charges are due and payable on demand and are nonrefundable. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.07. -46- LEGAL02/47543734v6
(e) Administrative Agent’s Fees. The Borrower agrees to pay the Administrative Agent and each Arranger or other Lender such fees as provided in the Fee Letters or as may be otherwise agreed by the Administrative Agent and the Borrower from time to time. (f) Extension Fees. (i) Revolving Facility. If the Borrower exercises its right to extend the Revolving Termination Date in accordance with Section 2.15(a), the Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender, a fee equal to 0.0625% of the amount of such Lender’s Revolving Committed Amount (whether or not utilized) as of the effective date of the Revolving Credit Extension payable in connection with each such Revolving Credit Extension. Each such applicable fee shall be due and payable in full on the effective date of the applicable Revolving Credit Extension. (ii) HTA-1 Term Loan Facility. If the Borrower exercises its right to extend the HTA-1 Term Loan Termination Date in accordance with Section 2.15(b), the Borrower agrees to pay to the Administrative Agent for the account of each HTA-1 Term Loan Lender, (i) for the exercise of the First HTA-1 Extension, a fee equal to 0.030% of the outstanding principal amount of such Lender’s HTA-1 Term Loans on the effective date of the First HTA-1 Extension, (ii) for the exercise of the Second HTA-1 Extension, a fee equal to 0.095% of the outstanding principal amount of such Lender’s HTA-1 Term Loans on the effective date of such Second HTA-1 Extension and (iii) for the exercise of each of the Third HTA-1 Extension and the Fourth HTA-1 Extension, a fee equal to 0.0625% of the outstanding principal amount of such Lender’s HTA-1 Term Loans on the applicable effective date of each such HTA-1 Term Loan Extension. Each such applicable fee shall be due and payable in full on the effective date of the applicable HTA-1 Term Loan Extension. (iii) HTA-2 Term Loan Facility. If the Borrower exercises its right to extend the HTA-2 Term Loan Termination Date in accordance with Section 2.15(c), the Borrower agrees to pay to the Administrative Agent for the account of each HTA-2 Term Loan Lender, a fee equal to 0.125% of the amount of such Lender’s HTA-2 Term Loans on the effective date of each such HTA-2 Term Loan Extension. Each such applicable fee shall be due and payable in full on the effective date of the applicable HTA-2 Term Loan Extension. (iv) HR-1 Term Loan Facility. If the Borrower exercises its right to extend the HR-1 Term Loan Termination Date in accordance with Section 2.15(d), the Borrower agrees to pay to the Administrative Agent for the account of each HR-1 Term Loan Lender, (i) for the exercise of the First HR-1 Extension, a fee equal to 0.045% of the outstanding principal amount of such Lender’s HR-1 Term Loans on the effective date of such HR-1 Term Loan Extension, and (ii) for the exercise of each of the Second HR-1 Extension and the Third HR-1 Extension, a fee equal to 0.0625% of the outstanding principal amount of such Lender’s HR-1 Term Loans on the effective date of each such HR-1 Term Loan Extension. Each such applicable fee shall be due and payable in full on the effective date of the applicable HR-1 Term Loan Extension. (v) HR-2 Term Loan Facility. If the Borrower exercises its right to extend the HR-2 Term Loan Termination Date in accordance with Section 2.15(e), the Borrower agrees to pay to the Administrative Agent for the account of each HR-2 Term Loan Lender, a fee equal to 0.0625% of the outstanding principal amount of such Lender’s HR-2 Term Loans on the effective date of each such HR-2 Term Loan Extension. Each such applicable fee shall be due and payable in full on the effective date of the applicable HR-2 Term Loan Extension. -47- LEGAL02/47543734v6
(vi) 2022 Term Loan Facility. If the Borrower exercises its right to extend the 2022 Term Loan Termination Date in accordance with Section 2.15(f), the Borrower agrees to pay to the Administrative Agent for the account of each 2022 Term Loan Lender, a fee equal to 0.125% of the amount of such Lender’s 2022 Term Loans on the effective date of the 2022 Term Loan Extension. Such fee shall be due and payable in full on the effective date of the 2022 Term Loan Extension. (g) Other Fees. The Borrower shall pay to the Lenders such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever. 2.10 Computation of Interest and Fees. All computations of interest and fees shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.11(a), bear interest for one day. 2.11 Payments Generally; Administrative Agent’s Clawback. (a) All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or set-off. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Credit Percentage of the applicable Class (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after 4:00 p.m. shall be deemed received on the immediately succeeding Business Day and any applicable interest or fee shall continue to accrue. (b) Subject to the definition of “Interest Period,” if any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be. (c) (i) Funding by Lenders; Presumptions by Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of Term SOFR Loans (or, in the case of any Borrowing of Base Rate Loans or Daily Simple SOFR Loans, prior to 12:00 noon on the date of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Borrowing of Base Rate Loans and Daily Simple SOFR Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02) and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such -48- LEGAL02/47543734v6
corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent. A notice from the Administrative Agent of amounts owing under this subsection shall be conclusive absent manifest error. (ii) Payments by Borrower; Presumptions by Administrative Agent. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the L/C Issuers hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the L/C Issuers, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the L/C Issuers, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or such L/C Issuer, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. A notice from the Administrative Agent of amounts owing under this subsection shall be conclusive absent manifest error. (d) If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Extension of Credit set forth in Section 4.02 are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest. (e) The obligations of the Lenders hereunder to make Loans, to fund participations in Letters of Credit and to make payments pursuant to Section 8.09 are several and not joint. The failure of any Lender to make any Loan, to fund any such participation or to make any payment under Section 8.09 on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase its participation or to make its payment under Section 8.09. (f) Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner. -49- LEGAL02/47543734v6
(g) If at any time insufficient funds are received by or are available to the Administrative Agent to pay fully all amounts of principal, Reimbursement Obligations, interest and fees then due hereunder, such funds shall be applied (i) first, toward costs and expenses (including Attorney Costs and amounts payable under Article III) incurred by the Administrative Agent and each Lender, (ii) second, toward repayment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (iii) third, toward repayment of principal and Reimbursement Obligations then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and Reimbursement Obligations then due to such parties. 2.12 Sharing of Payments. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Loans made by it, or the participations in L/C Obligations held by it resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Loans or participations and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and subparticipations in L/C Obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them; provided that: (i) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and (ii) the provisions of this Section shall not be construed to apply to (A) any payment made by the Borrower pursuant to and in accordance with the express terms of this Credit Agreement, (B) [reserved], (C) any amounts applied to L/C Obligations by the L/C Issuer from Cash Collateral provided under Section 2.14, or (D) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or subparticipations in L/C Obligations to any assignee or participant, other than to the Parent, the Borrower, any Subsidiary or any Affiliate of any of the foregoing (as to which the provisions of this Section shall apply). The Borrower agrees that any Lender so purchasing a participation from another Lender may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off, but subject to Section 9.09) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. The Administrative Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section and will in each case notify the Lenders following any such purchases or repayments. Each Lender that purchases a participation pursuant to this Section shall from and after such purchase have the right to give all notices, requests, demands, directions and other communications under this Credit Agreement with respect to the portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased. -50- LEGAL02/47543734v6
2.13 Evidence of Debt. (a) The Extensions of Credit made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Extensions of Credit made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. The Borrower shall execute and deliver to the Administrative Agent a Note for each Lender that requests a Note, which shall evidence such Lender’s Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto. (b) In addition to the accounts and records referred to in clause (a), each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. 2.14 Defaulting Lenders. Notwithstanding anything to the contrary contained in this Credit Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law: (a) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Credit Agreement shall be restricted as set forth in the definition of Required Lenders, Required Class Lenders, Required Revolving Lenders and in Section 9.01. (b) Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 9.09 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to the L/C Issuer hereunder; third, to Cash Collateralize the L/C Issuer’s Fronting Exposure with respect to such Defaulting Lender in accordance with subsection (e) below; fourth, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Credit Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Credit Agreement and (y) Cash Collateralize the L/C Issuer’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Credit Agreement, in accordance with subsection (e) below; sixth, to the payment of any amounts owing to the Lenders or the L/C Issuer as a result of any judgment of a court of competent jurisdiction obtained -51- LEGAL02/47543734v6
by any Lender or the L/C Issuer against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Credit Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Credit Agreement or under any other Credit Document; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or amounts owing by such Defaulting Lender in respect of Section 2.03(j) in respect of Letters of Credit (such amounts, “L/C Disbursements”) in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Disbursements owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C Disbursements owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in L/C Obligations are held by the Lenders pro rata in accordance with their respective Credit Percentages (determined (1) assuming each Term Loan Lender had funded all of its Term Loans in full and (2) without giving effect to the immediately following subsection (d)). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this subsection shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto. (c) Certain Fees. (i) No Defaulting Lender shall be entitled to receive any Fee payable under Sections 2.09(a) or 2.09(b) for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender). (ii) Each Defaulting Lender shall be entitled to receive any Fee payable under Section 2.09(d)(i) for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Credit Percentage in respect of its Revolving Committed Amount of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to the immediately following subsection (e). (iii) With respect to any Fee not required to be paid to any Defaulting Lender pursuant to the immediately preceding clause (ii), the Borrower shall (x) pay to each Non-Defaulting Lender that portion of any such Fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in L/C Obligations that has been reallocated to such Non-Defaulting Lender pursuant to the immediately following subsection (d), (y) pay to the L/C Issuer the amount of any such Fee otherwise payable to such Defaulting Lender to the extent allocable to such L/C Issuer’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such Fee. (d) Reallocation of Participations to Reduce Fronting Exposure. All or any part of such Defaulting Lender’s participation in L/C Obligations shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Credit Percentages in respect of their Revolving Committed Amounts (determined without regard to such Defaulting Lender’s Commitment) but only to the extent that such reallocation does not cause the aggregate Revolving Credit Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Commitment. Subject to Section 9.23, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a -52- LEGAL02/47543734v6
Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation. (e) Cash Collateral. (i) If the reallocation described in the immediately preceding subsection (d) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under law, Cash Collateralize the L/C Issuer’s Fronting Exposure in accordance with the procedures set forth in this subsection. (ii) At any time that there shall exist a Defaulting Lender, within 1 Business Day following the written request of the Administrative Agent or any L/C Issuer (with a copy to the Administrative Agent), the Borrower shall Cash Collateralize such L/C Issuer’s Fronting Exposure with respect to such Defaulting Lender (determined after giving effect to the immediately preceding subsection (d) and any Cash Collateral provided by such Defaulting Lender) in an amount not less than the aggregate Fronting Exposure of such L/C Issuer with respect to Letters of Credit issued and outstanding at such time. (iii) The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grant to the Administrative Agent, for the benefit of the L/C Issuers, and agree to maintain, a first priority security interest in all such Cash Collateral as security for the Defaulting Lenders’ obligation to fund participations in respect of L/C Obligations, to be applied pursuant to the immediately following clause (iv). If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent and the L/C Issuers as herein provided, or that the total amount of such Cash Collateral is less than the aggregate Fronting Exposure of the L/C Issuers with respect to Letters of Credit issued and outstanding at such time, the Borrower will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any Cash Collateral provided by the Defaulting Lender). (iv) Notwithstanding anything to the contrary contained in this Credit Agreement, Cash Collateral provided under this Section in respect of Letters of Credit shall be applied to the satisfaction of the Defaulting Lender’s obligation to fund participations in respect of L/C Obligations (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein. (v) Cash Collateral (or the appropriate portion thereof) provided to reduce the L/C Issuer’s Fronting Exposure shall no longer be required to be held as Cash Collateral pursuant to this subsection following (x) the elimination of the applicable Fronting Exposure (including by the termination of Defaulting Lender status of the applicable Lender), or (y) the determination by the Administrative Agent and the L/C Issuers that there exists excess Cash Collateral; provided that, subject to the immediately preceding subsection (b), the Person providing Cash Collateral and the L/C Issuers may agree that Cash Collateral shall be held to support future anticipated Fronting Exposure or other obligations and provided further that to the extent that such Cash Collateral was provided by the Borrower, such Cash Collateral shall remain subject to the security interest granted pursuant to the Credit Documents. (f) Defaulting Lender Cure. If the Borrower, the Administrative Agent and the L/C Issuers agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify -53- LEGAL02/47543734v6
the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase, subject to any amounts owed pursuant to Section 3.05, at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit to be held pro rata by the Lenders in accordance with their respective Credit Percentages in respect of their Revolving Committed Amount (determined (1) assuming each Term Loan Lender had funded all of its Term Loans in full and (2) without giving effect to the immediately preceding subsection (d)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. (g) New Letters of Credit. So long as any Lender is a Defaulting Lender, the L/C Issuers shall not be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto. (h) Purchase of Defaulting Lender’s Commitment/Loans. During any period that a Lender is a Defaulting Lender, the Borrower may, by the Borrower giving written notice thereof to the Administrative Agent, such Defaulting Lender and the other Lenders, demand that such Defaulting Lender assign its Commitment and Loans to an Eligible Assignee subject to and in accordance with the provisions of Section 3.06. No party hereto shall have any obligation whatsoever to initiate any such replacement or to assist in finding an Eligible Assignee. In addition, any Lender which is not a Defaulting Lender may, but shall not be obligated, in its sole discretion, to acquire the face amount of all or a portion of such Defaulting Lender’s Commitment and Loans via an assignment subject to and in accordance with the provisions of Section 9.07. In connection with any such assignment, such Defaulting Lender shall promptly execute all documents reasonably requested to effect such assignment, including an appropriate Assignment and Assumption and, notwithstanding Section 9.07, shall pay to the Administrative Agent an assignment fee in the amount of $7,500. The exercise by the Borrower of its rights under this Section shall be at the Borrower’s sole cost and expense and at no cost or expense to the Administrative Agent or any of the Lenders. 2.15 Extensions of Termination Date. (a) Extensions of Revolving Termination Date. The Borrower shall have the right, exercisable two times, to extend the current Revolving Termination Date by six (6) months in the case of each such extension (each such extension, a “Revolving Credit Extension”). The Borrower may exercise such right only by executing and delivering to the Administrative Agent at least 30 days but not more than 90 days prior to the current Revolving Termination Date, a written request for such extension (a “Revolving Extension Request”). The Administrative Agent shall notify the applicable Lenders if it receives a Revolving Extension Request promptly upon receipt thereof. Subject to satisfaction of the following conditions, the Revolving Termination Date shall be extended for six months effective upon receipt by the Administrative Agent of the Revolving Extension Request and payment of the fee referred to in the following clause (ii): (i) immediately prior to such extension and immediately after giving effect thereto, (x) no Default or Event of Default shall exist and (y) the representations and warranties made or deemed made by the Borrower and each other Credit Party in the Credit Documents to which any of them is a party, shall be true and correct in all material respects (or in the case of a representation or warranty qualified by materiality, true and correct in all respects) on and as of the date of such extension with the same force and effect as if made on and as of such date except to the extent that such representations and -54- LEGAL02/47543734v6
warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and correct in all material respects (or in the case of a representation or warranty qualified by materiality, true and correct in all respects) on and as of such earlier date) and except for changes in factual circumstances specifically and expressly permitted under the Credit Documents and (ii) the Borrower shall have paid the Fees payable under Section 2.09(f)(i) in respect of each applicable Revolving Extension Request. At any time prior to the effectiveness of any such extension, upon the Administrative Agent’s request, the Borrower shall deliver to the Administrative Agent a certificate from the chief executive officer or chief financial officer certifying the matters referred to in the immediately preceding clauses (i)(x) and (i)(y). (b) Extensions of HTA-1 Term Loan Termination Date. The Borrower shall have the right, exercisable four times, to extend the current HTA-1 Term Loan Termination Date by (i) first, by three (3) months (the “First HTA-1 Extension”), (ii) then, by nine (9) months (the “Second HTA-1 Extension”), (iii) then, by six (6) months (the “Third HTA-1 Extension” and (iv) then, by six (6) months (the “Fourth HTA-1 Extension” and, together with the First HTA-1 Extension, the Second HTA-1 Extension and the Third HTA-1 Extension, each a “HTA-1 Term Loan Extension”). If any immediately preceding HTA-1 Term Loan Extension does not occur for any reason, any following HTA-1 Term Loan Extensions shall no longer be applicable. The Borrower may exercise such right only by executing and delivering to the Administrative Agent at least 30 days but not more than 90 days prior to the current HTA-1 Term Loan Termination Date, a written request for such extension (a “HTA-1 Term Loan Extension Request”). The Administrative Agent shall notify the applicable Lenders if it receives an HTA-1 Term Loan Extension Request promptly upon receipt thereof. Subject to satisfaction of the following conditions, the then applicable HTA-1 Term Loan Termination Date shall be extended for three months, in the case of the First HTA-1 Extension, for nine months, in the case of the Second HTA-1 Extension and for six months, in the case of each of the Third HTA-1 Extension and the Fourth HTA-1 Extension, effective upon receipt by the Administrative Agent of the HTA-1 Term Loan Extension Request and payment of the fee referred to in the following clause (ii): (i) immediately prior to such extension and immediately after giving effect thereto, (x) no Default or Event of Default shall exist and (y) the representations and warranties made or deemed made by the Borrower and each other Credit Party in the Credit Documents to which any of them is a party, shall be true and correct in all material respects (or in the case of a representation or warranty qualified by materiality, true and correct in all respects) on and as of the date of such extension with the same force and effect as if made on and as of such date except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and correct in all material respects (or in the case of a representation or warranty qualified by materiality, true and correct in all respects) on and as of such earlier date) and except for changes in factual circumstances specifically and expressly permitted under the Credit Documents and (ii) the Borrower shall have paid the Fees payable under Section 2.09(f)(ii) in respect of each applicable HTA-1 Term Loan Extension Request. At any time prior to the effectiveness of any such extension, upon the Administrative Agent’s request, the Borrower shall deliver to the Administrative Agent a certificate from the chief executive officer or chief financial officer certifying the matters referred to in the immediately preceding clauses (i)(x) and (i)(y). (c) Extensions of HTA-2 Term Loan Termination Date. The Borrower shall have the right, exercisable two times, to extend the current HTA-2 Term Loan Termination Date by twelve (12) months in the case of each such extension (each such extension, a “HTA-2 Term Loan Extension”). The Borrower may exercise such right only by executing and delivering to the Administrative Agent at least 30 days but not more than 90 days prior to the current HTA-2 Term Loan Termination Date, a written request for such extension (a “HTA-2 Term Loan Extension Request”). The Administrative Agent shall notify the applicable Lenders if it receives a HTA-2 Term Loan Extension Request promptly upon receipt thereof. Subject to satisfaction of the following conditions, the HTA-2 Term Loan Termination Date shall be extended for twelve months effective upon receipt by the Administrative Agent of the HTA-2 -55- LEGAL02/47543734v6
Term Loan Extension Request and payment of the fee referred to in the following clause (ii): (i) immediately prior to such extension and immediately after giving effect thereto, (x) no Default or Event of Default shall exist and (y) the representations and warranties made or deemed made by the Borrower and each other Credit Party in the Credit Documents to which any of them is a party, shall be true and correct in all material respects (or in the case of a representation or warranty qualified by materiality, true and correct in all respects) on and as of the date of such extension with the same force and effect as if made on and as of such date except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and correct in all material respects (or in the case of a representation or warranty qualified by materiality, true and correct in all respects) on and as of such earlier date) and except for changes in factual circumstances specifically and expressly permitted under the Credit Documents and (ii) the Borrower shall have paid the Fees payable under Section 2.09(f)(iii) in respect of each applicable HTA-2 Term Loan Extension Request. At any time prior to the effectiveness of any such extension, upon the Administrative Agent’s request, the Borrower shall deliver to the Administrative Agent a certificate from the chief executive officer or chief financial officer certifying the matters referred to in the immediately preceding clauses (i)(x) and (i)(y). (d) Extensions of HR-1 Term Loan Termination Date. The Borrower shall have the right, exercisable three times, to extend the current HR-1 Term Loan Termination Date (i) first, by four (4) months (the “First HR-1 Extension”), (ii) then, by six (6) months (“Second HR-1 Extension”) and (iii) then, by six (6) months (the “Third HR-1 Extension” and, together with the First HR-1 Extension and the Second HR-1 Extension, each a “HR-1 Term Loan Extension”). If any immediately preceding HR-1 Term Loan Extension does not occur for any reason, any following HR-1 Term Loan Extensions shall no longer be applicable. The Borrower may exercise such right only by executing and delivering to the Administrative Agent at least 30 days but not more than 90 days prior to the current HR-1 Term Loan Termination Date, a written request for such extension (a “HR-1 Term Loan Extension Request”). The Administrative Agent shall notify the applicable Lenders if it receives an HR-1 Term Loan Extension Request promptly upon receipt thereof. Subject to satisfaction of the following conditions, the then applicable HR-1 Term Loan Termination Date shall be extended for four months, in the case of the First HR-1 Extension, and for six months, in the case of each of the Second HR-Extension and the Third HR-1 Extension, effective upon receipt by the Administrative Agent of the HR-1 Term Loan Extension Request and payment of the fee referred to in the following clause (ii): (i) immediately prior to such extension and immediately after giving effect thereto, (x) no Default or Event of Default shall exist and (y) the representations and warranties made or deemed made by the Borrower and each other Credit Party in the Credit Documents to which any of them is a party, shall be true and correct in all material respects (or in the case of a representation or warranty qualified by materiality, true and correct in all respects) on and as of the date of such extension with the same force and effect as if made on and as of such date except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and correct in all material respects (or in the case of a representation or warranty qualified by materiality, true and correct in all respects) on and as of such earlier date) and except for changes in factual circumstances specifically and expressly permitted under the Credit Documents and (ii) the Borrower shall have paid the Fees payable under Section 2.09(f)(iv) in respect of each applicable HR-1 Term Loan Extension Request. At any time prior to the effectiveness of any such extension, upon the Administrative Agent’s request, the Borrower shall deliver to the Administrative Agent a certificate from the chief executive officer or chief financial officer certifying the matters referred to in the immediately preceding clauses (i)(x) and (i)(y). (e) Extensions of HR-2 Term Loan Termination Date. The Borrower shall have the right, exercisable two times, to extend the current HR-2 Term Loan Termination Date by six (6) months in the case of each such extension (each such extension, a “HR-2 Term Loan Extension”). The Borrower may exercise such right only by executing and delivering to the Administrative Agent at least 30 days but not -56- LEGAL02/47543734v6
more than 90 days prior to the current HR-2 Term Loan Termination Date, a written request for such extension (a “HR-2 Term Loan Extension Request”). The Administrative Agent shall notify the applicable Lenders if it receives a HR-2 Term Loan Extension Request promptly upon receipt thereof. Subject to satisfaction of the following conditions, the HR-2 Term Loan Termination Date shall be extended for six months effective upon receipt by the Administrative Agent of the HR-2 Term Loan Extension Request and payment of the fee referred to in the following clause (ii): (i) immediately prior to such extension and immediately after giving effect thereto, (x) no Default or Event of Default shall exist and (y) the representations and warranties made or deemed made by the Borrower and each other Credit Party in the Credit Documents to which any of them is a party, shall be true and correct in all material respects (or in the case of a representation or warranty qualified by materiality, true and correct in all respects) on and as of the date of such extension with the same force and effect as if made on and as of such date except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and correct in all material respects (or in the case of a representation or warranty qualified by materiality, true and correct in all respects) on and as of such earlier date) and except for changes in factual circumstances specifically and expressly permitted under the Credit Documents and (ii) the Borrower shall have paid the Fees payable under Section 2.09(f)(v) in respect of each applicable HR-2 Term Loan Extension Request. At any time prior to the effectiveness of any such extension, upon the Administrative Agent’s request, the Borrower shall deliver to the Administrative Agent a certificate from the chief executive officer or chief financial officer certifying the matters referred to in the immediately preceding clauses (i)(x) and (i)(y). (f) Extension of 2022 Term Loan Termination Date. The Borrower shall have the right, exercisable one time, to extend the current 2022 Term Loan Termination Date by twelve (12) months (a “2022 Term Loan Extension”). The Borrower may exercise such right only by executing and delivering to the Administrative Agent at least 30 days but not more than 90 days prior to the then current 2022 Term Loan Termination Date, a written request for such extension (a “2022 Term Loan Extension Request”). The Administrative Agent shall notify the applicable Lenders if it receives a 2022 Term Loan Extension Request promptly upon receipt thereof. Subject to satisfaction of the following conditions, the 2022 Term Loan Termination Date shall be extended for twelve months effective upon receipt by the Administrative Agent of the 2022 Term Loan Extension Request and payment of the fee referred to in the following clause (ii): (i) immediately prior to such extension and immediately after giving effect thereto, (x) no Default or Event of Default shall exist and (y) the representations and warranties made or deemed made by the Borrower and each other Credit Party in the Credit Documents to which any of them is a party, shall be true and correct in all material respects (or in the case of a representation or warranty qualified by materiality, true and correct in all respects) on and as of the date of such extension with the same force and effect as if made on and as of such date except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and correct in all material respects (or in the case of a representation or warranty qualified by materiality, true and correct in all respects) on and as of such earlier date) and except for changes in factual circumstances specifically and expressly permitted under the Credit Documents and (ii) the Borrower shall have paid the Fees payable under Section 2.09(f)(vi) in respect of each applicable 2022 Term Loan Extension Request. At any time prior to the effectiveness of any such extension, upon the Administrative Agent’s request, the Borrower shall deliver to the Administrative Agent a certificate from the chief executive officer or chief financial officer certifying the matters referred to in the immediately preceding clauses (i)(x) and (i)(y). 2.16 Increase in Commitments. (a) Request for Increase. The Borrower may from time to time, request by notice to the Administrative Agent (x) an increase in the amount of the Aggregate Commitments (each, a “Revolving Credit Increase”) or (y) an increase in the amount of the HTA-1 Term Loans, the HTA-2 -57- LEGAL02/47543734v6
Term Loans, the 2022 Term Loans, the HR-1 Term Loans, the HR-2 Term Loans, or one or more new term loan tranches (each, an “Incremental Term Loan”; each Incremental Term Loan and each Revolving Credit Increase, collectively, referred to as the “Incremental Increases”); provided that (i) the principal amount for all such Incremental Increases in the aggregate since the Closing Date (including the then requested Incremental Increase) shall not exceed $1,000,000,000, (ii) any such request for an Incremental Increase shall be in a minimum amount of $10,000,000 (or a lesser amount in the event such amount represents all remaining availability under this Section), (iii) no Revolving Credit Increase shall increase the L/C Committed Amount without the consent of each L/C Issuer, (iv) no Incremental Term Loan that is a separate tranche shall mature earlier than the latest Termination Date, (v) the terms of each Revolving Credit Increase or Incremental Term Loan that is an increase to an existing tranche of Term Loans shall be identical to those of the Revolving Loans or such applicable Term Loan, as applicable, and (vi) each Incremental Increase (x) shall constitute Obligations hereunder, (y) shall have the same borrower and guarantors as the existing Revolving Loans or existing Term Loans, as applicable, and be guaranteed pursuant to the Guaranties on a pari passu basis with the other Obligations hereunder and (z) will rank pari passu in right of payment and with respect to security (if any) with the existing Revolving Loans and the existing Term Loans. (b) Process for Increase. Incremental Increases may be (but shall not be required to be) provided by any existing Lender, in each case on terms permitted in this Section and otherwise on terms reasonably acceptable to the Administrative Agent, or by any other Person that qualifies as an Eligible Assignee (each such other Person, an “Additional Lender”) pursuant to a joinder agreement in form and substance reasonably satisfactory to the Administrative Agent; provided that (i) the Administrative Agent shall have consented (in each case, such consent not to be unreasonably withheld) to each such Lender or proposed Additional Lender providing such Incremental Increase and (ii) in the case of any Revolving Credit Increase and the L/C Issuers shall have consented (in each case, such consent not to be unreasonably withheld) to each such Lender or proposed Additional Lender providing such Revolving Credit Increase if such consent by the L/C Issuers would be required under Section 9.07 for an assignment of Revolving Loans or Commitments to such Lender or proposed Additional Lender. No Lender shall have any obligation to (i) increase its Commitment, (ii) increase its HTA-1 Term Loans, HTA-2 Term Loans, 2022 Term Loans, the HR-1 Term Loans or the HR-2 Term Loans, or (iii) participate in an Incremental Term Loan, as the case may be, and no consent of any Lender, other than the Lenders agreeing to provide any portion of an Incremental Increase, shall be required to effectuate such Incremental Increase. (c) Effective Date and Allocations. The Administrative Agent and the Borrower shall determine the effective date of any Incremental Increase (the “Increase Effective Date”) and the final allocations therefor. The Administrative Agent shall promptly notify the Borrower and the Lenders of the final allocation of such Incremental Increase and the Increase Effective Date. (d) Conditions to Effectiveness of Increase. As a condition precedent to such increase, the Borrower shall deliver to the Administrative Agent a certificate of each Credit Party dated as of the Increase Effective Date (in sufficient copies for each Lender) signed by a Responsible Officer of such Credit Party (i) certifying and attaching the resolutions adopted by such Credit Party approving or consenting to such Incremental Increase, (ii) in the case of the Borrower, certifying that, before and after giving effect to such increase, (A) the representations and warranties contained in Article V and the other Credit Documents are true and correct in all material respects (or in the case of a representation or warranty qualified by materiality, true and correct in all respects) on and as of the Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Section, the representations and warranties contained in subsections (a) and (b) of Section 5.19 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01, -58- LEGAL02/47543734v6
(B) no Default or Event of Default exists and is continuing and (C) the Borrower and its Subsidiaries are in pro forma compliance with each of the financial covenants contained in Section 6.16. To the extent that any Incremental Increase shall take the form of an Incremental Term Loan, this Credit Agreement shall be amended (without the need to obtain the consent of any Lender or the L/C Issuers other than the Lenders providing such Incremental Term Loans), in form and substance satisfactory to the Administrative Agent, to include such terms as are customary for a term loan commitment, including mandatory prepayments, assignments and voting provisions; provided that the covenants, defaults and similar non-economic provisions applicable to any Incremental Term Loan (i) shall be substantially similar to the terms of the then existing Credit Documents and shall be no more restrictive than the corresponding terms set forth in the then existing Credit Documents without the express written consent of the Administrative Agent and the Required Revolving Lenders and (ii) shall not contravene any of the terms of the then existing Credit Documents. Each Revolving Credit Increase shall have the same terms as the outstanding Revolving Loans and be part of the existing revolving credit facilities hereunder. Upon each Revolving Credit Increase (x) each Lender having a Commitment immediately prior to such increase will automatically and without further act be deemed to have assigned to each Lender providing a portion of the Revolving Credit Increase (each, a “Revolving Credit Increase Lender”) in respect of such increase, and each such Revolving Credit Increase Lender will automatically and without further act be deemed to have assumed, a portion of such Lender’s participations hereunder in outstanding Letters of Credit such that, after giving effect to each such deemed assignment and assumption of participations, the percentage of the aggregate outstanding participations hereunder in Letters of Credit will equal each Lender’s Credit Percentage in respect of its Revolving Committed Amount (after giving effect to such increase in the Commitments) and (y) if, on the date of such increase there are any Revolving Loans outstanding, such Revolving Loans shall, on or prior to the effectiveness of such Revolving Credit Increase, be prepaid from the proceeds of additional Revolving Loans made hereunder (reflecting such increase in Commitments), which prepayment shall be accompanied by any amounts required to be paid pursuant to Section 3.05 to the extent necessary to keep the outstanding Revolving Loans ratable with any revised Credit Percentages arising from such Revolving Credit Increase. (e) Conflicting Provisions. This Section shall supersede any provisions in Section 2.12 or 9.01 to the contrary. 2.17 Expiration Date of Letters of Credit Past Revolving Termination Date. If on the date the Commitments are terminated or reduced to zero (whether voluntarily, by reason of the occurrence of an Event of Default or otherwise) there are any Letters of Credit outstanding hereunder and the aggregate Stated Amount of such Letters of Credit exceeds the balance of available funds on deposit in the Letter of Credit Collateral Account, then the Borrower shall, on such date, pay to the Administrative Agent, for its benefit and the benefit of the Lenders and the L/C Issuers, for deposit into the Letter of Credit Collateral Account, an amount of money equal to the amount of such excess. 2.18 Pro Rata Treatment. Except to the extent otherwise provided herein: (a) each borrowing from the Lenders under Sections 2.01 and 2.03(e) shall be made from the applicable Lenders in such Class, each payment of the fees under Sections 2.09(a), 2.09(b), the first sentence of 2.09(d)(i), and 2.09(f) shall be made for the account of the applicable Lenders in such Class, and each termination or reduction of the amount of any Commitments under Section 2.07 of a given Class shall be applied to the respective Commitments of the applicable Lenders in such Class, pro rata according to the amounts of their respective Commitments of such Class; (b) each payment or prepayment of principal of Loans of any Class shall be made for the account of the applicable Lenders in such Class pro rata in accordance with the respective unpaid principal amounts of the Loans of such Class, held by them, provided that, subject to Section 2.14, if -59- LEGAL02/47543734v6
immediately prior to giving effect to any such payment in respect of any Revolving Loans the outstanding principal amount of the Revolving Loans shall not be held by the Lenders pro rata in accordance with their respective Commitments in effect at the time such Revolving Loans were made, then such payment shall be applied to the Revolving Loans in such manner as shall result, as nearly as is practicable, in the outstanding principal amount of the Revolving Loans being held by the Lenders pro rata in accordance with such respective Commitments; (c) each payment of interest on the Loans of a particular Class shall be made for the account of the Lenders in such Class pro rata in accordance with the amounts of interest on such Loans of such Class then due and payable to the respective Lenders of such Class; (d) the conversion and continuation of Loans of a particular Type and Class (other than conversions provided for by Sections 3.04(c) and 3.07) shall be made pro rata among the Lenders according to the amounts of their respective Loans of such Class and the then current Interest Period for each Lender’s portion of each such Loan of such Type and Class shall be coterminous; (e) [reserved]; and (f) the Revolving Lenders’ participation in, and payment obligations in respect of, Letters of Credit under Section 2.03, shall be in accordance with their respective Credit Percentages for their Revolving Committed Amounts. 2.19 Reallocations on Closing Date. (a) Revolving Loans. Simultaneously with the effectiveness of this Credit Agreement, the “Revolving Commitments” (as defined in the Existing Credit Agreement) of each of the “Revolving Lenders” (as defined in the Existing Credit Agreement) as existing immediately prior to the Closing Date, shall be reallocated among the Revolving Lenders so that the Commitments are held by the Revolving Lenders as set forth on Schedule 2.01 attached hereto. To effect such reallocations (a) each Revolving Lender which either had no “Revolving Commitment” under the Existing Credit Agreement immediately prior to the Closing Date or whose Commitment upon the effectiveness of this Credit Agreement exceeds its “Revolving Commitment” under the Existing Credit Agreement immediately prior to the effectiveness of this Credit Agreement (each an “Revolving Credit Assignee Lender”) shall be deemed to have purchased all right, title and interest in, and all obligations in respect of, the “Revolving Commitments” from the “Revolving Lenders” under the Existing Credit Agreement which will not have a Commitment on and as of the Closing Date or whose Commitments upon the effectiveness of this Credit Agreement are less than their respective “Revolving Commitment” under the Existing Credit Agreement immediately prior to the effectiveness of this Credit Agreement (each a “Revolving Credit Assignor Lender”), so that the Commitments of the Revolving Lenders will be held by the Revolving Lenders as set forth on Schedule 2.01. Such purchases shall be deemed to have been effected by way of, and subject to the terms and conditions of, an Assignment and Assumption without the payment of any related assignment fee, and, except for Revolving Notes to be provided to the Revolving Assignor Lenders and Revolving Assignee Lenders in the principal amount of their respective Commitments, no other documents or instruments shall be, or shall be required to be, executed in connection with such assignments (all of which are hereby waived). The Revolving Assignor Lenders, the Revolving Assignee Lenders and the other Revolving Lenders shall make such cash settlements among themselves, through the Administrative Agent, as the Administrative Agent may direct (after giving effect to the making of any Revolving Loans to be made on the Closing Date and any netting transactions effected by the Administrative Agent) with respect to such reallocations and assignments so that the aggregate outstanding principal amount of Revolving Loans shall be held by the Revolving Lenders pro rata in accordance with the amount of the Commitments set forth on Schedule 2.01. (b) HTA-1 Term Loans. Simultaneously with the effectiveness of this Credit Agreement, the principal amount of all outstanding “HTA-1 Term Loans” (as defined in the Existing Credit Agreement) of each of the “HTA-1 Term Loan Lenders” (as defined in the Existing Credit Agreement) as existing immediately prior to the Closing Date, shall be reallocated among the HTA-1 Term Loan Lenders so that the HTA-1 Term Loans are held by the HTA-1 Term Loan Lenders as set forth on Schedule 2.01 attached hereto. To effect such reallocations each HTA-1 Term Loan Lender which either was not a “HTA-1 -60- LEGAL02/47543734v6
Term Loan Lender” under the Existing Credit Agreement immediately prior to the Closing Date or whose HTA-1 Term Loan upon the effectiveness of this Credit Agreement exceeds its “HTA-1 Term Loan” under the Existing Credit Agreement immediately prior to the effectiveness of this Credit Agreement (each a “HTA-1 Term Loan Assignee Lender”) shall be deemed to have purchased such right, title and interest in, and such obligations in respect of, the “HTA-1 Term Loans” under the Existing Credit Agreement from the “HTA-1 Term Loan Lenders” under the Existing Credit Agreement which will not have a HTA-1 Term Loan on and as of the Closing Date or whose HTA-1 Term Loans upon the effectiveness of this Credit Agreement are less than their respective “HTA-1 Term Loans” under the Existing Credit Agreement (each a “HTA-1 Term Loan Assignor Lender”), so that the HTA-1 Term Loans of the HTA-1 Term Loan Lenders will be held by the HTA-1 Term Loan Lenders as set forth on Schedule 2.01. Such purchases shall be deemed to have been effected by way of, and subject to the terms and conditions of, an Assignment and Assumption without the payment of any related assignment fee, and, except for HTA-1 Term Loan Notes to be provided to the HTA-1 Term Loan Assignor Lenders and HTA-1 Term Loan Assignee Lenders in the principal amount of their respective HTA-1 Term Loans, no other documents or instruments shall be, or shall be required to be, executed in connection with such assignments (all of which are hereby waived). The HTA-1 Term Loan Assignor Lenders, the HTA-1 Term Loan Assignee Lenders and the other HTA-1 Term Loan Lenders shall make such cash settlements among themselves, through the Administrative Agent, as the Administrative Agent may direct with respect to such reallocations and assignments so that the aggregate outstanding principal amount of HTA-1 Term Loans shall be held by the HTA-1 Term Loan Lenders pro rata in accordance with the amount of the “HTA-1 Term Loan Amounts” set forth on Schedule 2.01. (c) HTA-2 Term Loans. Simultaneously with the effectiveness of this Credit Agreement, the principal amount of all outstanding “HTA-2 Term Loans” (as defined in the Existing Credit Agreement) of each of the “HTA-2 Term Loan Lenders” (as defined in the Existing Credit Agreement) as existing immediately prior to the Closing Date, shall be reallocated among the HTA-2 Term Loan Lenders so that the HTA-2 Term Loans are held by the HTA-2 Term Loan Lenders as set forth on Schedule 2.01 attached hereto. To effect such reallocations each HTA-2 Term Loan Lender which either was not a “HTA-2 Term Loan Lender” under the Existing Credit Agreement immediately prior to the Closing Date or whose HTA-2 Term Loan upon the effectiveness of this Credit Agreement exceeds its “HTA-2 Term Loan” under the Existing Credit Agreement immediately prior to the effectiveness of this Credit Agreement (each a “HTA-2 Term Loan Assignee Lender”) shall be deemed to have purchased such right, title and interest in, and such obligations in respect of, the “HTA-2 Term Loans” under the Existing Credit Agreement from the “HTA-2 Term Loan Lenders” under the Existing Credit Agreement which will not have a HTA-2 Term Loan on and as of the Closing Date or whose HTA-2 Term Loans upon the effectiveness of this Credit Agreement are less than their respective “HTA-2 Term Loans” under the Existing Credit Agreement (each a “HTA-2 Term Loan Assignor Lender”), so that the HTA-2 Term Loans of the HTA-2 Term Loan Lenders will be held by the HTA-2 Term Loan Lenders as set forth on Schedule 2.01. Such purchases shall be deemed to have been effected by way of, and subject to the terms and conditions of, an Assignment and Assumption without the payment of any related assignment fee, and, except for HTA-2 Term Loan Notes to be provided to the HTA-2 Term Loan Assignor Lenders and HTA-2 Term Loan Assignee Lenders in the principal amount of their respective HTA-2 Term Loans, no other documents or instruments shall be, or shall be required to be, executed in connection with such assignments (all of which are hereby waived). The HTA-2 Term Loan Assignor Lenders, the HTA-2 Term Loan Assignee Lenders and the other HTA-2 Term Loan Lenders shall make such cash settlements among themselves, through the Administrative Agent, as the Administrative Agent may direct with respect to such reallocations and assignments so that the aggregate outstanding principal amount of HTA-2 Term Loans shall be held by the HTA-2 Term Loan Lenders pro rata in accordance with the amount of the “HTA-2 Term Loan Amounts” set forth on Schedule 2.01. -61- LEGAL02/47543734v6
(d) HR-1 Term Loans. Simultaneously with the effectiveness of this Credit Agreement, the principal amount of all outstanding “HR-1 Term Loans” (as defined in the Existing Credit Agreement) of each of the “HR-1 Term Loan Lenders” (as defined in the Existing Credit Agreement) as existing immediately prior to the Closing Date, shall be reallocated among the HR-1 Term Loan Lenders so that the HR-1 Term Loans are held by the HR-1 Term Loan Lenders as set forth on Schedule 2.01 attached hereto. To effect such reallocations each HR-1 Term Loan Lender which either was not a “HR-1 Term Loan Lender” under the Existing Credit Agreement immediately prior to the Closing Date or whose HR-1 Term Loan upon the effectiveness of this Credit Agreement exceeds its “HR-1 Term Loan” under the Existing Credit Agreement immediately prior to the effectiveness of this Credit Agreement (each a “HR-1 Term Loan Assignee Lender”) shall be deemed to have purchased such right, title and interest in, and such obligations in respect of, the “HR-1 Term Loans” under the Existing Credit Agreement from the “HR-1 Term Loan Lenders” under the Existing Credit Agreement which will not have a HR-1 Term Loan on and as of the Closing Date or whose HR-1 Term Loans upon the effectiveness of this Credit Agreement are less than their respective “HR-1 Term Loans” under the Existing Credit Agreement (each a “HR-1 Term Loan Assignor Lender”), so that the HR-1 Term Loans of the HR-1 Term Loan Lenders will be held by the HR-1 Term Loan Lenders as set forth on Schedule 2.01. Such purchases shall be deemed to have been effected by way of, and subject to the terms and conditions of, an Assignment and Assumption without the payment of any related assignment fee, and, except for HR-1 Term Loan Notes to be provided to the HR-1 Term Loan Assignor Lenders and HR-1 Term Loan Assignee Lenders in the principal amount of their respective HR-1 Term Loans, no other documents or instruments shall be, or shall be required to be, executed in connection with such assignments (all of which are hereby waived). The HR-1 Term Loan Assignor Lenders, the HR-1 Term Loan Assignee Lenders and the other HR-1 Term Loan Lenders shall make such cash settlements among themselves, through the Administrative Agent, as the Administrative Agent may direct with respect to such reallocations and assignments so that the aggregate outstanding principal amount of HR-1 Term Loans shall be held by the HR-1 Term Loan Lenders pro rata in accordance with the amount of the “HR-1 Term Loan Amounts” set forth on Schedule 2.01. (e) HR-2 Term Loans. Simultaneously with the effectiveness of this Credit Agreement, the principal amount of all outstanding “HR-2 Term Loans” (as defined in the Existing Credit Agreement) of each of the “HR-2 Term Loan Lenders” (as defined in the Existing Credit Agreement) as existing immediately prior to the Closing Date, shall be reallocated among the HR-2 Term Loan Lenders so that the HR-2 Term Loans are held by the HR-2 Term Loan Lenders as set forth on Schedule 2.01 attached hereto. To effect such reallocations each HR-2 Term Loan Lender which either was not a “HR-2 Term Loan Lender” under the Existing Credit Agreement immediately prior to the Closing Date or whose HR-2 Term Loan upon the effectiveness of this Credit Agreement exceeds its “HR-2 Term Loan” under the Existing Credit Agreement immediately prior to the effectiveness of this Credit Agreement (each a “HR-2 Term Loan Assignee Lender”) shall be deemed to have purchased such right, title and interest in, and such obligations in respect of, the “HR-2 Term Loans” under the Existing Credit Agreement from the “HR-2 Term Loan Lenders” under the Existing Credit Agreement which will not have a HR-2 Term Loan on and as of the Closing Date or whose HR-2 Term Loans upon the effectiveness of this Credit Agreement are less than their respective “HR-2 Term Loans” under the Existing Credit Agreement (each a “HR-2 Term Loan Assignor Lender”), so that the HR-2 Term Loans of the HR-2 Term Loan Lenders will be held by the HR-2 Term Loan Lenders as set forth on Schedule 2.01. Such purchases shall be deemed to have been effected by way of, and subject to the terms and conditions of, an Assignment and Assumption without the payment of any related assignment fee, and, except for HR-2 Term Loan Notes to be provided to the HR-2 Term Loan Assignor Lenders and HR-2 Term Loan Assignee Lenders in the principal amount of their respective HR-2 Term Loans, no other documents or instruments shall be, or shall be required to be, executed in connection with such assignments (all of which are hereby waived). The HR-2 Term Loan Assignor Lenders, the HR-2 Term Loan Assignee Lenders and the other HR-2 Term Loan Lenders shall make such cash settlements among themselves, through the Administrative -62- LEGAL02/47543734v6
Agent, as the Administrative Agent may direct with respect to such reallocations and assignments so that the aggregate outstanding principal amount of HR-2 Term Loans shall be held by the HR-2 Term Loan Lenders pro rata in accordance with the amount of the “HR-2 Term Loan Amounts” set forth on Schedule 2.01. (f) 2022 Term Loans. Simultaneously with the effectiveness of this Credit Agreement, the principal amount of all outstanding “New 5.5-Year Term Loans” (as defined in the Existing Credit Agreement) of each of the “New 5.5-Year Term Loan Lenders” (as defined in the Existing Credit Agreement) as existing immediately prior to the Closing Date, shall be reallocated among the 2022 Term Loan Lenders so that the 2022 Term Loans are held by the 2022 Term Loan Lenders as set forth on Schedule 2.01 attached hereto. To effect such reallocations each 2022 Term Loan Lender which either was not a “New 5.5-Year Term Loan Lender” under the Existing Credit Agreement immediately prior to the Closing Date or whose 2022 Term Loan upon the effectiveness of this Credit Agreement exceeds its “New 5.5-Year Term Loan” under the Existing Credit Agreement immediately prior to the effectiveness of this Credit Agreement (each a “2022 Term Loan Assignee Lender”) shall be deemed to have purchased such right, title and interest in, and such obligations in respect of, the “New 5.5-Year Term Loans” under the Existing Credit Agreement from the “New 5.5-Year Term Loan Lenders” under the Existing Credit Agreement which will not have a 2022 Term Loan on and as of the Closing Date or whose 2022 Term Loans upon the effectiveness of this Credit Agreement are less than their respective “New 5.5-Year Term Loans” under the Existing Credit Agreement (each a “2022 Term Loan Assignor Lender”), so that the 2022 Term Loans of the 2022 Term Loan Lenders will be held by the 2022 Term Loan Lenders as set forth on Schedule 2.01. Such purchases shall be deemed to have been effected by way of, and subject to the terms and conditions of, an Assignment and Assumption without the payment of any related assignment fee, and, except for 2022 Term Loan Notes to be provided to the 2022 Term Loan Assignor Lenders and 2022 Term Loan Assignee Lenders in the principal amount of their respective 2022 Term Loans, no other documents or instruments shall be, or shall be required to be, executed in connection with such assignments (all of which are hereby waived). The 2022 Term Loan Assignor Lenders, the 2022 Term Loan Assignee Lenders and the other 2022 Term Loan Lenders shall make such cash settlements among themselves, through the Administrative Agent, as the Administrative Agent may direct with respect to such reallocations and assignments so that the aggregate outstanding principal amount of 2022 Term Loans shall be held by the 2022 Term Loan Lenders pro rata in accordance with the amount of the “2022 Term Loan Amounts” set forth on Schedule 2.01. (g) Departing Lenders. For the avoidance of doubt, as a result of the immediately preceding subsections (a) through (f) of this Section 2.19, (i) the “Revolving Loans” and “Term Loans” under the Existing Credit Agreement previously made to the Borrower by each Departing Lender under the Existing Credit Agreement which remain outstanding immediately prior to the date of this Agreement shall be repaid in full (accompanied by any accrued and unpaid interest and fees thereon), (ii) each Departing Lender’s “Commitments” under the Existing Credit Agreement shall be terminated and (iii) each Departing Lender shall not be a Lender hereunder, in each case of the foregoing clauses (i) through (iii), on and as of the Closing Date. ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY 3.01 Taxes. (a) L/C Issuer. For purposes of this Section, the term “Lender” includes each L/C Issuer and the term “applicable Law” includes FATCA. -63- LEGAL02/47543734v6
(b) Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes. Any and all payments by or on account of any obligation of any Credit Party under any Credit Document shall be made without deduction or withholding for any Taxes, except as required by applicable Law. If any applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Credit Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made. (c) Payment of Other Taxes by the Credit Parties. The applicable Credit Party shall timely pay to the relevant Governmental Authority in accordance with applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes. (d) Indemnification by the Credit Parties. The Credit Parties shall jointly and severally indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. (e) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Credit Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Credit Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.07 relating to the maintenance of a Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Credit Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Credit Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this subsection. The provisions of this subsection shall continue to inure to the benefit of an Administrative Agent following its resignation or removal as Administrative Agent. (f) Evidence of Payments. As soon as practicable after any payment of Taxes by any Credit Party to a Governmental Authority as provided in this Section 3.01, such Credit Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by Law to report such payment or other evidence of such payment reasonably satisfactory to the Borrower or the Administrative Agent, as the case may be. (g) Status of Lenders; Tax Documentation. -64- LEGAL02/47543734v6
(i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Credit Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in the immediately following clauses (ii)(A), (ii)(B) and (ii)(D)) shall not be required if in the applicable Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender. (ii) Without limiting the generality of the foregoing: (A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Credit Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), an electronic copy (or an original if requested by the Borrower or the Administrative Agent) of an executed IRS Form W-9 (or any successor form) certifying that such Lender is exempt from U.S. federal backup withholding tax; (B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Credit Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable: (I) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Credit Document, an electronic copy (or an original if requested by the Borrower or the Administrative Agent) of an executed IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Credit Document, IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty; (II) an electronic copy (or an original if requested by the Borrower or the Administrative Agent) of an executed IRS Form W-8ECI; (III) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 871(h) or Section 881(c) of the -65- LEGAL02/47543734v6
Internal Revenue Code, (x) a certificate substantially in the form of Exhibit 3.01-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, a “10 percent shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Internal Revenue Code (a “U.S. Tax Compliance Certificate”) and (y) an electronic copy (or an original if requested by the Borrower or the Administrative Agent) of an IRS Form W-8BEN or IRS Form W-8BEN-E, applicable; or (IV) to the extent a Foreign Lender is not the beneficial owner, an electronic copy (or an original if requested by the Borrower or the Agent) of an executed IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, a U.S. Tax Compliance Certificate substantially in the form of Exhibit 3.01-2 or Exhibit 3.01-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit 3.01-4 on behalf of each such direct and indirect partner; (C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Credit Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), an electronic copy (or an original if requested by the Borrower or the Administrative Agent) of any other form prescribed by applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable Law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and (D) if a payment made to a Lender under any Credit Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by applicable Law and at such time or times reasonably requested by the Borrower or the Agent such documentation prescribed by applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Credit Agreement. Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so. -66- LEGAL02/47543734v6
(h) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section (including by the payment of additional amounts pursuant to this Section), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this subsection (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection, in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this subsection the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person. (i) Survival. Each party’s obligations under this Section shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Credit Document. (j) FATCA Determination. For purposes of determining withholding Taxes imposed under FATCA, from and after the Closing Date, the Borrower and the Administrative Agent shall treat (and the Lenders hereby authorize the Administrative Agent to treat) this Credit Agreement as not qualifying as a “grandfathered obligation” within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i). 3.02 Illegality. If, in any applicable jurisdiction, the Administrative Agent, any L/C Issuer or any Lender determines that any applicable Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for the Administrative Agent, any L/C Issuer or any Lender to (i) perform any of its obligations hereunder or under any other Credit Document, (ii) to fund or maintain its participation in any Loan or (iii) issue, make, maintain, fund or charge interest or fees with respect to any Extension of Credit, such Person shall promptly notify the Administrative Agent, then, upon the Administrative Agent notifying the Borrower, and until such notice by such Person is revoked, any obligation of such Person to issue, make, maintain, fund or charge interest or fees with respect to any such Extension of Credit shall be suspended, and to the extent required by applicable Law, cancelled. Upon receipt of such notice, the Credit Parties shall, (A) repay that Person’s participation in the Loans or other applicable Obligations on with respect to any Term SOFR Loan, the last day of the Interest Period therefor, or on another applicable date with respect to another Obligation, occurring after the Administrative Agent has notified the Borrower or, in each case, if earlier, the date specified by such Person in the notice delivered to the Administrative Agent (being no earlier than the last day of any applicable grace period permitted by applicable Law) and (B) take all reasonable actions requested by such Person to mitigate or avoid such illegality. 3.03 Changed Circumstances. -67- LEGAL02/47543734v6
(a) Circumstances Affecting Benchmark Availability. Subject to clause (c) below, in connection with any request for a SOFR Loan or a conversion to or continuation thereof or otherwise, if for any reason (i) the Administrative Agent shall determine (which determination shall be conclusive and binding absent manifest error) that reasonable and adequate means do not exist for ascertaining Adjusted Term SOFR with respect to a proposed Term SOFR Loan on or prior to the first day of the applicable Interest Period or Adjusted Daily Simple SOFR with respect to a proposed Daily Simple SOFR Loan or (ii) the Required Lenders shall determine (which determination shall be conclusive and binding absent manifest error) that Adjusted Term SOFR or Adjusted Daily Simple SOFR does not adequately and fairly reflect the cost to such Lenders of making or maintaining (x) such Term SOFR Loan during such Interest Period or (y) such Daily Simple SOFR Loan, and, in the case of clause (ii), the Required Lenders have provided notice of such determination to the Administrative Agent, then, in each case, the Administrative Agent shall promptly give notice thereof to the Borrower. Upon notice thereof by the Administrative Agent to the Borrower, any obligation of the Lenders to make Term SOFR Loans or Daily Simple SOFR Loans, as the case may be, and any right of the Borrower to convert any Loan to or continue any Loan as a Term SOFR Loan or Daily Simple SOFR Loan, as the case may be, shall be suspended (to the extent of the affected Term SOFR Loans or the affected Interest Periods or affected Daily Simple SOFR Loans) until the Administrative Agent (with respect to clause (ii), at the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, (A) the Borrower may revoke any pending request for a borrowing of, conversion to or continuation of Term SOFR Loans (to the extent of the affected Term SOFR Loans or the affected Interest Periods) or Daily Simple SOFR Loans or, failing that, the Borrower will be deemed to have converted any such request into a request for a borrowing of or conversion to Daily Simple SOFR Loans to the extent available, in the case of Term SOFR Loans, or otherwise to Base Rate Loans in the amount specified therein and (B) any outstanding affected Term SOFR Loans will be deemed to have been converted into Daily Simple SOFR Loans to the extent available, or otherwise to Base Rate Loans at the end of the applicable Interest Period, and any outstanding affected Daily Simple SOFR Loans will be deemed to have been converted into Base Rate Loans. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted, together with, in the case of Term SOFR Loans, any additional amounts required pursuant to Section 3.05. (b) Laws Affecting SOFR Availability. If, after the date hereof, the introduction of, or any change in, any applicable Law or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any of the Lenders (or any of their respective Lending Offices) with any request or directive (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, shall make it unlawful or impossible for any of the Lenders (or any of their respective Lending Offices) to honor its obligations hereunder to make or maintain any SOFR Loan, or to determine or charge interest based upon SOFR, Daily Simple SOFR, Adjusted Daily Simple SOFR, the Term SOFR Reference Rate, Adjusted Term SOFR or Term SOFR, such Lender shall promptly give notice thereof to the Administrative Agent and the Administrative Agent shall promptly give notice to the Borrower and the other Lenders (an “Illegality Notice”). Thereafter, until each affected Lender notifies the Administrative Agent and the Administrative Agent notifies the Borrower that the circumstances giving rise to such determination no longer exist, (i) any obligation of the Lenders to make Term SOFR Loans and/or Daily Simple SOFR Loans, as applicable, and any right of the Borrower to convert any Loan to a Daily Simple SOFR Loan or Term SOFR Loan, as applicable, or continue any Loan as a Term SOFR Loan shall be suspended and (ii) if necessary to avoid such illegality, the Administrative Agent shall compute the Base Rate without reference to clause (c) of the definition of “Base Rate”. Upon receipt of an Illegality Notice, the Borrower shall, if necessary to avoid such illegality, upon demand from any Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all affected Term SOFR Loans to Daily Simple SOFR Loans, to the extent available, or Base Rate Loans and convert all affected Daily Simple SOFR Loans into Base Rate Loans (in each -68- LEGAL02/47543734v6
case, if necessary to avoid such illegality, the Administrative Agent shall compute the Base Rate without reference to clause (c) of the definition of “Base Rate”) on the last day of the Interest Period therefor, if all affected Lenders may lawfully continue to maintain such Daily Simple SOFR Loans and/or Term SOFR Loans to such day, or immediately, if any Lender may not lawfully continue to maintain such Daily Simple SOFR Loans and/or Term SOFR Loans to such day. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount of any Term SOFR Loans and/or Daily Simple SOFR Loans so prepaid or converted, together with, in the case of Term SOFR Loans, any additional amounts required pursuant to Section 3.05. (c) Benchmark Replacement Setting. (i) Benchmark Replacement. (A) Notwithstanding anything to the contrary herein or in any other Credit Document, upon the occurrence of a Benchmark Transition Event with respect to any Benchmark, the Administrative Agent and the Borrower may amend this Credit Agreement to replace such Benchmark with a Benchmark Replacement. Any such amendment with respect to a Benchmark Transition Event will become effective at 5:00 p.m. on the fifth (5th) Business Day after the Administrative Agent has posted such proposed amendment to all affected Lenders and the Borrower so long as the Administrative Agent has not received, by such time, written notice of objection to such amendment from Lenders comprising the Required Lenders. No replacement of a Benchmark with a Benchmark Replacement pursuant to this Section 3.03(c)(i)(A) will occur prior to the applicable Benchmark Transition Start Date. (B) No Swap Contract shall be deemed to be a “Credit Document” for purposes of this Section 3.03(c). (ii) Benchmark Replacement Conforming Changes. In connection with the use, administration, adoption or implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Credit Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Credit Agreement or any other Credit Document. (iii) Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Borrower and the Lenders of (A) the implementation of any Benchmark Replacement and (B) the effectiveness of any Conforming Changes in connection with the use, administration, adoption or implementation of a Benchmark Replacement. The Administrative Agent will promptly notify the Borrower of the removal or reinstatement of any tenor of a Benchmark pursuant to Section 3.03(c)(iv). Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 3.03(c), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Credit Agreement or any other Credit Document, except, in each case, as expressly required pursuant to this Section 3.03(c). -69- LEGAL02/47543734v6
(iv) Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Credit Document, at any time (including in connection with the implementation of a Benchmark Replacement), (A) if any then-current Benchmark is a term rate (including the Term SOFR Reference Rate) and either (1) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (2) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will not be representative, then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (B) if a tenor that was removed pursuant to clause (A) above either (1) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (2) is not, or is no longer, subject to an announcement that it is not or will not be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor. (v) Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period with respect to a given Benchmark, (A) the Borrower may revoke any pending request for a borrowing of, conversion to or continuation of any affected SOFR Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a borrowing of or conversion to Daily Simple SOFR Loans to the extent available, in the case of Term SOFR Loans, or Base Rate Loans and (B) any outstanding affected SOFR Loans will be deemed to have been converted to Daily Simple SOFR Loans to the extent available, in the case of Term SOFR Loans, or Base Rate Loans, at the end of the applicable Interest Period for Term SOFR Loans or immediately in the case of Daily Simple SOFR Loans. During any Benchmark Unavailability Period with respect to any Benchmark or at any time that a tenor for any then-current Benchmark is not an Available Tenor, the component of Base Rate based upon the then-current Benchmark that is the subject of such Benchmark Unavailability Period or such tenor for such Benchmark, as applicable, will not be used in any determination of Base Rate. 3.04 Increased Cost; Capital Adequacy. (a) Increased Costs Generally. If any Change in Law shall (such increases in costs and reductions in amounts receivable being herein called “Additional Costs”): (i) impose, modify or deem applicable any reserve (including pursuant to regulations issued from time to time by the FRB for determining the maximum reserve requirement (including any emergency, special, supplemental or other marginal reserve requirement) with respect to eurocurrency funding (currently referred to as “Eurocurrency liabilities” in Regulation D of the FRB, as amended and in effect from time to time)), special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or advances, loans or other credit extended or participated in by, any Lender or any L/C Issuer; (ii) subject any Lender or any L/C Issuer to any tax of any kind whatsoever with respect to this Credit Agreement, any Letter of Credit, any participation in a Letter of Credit or any SOFR Loan made by it, or change the basis of taxation of payments to such Lender or such -70- LEGAL02/47543734v6
L/C Issuer in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or such L/C Issuer); or (iii) impose on any Lender or any L/C Issuer any other condition, cost or expense affecting this Credit Agreement or Loans made by such Lender or any Letter of Credit or participation therein; and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining, continuing or converting any Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or such L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or such L/C Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or such L/C Issuer, the Borrower will pay to such Lender or such L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or such L/C Issuer, as the case may be, for such additional costs incurred or reduction suffered. (b) Capital Requirements. If any Lender or any L/C Issuer determines that any Change in Law affecting such Lender or such L/C Issuer or any Lending Office of such Lender or such Lender’s or such L/C Issuer’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s or such L/C Issuer’s capital or on the capital of such Lender’s or such L/C Issuer’s holding company, if any, as a consequence of this Credit Agreement, the Commitment of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by such L/C Issuer, to a level below that which such Lender or such L/C Issuer or such Lender’s or such L/C Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or such L/C Issuer’s policies and the policies of such Lender’s or such L/C Issuer’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or such L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or such L/C Issuer or such Lender’s or such L/C Issuer’s holding company for any such reduction suffered. (c) Lender’s Suspension of SOFR Loans. Without limiting the effect of the provisions of the immediately preceding subsections (a) and (b), if by reason of any Change in Law, any Lender either (i) incurs Additional Costs based on or measured by the excess above a specified level of the amount of a category of deposits or other liabilities of such Lender that includes deposits by reference to which the interest rate on SOFR Loans is determined as provided in this Credit Agreement or a category of extensions of credit or other assets of such Lender that includes SOFR Loans or (ii) becomes subject to restrictions on the amount of such a category of liabilities or assets that it may hold, then, if such Lender so elects by notice to the Borrower (with a copy to the Administrative Agent), the obligation of such Lender to make or continue, or to convert Base Rate Loans into, such Type of SOFR Loans shall be suspended until such Change in Law ceases to be in effect (in which case the provisions of Section 3.07 shall apply). (d) Additional Costs in Respect of Letters of Credit. Without limiting the obligations of the Borrower under the preceding subsections of this Section (but without duplication), if as a result of any Change in Law or any risk-based capital guideline or other requirement heretofore or hereafter issued by any Governmental Authority there shall be imposed, modified or deemed applicable any Tax (other than Indemnified Taxes, Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and Connection Income Taxes), reserve, special deposit, capital adequacy or similar requirement against or with respect to or measured by reference to Letters of Credit and the result shall be to increase the cost to -71- LEGAL02/47543734v6
an L/C Issuer of issuing (or any Lender of purchasing participations in) or maintaining its obligation hereunder to issue (or purchase participations in) any Letter of Credit or reduce any amount receivable by an L/C Issuer or any Lender hereunder in respect of any Letter of Credit, then, upon demand by such L/C Issuer or such Lender, the Borrower shall pay immediately to such L/C Issuer or, in the case of such Lender, to the Administrative Agent for the account of such Lender, from time to time as specified by such L/C Issuer or such Lender, such additional amounts as shall be sufficient to compensate such L/C Issuer or such Lender for such increased costs or reductions in amount. (e) Certificates for Reimbursement. A duly executed certificate of a Lender or a L/C Issuer setting forth in reasonable detail the calculation of the amount or amounts necessary to compensate such Lender or such L/C Issuer or its holding company, as the case may be, as specified in subsections of this Section and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender or such L/C Issuer, as the case may be, the amount shown as due on any such certificate within thirty (30) days after receipt thereof. (f) Delay in Requests. Failure or delay on the part of any Lender or any L/C Issuer to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of the Administrative Agent’s, such Lender’s or such L/C Issuer’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender or a L/C Issuer pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine (9) months prior to the date that the Administrative Agent, such Lender or such L/C Issuer, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or such L/C Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof). 3.05 Compensation for Losses. Upon demand of the Administrative Agent (or any Lender through the Administrative Agent) from time to time, the Borrower shall promptly compensate each Lender for and hold each Lender harmless from any loss, cost or expense attributable to: (a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); (b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Borrower; or (c) any assignment of a Term SOFR Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 9.15; including any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained; provided, that any such compensation shall, for the avoidance of doubt, in no event include any lost profits. -72- LEGAL02/47543734v6
3.06 Mitigation Obligations; Replacement of Lenders. (a) Designation of a Different Lending Office. If any Lender requests compensation under Section 3.04, or the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, or if any Lender gives a notice pursuant to Section 3.02, then such Lender shall use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02, as applicable, and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment. (b) If (a) a Lender requests compensation pursuant to Section 3.01 or 3.04, and the Required Lenders are not also doing the same, (b) the obligation of any Lender to make a Type of SOFR Loans or to continue, or to convert Base Rate Loans into, a Type of SOFR Loans shall be suspended pursuant to Section 3.04(c) or 3.02 but the obligation of the Required Lenders shall not have been suspended under such Sections, and in the case of clause (a) or (b) such Lender has declined or is unable to designate a different Lending Office in accordance with Section 3.06(a) or (c) a Lender is a Defaulting Lender, then the Borrower may, at its sole expense and effort, so long as there does not then exist any Default or Event of Default, demand that such Lender, and upon such demand such Lender shall promptly, assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 9.07), all of its interests, rights (other than its existing rights to payments pursuant to Section 3.01 or Section 3.04 and rights to indemnification under Section 9.05) and obligations under this Credit Agreement and the related Credit Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that: (i) the Borrower shall have paid, or caused to be paid, to the Administrative Agent the assignment fee (if any) specified in Section 9.07; (ii) such Lender shall have received payment of (x) the aggregate principal balance of all Loans then owing to such Lender, plus (y) the aggregate amount of payments previously made by such Lender under Section 2.03(j) and Section 2.04(e) that have not been repaid, plus (z) any accrued but unpaid interest thereon and accrued but unpaid fees owing to such Lender, or any other amount as may be mutually agreed upon by such Lender and Eligible Assignee; (iii) in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.04, such assignment will result in a reduction in such compensation or payments thereafter; and (iv) such assignment does not conflict with applicable Law. In connection with any such assignment under this Section 3.06, such Lender shall promptly execute all documents reasonably requested to effect such assignment, including an appropriate Assignment and Assumption; provided that such Lender’s failure to execute an Assignment and Assumption within five Business Days after written request by the Borrower shall not prevent the effectiveness of such assignment. A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. -73- LEGAL02/47543734v6
3.07 Treatment of Affected Loans. If the obligation of any Lender to make SOFR Loans or to continue, or to convert Loans of one Type into, SOFR Loans shall be suspended pursuant to Section 3.02, Section 3.03 or Section 3.04(c) then such Lender’s affected SOFR Loans shall be automatically converted into Daily Simple SOFR Loans to the extent available in the case of Term SOFR Loans, or Base Rate Loans, on the last day(s) of the then current Interest Period(s) for Term SOFR Loans or immediately in the case of Daily Simple SOFR Loans (or, in the case of a conversion required by Section 3.02, Section 3.03 or Section 3.04(c) on such earlier date as such Lender or the Administrative Agent, as applicable, may specify to the Borrower (with a copy to the Administrative Agent, as applicable)) (provided that, for the avoidance of doubt, such Daily Simple SOFR Loans so converted to Base Rate Loans shall accrue interest at Adjusted Daily Simple SOFR in accordance with Section 2.08(a) up to and including the date of such conversion) and, unless and until such Lender or the Administrative Agent, as applicable, gives notice as provided below that the circumstances specified in Section 3.02, Section 3.03 or Section 3.04(c) that gave rise to such conversion no longer exist: (i) to the extent that such Lender’s SOFR Loans have been so converted, all payments and prepayments of principal that would otherwise be applied to such Lender’s SOFR Loans shall be applied instead to its Base Rate Loans; and (ii) all Loans that would otherwise be made or continued by such Lender as SOFR Loans shall be made or continued instead as Daily Simple SOFR Loans to the extent available in the case of Term SOFR Loans, or as Base Rate Loans, and all Base Rate Loans of such Lender that would otherwise be converted into SOFR Loans shall remain as Base Rate Loans. If such Lender or the Administrative Agent, as applicable, gives notice to the Borrower (with a copy to the Administrative Agent, as applicable) that the circumstances specified in Section 3.02, Section 3.03 or Section 3.04(c) that gave rise to the conversion of such Lender’s SOFR Loans pursuant to this Section no longer exist (which such Lender or the Administrative Agent, as applicable, agrees to do promptly upon such circumstances ceasing to exist) at a time when SOFR Loans made by other Lenders are outstanding, then such Lender’s Base Rate Loans shall be automatically converted, on the first day(s) of the next succeeding Interest Period(s) for such outstanding Term SOFR Loans or immediately with respect to Daily Simple SOFR Loans, to the extent necessary so that, after giving effect thereto, all Loans held by the Lenders holding SOFR Loans and by such Lender are held pro rata (as to principal amounts, Types and Interest Periods) in accordance with their respective Commitments. 3.08 Survival Losses. All of the Borrower’s obligations under this Article III shall survive termination of the Aggregate Commitments, repayment of all other Obligations hereunder and resignation of the Administrative Agent. -74- LEGAL02/47543734v6
ARTICLE IV CONDITIONS PRECEDENT TO EXTENSIONS OF CREDIT 4.01 Conditions to Initial Extensions of Credit. The obligation of the Lenders to close this Credit Agreement and make initial Extensions of Credit hereunder is subject to the satisfaction of such of the following conditions in all material respects on or prior to the Closing Date as shall not have been expressly waived in accordance with Section 9.01, with each delivery item set forth below in form and substance satisfactory to the Administrative Agent and each of the Lenders: (a) the Administrative Agent shall have received counterparts of this Credit Agreement signed by each of the parties hereto; (b) the Administrative Agent shall have received a duly executed Note for the account of each Lender that requests a Note for a particular Class; (c) the Administrative Agent and each Lender shall have received legal opinions of counsel to the Borrower, addressed to the Administrative Agent and the Lenders, in form and substance satisfactory to the Administrative Agent and the Lenders; (d) the Administrative Agent shall have received the certificate or articles of incorporation or formation, articles of organization, certificate of limited partnership, declaration of trust or other comparable organizational instrument (if any) of each of the Parent, the Borrower and each other Credit Party certified as of a recent date by the applicable Secretary of State of the state of formation of the Parent, the Borrower and such other Credit Party; (e) the Administrative Agent shall have received a certificate of good standing (or certificate of similar meaning) with respect to the Parent, the Borrower and each other Credit Party issued as of a recent date by the applicable Secretary of State of the state of formation of the Parent, the Borrower and such other Credit Parties and certificates of qualification to transact business or other comparable certificates issued as of a recent date by each Secretary of State (and any state department of taxation, as applicable) of each state in which the Parent, the Borrower or such other Credit Parties is required to be so qualified and where failure to be so qualified could reasonably be expected to have a Material Adverse Effect; (f) the Administrative Agent shall have received a certificate of incumbency signed by the Secretary or Assistant Secretary (or other individual performing similar functions) of the Parent, the Borrower and each other Credit Party with respect to each of the officers of the Parent, the Borrower and such other Credit Parties authorized to execute and deliver the Credit Documents to which the Parent, the Borrower or such other Credit Party is a party and authorized to execute and deliver on behalf of the Borrower Requests for Extensions of Credit; (g) the Administrative Agent shall have received copies certified by the Secretary or Assistant Secretary (or other individual performing similar functions) of the Parent, the Borrower and each other Credit Party of (A) the by-laws or similar governing document of the Parent, the Borrower and such other Credit Parties and (B) all corporate, limited liability company, partnership or other necessary action taken by the Parent, the Borrower and each other Credit Party to authorize the execution, delivery and performance of the Credit Documents to which it is a party; -75- LEGAL02/47543734v6
(h) the Administrative Agent shall have received a certificate of the Borrower, signed on behalf of Borrower by the Borrower’s chief executive officer or chief financial officer, confirming to the knowledge of such officer that as of such date (i) the representations and warranties in Article V hereof are true and correct in all material respects (or in the case of a representation or warranty qualified by materiality, true and correct in all respects), (ii) no Default or Event of Default has occurred and is continuing, (iii) since December 31, 2024, there has not occurred a material adverse change in the condition (financial or otherwise), operations, business, assets or liabilities of the Parent and its Subsidiaries, taken as a whole; (i) the Administrative Agent, the Arrangers and the Lenders shall have been paid all fees due and payable in connection herewith (including fees and expenses of counsel of the Administrative Agent) to the extent invoiced prior to the Closing Date; (j) the Administrative Agent shall have received a Disbursement Instruction Agreement executed by the Borrower; (k) the Administrative Agent and the Lenders shall have received (i) the financial statements referenced in Section 5.19(b) and (ii) a Compliance Certificate for the Borrower’s fiscal quarter ending March 31, 2025; (l) the Borrower or any Subsidiary that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation shall, collectively, have delivered to the Administrative Agent, and any Lender requesting the same, one Beneficial Ownership Certification in relation to the Borrower or each such Subsidiary, in each case, at least five (5) Business Days prior to the date of closing; (m) the Borrower and each other Credit Party shall have provided all information requested by the Administrative Agent and each Lender in order to comply with applicable “know your customer”, beneficial ownership and anti-money laundering rules and regulations, including without limitation, the Patriot Act, in each case, to the extent requested at least five (5) Business Days prior to the date of closing; (n) the Administrative Agent shall have received and reviewed, with results satisfactory to the Administrative Agent and its counsel, information regarding litigation, tax, accounting, labor, insurance, pension liabilities (actual or contingent), real estate leases, material contracts, debt agreements, property ownership, environmental matters, contingent liabilities and management of the Parent, the Borrower and their respective Subsidiaries; (o) [reserved]; (p) the Administrative Agent shall have received such other documents, agreements and instruments as the Administrative Agent, or any Lender through the Administrative Agent, may reasonably request; and (q) In the good faith, reasonable judgment of the Administrative Agent: (i) since December 31, 2024, there shall not have occurred a material adverse change in the condition (financial or otherwise), operations, business, assets or liabilities of the Parent and its Subsidiaries, taken as a whole; (ii) [reserved]; -76- LEGAL02/47543734v6
(iii) no action, suit, investigation or proceeding pending or threatened in any court or before any arbitrator or governmental authority that could reasonably be expected to (a) materially and adversely affect the Parent or its Subsidiaries, or (b) affect any transaction contemplated hereby or the ability of the Parent and its Subsidiaries to perform their respective obligations under the Credit Documents, other than as disclosed to the Administrative Agent and the Lenders prior to the date hereof; (iv) the Parent, the Borrower and their respective Subsidiaries shall have received all approvals, consents and waivers, and shall have made or given all necessary filings and notices as shall be required to consummate the transactions contemplated hereby without the occurrence of any default under, conflict with or violation of (A) any applicable Law or (B) any agreement, document or instrument to which any Credit Party is a party or by which any of them or their respective properties is bound; (v) the Borrower and each other Credit Party shall have provided all information requested by the Administrative Agent and each Lender in order to comply with applicable “know your customer” and anti-money laundering rules and regulations, including without limitation, the Patriot Act; and (vi) there shall not have occurred or exist any other material disruption of financial or capital markets that could reasonably be expected to materially and adversely affect the transactions contemplated by the Credit Documents. 4.02 Conditions to Extensions of Credit. The obligation of any Lender to make any Extension of Credit hereunder is subject to the satisfaction of each of the following conditions on or prior to the proposed date of the making of such Extension of Credit: (a) The Administrative Agent shall receive the applicable Request for Extension of Credit; (b) No Default or Event of Default shall have occurred and be continuing immediately before the making of such Extension of Credit and no Default or Event of Default shall exist immediately thereafter; (c) The representations and warranties of the Parent and the Borrower made in or pursuant to the Credit Documents (excluding, solely in the case of any Borrowing of Revolving Loans occurring after the date hereof, the representations and warranties contained in SectionSections 5.04 and 5.20) shall be true and correct in all material respects (or in the case of a representation or warranty qualified by materiality, true and correct in all respects) on and as of the date of such Extension of Credit, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct on such earlier date in all material respects (or in the case of a representation or warranty qualified by materiality, true and correct in all respects); (d) Immediately following the making of such Extension of Credit the outstanding principal balance of the Revolving Obligations shall not exceed the Aggregate Commitments. -77- LEGAL02/47543734v6
The making of such Extension of Credit hereunder shall be deemed to be a representation and warranty by the Parent and the Borrower on the date thereof as to the facts specified in clauses (b), (c), and (d) of this Section. ARTICLE V REPRESENTATIONS AND WARRANTIES Each of the Parent and the Borrower represents and warrants that: 5.01 Corporate Existence and Power. The Parent, the Borrower and each of their respective Material Subsidiaries is a corporation, partnership or limited liability company, as applicable, duly organized or formed, validly existing and in good standing under the laws of its jurisdiction of incorporation, has all organizational powers and all material governmental licenses, authorizations, consents and approvals required to own or lease its respective properties and to carry on its business as now being, and hereafter proposed to be, conducted and is duly qualified as a foreign entity and in good standing, and authorized to do business, under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification or authorization, other than in such jurisdictions where the failure to be so qualified, authorized and in good standing would not, in the aggregate, have a Material Adverse Effect. 5.02 Corporate and Governmental Authorization; No Contravention. The execution and delivery by the Borrower and each other Credit Party of the Credit Documents to which it is a party and the performance by the Borrower and each other Credit Party of their respective obligations thereunder are within the corporate, limited liability company or partnership power of the Borrower or such other Credit Party, as applicable, have been duly authorized by all necessary corporate, limited liability company or partnership action, as applicable, require no action by or in respect of, or filing with, any governmental body, agency or official or other Person (except for any such action or filing that has been taken and is in full force and effect) and do not contravene, or constitute a default under, any provision of applicable Law or regulation or of the Organization Documents of the Borrower or such other Credit Party or of any material agreement, judgment, injunction, order, decree or other material instrument binding upon the Borrower or such other Credit Party or result in the creation or imposition of any Lien on any asset of the Borrower or such other Credit Party other than Liens created pursuant to the Credit Documents. 5.03 Binding Effect. The Credit Documents constitute valid and binding agreements of the Borrower and each other Credit Party which is a party to such Credit Documents, enforceable against the Borrower and such other Credit Parties in accordance with their respective terms, except as the same may be limited by bankruptcy, insolvency, and other similar laws affecting the rights of creditors generally and the availability of equitable remedies for the enforcement of certain obligations (other than the payment of principal) contained herein or therein and as may be limited by equitable principles generally. The Credit Documents and the Fee Letters to which the Borrower or any other Credit Party is a party have been duly executed and delivered by the duly authorized officers of such Person. -78- LEGAL02/47543734v6
5.04 Litigation. Except as set forth on Schedule 5.04 attached hereto, there is no action, suit, proceeding or, to the knowledge of the Borrower, investigation pending against, or to the knowledge of the Borrower threatened against or affecting, the Parent, the Borrower or any of their respective Material Subsidiaries before any court or arbitrator or any governmental body, agency or official that would reasonably be expected to have a Material Adverse Effect. 5.05 Compliance with ERISA. (a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Internal Revenue Code and other federal or state Laws. Each Plan that is intended to qualify under Section 401(a) of the Internal Revenue Code has received a favorable determination letter from the IRS or an application for such a letter is currently pending before the IRS with respect thereto and, to the best knowledge of the Borrower, nothing has occurred that would prevent, or cause the loss of, such qualification. The Parent, the Borrower and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Internal Revenue Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Internal Revenue Code has been made with respect to any Plan. (b) There are no pending or, to the best knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could be reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or, to the best knowledge of the Borrower, violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect. (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) none of the Parent, the Borrower or any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred that, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could reasonably be expected to be subject to Sections 4069 or 4212(c) of ERISA. 5.06 Environmental Matters. Except as set forth on Schedule 5.06 hereto: (a) No written notice, notification, demand, request for information, citation, summons, complaint or order has been received by the Parent or the Borrower and to the knowledge of the Borrower, no penalty has been assessed and no investigation or review is pending or threatened by any governmental or other entity, (i) with respect to any alleged violation of any Environmental Laws in connection with the conduct of the Parent, the Borrower or any Material Subsidiary and relating to a Hazardous Substance or (ii) with respect to any alleged failure to have any permit, certificate, license, approval, registration or authorization required in connection with the conduct of the Parent, the Borrower or any Material Subsidiary relating to a Hazardous Substance or (iii) with respect to any generation, treatment, storage, recycling, transportation, disposal or release (including a release as defined in 42 U.S.C. Section 9601(22)) (“Release”) of any Hazardous Substance used by the Parent, the Borrower or -79- LEGAL02/47543734v6
any Material Subsidiary, which alleged violation, alleged failure to have any required permit, certificate, license, approval, or registration, or generation, treatment, storage, recycling, transportation, disposal or release, is reasonably likely to result in liability to the Parent, the Borrower or any Material Subsidiary in excess of $5,000,000 in the aggregate. (b) (i) To the Borrower’s knowledge, there has been no Release of a Hazardous Substance at, on or under any property used by the Parent, the Borrower or any of their respective Material Subsidiaries or for which the Parent, the Borrower or any of their respective Material Subsidiaries would be liable, which Release, is reasonably likely to result in liability to the Parent, the Borrower or any of their respective Material Subsidiaries in excess of $5,000,000 in the aggregate; (ii) to the Borrower’s knowledge, none of the Parent, the Borrower or any of their respective Material Subsidiaries has, other than as a generator or in a manner not regulated or prohibited under the Environmental Laws, stored or treated any “hazardous waste” (as defined in 42 U.S.C. Section 6903(5)) on any property used by the Parent, the Borrower or any of their respective Material Subsidiaries or for which the Parent, the Borrower or any of their respective Material Subsidiaries would be liable, except for such storage or treatment which is not reasonably likely to result in liability to the Parent, the Borrower or any of their respective Material Subsidiaries in excess of $5,000,000 in the aggregate; and (iii) to the Borrower’s knowledge no polychlorinated biphenyl (“PCB”) in concentrations greater than 50 parts per million, friable asbestos, or underground storage tank (in use or abandoned) is at any property used by the Parent, the Borrower or any of their respective Material Subsidiaries or for which the Parent, the Borrower or any of their respective Material Subsidiaries would be liable, except for such PCBs, friable asbestos or underground storage tanks that are not reasonably likely to result in liability to the Parent, the Borrower or any of their respective Material Subsidiaries in excess of $5,000,000 in the aggregate. (c) To the knowledge of the Borrower, neither the Parent, the Borrower nor any of their respective Material Subsidiaries has transported or arranged for the transportation (directly or indirectly) of any Hazardous Substance to any location which is listed under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”), on the Comprehensive Environmental Response, Compensation and Liability Information System, as amended (“CERCLIS”), or on any similar state list or which is the subject of any federal state or local enforcement action or other investigation which may lead to claims for clean-up costs, remedial work, damages to natural resources or for personal injury claims, including, but not limited to, claims under CERCLA, that are reasonably likely to result in liability to the Parent, the Borrower or any of their respective Material Subsidiaries in excess of $5,000,000 in the aggregate. (d) No written notification of a Release of a Hazardous Substance has been filed by or on behalf of the Parent, the Borrower or any of their respective Material Subsidiaries, which individually or in combination with other such Releases, is reasonably likely to result in liability for the Parent, the Borrower or any of their respective Material Subsidiaries in excess of $5,000,000 in the aggregate. (e) There have been no environmental audits or similar investigations conducted by or which are in the possession of the Parent, the Borrower or any of their respective Material Subsidiaries in relation to any property used by the Parent, the Borrower or any of their respective Material Subsidiaries or for which the Parent, the Borrower or any of their respective Material Subsidiaries would be liable, which identify one or more environmental liabilities of the Parent, the Borrower or any of their respective Material Subsidiaries which are reasonably likely to exceed $5,000,000 in the aggregate. -80- LEGAL02/47543734v6
5.07 Material Subsidiaries and Specified Affiliates. Set forth on Schedule 5.07 hereto is a complete and accurate list of all of the Material Subsidiaries and Specified Affiliates of the Parent and the Borrower, showing as to each such Material Subsidiary and Specified Affiliates the jurisdiction of its organization, the number of shares of each class of capital stock or other equity interests outstanding and the percentage of the outstanding shares of each such class owned (directly or indirectly) by the Parent, the Borrower or any other Material Subsidiary of the Parent or the Borrower and the number of shares covered by all outstanding options, warrants, rights of conversion or purchase, and similar rights. All of the outstanding capital stock or other equity interests of all of such Material Subsidiaries identified in such Schedule 5.07 as being owned by the Parent, the Borrower or any of their respective Material Subsidiaries have been validly issued, are fully paid and nonassessable and are owned directly or indirectly by the Parent, the Borrower or any of their respective Material Subsidiaries, as the case may be, free and clear of all Liens other than a Lien described in and permitted by Section 6.07 hereof. The Borrower may provide periodic updates of the information in Schedule 5.07, which shall be deemed modified to include the updated information. 5.08 Not an Investment Company. None of the Parent, the Borrower or any of their respective Material Subsidiaries is an “investment company” within the meaning of the Investment Company Act of 1940, as amended. 5.09 Margin Stock. No proceeds of any Loan will be used to purchase or carry any “margin stock” or to extend credit to others for the purpose of purchasing or carrying any “margin stock” in violation of Regulations U, T or X. 5.10 Compliance with Laws. Except as set forth on Schedule 5.10 attached hereto and made a part hereof, the Parent, the Borrower and each of their respective Material Subsidiaries is in compliance in all material respects with all applicable Law, rules and regulations (including, without limitation, Environmental Laws), and is not in violation of, or in default under, any term or provision of any charter, bylaw, mortgage, indenture, agreement, instrument, statute, rule, regulation, judgment, decree, order, writ or injunction applicable to it, except for any such non-compliance, violation, default or failure to comply which would not reasonably be expected to have a Material Adverse Effect. 5.11 Absence of Liens. There are no Liens of any nature whatsoever on any properties or assets of the Parent, the Borrower or any of their respective Material Subsidiaries, except as otherwise permitted under Section 6.07 hereof. 5.12 Indebtedness. Other than as set forth on Schedule 5.12 hereto, there is no material Indebtedness of the Parent, the Borrower and their Material Subsidiaries outstanding as of the date hereof. -81- LEGAL02/47543734v6
5.13 Contingent Liabilities. As of the Closing Date, other than as set forth on Schedule 5.13 there are no material contingent liabilities (other than contingent liabilities that constitute Funded Debt and material contingent liabilities arising out of customary indemnifications given by the Parent, the Borrower or their respective Material Subsidiaries to its officers and directors, its underwriters or its lenders) of the Parent, the Borrower or their respective Material Subsidiaries as of the date hereof. 5.14 Investments. Set forth on Schedule 5.14 is a complete and accurate list, in all material respects, as of the date hereof of all Investments by the Parent, the Borrower or any of their respective Material Subsidiaries in any Person, other than investments by the Parent, the Borrower or any of their respective Material Subsidiaries in a Subsidiary or Specified Affiliate. 5.15 Solvency. The Parent and its Subsidiaries, on a consolidated basis, are Solvent after giving effect to the transactions contemplated by the Credit Documents. 5.16 Taxes. The Parent, the Borrower and their respective Material Subsidiaries have filed, or caused to be filed, all tax returns (federal, state, local and foreign) required to be filed and paid all amounts of taxes shown thereon to be due (including interest and penalties) and have paid all other taxes, fees, assessments and other governmental charges owing by them, except for such taxes (i) which are not yet delinquent or (ii) as are being contested in good faith and by proper proceedings, and against which adequate accruals are being maintained in accordance with GAAP. Neither the Parent nor the Borrower is aware of any proposed material tax assessments against it or any of their respective Material Subsidiaries. 5.17 REIT Status. The Parent is taxed as a “real estate investment trust” within the meaning of Section 856(a) of the Internal Revenue Code. 5.18 Specified Affiliates. Except as set forth on Schedule 5.07, there are no Specified Affiliates as of the date hereof. 5.19 Financial Condition. Each of the financial statements described below (copies of which have been provided to the Administrative Agent for the benefit of the Lenders), have been prepared in accordance with GAAP throughout the periods covered thereby, present fairly in all material respects the financial condition and results from operations of the entities and for the periods specified, subject in the case of interim company-prepared statements to normal year-end adjustments: (a) an audited consolidated balance sheet of the Parent and its Consolidated Subsidiaries as of the end of the fiscal year ended December 31, 2024, together with the related consolidated statements of income and cash flows certified by BDO USA, P.C. or other -82- LEGAL02/47543734v6
independent certified public accountants of nationally recognized standing and containing an opinion of such accountants; and (b) a consolidated balance sheet of the Parent and its Subsidiaries as of the end of the fiscal quarter ended March 31, 2025, together with the related consolidated statements of income and cash flows. 5.20 No Material Adverse Effect. Since the date of the annual audited financial statements referenced in Section 5.19(a), there has been no circumstance, development or event relating to or affecting the Parent, the Borrower and their respective Material Subsidiaries which has had or is reasonably likely to have a Material Adverse Effect. 5.21 Accuracy and Completeness of Information. All written information, reports and other papers and data (other than financial projections and other forward looking statements, and information of a general economic or industry-specific nature) furnished to the Administrative Agent or any Lender by, on behalf of, or at the direction of, the Parent, the Borrower, any other Credit Party or any other Subsidiary were, at the time the same were so furnished, complete and correct in all material respects, to the extent necessary to give the recipient a true and accurate knowledge of the subject matter, or, in the case of financial statements, present fairly, in accordance with GAAP consistently applied throughout the periods involved, the financial position of the Persons involved as at the date thereof and the results of operations for such periods (subject, as to interim statements, to changes resulting from normal year end audit adjustments and absence of full footnote disclosure). All financial projections and other forward looking statements prepared by or on behalf of the Parent, the Borrower, any other Credit Party or any other Subsidiary that have been or may hereafter be made available to the Administrative Agent or any Lender were or will be prepared in good faith based on reasonable assumptions. No fact is known to any Credit Party which has had, or may in the future have (so far as any Credit Party can reasonably foresee), a Material Adverse Effect which has not been set forth in the financial statements referred to in Section 5.19 or in such information, reports or other papers or data or otherwise disclosed in writing to the Administrative Agent and the Lenders. No document furnished or written statement made to the Administrative Agent or any Lender in connection with the negotiation, preparation or execution of, or pursuant to, this Credit Agreement or any of the other Credit Documents contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary in order to make the statements contained therein not misleading. As of the Closing Date, if applicable, the information contained in the Beneficial Ownership Certification is true and correct in all respects. 5.22 Anti-Corruption Laws and Sanctions; Anti-Money Laundering Laws. (a) None of (i) the Parent, the Borrower, any Subsidiary, any of their respective directors, officers, or, to the knowledge of the Parent, the Borrower or such Subsidiary, any of their respective employees or Affiliates, or (ii) to the knowledge of Borrower, any agent or representative of the Parent, the Borrower or any Subsidiary that will act in any capacity in connection with or benefit from the Credit Facility, (A) is a Sanctioned Person or currently the subject or target of any Sanctions, (B) is controlled by or is acting on behalf of a Sanctioned Person, (C) has its assets located in a Sanctioned Country, (D) is under administrative, civil or criminal investigation for an alleged violation of, or received notice from or made a voluntary disclosure to any governmental entity regarding a possible violation of, Anti-Corruption Laws, Anti-Money Laundering Laws or Sanctions by a governmental authority that enforces Sanctions or -83- LEGAL02/47543734v6
any Anti-Corruption Laws or Anti-Money Laundering Laws, or (E) directly or indirectly derives revenues from investments in, or transactions with, Sanctioned Persons. (b) Each of the Parent, the Borrower and their respective Subsidiaries has implemented and maintains in effect policies and procedures reasonably designed to promote and achieve compliance by the Parent, the Borrower and their respective Subsidiaries and their respective directors, officers, employees, agents and Affiliates with applicable Anti-Corruption Laws, Anti-Money Laundering Laws and Sanctions. (c) Each of the Parent, the Borrower and their respective Subsidiaries, each director, officer, and to the knowledge of Borrower, employee, agent and Affiliate of Parent, Borrower and each such Subsidiary, is in compliance with applicable Anti-Corruption Laws, Anti-Money Laundering Laws and Sanctions in all material respects. (d) No proceeds of any Extension of Credit have been used, directly or (to the knowledge of the Borrower) indirectly, by the Parent, the Borrower, any of their respective Subsidiaries or any of its or their respective directors, officers, employees and agents in violation of Section 6.12. ARTICLE VI COVENANTS Each of the Parent and the Borrower hereby covenants and agrees that until the Obligations, together with interest, fees and other obligations hereunder, have been paid in full (other than contingent indemnification, expense reimbursement or other contingent obligations for which no claim has been asserted) and the Commitments hereunder shall have terminated (other than regarding Extended Letters of Credit in respect of which the Borrower has satisfied the requirements to provide Cash Collateral as required in Section 2.03(b)), the Parent and the Borrower shall, and shall cause their respective Subsidiaries to, perform and comply with the following covenants: 6.01 Information. The Borrower will deliver to Administrative Agent for the benefit of the Lenders: (a) within ninety-five (95) days after the end of each fiscal year of the Parent (beginning with the fiscal year ending December 31, 2025), a consolidated balance sheet of the Parent and its Subsidiaries as of the end of such fiscal year and the related consolidated statement of income and consolidated statement of cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, and, with respect to such financial information for the Parent and the Borrower, such consolidated statements shall be audited statements by BDO USA, P.C. or other independent public accountants of nationally recognized standing and containing an opinion of such accountants, which opinion shall be without exception, qualification or limitation on scope of audit; (b) within fifty (50) days after the end of each of the first three fiscal quarters of the Parent (beginning with the fiscal quarter ending June 30, 2025), a consolidated balance sheet of the Parent and its Subsidiaries as of the end of such quarter and the related consolidated statement of income and consolidated statement of cash flows for such quarter and for the portion of the Parent’s fiscal year ended at the end of such quarter, setting forth in each case in comparative form the figures for the corresponding quarter and the corresponding portion of the previous -84- LEGAL02/47543734v6
fiscal year, all certified (subject to normal adjustments) as to fairness of presentation and conformity with GAAP by the chief financial officer or treasurer of the Parent; (c) simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) of this Section, a certificate of the Parent, substantially in the form of Exhibit 6.01 (each, a “Compliance Certificate”), signed on behalf of the Parent by the chief financial officer, chief accounting officer or the treasurer of the Parent (i) stating whether, to such officer’s knowledge, there exists on the date of such certificate any Default and, if any Default then exists, setting forth the details thereof and the action that the Parent and/or the Borrower is taking or proposes to take with respect thereto, (ii) stating whether, since the date of the most recent financial statements previously delivered pursuant to clauses (a) or (b) of this Section, there has been a change in the GAAP applied in preparing the financial statements then being delivered from those applied in preparing the most recent audited financial statements so delivered which is material to the financial statements then being delivered and, if so, the effect on the financial covenants on account thereof and a reconciliation between calculation of the financial covenants before and after giving effect thereto, (iii) furnishing calculations demonstrating the compliance by the Parent and the Borrower of the financial covenants in Section 6.16 hereunder, (iv) attaching management’s summary of the results contained in such financial statements and (v) identifying the Borrower’s Debt Ratings then in effect; (d) [reserved]; (e) promptly, and in any event within five (5) Business Days after any officer obtains knowledge thereof, written notice of any change by a Ratings Service in its rating for the Borrower’s senior unsecured (non-credit enhanced) long term debt; (f) within five (5) Business Days after any officer obtains knowledge of any Default or Event of Default, if such Default or Event of Default is then continuing, a certificate of Borrower, signed on behalf of Borrower by the chief financial officer or the treasurer of the Borrower, setting forth the details thereof and the action which the Borrower is taking or proposes to take with respect thereto; (g) promptly upon the mailing thereof to the shareholders of the Parent generally, copies of all financial statements, reports and proxy statements so mailed; (h) promptly upon the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their equivalents) which the Parent or the Borrower shall have filed with the SEC; (i) promptly, and in any event within five (5) Business Days, after the occurrence of any ERISA Event, written notice of such ERISA Event; (j) as soon as possible after any officer of the Borrower obtains knowledge of the commencement of, or of a material threat of the commencement of, an action, suit or proceeding against the Parent, the Borrower or any of their respective Subsidiaries before any court or arbitrator or any governmental body, agency or official in which there is a reasonable likelihood of an adverse decision which would, after the application of applicable insurance, result in a Material Adverse Effect; -85- LEGAL02/47543734v6
(k) to the extent the information provided by the Borrower on Schedule 5.07 (Material Subsidiaries and Specified Affiliates) changes following the Closing Date, the Borrower will provide the Administrative Agent with updated information in connection with the delivery of the Compliance Certificate for the period in which such information changed, and such Schedule 5.07 shall be deemed modified to include the applicable updated information; (l) promptly after the Borrower has notified the Administrative Agent of its intention to treat any of the Loans, the Letters of Credit or any related transaction as a “reportable transaction” (within the meaning of Treasury Regulation Section 1.6011-4), a duly completed copy of IRS Form 8886 or any successor form thereto; (m) promptly, such information, certificates or documents as any Lender or the Administrative Agent may reasonably request in order for such Lender or the Administrative Agent to maintain compliance with the Patriot Act; and (n) from time to time such additional information regarding the financial position or business of the Parent, the Borrower and their respective Subsidiaries, as the Administrative Agent or any Lender may reasonably request. For purposes of the foregoing: (i) during any period when GAAP requires that a Specified Affiliate of the Parent be accounted for as a Subsidiary for purposes of the consolidated financial statements of the Parent and its Subsidiaries, the term “Subsidiary” shall include a Specified Affiliate of the Parent for purposes of clauses (a) and (b) above; and (ii) during any period when GAAP does not require that a Specified Affiliate of the Parent be accounted for as a Subsidiary for purposes of the consolidated financial statements of the Parent and its Subsidiaries, the terms “Subsidiary” shall not include a Specified Affiliate of the Parent for purposes of clauses (a) and (b) above and, if the Parent shall have any Specified Affiliates during any period covered by the financial statements delivered pursuant to clauses (a) or (b) above, the Parent and the Borrower shall deliver (A) financial statements of the character specified in clauses (a) and (b) above for such Specified Affiliates within the time periods set forth in clauses (a) and (b) above, and (B) on a combined basis, financial statements of the character specified in clauses (a) and (b) above for the Parent, its Subsidiaries and such Specified Affiliates accompanied by the opinions and certificates specified in clauses (b) and (c) above within the time periods set forth in clauses (a), (b) and (c) above. As to any information contained in materials furnished pursuant to Section 6.01(h), the Borrower shall not be separately required to furnish such information under clauses (a) or (b) above, but the foregoing shall not be in derogation of the obligation of the Borrower to furnish the information and materials described in clauses (a) and (b) above at the times specified therein. Documents required to be delivered pursuant to clauses (a), (b), (g) or (h) (to the extent any such documents are included in materials otherwise filed or furnished with the SEC) above may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 9.02; or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access without charge (whether a commercial, third-party website or whether sponsored by -86- LEGAL02/47543734v6
the Administrative Agent); provided that: (i) upon the request of the Administrative Agent or any Lender, the Borrower shall deliver paper copies of such documents to such Administrative Agent or such Lender, respectively, until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender, respectively, and (ii) the Borrower shall notify the Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the Compliance Certificates required by Section 6.01(c) to the Administrative Agent. Except for such Compliance Certificates, the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents. Each of the Parent and the Borrower hereby acknowledges that (a) the Administrative Agent and/or WFS will make available to the Lenders and the L/C Issuers materials and/or information provided by or on behalf of the Parent and the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to the Parent, the Borrower or their respective Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. Each of the Parent and the Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” each of the Parent and the Borrower shall be deemed to have authorized the Administrative Agent, WFS, the L/C Issuers and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Parent, the Borrower or their respective securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Confidential Information, they shall be treated as set forth in Section 9.08); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (z) the Administrative Agent and WFS shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform that is not designated “Public Side Information.” 6.02 Payment of Obligations. Each of the Parent and the Borrower will pay and discharge, and will cause each of their respective Subsidiaries to pay and discharge, at or before maturity, or prior to expiration of applicable notice, grace and curative periods, all their respective material obligations and liabilities, including, without limitation, tax liabilities, except where the same may be contested in good faith by appropriate proceedings, and will maintain, and will cause each of their respective Subsidiaries to maintain, in accordance with GAAP, appropriate reserves for the accrual of any of the same. 6.03 Maintenance of Property; Insurance. (a) Each of the Parent and the Borrower will keep, and will cause each of their respective Subsidiaries to keep, or will in the ordinary course of business cause the tenants of respective properties to keep, all property materially useful and necessary in its business in good working order and condition, ordinary wear and tear excepted and fire, casualty or condemnation excepted. -87- LEGAL02/47543734v6
(b) Each of the Parent and the Borrower will maintain, and will cause each of their respective Subsidiaries to maintain, with financially sound and responsible insurance companies, insurance on all their respective properties in at least such amounts and against such risks (and with such risk retention) as are usually insured against in the same general area by companies of established repute engaged in the same or a similar business, and will furnish to the Lenders, upon request from the Administrative Agent, information presented in reasonable detail as to the insurance so carried. The insurance described in this Section 6.03 may be carried by the tenants under the respective tenant leases of such properties in lieu of by the Parent, the Borrower or their respective Subsidiaries so long as the Parent, the Borrower or the respective Subsidiary is named as loss payee and additional insured with respect to such insurance. 6.04 Conduct of Business and Maintenance of Existence. Each of the Parent and the Borrower will continue, and will cause each Subsidiary to continue, to engage in business of the same general type as now conducted by the Parent, the Borrower and each of their respective Subsidiaries, and will preserve, renew and keep in full force and effect, and will cause each of their respective Subsidiaries to preserve, renew and keep in full force and effect their respective organizational existences and, with respect to the Parent and the Borrower, their respective jurisdictions of organization shall remain in the United States (except with the written consent of the Administrative Agent and each Lender) and, except for any such rights, privileges and franchises the failure to preserve which would not in the aggregate have a Material Adverse Effect; provided that nothing in this Section 6.04 shall prohibit (a) the merger of a Subsidiary into Parent or the Borrower or the merger or consolidation of any Subsidiary with or into another Person if the corporation surviving such consolidation or merger is a Wholly Owned Consolidated Subsidiary of the Parent and if, in each case, after giving effect thereto, no Default or Event of Default shall have occurred and be continuing and a responsible officer of the Borrower shall deliver to the Administrative Agent an officer’s certificate representing that after giving effect to the transaction (i) the Parent and the Borrower are in compliance with the terms of the Credit Agreement on a pro forma basis and (ii) no Default or Event of Default shall then exist, or (b) the termination of the corporate existence of any Subsidiary or the discontinuation of any line of business of the Parent, the Borrower or any of their respective Subsidiaries if the Borrower in good faith determines that such termination is in the best interest of the Parent, the Borrower or such Subsidiary, as the case may be, and is not materially disadvantageous to the Lenders. 6.05 Compliance with Laws. (a) Each of the Parent and the Borrower will comply, and cause each of their respective Subsidiaries to comply, in all material respects with all applicable Law, ordinances, rules, regulations, and requirements of governmental authorities (including, without limitation, Environmental Laws and ERISA and the rules and regulations thereunder) the failure to comply with which would reasonably be expected to have a Material Adverse Effect, except where the necessity of compliance therewith is contested in good faith by appropriate proceedings. (b) Each of the Parent and the Borrower will (i) maintain in effect and enforce policies and procedures designed to ensure compliance by the Parent, the Borrower, their respective Subsidiaries and their respective directors, officers, employees and agents with all Anti-Corruption Laws, Anti-Money Laundering Laws and applicable Sanctions, (ii) notify the Administrative Agent and each Lender that previously received a Beneficial Ownership Certification, if any, of any change in the information provided in the Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified therein and (iii) promptly upon the reasonable request of the Administrative Agent or any Lender, provide the Administrative Agent or such Lender, as the case may be, any information or documentation requested by it for purposes of complying with the Beneficial Ownership Regulation. -88- LEGAL02/47543734v6
6.06 Inspection of Property, Books and Records. Each of the Parent and the Borrower will keep, and will cause each of their respective Subsidiaries to keep, proper books of record and account in which full, true and correct entries shall be made of all material dealings and transactions in relation to its business and activities; and, except to the extent prohibited by applicable Law, rule, regulations or orders, will permit, and will cause each of their respective Subsidiaries to permit, representatives of the Administrative Agent or any Lender at such Person’s expense (which expense shall not be subject to reimbursement by the Borrower hereunder except in the case of the Administrative Agent while an Event of Default exists) to visit and inspect any of their respective properties (subject to the rights of tenants in possession thereof and to any limitations on the inspection rights of the Parent or the Borrower in connection therewith), to examine and make abstracts from any of their respective books and records and to discuss their respective affairs, finances and accounts with their respective officers, employees and independent public accountants, upon reasonable prior written notice to the Borrower, all at such reasonable times and as often as may reasonably be desired, without unreasonable interference to the business operations of the Parent, the Borrower or their respective Subsidiaries; provided, however, that no such notice shall be required by the Administrative Agent while an Event of Default exists. 6.07 Negative Pledge. Each of the Parent and the Borrower will not, and will not permit any of their respective Subsidiaries to create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except: (a) Liens pursuant to any Credit Document securing the Obligations hereunder, including Cash Collateral pledged to secure obligations of Defaulting Lenders as provided in Section 2.14; (b) Liens in favor of a Lender or any of its Affiliates pursuant to a Swap Contract permitted hereunder, but only to the extent that (i) the obligations under such Swap Contract are permitted under Section 6.10, (ii) such Liens are on the same collateral that secures the Obligations, and (iii) the obligations under such Swap Contract and the Obligations share pari passu in the collateral subject to such Liens; (c) mortgage Liens to the extent not prohibited, both before and after giving effect thereto on a pro forma basis, by the provisions of the financial covenants set out in Section 6.16; (d) Liens for taxes not yet due or that are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP; (e) carriers’, landlords’, sublandlords’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business that are not overdue for a period of more than thirty (30) days or that are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person; (f) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA; -89- LEGAL02/47543734v6
(g) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (h) easements, rights-of-way, restrictions and other similar encumbrances (including zoning restrictions) affecting real property that, in the aggregate, are not material in amount, and that do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person; (i) Liens of a judgment debtor securing judgments for the payment of money not constituting an Event of Default under Section 7.01(k) or securing appeal or other surety bonds related to such judgments; (j) Liens securing reimbursement obligations with respect to trade letters of credit issued in the ordinary course of business, provided that such Liens attach only to the assets being acquired with the proceeds of such letters of credit; (k) any Lien arising out of the refinancing, extension, renewal or refunding of any Indebtedness secured by any Lien, to the extent that such Lien is permitted by any of the foregoing clauses of this Section, and provided that such Indebtedness is not increased and is not secured by any additional assets; (l) Liens (i) of a collection bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of collection, (ii) attaching to commodity trading accounts or other commodities brokerage accounts incurred in the ordinary course of business, or (iii) in favor of a banking or other financial institution arising as a matter of Law or under customary general terms and conditions encumbering deposits or other funds maintained with a financial institution (including the right of set-off) and that are within the general parameters customary in the banking industry or arising pursuant to such banking institution’s general terms and conditions; (m) Liens arising from precautionary Uniform Commercial Code (or equivalent statutes) financing statements or similar public filings; (n) Liens (i) solely on any cash earnest money deposits made by the Borrower or any of Borrower’s other Subsidiaries in connection with any letter of intent or purchase agreement or (ii) consisting of an agreement to dispose of any property; (o) the rights of tenants and landlords under leases (including ground leases), subleases, licenses or other use agreements, managers under management agreements or franchisors under franchise agreements, in each case, not interfering in any material respect with the ordinary conduct of business of such Person; and (p) Liens securing Indebtedness of any Subsidiary or Specified Affiliate owing to the Borrower. 6.08 Consolidations and Mergers. Each of the Parent and the Borrower will not, and will not permit any of their respective Subsidiaries to, consolidate or merge with or into any Person except as may be permitted in accordance with Section 6.04. -90- LEGAL02/47543734v6
6.09 Creation of Subsidiaries. Each of the Parent and the Borrower will not, and will not permit any of their respective Subsidiaries to, create any Subsidiary except for the creation of a Wholly Owned Subsidiary of the Borrower or a Specified Affiliate provided that (i) such Subsidiary or Specified Affiliate is organized under the laws of a jurisdiction within the United States of America and (ii) no Default or Event of Default exists immediately prior to or after the creation of such Subsidiary or Specified Affiliate. 6.10 Incurrence and Existence of Debt. Each of the Parent and the Borrower will not, and will not permit any of their respective Subsidiaries to, incur, assume or permit to exist any Indebtedness, except: (a) Indebtedness of the Borrower and its Subsidiaries under the Credit Documents; (b) Indebtedness outstanding on the date hereof and listed on Schedule 5.12 and any refinancings, refundings, renewals or extensions thereof; provided that the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder; (c) Support Obligations of the Borrower or any of its Subsidiaries in respect of Indebtedness otherwise permitted hereunder; (d) (x) obligations (contingent or otherwise) of the Borrower or any of its Subsidiaries existing or arising under any Swap Contract, provided that (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for purposes of speculation or taking a “market view”; and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party; or (y) obligations (contingent or otherwise) of the Parent, the Borrower or any of their respective Subsidiaries existing or arising under any Bond Hedge Transaction or Warrant Transaction; (e) (i) publicly issued or privately placed Funded Debt of the Borrower issued or placed after the Closing Date, provided that the final maturity thereof shall not be prior to the latest Termination Date hereunder; or (ii) Convertible Indebtedness; (f) Funded Debt of the Borrower or any of its Subsidiaries secured by mortgage liens, provided that, while an Event of Default exists, no additional Funded Debt of the Borrower or any of its Subsidiaries secured by mortgage liens shall be incurred; (g) unsecured inter-company Indebtedness between and among the Borrower and its Subsidiaries, provided that any such Indebtedness under this subsection (g) owing by a Credit Party shall be subordinated in writing to the Obligations on terms acceptable to the Administrative Agent; -91- LEGAL02/47543734v6
(h) Indebtedness of the Borrower incurred through the issuance of short-term unsecured commercial paper notes in an aggregate principalface amount at any one time outstanding that would not violate the covenants set forth in Section 6.16 hereofnot to exceed $750,000,000; and (i) the unsecured notes of HRTI, LLC, a Maryland limited liability company (formerly named Healthcare Realty Trust Incorporated, a Maryland corporation), issued or placed pursuant to that certain Indenture dated as of May 15, 2001, and any exchanges thereof for unsecured notes issued by the Borrower; provided that the amount of such Indebtedness is not increased at the time of such exchange except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such exchange; provided, that in the case of Indebtedness incurred under clauses (e) through (h), immediately after giving effect to the incurrence or assumption thereof on a pro forma basis, the Parent, the Borrower and the other members of the Consolidated Group shall be in compliance with the terms of this Credit Agreement, including the financial covenants hereunder. 6.11 Transactions with Affiliates. Each of the Parent and the Borrower will not and will not permit any Subsidiary to enter into directly or indirectly any material transaction or material group of related transactions (including without limitation the purchase, lease, sale or exchange of properties of any kind or the rendering of any service) with any Affiliate (other than the Borrower), except in the ordinary course and pursuant to the reasonable requirements of the Borrower’s, the Parent’s or such Subsidiary’s business and upon fair and reasonable terms no less favorable to the Borrower, the Parent or such Subsidiary than would be obtainable in a comparable arm’s-length transaction with a Person that is not an Affiliate. 6.12 Use of Proceeds. The Extensions of Credit hereunder will be used (a) to finance the acquisition and development of healthcare real estate properties by the Borrower and its Subsidiaries, and (b) to finance the general corporate purposes of the Borrower and its Subsidiaries, including, without limitation, the payment of principal or interest with respect to any debt. No proceeds of any Loan will be used to purchase or carry any “margin stock” or to extend credit to others for the purpose of purchasing or carrying any “margin stock” in violation of Regulations U, T or X. The Borrower will not request any Extension of Credit, and the Parent and the Borrower shall not use, and shall ensure that the Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Extension of Credit, directly or to Borrower’s knowledge indirectly, (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws or any Anti-Money Laundering Laws, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (iii) in any manner that would result in the violation of any Sanctions applicable to any party hereto. 6.13 Organization Documents. Subject to changes, including any dissolutions, permitted pursuant to this Credit Agreement: (a) each of the Parent and the Borrower will not, and will not permit any of their respective Subsidiaries to, amend its Organization Documents in any manner which could materially adversely affect the rights of the Lenders under the Credit Documents or their ability to enforce the same; and (b) the Parent will not -92- LEGAL02/47543734v6
amend its Organization Documents in a manner which would permit a single shareholder (as determined for purposes hereof pursuant to the attribution provisions of Section 544 of the Internal Revenue Code as modified by Section 856 of the Internal Revenue Code) to own more than 30% of the outstanding stock in Parent. 6.14 [Reserved]. 6.15 [Reserved]. 6.16 Financial Covenants. The Parent and the Borrower will not: (a) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio at any time to be greater than 60%; provided, however, that if such ratio is greater than 60% but is not greater than 65%, then the Parent and the Borrower shall be deemed to be in compliance with this subsection (a) so long as (i) the Parent or a Subsidiary of the Parent completed a Material Acquisition during the quarter in which such ratio first exceeded 60%, (ii) such ratio does not exceed 60% at any time after the three fiscal quarters immediately following the fiscal quarter in which such Material Acquisition was completed, (iii) the Parent and the Borrower have not maintained compliance with this subsection (a) in reliance on this proviso more than one time during the term of this Credit Agreement and (iv) such ratio is not greater than 65% at any time. (b) Consolidated Secured Leverage Ratio. Permit the Consolidated Secured Leverage Ratio at any time to be greater than 30%; provided, however, that if such amount is greater than 30% but is not greater than 40%, then the Parent and the Borrower shall be deemed to be in compliance with this subsection (b) so long as (i) the Parent or a Subsidiary of the Parent completed a Material Acquisition during the quarter in which such ratio first exceeded 30%, (ii) such ratio does not exceed 30% at any time after the three fiscal quarters immediately following the fiscal quarter in which such Material Acquisition was completed, (iii) the Parent and the Borrower have not maintained compliance with this subsection (b) in reliance on this proviso more than one time during the term of this Credit Agreement and (iv) such ratio is not greater than 40% at any time. (c) Consolidated Unencumbered Leverage Ratio. Permit the Consolidated Unencumbered Leverage Ratio at any time to be greater than 60%; provided, however, that if such ratio is greater than 60% but is not greater than 65%, then the Parent and the Borrower shall be deemed to be in compliance with this subsection (c) so long as (i) the Parent or a Subsidiary of the Parent completed a Material Acquisition during the quarter in which such ratio first exceeded 60%, (ii) such ratio does not exceed 60% at any time after the three fiscal quarters immediately following the fiscal quarter in which such Material Acquisition was completed, (iii) the Parent and the Borrower have not maintained compliance with this subsection (c) in reliance on this proviso more than one time during the term of this Credit Agreement and (iv) such ratio is not greater than 65% at any time. (d) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge Coverage Ratio as of the end of any fiscal quarter to be less than 1.50:1.0. (e) Consolidated Unsecured Coverage Ratio. Permit the Consolidated Unsecured Coverage Ratio as of the end of any fiscal quarter to be less than 1.75:1.0. (f) [Reserved]. -93- LEGAL02/47543734v6
6.17 Specified Affiliates. The Borrower will give the Administrative Agent prompt notice of any Subsidiary of the Parent that to the Borrower’s knowledge becomes a Specified Affiliate subsequent to the Closing Date. 6.18 REIT Status. The Parent will continue to meet the requirements of Section 857(a) of the Internal Revenue Code and regulations thereunder. 6.19 Leases. Each of the Parent and the Borrower will not modify or amend any lease where the Parent or the Borrower is the lessor thereunder if such modification or amendment would have a Material Adverse Effect on the Borrower. 6.20 Favorable Treatment. The Borrower will not permit any of its Subsidiaries to issue, have outstanding, or give any guaranty or pledge of collateral (other than in connection with financing as permitted under Section 6.10(f) hereof) in respect of, any other Indebtedness (including, for the avoidance of doubt, any Convertible Indebtedness), unless such Subsidiary shall also give an equal and ratable guaranty and pledge of collateral of the loans and obligations hereunder (in substantially the form attached as Exhibit 6.20 or such other form as may be reasonably acceptable to the Administrative Agent and the Required Lenders) and become a Subsidiary Guarantor hereunder, without prejudice to any Event of Default that may arise under Section 6.07. With respect to any such Subsidiary that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, the Borrower shall deliver to the Administrative Agent, and any Lender requesting the same, a Beneficial Ownership Certification with respect to such Subsidiary at least five (5) Business Days prior to the effective date of the Guaranty. 6.21 Limitations on Parent. For so long as this Agreement is in effect, and so long as the Parent is not a Guarantor, (i) the Parent shall directly own at least 95% of the Capital Stock of the Borrower, (ii) the Parent’s assets shall consist solely of Capital Stock of the Borrower or any Wholly Owned Subsidiaries whose assets consist solely of direct or indirect Capital Stock in the Borrower (provided, that the Parent may (A) have cash in an amount not to exceed $5,000,000, (B) have other assets of nominal value incidental to its ownership of such Capital Stock, (C) maintain assets on a temporary or pass-through basis that are held for subsequent payment of dividends or for contribution to any Subsidiary, and (D) have contract rights related to the Parent’s status as a public company, and (E) own rights under or with respect to a Bond Hedge Transaction) and (iii) neither the Parent nor any Wholly Owned Subsidiaries whose assets consist solely of direct or indirect Capital Stock in the Borrower (each a “Parent Entity”) shall have any liabilities other than liabilities that would be reflected in consolidated financial statements of the Borrower (for the avoidance of doubt, guaranties by the Parent of direct obligations of the Borrower which are reflected in the consolidated financial statements of the Borrower are considered “liabilities reflected in the consolidated financial statements of the Borrower” for purposes hereof) (provided, that any Parent Entity may have (1) other liabilities incidental to its status as a publicly traded REIT and not constituting liabilities in respect of Indebtedness for borrowed money, including liabilities associated with employment contracts, employee benefit matters, indemnification obligations pursuant to purchase and sale agreements and banker engagement letters in connection with transactions permitted under this Agreement and, (2) liabilities solely relating to the issuance of Capital Stock of the Parent Entity arising -94- LEGAL02/47543734v6
pursuant to any merger, purchase, acquisition or other similar agreements in connection with transactions permitted under Section 6.08, in each case other than liabilities constituting Indebtedness and (3) indemnification, notice, registration and other ministerial obligations and related liabilities in connection with any Bond Hedge Transaction, and any delivery obligations upon exercise and settlement or termination of any Warrant Transaction). If at any time the requirements set forth in this Section 6.21 are not satisfied, the Parent shall be required become a Guarantor by executing and delivering a Guaranty to the Administrative Agent. 6.22 Limitation on Certain Agreements. Each of the Parent and the Borrower will not, and will not permit their respective Subsidiaries to, enter into, assume or otherwise become subject to any agreement (i) restricting their ability to grant a lien on their property (except with respect to (A) those properties which are the subject of mortgage financing permitted under Section 6.10(f) hereof, so long as such restrictions do not prohibit the granting of liens on any property other than the applicable property securing the Funded Debt permitted under Section 6.10(f)), (B) the sale of a Subsidiary or assets pending such sale; provided that in any such case the restrictions apply only to the Subsidiary or the assets that are the subject of such sale, or (C) any agreement that evidences unsecured Indebtedness which contains restrictions on encumbering property that are substantially similar to those restrictions contained in this Agreement or the other Credit Documents, or (ii) restricting the ability of the Subsidiaries to give a guaranty of the loans and obligations hereunder. ARTICLE VII EVENTS OF DEFAULT AND REMEDIES 7.01 Events of Default. The occurrence of any of the following events shall constitute an event of default hereunder (individually, an “Event of Default” and collectively the “Events of Default”): (a) The Borrower shall fail to pay (i) when due any principal of any Loan or any reimbursement obligation owing on account of a drawing under a Letter of Credit or (ii) within five (5) days after the same shall become due, any interest on any Obligation or any fees or any other amount payable hereunder; (b) Default by the Parent or the Borrower in the due performance or observance of any term, covenant or agreement contained in Section 6.01(f), 6.04 (solely with respect to the continued existence of the Parent or the Borrower) or any of Section 6.07 through 6.22, inclusive; (c) The Parent, the Borrower or any other Credit Party shall fail to observe or perform any covenant or agreement contained in any Credit Document (other than those covered by clause (a) or (b) above) for thirty (30) days after the earlier of a responsible officer of the Borrower becoming aware of such failure or written notice of such failure shall have been given to the Borrower by the Administrative Agent; (d) Any representation, warranty, certification or statement made or deemed made by the Parent, the Borrower or any other Credit Party in any Credit Document or in any certificate, financial statement or other document delivered pursuant thereto shall prove to have been incorrect in any material respect when made (or deemed made); -95- LEGAL02/47543734v6
(e) The Borrower, the Parent or any of their respective Material Subsidiaries shall fail to make any payment in respect of any Indebtedness (other than the Obligations) in an aggregate amount in excess of $50,000,000 when due and such failure shall continue beyond any applicable grace period; (f) Any event or condition shall occur which would cause or permit the acceleration of the maturity of any Indebtedness (other than the Obligations) of the Borrower, the Parent or any Material Subsidiary in an aggregate amount in excess of $50,000,000 or enables the holder of such Indebtedness or any Person acting on such holder’s behalf to accelerate the maturity thereof; (it being understood, for the avoidance of doubt, that none of the following events will, in and of themselves, be a Default or Event of Default under this Section 7.01(f): (x) the occurrence of any customary event or condition that vests the right of any holder of Convertible Indebtedness to submit any Convertible Indebtedness for conversion, exchange or exercise in accordance with its terms; (y) any actual conversion, exchange or exercise of any Convertible Indebtedness in accordance with its terms; or (z) the calling of any Convertible Indebtedness for redemption in accordance with its terms; provided, in the case of each of the foregoing clauses (x), (y) and (z), that such event or condition does not result from a breach or violation by any Convertible Indebtedness Party of the terms of such Convertible Indebtedness; (g) The Borrower, the Parent or any Material Subsidiary of the Borrower or the Parent shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate, limited liability company or partnership action to authorize any of the foregoing; (h) An involuntary case or other proceeding shall be commenced against the Borrower, the Parent or any Material Subsidiary of the Borrower or Parent seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of thirty (30) days; or an order for relief shall be entered against the Borrower, the Parent or any Material Subsidiary of the Borrower or the Parent under the federal bankruptcy laws as now or hereafter in effect; (i) The Borrower, the Parent or any Material Subsidiary of the Borrower or Parent shall admit in writing its inability to pay its debts as and when they fall due; (j) (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan that has resulted or could reasonably be expected to result in liability of a Credit Party under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $20,000,000, or (ii) a Credit Party or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $20,000,000; -96- LEGAL02/47543734v6
(k) An uninsured, final, unappealable judgment or order for the payment of money in excess of $50,000,000 shall be rendered against the Borrower, the Parent or any of the Material Subsidiaries and such judgment or order shall continue unsatisfied and unstayed for a period of thirty (30) days; (l) (i) The voting interests in any Specified Affiliate shall be held by a Person other than a director, officer or employee of the Parent or the Borrower, (ii) the Borrower shall fail to own substantially all of the economic interest in any Specified Affiliate and the remainder of such economic interest shall be held by a Person other than directors, officers and/or employees or (iii) a Specified Affiliate shall engage in any of the actions or activities that are limited or restricted by Article VI hereof; (m) Except as to any Guarantor which is dissolved, released or merged or consolidated out of existence as the result of or in connection with a dissolution, merger or consolidation permitted by Section 6.04, any guaranty of the loans and obligations hereunder or any material provision thereof shall cease to be in full force and effect, or any Guarantor or any Person acting by or on behalf of such Guarantor shall deny or disaffirm such Guarantor’s obligations under such guaranty, or any Guarantor shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to any guaranty; (n) The occurrence of a Change of Control; or (o) Any Credit Party shall (or shall attempt to) disavow, revoke or terminate any Credit Document or any Fee Letter to which it is a party or shall otherwise challenge or contest in any action, suit or proceeding in any court or before any Governmental Authority the validity or enforceability of any Credit Document or any Fee Letter or any Credit Document or any Fee Letter shall cease to be in full force and effect (except as a result of the express terms thereof or the express written agreement of the parties thereto); then, and in every such event, the Administrative Agent shall during the continuance of such Event of Default (i) if requested by the Required Lenders, by notice to the Borrower terminate the Commitments, (ii) if requested by the Required Lenders, by notice to the Borrower declare the principal of, and all accrued interest on, the Loans and all other amounts payable by the Borrower hereunder to be, and such Loans and amounts shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower, (iii) provide Cash Collateral in an amount equal to 103% of the L/C Obligations for deposit into the Letter of Credit Collateral Account, and (iv) take such other actions as are directed by the Required Lenders; provided that in the case of any Event of Acceleration, without any notice to the Borrower or any other act by the Administrative Agent or any Lender, the Commitments shall automatically terminate and the principal of, and all accrued interest on, the Loans and all other amounts payable by the Borrower hereunder shall automatically become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and provided further that the Administrative Agent may terminate commitments, declare the Loans and Obligations hereunder immediately due and payable and demand Cash Collateral for the L/C Obligations without prior notice to or the consent of the Lenders where it determines such action is warranted and appropriate based on the facts and circumstances. Subject to the request or direction of the Required Lenders as provided above, the Administrative Agent shall have the exclusive right to enforce the remedies available under this Credit Agreement during the continuance of any Event of Default hereunder. -97- LEGAL02/47543734v6
7.02 Application of Funds. After the exercise of remedies provided for in Section 7.01 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to provide Cash Collateral as set forth in the proviso to Section 7.01), any amounts received on account of the Obligations (whether as a result of the exercise of the right of set off pursuant to Section 9.09 or otherwise) shall be applied by the Administrative Agent in the following order: First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including Attorney Costs and amounts payable under Article III) payable to the Administrative Agent in its capacity as such; Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders (including Attorney Costs and amounts payable under Article III), ratably among the Lenders in proportion to the amounts described in this clause Second payable to them; Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and L/C Obligations, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them; Fourth, to (a) payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C Obligations, and (b) the Administrative Agent for the account of the L/C Issuers, to provide Cash Collateral for that portion of the L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit, ratably among such parties in proportion to the respective amounts described in this clause Fourth held by them; and Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full (other than contingent indemnification, expense reimbursement obligations and other contingent obligations for which no claim has been asserted), to the Borrower or as otherwise required by Law. 7.03 Letter of Credit Collateral Account. (a) As collateral security for the prompt payment in full when due of all L/C Obligations and the other Obligations, the Borrower hereby pledges and grants to the Administrative Agent, for the ratable benefit of the Administrative Agent, the L/C Issuers and the Lenders as provided herein, a security interest in all of its right, title and interest in and to the Letter of Credit Collateral Account and the balances from time to time in the Letter of Credit Collateral Account (including the investments and reinvestments therein provided for below). The balances from time to time in the Letter of Credit Collateral Account shall not constitute payment of any L/C Obligations until applied by the L/C Issuers as provided herein. Anything in this Credit Agreement to the contrary notwithstanding, funds held in the Letter of Credit Collateral Account shall be subject to withdrawal only as provided in this Section. (b) Amounts on deposit in the Letter of Credit Collateral Account shall be invested and reinvested by the Administrative Agent in such Cash Equivalents as the Administrative Agent shall determine in its sole discretion. All such investments and reinvestments shall be held in the name of and be under the sole dominion and control of the Administrative Agent for the ratable benefit of the Administrative Agent, the L/C Issuers and the Lenders; provided, that all earnings on such investments will be credited to and retained in the Letter of Credit Collateral Account. The Administrative Agent shall exercise reasonable care in the custody and preservation of any funds held in the Letter of Credit -98- LEGAL02/47543734v6
Collateral Account and shall be deemed to have exercised such care if such funds are accorded treatment substantially equivalent to that which the Administrative Agent accords other funds deposited with the Administrative Agent, it being understood that the Administrative Agent shall not have any responsibility for taking any necessary steps to preserve rights against any parties with respect to any funds held in the Letter of Credit Collateral Account. (c) If a drawing pursuant to any Letter of Credit occurs on or prior to the expiration date of such Letter of Credit, the Borrower and the Lenders authorize the Administrative Agent to use the monies deposited in the Letter of Credit Collateral Account to reimburse such L/C Issuer for the payment made by such L/C Issuer to the beneficiary with respect to such drawing. (d) If an Event of Default exists, the Administrative Agent may (and, if instructed by the Required Lenders, shall) in its (or their) discretion at any time and from time to time elect to liquidate any such investments and reinvestments and apply the proceeds thereof to the Obligations in accordance with Section 7.02. Notwithstanding the foregoing, the Administrative Agent shall not be required to liquidate and release any such amounts if such liquidation or release would result in the amount available in the Letter of Credit Collateral Account to be less than the Stated Amount of all Extended Letters of Credit that remain outstanding. (e) So long as no Default or Event of Default exists, and to the extent amounts on deposit in or credited to the Letter of Credit Collateral Account exceed the aggregate amount of the L/C Obligations then due and owing, the Administrative Agent shall, from time to time, at the written request of the Borrower, deliver to the Borrower within 10 Business Days after the Administrative Agent’s receipt of such request from the Borrower, against receipt but without any recourse, warranty or representation whatsoever, such amount of the credit balances in the Letter of Credit Collateral Account as exceeds the aggregate amount of L/C Obligations at such time. Upon the expiration, termination or cancellation of an Extended Letter of Credit for which the Lenders reimbursed (or funded participations in) a drawing deemed to have occurred under the fourth sentence of Section 2.03(b) for deposit into the Letter of Credit Collateral Account but in respect of which the Lenders have not otherwise received payment for the amount so reimbursed or funded, the Administrative Agent shall promptly remit to the Lenders the amount so reimbursed or funded for such Extended Letter of Credit that remains in the Letter of Credit Collateral Account, pro rata in accordance with the respective unpaid reimbursements or funded participations of the Lenders in respect of such Extended Letter of Credit, against receipt but without any recourse, warranty or representation whatsoever. When all of the Obligations shall have been paid in full (other than contingent indemnification, expense reimbursement or other contingent obligations for which no claim has been asserted) and no Letters of Credit remain outstanding, the Administrative Agent shall deliver to the Borrower, against receipt but without any recourse, warranty or representation whatsoever, the balances remaining in the Letter of Credit Collateral Account. (f) The Borrower shall pay to the Administrative Agent from time to time such fees as the Administrative Agent normally charges for similar services in connection with the Administrative Agent’s administration of the Letter of Credit Collateral Account and investments and reinvestments of funds therein. -99- LEGAL02/47543734v6
ARTICLE VIII ADMINISTRATIVE AGENT 8.01 Appointment and Authorization. Each Lender hereby irrevocably appoints and authorizes the Administrative Agent to take such action as contractual representative on such Lender’s behalf and to exercise such powers under this Credit Agreement and the other Credit Documents as are specifically delegated to the Administrative Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. Not in limitation of the foregoing, each Lender authorizes and directs the Administrative Agent to enter into the Credit Documents for the benefit of the Lenders. Each Lender hereby agrees that, except as otherwise set forth herein, any action taken by the Required Lenders in accordance with the provisions of this Credit Agreement or the Credit Documents, and the exercise by the Required Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders. Nothing herein shall be construed to deem the Administrative Agent a trustee or fiduciary for any Lender or to impose on the Administrative Agent duties or obligations other than those expressly provided for herein. Without limiting the generality of the foregoing, the use of the terms “Agent”, “Administrative Agent”, “agent” and similar terms in the Credit Documents with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead, use of such terms is merely a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. The Administrative Agent shall deliver to each Lender, promptly upon receipt thereof by the Administrative Agent, copies of each of the financial statements, certificates, notices and other documents delivered to the Administrative Agent pursuant to Article VI. that the Borrower is not otherwise required to deliver directly to the Lenders. The Administrative Agent will furnish to any Lender, upon the request of such Lender, a copy (or, where appropriate, an original) of any document, instrument, agreement, certificate or notice furnished to the Administrative Agent by the Borrower, any other Credit Party or any other Affiliate of the Borrower, pursuant to this Credit Agreement or any other Credit Document not already delivered or otherwise made available to such Lender pursuant to the terms of this Credit Agreement or any such other Credit Document. As to any matters not expressly provided for by the Credit Documents (including, without limitation, enforcement or collection of any of the Obligations), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders (or all of the Lenders if explicitly required under any other provision of this Credit Agreement), and such instructions shall be binding upon all Lenders and all holders of any of the Obligations; provided, however, that, notwithstanding anything in this Credit Agreement to the contrary, the Administrative Agent shall not be required to take any action which exposes the Administrative Agent to personal liability or which is contrary to this Credit Agreement or any other Credit Document or applicable Law. Not in limitation of the foregoing, the Administrative Agent may exercise any right or remedy it or the Lenders may have under any Credit Document upon the occurrence of a Default or an Event of Default unless the Required Lenders have directed the Administrative Agent otherwise. Without limiting the foregoing, no Lender shall have any right of action whatsoever against the Administrative Agent as a result of the Administrative Agent acting or refraining from acting under this Credit Agreement or any of the other Credit Documents in accordance with the instructions of the Required Lenders, or where applicable, all the Lenders. 8.02 Wells Fargo as Lender. Wells Fargo, as a Lender shall have the same rights and powers under this Credit Agreement and any other Credit Document as any other Lender and may exercise the same as though it were not the -100- LEGAL02/47543734v6
Administrative Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include Wells Fargo in each case in its individual capacity. Wells Fargo and its Affiliates may each accept deposits from, maintain deposits or credit balances for, invest in, lend money to, act as trustee under indentures of, serve as financial advisor to, and generally engage in any kind of business with the Borrower, any other Credit Party or any other Affiliate thereof as if it were any other bank and without any duty to account therefor to the L/C Issuers or other Lenders. Further, the Administrative Agent and any Affiliate may accept fees and other consideration from the Borrower for services in connection with this Credit Agreement or otherwise without having to account for the same to the L/C Issuers or the other Lenders. The L/C Issuers and the Lenders acknowledge that, pursuant to such activities, Wells Fargo or its Affiliates may receive information regarding the Borrower, other Credit Parties, other Subsidiaries and other Affiliates (including information that may be subject to confidentiality obligations in favor of such Person) and acknowledge that the Administrative Agent shall be under no obligation to provide such information to them. 8.03 Approvals of Lenders. All communications from the Administrative Agent to any Lender requesting such Lender’s determination, consent, approval or disapproval (a) shall be given in the form of a written notice to such Lender, (b) shall be accompanied by a description of the matter or issue as to which such determination, approval, consent or disapproval is requested, or shall advise such Lender where information, if any, regarding such matter or issue may be inspected, or shall otherwise describe the matter or issue to be resolved, (c) shall include, if reasonably requested by such Lender and to the extent not previously provided to such Lender, written materials provided to the Administrative Agent by the Borrower in respect of the matter or issue to be resolved. Except for the amendments, consents or waivers that require the approval of specific Lenders or the Administrative Agent as set forth in clauses (a) through (g) of Section 9.01, unless a Lender shall give written notice to the Administrative Agent that it specifically objects to the requested determination, consent, approval or disapproval within ten (10) Business Days (or such lesser or greater period as may be specifically required under the express terms of the Credit Documents) of receipt of such communication, such Lender shall be deemed to have conclusively approved of or consented to such requested determination, consent, approval or disapproval. 8.04 Notice of Events of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of a Default or Event of Default (other than under Section 7.01(a)) unless the Administrative Agent has received notice from a Lender or the Borrower referring to this Credit Agreement, describing with reasonable specificity such Default or Event of Default and stating that such notice is a “notice of default.” If any Lender (excluding the Lender which is also acting as Administrative Agent) becomes aware of any Default or Event of Default, it shall promptly send to the Administrative Agent such a “notice of default”; provided, the failure to provide such a “notice of default” to the Administrative Agent shall not result in any liability of such Lender to any other party to this Credit Agreement. Further, if the Administrative Agent receives such a “notice of default,” the Administrative Agent shall give prompt notice thereof to the Lenders. 8.05 Administrative Agent’s Reliance. Notwithstanding any other provisions of this Credit Agreement or any other Credit Documents, neither the Administrative Agent nor any of its directors, officers, agents, employees or counsel shall be liable for any action taken or not taken by it under or in connection with this Credit Agreement or any other Credit Document, except for its or their own gross negligence or willful misconduct in connection with its duties expressly set forth herein or therein as determined by a court of competent jurisdiction in a -101- LEGAL02/47543734v6
final non-appealable judgment. Without limiting the generality of the foregoing, the Administrative Agent may consult with legal counsel (including its own counsel or counsel for the Borrower or any other Credit Party), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts. Neither the Administrative Agent nor any of its directors, officers, agents, employees or counsel: (a) makes any warranty or representation to any Lender, any L/C Issuer or any other Person, or shall be responsible to any Lender, any L/C Issuer or any other Person for any statement, warranty or representation made or deemed made by the Borrower, any other Credit Party or any other Person in or in connection with this Credit Agreement or any other Credit Document; (b) shall have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Credit Agreement or any other Credit Document or the satisfaction of any conditions precedent under this Credit Agreement or any Credit Document on the part of the Borrower or other Persons, or to inspect the property, books or records of the Borrower or any other Person; (c) shall be responsible to any Lender or any L/C Issuer for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Credit Agreement or any other Credit Document, any other instrument or document furnished pursuant thereto or any collateral covered thereby or the perfection or priority of any Lien in favor of the Administrative Agent on behalf of the Lenders and the L/C Issuers in any such collateral; (d) shall have any liability in respect of any recitals, statements, certifications, representations or warranties contained in any of the Credit Documents or any other document, instrument, agreement, certificate or statement delivered in connection therewith; and (e) shall incur any liability under or in respect of this Credit Agreement or any other Credit Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telephone, telecopy or electronic mail) believed by it to be genuine and signed, sent or given by the proper party or parties. The Administrative Agent may execute any of its duties under the Credit Documents by or through agents, employees or attorneys-in-fact and shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final non-appealable judgment. 8.06 Lender Credit Decision. Each of the Lenders and each of the L/C Issuers expressly acknowledges and agrees that none of the Administrative Agent, the Sustainability Structuring Agent nor any of their respective officers, directors, employees, agents, counsel, attorneys-in-fact or other Affiliates has made any representations or warranties to such L/C Issuer or such Lender and that no act by the Administrative Agent or the Sustainability Structuring Agent hereafter taken, including any review of the affairs of the Borrower, any other Credit Party or any other Subsidiary or Affiliate, shall be deemed to constitute any such representation or warranty by the Administrative Agent or Sustainability Structuring Agent to any L/C Issuer or any Lender. Each of the Lenders and each of the L/C Issuers acknowledges that it has made its own credit and legal analysis and decision to enter into this Credit Agreement and the transactions contemplated hereby, independently and without reliance upon the Administrative Agent, the Sustainability Structuring Agent, any other Lender or counsel to the Administrative Agent, the Sustainability Structuring Agent, or any of their respective officers, directors, employees, agents or counsel, and based on the financial statements of the Borrower, the other Credit Parties, the other Subsidiaries and other Affiliates, and inquiries of such Persons, its independent due diligence of the business and affairs of the Borrower, the other Credit Parties, the other Subsidiaries and other Persons, its review of the Credit Documents, the legal opinions required to be delivered to it hereunder, the advice of its own counsel and such other documents and information as it has deemed appropriate. Each of the Lenders and each of the L/C Issuers also acknowledges that it will, independently and without reliance upon the Administrative Agent, the Sustainability Structuring Agent, any other Lender or counsel to the Administrative Agent, the Sustainability Structuring Agent or any of their respective officers, directors, employees and agents, and based on such review, advice, documents and information as it shall deem -102- LEGAL02/47543734v6
appropriate at the time, continue to make its own decisions in taking or not taking action under the Credit Documents. Neither the Administrative Agent nor the Sustainability Structuring Agent shall be required to keep itself informed as to the performance or observance by the Borrower or any other Credit Party of the Credit Documents or any other document referred to or provided for therein or to inspect the properties or books of, or make any other investigation of, the Borrower, any other Credit Party or any other Subsidiary. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders and the L/C Issuers by the Administrative Agent or the Sustainability Structuring Agent under this Credit Agreement or any of the other Credit Documents, neither the Administrative Agent nor the Sustainability Structuring Agent shall have any duty or responsibility to provide any Lender or the L/C Issuers with any credit or other information concerning the business, operations, property, financial and other condition or creditworthiness of the Borrower, any other Credit Party or any other Affiliate thereof which may come into possession of the Administrative Agent, the Sustainability Structuring Agent or any of their respective officers, directors, employees, agents, attorneys-in-fact or other Affiliates. Each of the Lenders and each of the L/C Issuers acknowledges that the Administrative Agent’s and the Sustainability Structuring Agent’s legal counsel in connection with the transactions contemplated by this Credit Agreement is only acting as counsel to the Administrative Agent and the Sustainability Structuring Agent, as applicable, and is not acting as counsel to any Lender or any L/C Issuer. 8.07 Successor Administrative Agent and Successor Sustainability Structuring Agent. (a) The Administrative Agent may resign at any time as Administrative Agent under the Credit Documents by giving at least 30 days prior written notice thereof to the Lenders and the Borrower. The Administrative Agent may be removed as Administrative Agent by all of the Lenders (other than the Lender then acting as Administrative Agent) upon 30 days’ prior written notice if the Administrative Agent: (i) is found by a court of competent jurisdiction in a final, non-appealable judgment to have committed gross negligence or willful misconduct in the course of performing its duties hereunder or (ii) has become or is insolvent or has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Administrative Agent which appointment shall, provided no Event of Default exists, be subject to the Borrower’s approval, which approval shall not be unreasonably withheld or delayed; provided that the Borrower shall be deemed to have consented to any such appointment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after receiving notice thereof. If no successor Administrative Agent shall have been so appointed in accordance with the immediately preceding sentence, and shall have accepted such appointment, within 30 days after the current Administrative Agent’s giving of notice of resignation or after such removal, then the current Administrative Agent may, on behalf of the Lenders and the L/C Issuers, appoint a successor Administrative Agent, which shall be a Lender, if any Lender shall be willing to serve, and otherwise shall be an Eligible Assignee; provided that if the Administrative Agent shall notify the Borrower and the Lenders that no Lender has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Credit Documents and (2) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made to each Lender and each L/C Issuer directly, until such time as a successor Administrative Agent has been appointed as provided for above in this Section; provided, further that such Lenders and such L/C Issuer so acting directly shall be and be deemed to be protected by all indemnities and other provisions herein for the benefit and protection of the Administrative Agent as if each such Lender and each such L/C Issuer were itself the Administrative Agent. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor -103- LEGAL02/47543734v6
Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the current Administrative Agent, and the current Administrative Agent shall be discharged from its duties and obligations under the Credit Documents. Any resignation by an Administrative Agent shall also constitute the resignation as an L/C Issuer by the Lender then acting as Administrative Agent (the “Resigning Lender”). Upon the acceptance of a successor’s appointment as Administrative Agent hereunder and the assignment of any Cash Collateral and interest in the Letter of Credit Collateral Account to the successor (i) the Resigning Lender shall be discharged from all duties and obligations of an L/C Issuer hereunder and under the other Credit Documents and (ii) the successor L/C Issuer shall issue letters of credit in substitution for all Letters of Credit issued by the Resigning Lender as L/C Issuer outstanding at the time of such succession (which letters of credit issued in substitutions shall be deemed to be Letters of Credit issued hereunder) or make other arrangements satisfactory to the Resigning Lender to effectively assume the obligations of the Resigning Lender with respect to such Letters of Credit. After any Administrative Agent’s resignation or removal hereunder as Administrative Agent, the provisions of this Article VIII shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under the Credit Documents. Notwithstanding anything contained herein to the contrary, the Administrative Agent may assign its rights and duties under the Credit Documents to any of its Affiliates by giving the Borrower and each Lender prior written notice. (b) The Sustainability Structuring Agent may resign, and its engagement as such may be terminated, by giving at least 30 days prior written notice thereof to the Borrower and the Lenders. The Sustainability Structuring Agent’s engagement hereunder may also be terminated by the Borrower at any time upon not less than 30 days’ prior written notice by the Borrower to the Sustainability Structuring Agent. 8.08 Titled Agents. Each of the Arrangers, the Co-Syndication Agents, the Joint Book Runners and the Sustainability Structuring Agent (each a “Titled Agent”) in each such respective capacity, assumes no responsibility obligation hereunder, including, without limitation, for servicing, enforcement or collection of any of the Loans, nor any duties as an agent hereunder for the Lenders. The titles given to the Titled Agents are solely honorific and imply no fiduciary responsibility on the part of the Titled Agents to the Administrative Agent, any Lender, any L/C Issuer, the Borrower or any other Credit Party and the use of such titles does not impose on the Titled Agents any duties or obligations greater than those of any other Lender or entitle the Titled Agents to any rights other than those to which any other Lender is entitled. 8.09 Indemnification of Administrative Agent. Each Lender agrees to indemnify the Administrative Agent, in its capacity as such, and the Sustainability Structuring Agent, in its capacity as such (in each case, to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), pro rata in accordance with such Lender’s respective Credit Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits and reasonable out-of-pocket costs and expenses of any kind or nature whatsoever which may at any time be imposed on, incurred by, or asserted against the Administrative Agent or the Sustainability Structuring Agent (in its capacity as Administrative Agent or Sustainability Structuring Agent, as the case may be, but not as a Lender) in any way relating to or arising out of the Credit Documents, any transaction contemplated hereby or thereby or any action taken or omitted by the Administrative Agent or the Sustainability Structuring Agent under the Credit Documents (collectively, “Indemnifiable Amounts”); provided, however, that no Lender shall be liable for any portion of such Indemnifiable Amounts to the extent resulting from the Administrative Agent’s (in the case of Indemnifiable Amounts owing to it) or the Sustainability Structuring Agent’s (in the case of -104- LEGAL02/47543734v6
Indemnifiable Amounts owing to it) gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final, non-appealable judgment; provided, further, that no action taken in accordance with the directions of the Required Lenders, Required Class Lenders, Required Revolving Lenders or all of the Lenders, if expressly required hereunder shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section. Without limiting the generality of the foregoing, each Lender agrees to reimburse the Administrative Agent and the Sustainability Structuring Agent (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so) promptly upon demand for its Credit Percentage (determined as of the time that the applicable reimbursement is sought) of any out-of-pocket expenses (including the reasonable and documented fees and expenses of the counsel to the Administrative Agent and/or Sustainability Structuring Agent, as applicable) incurred by the Administrative Agent or the Sustainability Structuring Agent, as applicable, in connection with the preparation, negotiation, execution, administration, or enforcement (whether through negotiations, legal proceedings, or otherwise) of, or legal advice with respect to the rights or responsibilities of the parties under, the Credit Documents, any suit or action brought by the Administrative Agent or the Sustainability Structuring Agent to enforce the terms of the Credit Documents and/or collect any Obligations, any “lender liability” suit or claim brought against the Administrative Agent, the Sustainability Structuring Agent and/or the Lenders, and any claim or suit brought against the Administrative Agent, the Sustainability Structuring Agent and/or the Lenders arising under any Environmental Laws. Such out-of-pocket expenses (including reasonable and documented counsel fees) shall be advanced by the Lenders on the request of the Administrative Agent or the Sustainability Structuring Agent, as the case may be, notwithstanding any claim or assertion that the Administrative Agent or the Sustainability Structuring Agent, as applicable, is not entitled to indemnification hereunder upon receipt of an undertaking by the Administrative Agent or the Sustainability Structuring Agent, as applicable, that the Administrative Agent or Sustainability Structuring Agent, as applicable, will reimburse the Lenders if it is actually and finally determined by a court of competent jurisdiction that the Administrative Agent or the Sustainability Structuring Agent, as applicable, is not so entitled to indemnification. The agreements in this Section shall survive the payment of the Loans and all other Obligations and the termination of this Credit Agreement. If the Borrower shall reimburse the Administrative Agent or the Sustainability Structuring Agent for any Indemnifiable Amount following payment by any Lender to the Administrative Agent or the Sustainability Structuring Agent in respect of such Indemnifiable Amount pursuant to this Section, the Administrative Agent or the Sustainability Structuring Agent, as the case may be, shall share such reimbursement on a ratable basis with each Lender making any such payment. 8.10 Erroneous Payments. (a) Each Lender, each L/C Issuer and any other party hereto hereby severally agrees that if (i) the Administrative Agent notifies (which such notice shall be conclusive absent manifest error) such Lender or L/C Issuer or any other Person that has received funds from the Administrative Agent or any of its Affiliates, either for its own account or on behalf of a Lender or L/C Issuer (each such recipient, a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion that any funds received by such Payment Recipient were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Payment Recipient) or (ii) any Payment Recipient receives any payment from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, as applicable, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, as applicable, or (z) that such Payment Recipient otherwise becomes aware was transmitted or received in error or by mistake (in whole or in part) then, in each case, an error in payment shall be presumed to have been made (any such amounts specified in -105- LEGAL02/47543734v6
clauses (i) or (ii) of this Section 8.10(a), whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise; individually and collectively, an “Erroneous Payment”), then, in each case, such Payment Recipient is deemed to have knowledge of such error at the time of its receipt of such Erroneous Payment; provided that nothing in this Section shall require the Administrative Agent to provide any of the notices specified in clauses (i) or (ii) above. Each Payment Recipient agrees that it shall not assert any right or claim to any Erroneous Payment, and hereby waives any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payments, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine. (b) Without limiting the immediately preceding clause (a), each Payment Recipient agrees that, in the case of clause (a)(ii) above, it shall promptly notify the Administrative Agent in writing of such occurrence. (c) In the case of either clause (a)(i) or (a)(ii) above, such Erroneous Payment shall at all times remain the property of the Administrative Agent and shall be segregated by the Payment Recipient and held in trust for the benefit of the Administrative Agent, and upon demand from the Administrative Agent such Payment Recipient shall (or, shall cause any Person who received any portion of an Erroneous Payment on its behalf to), promptly, but in all events no later than two (2) Business Days thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made in same day funds and in the currency so received, together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. (d) In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor by the Administrative Agent in accordance with immediately preceding clause (c), from any Lender that is a Payment Recipient or an Affiliate of a Payment Recipient (such unrecovered amount as to such Lender, an “Erroneous Payment Return Deficiency”), then at the sole discretion of the Administrative Agent and upon the Administrative Agent’s written notice to such Lender (i) such Lender shall be deemed to have made a cashless assignment of the full face amount of the portion of its Loans (but not its Commitments) of the relevant Class with respect to which such Erroneous Payment was made (the “Erroneous Payment Impacted Class”) to the Administrative Agent or, at the option of the Administrative Agent, the Administrative Agent’s applicable lending affiliate in an amount that is equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Loans (but not Commitments) of the Erroneous Payment Impacted Class, the “Erroneous Payment Deficiency Assignment”) plus any accrued and unpaid interest on such assigned amount, without further consent or approval of any party hereto and without any payment by the Administrative Agent or its applicable lending affiliate as the assignee of such Erroneous Payment Deficiency Assignment. The parties hereto acknowledge and agree that (1) any assignment contemplated in this clause (d) shall be made without any requirement for any payment or other consideration paid by the applicable assignee or received by the assignor, (2) the provisions of this clause (d) shall govern in the event of any conflict with the terms and conditions of Section 9.07 and (3) the Administrative Agent may reflect such assignments in the Register without further consent or action by any other Person. (e) Each party hereto hereby agrees that (x) in the event an Erroneous Payment (or portion thereof) is not recovered from any Payment Recipient that has received such Erroneous Payment (or portion thereof) for any reason, the Administrative Agent (1) shall be subrogated to all the rights of such Payment Recipient with respect to such amount and (2) is authorized to set off, net and apply any and all -106- LEGAL02/47543734v6
amounts at any time owing to such Payment Recipient under any Credit Document, or otherwise payable or distributable by the Administrative Agent to such Payment Recipient from any source, against any amount due to the Administrative Agent under this Section 8.10 or under the indemnification provisions of this Credit Agreement, (y) the receipt of an Erroneous Payment by a Payment Recipient shall not for the purpose of this Credit Agreement be treated as a payment, prepayment, repayment, discharge or other satisfaction of any Obligations owed by the Borrower or any other Credit Party, except, in each case, to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Borrower or any other Credit Party for the purpose of making a payment on the Obligations and (z) to the extent that an Erroneous Payment was in any way or at any time credited as payment or satisfaction of any of the Obligations, the Obligations or any part thereof that were so credited, and all rights of the Payment Recipient, as the case may be, shall be reinstated and continue in full force and effect as if such payment or satisfaction had never been received. (f) Each party’s obligations under this Section 8.10 shall survive the resignation or replacement of the Administrative Agent or any transfer of right or obligations by, or the replacement of, a Lender, the termination of the Commitments or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Credit Document. (g) Nothing in this Section 8.10 will constitute a waiver or release of any claim of the Administrative Agent hereunder arising from any Payment Recipient’s receipt of an Erroneous Payment. 8.11 [Reserved]. 8.12 Sustainability Structuring Agent. The Sustainability Structuring Agent will (i) assist the Borrower in determining the KPI Metrics Pricing Provisions in connection with the KPI Metrics Amendment and (ii) assist the Borrower in preparing informational materials focused on environmental targets to be used in connection with the KPI Metrics Amendment, in each case, based upon the information provided by the Borrower with respect to the applicable KPIs or environmental rating targets selected in accordance with Section 9.01; provided that the Sustainability Structuring Agent (x) shall have no duty to ascertain, inquire into or otherwise independently verify any such information and (y) shall have no responsibility for (and shall not be liable for) the completeness or accuracy of any such information. ARTICLE IX MISCELLANEOUS 9.01 Amendments, Etc. No amendment or waiver of, or any consent to deviation from, any provision of this Credit Agreement or any other Credit Document shall be effective unless in writing and signed by the Parent, the Borrower and the other Credit Parties, as the case may be, and except as expressly provided herein below, the Required Lenders (or the Administrative Agent for and on behalf of the Required Lenders at their direction) and acknowledged by the Administrative Agent, and each such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given; provided, however, that: -107- LEGAL02/47543734v6
(a) No such amendment, waiver or consent shall be effective without the written consent of each Lender directly affected thereby (whose consent shall be sufficient therefore without the consent of the Required Lenders) where the effect would be to: (i) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 7.01), it being understood that the amendment or waiver of an Event of Default or a mandatory reduction or a mandatory prepayment in Commitments shall not be considered an increase in Commitments, (ii) waive non-payment or postpone any date fixed by this Credit Agreement or any other Credit Document for any payment of principal, interest, fees or other amounts due to any Lender hereunder or under any other Credit Document, (iii) reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Obligations, or any fees or other amounts payable hereunder or under any other Credit Document; provided, however, that only the consent of the Required Lenders shall be necessary (A) to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest at the Default Rate or (B) to amend any financial covenant hereunder (or any defined term used therein) even if the effect of such amendment would be to reduce the rate of interest on any Loan or L/C Obligation or to reduce any fee payable hereunder, (iv) change Section 2.18, Section 7.02 or any other provision of this Credit Agreement regarding pro rata sharing or pro rata funding with respect to (A) the making of advances (including participations), (B) the manner of application of payments or prepayments of principal, interest, or fees, (C) the manner of application of reimbursement obligations from drawings under Letters of Credit, or (D) the manner of reduction of commitments and committed amounts, (v) change any provision of this Section 9.01(a) or the definition of “Required Lenders”, “Required Class Lenders” or “Required Revolving Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, (vi) release all or substantially all of the Guarantors, if any, from their obligations hereunder (other than as provided herein or as appropriate in connection with transactions permitted hereunder), or (vii) eliminate or otherwise modify the requirement to deliver Cash Collateral pursuant to Section 2.03(b) (it being understood that each Lender having a Commitment shall be deemed to be adversely affected by any such elimination or modification); (b) Unless also agreed to by the L/C Issuers, no such amendment, waiver or consent shall be effective without the written consent of the L/C Issuers where the effect would be to affect the rights and duties of the L/C Issuers under this Credit Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (c) [reserved]; (d) Unless also agreed to by the Administrative Agent, no such amendment, waiver or consent shall be effective without the written consent of the Administrative Agent where the effect would -108- LEGAL02/47543734v6
be to affect the rights or duties of the Administrative Agent under this Credit Agreement or any other Credit Document; (e) Unless also agreed to by the Sustainability Structuring Agent, no such amendment, waiver or consent shall be effective without the written consent of the Sustainability Structuring Agent where the effect would be to affect the rights or duties of the Sustainability Structuring Agent under this Credit Agreement or any other Credit Document; (f) While any Term Loans remain outstanding, unless also agreed to by the Required Revolving Lenders, no such amendment, waiver or consent shall amend, modify or waive (A) Section 4.02 or any other provision of this Credit Agreement if the effect of such amendment, modification or waiver is to require the Lenders to make Loans when such Lenders would not otherwise be required to do so or (B) the amount of the L/C Committed Amount; (g) While any Incremental Term Loans remain outstanding, any term of this Credit Agreement or any other Credit Document relating to the rights or obligations of the Lenders holding such Incremental Term Loans not adverse to the rights of any Lender holding a Commitment, including any provision that becomes a part of this Credit Agreement solely as a result of an amendment to this Credit Agreement entered into in compliance with Section 2.16, may be amended, and the performance or observance thereof by any Credit Party or any of its Subsidiaries may be waived with the written consent of only such Lenders (and in the case of any such amendment to any Credit Document, the written consent of each Credit Party a party thereto), without the need to obtain the consent of any of the other Lenders; and (h) Notwithstanding the foregoing, the Administrative Agent (and, if applicable, the Borrower) may, without the consent of any Lender, enter into amendments or modifications to this Credit Agreement or any of the other Credit Documents or to enter into additional Credit Documents in order to implement any Benchmark Replacement or any Conforming Changes or otherwise effectuate the terms of Section 3.03(c) in accordance with the terms of Section 3.03(c); and provided further, that notwithstanding anything to the contrary contained herein: (i) no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that other than as provided in Section 9.15: (A) the Commitment of such Defaulting Lender may not be increased or extended and the principal amount of the Loans or L/C Obligations of such Defaulting Lender may not be decreased, and (B) the rate of interest for such Defaulting Lender may not be decreased (except as expressly provided in clause (a)(iii) above) and the pro rata sharing and funding provisions referenced in clause (a)(iv) above may not be changed, in either case in a way that would affect the Defaulting Lender more adversely than the other affected Lenders, without, in any such case, the consent of such Defaulting Lender, and (ii) each Lender is entitled to vote as such Lender sees fit on any bankruptcy or insolvency reorganization plan that affects the Loans, (iii) each Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code supersede the unanimous consent provisions set forth herein, (iv) the Required Lenders may consent to allow a Credit Party to use -109- LEGAL02/47543734v6
Cash Collateral in the context of a bankruptcy or insolvency proceeding, and (v) a Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. (i) The Borrower may, by written notice to the Administrative Agent from time to time, request an extension (each, an “Extension”) of the maturity date of any Class of Loans and Commitments to the extended maturity date specified in such notice on the terms described below. (i) Such notice shall (A) set forth the amount of the applicable Class of Commitments and/or Loans that will be subject to the Extension (which shall be in a minimum amount of $50,000,000 and minimum increments of $25,000,000 in excess thereof (or such other amounts as may be acceptable to the Borrower and the Administrative Agent)), (B) set forth the date on which such Extension is requested to become effective (which shall be not less than ten (10) Business Days nor more than sixty (60) days after the date of such Extension notice (or such longer or shorter periods as the Administrative Agent shall agree in its sole discretion)) and (C) identify the relevant Class of Commitments and/or Loans to which such Extension relates. Each Lender of the applicable Class shall be offered (an “Extension Offer”) an opportunity to participate in such Extension on a pro rata basis and on the same terms and conditions as each other Lender of such Class pursuant to procedures established by, or reasonably acceptable to, the Administrative Agent and the Borrower. If the aggregate principal amount of Commitments or Loans in respect of which Lenders shall have accepted the relevant Extension Offer shall exceed the maximum aggregate principal amount of Commitments or Loans, as applicable, subject to the Extension Offer as set forth in the Extension notice, then the Commitments or Loans, as applicable, of Lenders of the applicable Class shall be extended ratably up to such maximum amount based on the respective principal amounts with respect to which such Lenders have accepted such Extension Offer. (ii) The following shall be conditions precedent to the effectiveness of any Extension: (A) no Default or Event of Default shall have occurred and be continuing immediately prior to and immediately after giving effect to such Extension, (B) the representations and warranties of Parent and the Borrower contained in Article V shall be deemed to be made and shall be true and correct in all material respects on and as of the effective date of such Extension; provided that any representation or warranty that is qualified as to “materiality”, Material Adverse Effect or similar language shall be true and correct in all respects on such effective date and any such representation or warranty that is stated to relate solely to an earlier date shall be true and correct in all material respects (or, in the case of any such representation or warranty already qualified by materiality, in all respects) on and as of such earlier date, (C) the L/C Issuers shall have consented to any Extension of the Commitments, to the extent that such Extension provides for the issuance or extension of Letters of Credit at any time during the extended period and (D) the terms of such Extended Commitments and Extended Term Loans shall comply with subclause (iii) of this Section 9.01(i). Notwithstanding any other provision of this Agreement to the contrary, in no event shall the Commitments or Loans of any Lender be extended pursuant to this Section 9.01(i) unless such Lender affirmatively accepts in writing the applicable Extension Offer, it being understood and agreed that a failure by a Lender to respond to any such Extension Offer shall be deemed to be a rejection by such Lender of such Extension Offer. (iii) The terms of each Extension shall be determined by the Borrower and the applicable extending Lenders and set forth in an Extension Amendment; provided that (A) the final maturity date of any Extended Commitment or Extended Term Loan shall be no earlier than the latest maturity date then in effect for any Class of Loans, (B)(x) there shall be no scheduled amortization of the loans or reductions of commitments under any Extended Commitments and -110- LEGAL02/47543734v6
(y) the average life to maturity of the Extended Term Loans shall be no shorter than the remaining average life to maturity of any of the existing Term Loans, (C) the Extended Revolving Loans and the Extended Term Loans will rank pari passu in right of payment and with respect to security (if any) with the existing Revolving Loans and the existing Term Loans and the borrower and guarantors of the Extended Commitments or Extended Term Loans, as applicable, shall be the same as the Borrower and Guarantors with respect to the existing Revolving Loans or existing Term Loans, as applicable, (D) the interest rate margin, rate floors, fees, original issue discount and premium applicable to any Extended Commitment (and the Extended Revolving Loans thereunder) and Extended Term Loans shall be determined by the Borrower and the applicable extending Lenders, (E)(x) the Extended Term Loans may participate on a pro rata or less than pro rata (but not greater than pro rata) basis in voluntary or mandatory prepayments with the other Term Loans and (y) borrowing and prepayment of Extended Revolving Loans, or reductions of Extended Commitments, and participation in Letters of Credit, shall be on a pro rata basis with the other Revolving Loans or Commitments (other than upon the maturity of the non-extended Revolving Loans and Commitments) and (F) the terms of the Extended Commitments or Extended Term Loans, as applicable, shall be substantially identical to the terms set forth herein (except as set forth in sub-clauses (A) through (E) above). (iv) In connection with any Extension, the Borrower, the Administrative Agent and each applicable extending Lender shall execute and deliver to the Administrative Agent an Extension Amendment and such other documentation as the Administrative Agent shall reasonably require to evidence the Extension. The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Extension. Any Extension Amendment may, without the consent of any other Lender, effect such amendments to this Agreement and the other Credit Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrower, to implement the terms of any such Extension, including any amendments necessary to establish Extended Commitments or Extended Term Loans as a new Class or tranche of Commitments or Term Loans, as applicable, and such other technical amendments as may be necessary or appropriate in the reasonable opinion of the Administrative Agent and the Borrower in connection with the establishment of such new Class or tranche (including to preserve the pro rata treatment of the extended and non-extended Classes or tranches and to provide for the reallocation of Revolving Credit Exposure upon the expiration or termination of the commitments under any Class or tranche), in each case on terms consistent with this Section. (j) KPI Metrics Amendments. (i) Prior to the twelve-month anniversary of the Closing Date, the Borrower, in consultation with the Sustainability Structuring Agent, may in its sole discretion seek to establish specified key performance indicators with respect to certain environmental goals of the Borrower and its Subsidiaries (such indicators, “KPI Metrics”) and thresholds or targets with respect thereto (in either case, such thresholds or targets, “SPTs”). The Administrative Agent and the Borrower (each acting reasonably and in consultation with the Sustainability Structuring Agent) may propose an amendment to this Agreement (such amendment, a “KPI Metrics Amendment”) solely for the purpose of incorporating the KPI Metrics, the SPTs and other related provisions (the “KPI Metrics Pricing Provisions”) into this Agreement. Any such KPI Metrics Amendment shall become effective upon (i) receipt by the Lenders of a lender presentation or memorandum in regard to the KPI Metrics and SPTs from the Borrower no later than ten (10) Business Days before the proposed effective date of such proposed KPI Metrics Amendment, (ii) the posting of such proposed KPI Metrics Amendment to all Lenders and the Borrower, (iii) the identification, and engagement at the Borrower’s cost and expense, of a sustainability assurance provider, which -111- LEGAL02/47543734v6
shall be a qualified external reviewer of nationally recognized standing, independent of the Borrower and its Affiliates and (iv) the receipt by the Administrative Agent of executed signature pages and consents to such KPI Metrics Amendment from the Borrowers, the Administrative Agent and Lenders comprising at least the Required Lenders. Upon the effectiveness of any such KPI Metrics Amendment, based on the Borrower’s performance against the KPI Metrics and SPTs, certain adjustments (increase, decrease or no adjustment) (such adjustments, the “KPI Metrics Applicable Rate Adjustments”) to the otherwise applicable Applicable Percentage may be made; provided that (x) the amount of any such adjustments made pursuant to a KPI Metrics Amendment shall not result in a decrease or an increase of more than (i) 0.030% in the Applicable Percentage as it relates to interest on the Term Loans during any fiscal year, (ii) 0.030% in the Applicable Percentage as it relates to interest on the Revolving Loans or Letter of Credit Fees during any fiscal year or (iii) 0.010% in the Applicable Percentage as it relates to the Facility Fee, in each case, which pricing adjustments shall be applied in accordance with the terms as further described in the KPI Metrics Pricing Provisions and (y) in no event shall any Applicable Percentage be less than zero (the provisions of this proviso, the “Sustainability Adjustment Limitations”). For the avoidance of doubt, the KPI Metrics Applicable Rate Adjustments shall not be cumulative year-over-year and shall only apply until the date on which the next adjustment is due to take place. The KPI Metrics, the Borrower’s performance against the KPI Metrics, and any related KPI Metrics Applicable Rate Adjustments resulting therefrom, will be determined based on certain Borrower certificates, reports and other documents, in each case, setting forth the KPI Metrics in a manner that is aligned with the Sustainability Linked Loan Principles, including with respect to the selection, setting, calculation, certification and measurement thereof. Following the effectiveness of a KPI Metrics Amendment, any modification to the KPI Metrics Pricing Provisions shall be subject only to the consent of the Borrower, the Administrative Agent and the Required Lenders so long as such modification does not have the effect of (1) increasing or decreasing the Sustainability Adjustment Limitations set forth in the KPI Metrics Amendment or (2) reducing any Applicable Percentage to less than zero. (ii) The Borrower, the Sustainability Structuring Agent, the Administrative Agent and the Lenders agree that neither the Loans nor the Commitments are, nor shall be, a deemed sustainability-linked loan unless and until the effectiveness of any KPI Metrics Amendment. Prior to the effectiveness of a KPI Metrics Amendment, the Borrower will not publish any materials or statements (including on any website of the Borrower, in the financial statements or annual reports of the Borrower or in any press release or public announcement issued by the Borrower) which refer to this Agreement being a sustainability-linked loan. (iii) Other than (i) increasing or decreasing the Sustainability Adjustment Limitations or (ii) reducing any Applicable Percentage to less than zero (which, for the avoidance of doubt, shall be subject to the written consent of “each Lender directly affected thereby”, in accordance with Section 9.01(a)), this Section 9.01(j) shall supersede any other clause or provision in Section 9.01 to the contrary, including any provision of Section 9.01(a) requiring the consent of “each Lender directly affected thereby”, for reductions in interest rates or fees payable thereunder. 9.02 Notices and Other Communications. (a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or delivered to the applicable address, facsimile number or electronic mail address, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows: -112- LEGAL02/47543734v6
(i) if to the Parent, the Borrower, the Administrative Agent, the L/C Issuers to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 9.02; and (ii) if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire. Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by facsimile or other form of electronic transmission shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b). (b) Electronic Communications. Notices and other communications to the Lenders and the L/C Issuers hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or the L/C Issuers pursuant to Article II if such Lender or such L/C Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor. (c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE ADMINISTRATIVE AGENT AND THE AGENT-RELATED PERSONS DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE ADMINISTRATIVE AGENT OR ANY AGENT-RELATED PERSON IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any Agent-Related Persons have any liability to the Borrower, any Lender, any L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to -113- LEGAL02/47543734v6
have resulted from the gross negligence or willful misconduct of the Administrative Agent or such Agent-Related Person; provided, however, that in no event shall the Administrative Agent or any Agent-Related Person have any liability to the Borrower, any Lender, any L/C Issuer or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages). (d) Change of Address, Etc. Each of the Parent, the Borrower, the Administrative Agent, any L/C Issuer may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Borrower, the Administrative Agent and the L/C Issuers. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United States Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States Federal or state securities laws. (e) Reliance by Administrative Agent, L/C Issuers and Lenders. The Administrative Agent, the Sustainability Structuring Agent, the L/C Issuers and the Lenders shall be entitled to rely and act upon any notices (including telephonic Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify the Administrative Agent, the Sustainability Structuring Agent, each L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording. 9.03 No Waiver; Cumulative Remedies. No failure by any Lender, any L/C Issuer or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by Law. Notwithstanding anything to the contrary contained herein or in any other Credit Document, the authority to enforce rights and remedies hereunder and under the other Credit Documents against the Credit Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 7.01 for the benefit of all the Lenders and the L/C Issuers; provided, however, that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Credit Documents, (b) the L/C Issuers from exercising the rights and -114- LEGAL02/47543734v6
remedies that inure to its benefit (solely in its capacity as L/C Issuer) hereunder and under the other Credit Documents, (c) any Lender from exercising setoff rights in accordance with Section 9.09 (subject to the terms of Section 2.12), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Credit Party under any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Credit Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 7.01 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.12, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders. 9.04 Attorney Costs, Expenses and Taxes. The Borrower agrees (a) to pay directly to the provider thereof or to pay or reimburse the Administrative Agent and Sustainability Structuring Agent for all costs and expenses incurred in connection with the development, preparation, negotiation and execution of this Credit Agreement and the other Credit Documents, the preservation of any rights or remedies under this Credit Agreement and the other Credit Documents, and any amendment, waiver, consent or other modification of the provisions hereof and thereof (whether or not the transactions contemplated hereby or thereby are consummated), and the consummation and administration of the transactions contemplated hereby and thereby, including all Attorney Costs, and (b) to pay or reimburse the Administrative Agent, the Sustainability Structuring Agent, each L/C Issuer, each Arranger, and each Lender for all costs and expenses incurred following an Event of Default in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Credit Agreement or the other Credit Documents (including all such costs and expenses incurred during any “workout” or restructuring in respect of the Obligations and during any legal proceeding, including any proceeding under any Debtor Relief Law), including all Attorney Costs. The foregoing costs and expenses shall include all search, filing, recording, title insurance and appraisal charges and fees and taxes related thereto, and other out-of-pocket expenses incurred by the Administrative Agent and the cost of independent public accountants and other outside experts retained by the Administrative Agent, the Sustainability Structuring Agent or any Lender. All amounts due under this Section 9.04 shall be payable within ten (10) Business Days after demand therefor. The agreements in this Section shall survive the termination of the Aggregate Commitments and repayment of all other Obligations. 9.05 Indemnification by the Borrower; Limitation of Liability. The Borrower shall indemnify and hold harmless the Administrative Agent, the Sustainability Structuring Agent, each Agent-Related Person, each L/C Issuer, each Arranger, each Lender and their respective Affiliates and other Related Parties (collectively the “Indemnitees”) from and against any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever (subject to the provisions of Section 3.01 with respect to Taxes and Other Taxes) that may at any time be imposed on, incurred by or asserted against any such Indemnitee (whether by a Credit Party or any other party) in any way relating to or arising out of or in connection with (a) the execution, delivery, enforcement, performance or administration of any Credit Document or any other agreement, letter or instrument delivered in connection with the transactions contemplated thereby or the consummation of the transactions contemplated thereby, (b) any Commitment, Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by any L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), or (c) any actual or threatened claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other -115- LEGAL02/47543734v6
theory and regardless of whether any such claim, litigation, investigation or proceeding is brought by the Borrower, any of its Affiliates, any of its creditors, or any other third party (including any investigation of, preparation for, or defense of any pending or threatened claim, investigation, litigation or proceeding) and regardless of whether any Indemnitee is a party thereto (all the foregoing, collectively, the “Indemnified Liabilities”); provided that such indemnity shall not, as to an Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or disbursements (x) are determined by a court of competent jurisdiction in a final non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee, or (y) result from a dispute among Indemnitees (other than disputes involving the Administrative Agent in its capacity or in fulfilling its role as such and any claims arising out of any act or omission on the part of the Parent, the Borrower or any Subsidiary thereof). None of the Administrative Agent, the Sustainability Structuring Agent, any Agent-Related Person, any L/C Issuer, any Arranger, any Lender nor any of their respective Affiliates or other Related Parties (each, a “Lender-Related Person”) shall be liable for any damages arising from the use by others of any information or other materials obtained through IntraLinks or other similar information transmission systems in connection with this Credit Agreement, and no Lender-Related Person or any Credit Party shall have any liability for any indirect, special, incidental, consequential or punitive damages relating to this Credit Agreement or any other Credit Document or arising out of its activities in connection herewith or therewith (whether before or after the Closing Date); provided, the foregoing shall not limit your obligation to indemnify and hold harmless any Indemnitee to the extent required above in respect of indirect, consequential, special or punitive damages asserted by any person other than you or your Affiliates. All amounts due under this Section 9.05 shall be payable within ten (10) Business Days after demand therefor. The agreements in this Section shall survive the resignation of the Administrative Agent, the assignment by any Lender of any of its interests hereunder, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations. 9.06 Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of set-off, and such payment or the proceeds of such set-off or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. 9.07 Successors and Assigns. (a) Successors and Assigns Generally. The provisions of this Credit Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment -116- LEGAL02/47543734v6
of a security interest subject to the restrictions of subsection (f) of this Section (and, subject to the last sentence of the immediately following subsection (b)) any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Credit Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the L/C Issuers and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Credit Agreement. (b) Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Credit Agreement (including all or a portion of its Commitment and the Loans (including for purposes of this subsection (b), participations in L/C Obligations) at the time owing to it); provided that any such assignment shall be subject to the following conditions: (i) Minimum Amounts. (A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and Revolving Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and (B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $2,500,000, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); provided, however, that if, after giving effect to such assignment, the amount of the Commitment held by such assigning Lender or the outstanding principal balance of the Loans of such assigning Lender, as applicable, would be less than $2,500,000, then such assigning Lender shall assign the entire amount of its Commitment and the Loans at the time owing to it; provided, further, however, that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met. (ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Credit Agreement with respect to the Loans or the Commitment assigned; (iii) Required Consents. No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition: (A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an -117- LEGAL02/47543734v6
Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within 5 Business Days after having received notice thereof; (B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of any Commitment if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and (C) the consent of the L/C Issuers (such consent not to be unreasonably withheld or delayed) shall be required for any assignment that increases the obligation of the assignee to participate in exposure under one or more Letters of Credit (whether or not then outstanding). (iv) Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided, however, that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire. If requested by the transferor Lender or the assignee Lender, upon the consummation of any assignment, the transferor Lender, the Administrative Agent and the Borrower shall make appropriate arrangements so that new Notes are issued to the assignee Lender and such transferor Lender, as appropriate. (v) No Assignment to Certain Persons. No such assignment shall be made to (A) the Parent, the Borrower or any of their respective Affiliates or Subsidiaries or (B) to any Defaulting Lender or any of its Subsidiaries, or to any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B). (vi) No Assignment to Natural Persons. No such assignment shall be made to a natural person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person). (vii) Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, each L/C Issuer, and each other Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit in accordance with its Credit Percentage in respect of its Revolving Committed Amount. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Credit Agreement until such compliance occurs. -118- LEGAL02/47543734v6
Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Credit Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Credit Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Credit Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Credit Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05, 9.04 and 9.05 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided, that expect to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations under this Credit Agreement that does not comply with this subsection shall be treated for purposes of this Credit Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section. (c) Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive in the absence of manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Credit Agreement. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice. (d) Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower, the Administrative Agent or any L/C Issuer, sell participations to any Person (other than (x) a natural person, or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person, (y) the Borrower or any of the Borrower’s Affiliates or Subsidiaries or (z) a Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (z)) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Credit Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s participations in L/C Obligations) owing to it); provided that (i) such Lender’s obligations under this Credit Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Lenders and the L/C Issuers shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Credit Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce such Lender’s rights under this Credit Agreement (subject to Section 9.03) and to approve any amendment, modification or waiver of any provision of this Credit Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 9.01 that affects such Participant. Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.09 as though it were a Lender, provided such Participant agrees to be subject to Section 2.12 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a -119- LEGAL02/47543734v6
non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Credit Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans or its other obligations under any Credit Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Credit Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register. (e) Limitations upon Participant Rights. A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 3.01(e) as though it were a Lender. (f) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Credit Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. (g) Resignation as L/C Issuer after Assignment. Notwithstanding anything to the contrary contained herein, if at any time Wells Fargo assigns all of its Commitment and Revolving Loans pursuant to subsection (b) above, Wells Fargo may, upon thirty (30) days’ notice to the Borrower and the Lenders, resign as an L/C Issuer. In the event of any such resignation as an L/C Issuer, the Borrower shall be entitled to appoint (with such appointee’s consent) from among the Lenders a successor L/C Issuer hereunder; provided, however, that no failure by the Borrower to appoint any such successor shall affect the resignation of Wells Fargo as an L/C Issuer. If Wells Fargo resigns as an L/C Issuer, it shall retain all the rights, powers, privileges and duties of an L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as an L/C Issuer and all L/C Obligations with respect thereto. Upon the appointment of a successor L/C Issuer, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer and (b) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Wells Fargo to effectively assume the obligations of Wells Fargo with respect to such Letters of Credit. (h) USA Patriot Act Notice; Compliance. In order for the Administrative Agent to comply with “know your customer”, the Beneficial Ownership Regulation and anti-money laundering rules and regulations, including without limitation, the Patriot Act, prior to any Lender that is organized under the laws of a jurisdiction outside of the United States of America becoming a party hereto, the Administrative Agent may request, and such Lender shall provide to the Administrative Agent, its name, address, tax identification number and/or such other identification information as shall be necessary for the Administrative Agent to comply with federal law. -120- LEGAL02/47543734v6
9.08 Confidentiality. Each of the Administrative Agent, the Lenders and the L/C Issuers agrees to maintain the confidentiality of the Confidential Information (as defined below), except that Confidential Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, trustees, advisors, representatives, consultants and service providers (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Confidential Information and instructed to keep such Confidential Information confidential); (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners); (c) to the extent required by applicable Law or regulations or by any subpoena or similar legal process; (d) to any other party hereto; (e) in connection with the exercise of any remedies hereunder or under any other Credit Document or any action or proceeding relating to this Credit Agreement or any other Credit Document or the enforcement of rights hereunder or thereunder; (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Credit Agreement or any Eligible Assignee invited to be a Lender pursuant to Section 9.15 or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations; (g) with the consent of the Borrower; (h) to the extent such Confidential Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender, any L/C Issuer or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower; (i) to the extent required by a potential or actual insurer or reinsurer in connection with providing insurance, reinsurance or credit risk mitigation coverage under which payments are to be made or may be made by reference to this Agreement; and (j) on a confidential basis to (1) any rating agency in connection with rating the Borrower or its Subsidiaries or the Revolving Facility or (2) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the Revolving Facility. In addition, the Administrative Agent, the L/C Issuers and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry and service providers to the Administrative Agent or any L/C Issuer or Lender in connection with the administration of this Agreement, the other Credit Documents, the Loans and the Commitments. For the avoidance of doubt, nothing in this Section shall prohibit or impede any individual from communicating or disclosing information regarding suspected violations of laws, rules, or regulations to a Governmental Authority or self-regulatory authority without any notification to any Person. For purposes of this Section, “Confidential Information” means all information received from the Parent, the Borrower or any Subsidiary relating to the Parent, the Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or any L/C Issuer on a nonconfidential basis prior to disclosure by the Parent, the Borrower or any Subsidiary, provided that, in the case of information received from the Parent, the Borrower or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Confidential Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Confidential Information as such Person would accord to its own confidential information. Each of the Administrative Agent, the Lenders and the L/C Issuers acknowledges that (a) the Confidential Information may include material non-public information concerning the Parent, the Borrower or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including United States Federal and state securities Laws. -121- LEGAL02/47543734v6
9.09 Set-off. In addition to any rights and remedies of the Administrative Agent, L/C Issuers and Lenders provided by law, upon the occurrence and during the continuance of any Event of Default, the Administrative Agent, each L/C Issuer, each Lender and each of their respective Affiliates are authorized at any time and from time to time, without prior notice to the Parent, the Borrower or any other Credit Party, any such notice being waived by the Borrower (on its own behalf and on behalf of each Credit Party) to the fullest extent permitted by Law, but in the case of an L/C Issuer, a Lender or any Affiliate of an L/C Issuer or a Lender, subject to receipt of the prior written consent of the Required Lenders exercised in their sole discretion, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, the Administrative Agent, such L/C Issuer, such Lender or any of their respective Affiliates to or for the credit or the account of the respective Credit Parties against any and all Obligations owing to the Administrative Agent, such L/C Issuer, such Lender or such Affiliate hereunder or under any other Credit Document, now or hereafter existing, irrespective of whether or not the Administrative Agent, such L/C Issuer, such Lender or such Affiliate shall have made demand under this Credit Agreement or any other Credit Document and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable deposit or indebtedness. Each L/C Issuer and each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such set-off and application made by such L/C Issuer or such Lender, and the Administrative Agent agrees promptly to notify the Borrower after any such set-off and application made by the Administrative Agent; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. Notwithstanding anything to the contrary in this Section, if any Defaulting Lender shall exercise any such right of setoff, all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.14 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent, the L/C Issuers and the Lenders. 9.10 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Credit Document, the interest paid or agreed to be paid under the Credit Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder. 9.11 Counterparts. This Credit Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 9.12 Integration; Effectiveness. (a) This Credit Agreement, together with the other Credit Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes -122- LEGAL02/47543734v6
all prior agreements, written or oral, on such subject matter. In the event of any conflict between the provisions of this Credit Agreement and those of any other Credit Document, the provisions of this Credit Agreement shall control; provided that the inclusion of supplemental rights or remedies in favor of the Administrative Agent or the Lenders in any other Credit Document shall not be deemed a conflict with this Credit Agreement. Each Credit Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof. (b) Except as provided in Section 4.01, this Credit Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Credit Agreement by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Credit Agreement. 9.13 Survival of Representations and Warranties. All representations and warranties made hereunder and in any other Credit Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent, the Sustainability Structuring Agent and each Lender, regardless of any investigation made by the Administrative Agent, the Sustainability Structuring Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent, the Sustainability Structuring Agent or any Lender may have had notice or knowledge of any Default or Event of Default at the time of any Extension of Credit, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied (other than contingent indemnification, expense reimbursement or other contingent obligations for which no claim has been asserted) or any Letter of Credit shall remain outstanding (other than Extended Letters of Credit in respect of which the Borrower has satisfied the requirements to provide Cash Collateral as required by Section 2.03(b)). 9.14 Severability. If any provision of this Credit Agreement or the other Credit Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Credit Agreement and the other Credit Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 9.15 [Reserved]. 9.16 GOVERNING LAW. (a) GOVERNING LAW. THIS CREDIT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. (b) SUBMISSION TO JURISDICTION. EACH OF THE PARENT AND THE BORROWER IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, -123- LEGAL02/47543734v6
WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN, NEW YORK, NEW YORK, AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN, NEW YORK, NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS CREDIT AGREEMENT OR IN ANY OTHER CREDIT DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION. THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY THE ADMINISTRATIVE AGENT OR ANY LENDER OR THE ENFORCEMENT BY THE ADMINISTRATIVE AGENT OR ANY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION. (c) WAIVER OF VENUE. THE BORROWER AND EACH OTHER CREDIT PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT. (d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.02. NOTHING IN THIS CREDIT AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW. 9.17 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, -124- LEGAL02/47543734v6
SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. 9.18 No Conflict. To the extent there is any conflict or inconsistency between the provisions hereof and the provisions of any Credit Document, this Credit Agreement shall control. 9.19 USA PATRIOT Act Notice. The USA Patriot Act of 2001 (Public Law 107-56), the Beneficial Ownership Regulation and federal regulations issued with respect thereto require all financial institutions to obtain, verify and record certain information that identifies individuals or business entities which open an “account” with such financial institution. Consequently, each Lender hereunder may from time to time request, and the Borrower shall provide to such Lender, the Borrower’s name, address, tax identification number and/or such other identification information as shall be necessary for such Lender to comply with federal law. An “account” for this purpose may include, without limitation, a deposit account, cash management service, a transaction or asset account, a credit account, a loan or other extension of credit, and/or other financial services product. 9.20 No Advisory or Fiduciary Responsibility. (a) In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Credit Document), the Borrower acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Credit Agreement provided by the Administrative Agent, the Sustainability Structuring Agent, the Arrangers and the Lenders are arm’s-length commercial transactions between the Borrower, on the one hand, and the Administrative Agent, the Sustainability Structuring Agent, the Arrangers and the Lenders, on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Credit Documents; (ii) (A) each of the Administrative Agent, the Sustainability Structuring Agent, the Arrangers and the Lenders has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any other Person and (B) none of the Administrative Agent, the Sustainability Structuring Agent, the Arrangers or any Lender has any obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Credit Documents; and (iii) the Administrative Agent, the Sustainability Structuring Agent, the Arrangers and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and none of the Administrative Agent, the Sustainability Structuring Agent, the Arrangers and the Lenders has any obligation to disclose any of such interests to the Borrower or any of its Affiliates. To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against the Administrative Agent, the Sustainability Structuring Agent, the Arrangers and the Lenders with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby. (b) Neither the Administrative Agent nor the Sustainability Structuring Agent (i) makes any assurances whether this Agreement meets any criteria or expectations of the Borrower or any Lender with -125- LEGAL02/47543734v6
regard to environmental or social impact and sustainability performance, or whether the facility including the characteristics of the relevant KPI Metrics (including any environmental, social and sustainability criteria or any computation methodology) meet any industry standards for sustainability-linked credit facilities, or (ii) has any responsibility for or liability in respect of reviewing, auditing or otherwise evaluating any calculation by the Borrower of the KPI Metrics or any KPI Metrics Applicable Rate Adjustments (or any of the data or computations that are part of or related to any such calculation) set out in any certificate delivered by the Borrower (and the Administrative Agent and the Sustainability Structuring Agent may rely conclusively on any such certificate, without further inquiry, when implementing any KPI Metrics Applicable Rate Adjustment). The Sustainability Structuring Agent shall not be responsible or have any liability for, or have any duty to ascertain, inquire into or monitor compliance with, the provisions hereof relating to the KPI Metrics Pricing Provisions. 9.21 Termination; Survival. This Credit Agreement shall terminate at such time as (a) all of the Commitments have been terminated, (b) all Letters of Credit have terminated or expired or been canceled (other than Extended Letters of Credit in respect of which the Borrower has satisfied the requirements to provide Cash Collateral as required in Section 2.03(b)), (c) none of the Lenders is obligated any longer under this Credit Agreement to make any Loans and the L/C Issuers are no longer obligated under this Credit Agreement to issue Letters of Credit and (d) all Obligations (other than obligations which survive as provided in the following sentence) have been paid and satisfied in full. The indemnities to which the Administrative Agent, the L/C Issuers and the Lenders are entitled under the provisions of Sections 3.01, 3.04, 3.05, 8.09, 9.04 and 9.05 and any other provision of this Credit Agreement and the other Credit Documents, and the provisions of Sections 9.03, 9.16 and 9.17, shall continue in full force and effect and shall protect the Administrative Agent, the L/C Issuers and the Lenders (i) notwithstanding any termination of this Credit Agreement, or of the other Credit Documents, against events arising after such termination as well as before and (ii) at all times after any such party ceases to be a party to this Credit Agreement with respect to all matters and events existing on or prior to the date such party ceased to be a party to this Credit Agreement. 9.22 Entire Agreement. THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES. 9.23 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Credit Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Credit Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by: (a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and (b) the effects of any Bail-In Action on any such liability, including, if applicable: -126- LEGAL02/47543734v6
(i) a reduction in full or in part or cancellation of any such liability; (ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Credit Agreement or any other Credit Document; or (iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority. To the extent not prohibited by applicable Law, each Lender shall notify the Borrower and the Administrative Agent if it has become the subject of a Bail-In Action (or any case or other proceeding in which a Bail-In Action could be reasonably be expected to be asserted against such Lender). 9.24 Effect of Existing Credit Agreement. (a) Existing Credit Agreement. Upon satisfaction of the conditions precedent set forth in Sections 4.01. and 4.02. of this Credit Agreement, this Credit Agreement shall exclusively control and govern the mutual rights and obligations of the parties hereto with respect to the Existing Credit Agreement, and the Existing Credit Agreement shall be superseded by this Credit Agreement in all respects, in each case, on a prospective basis only. (b) NO NOVATION. THE PARTIES HERETO HAVE ENTERED INTO THIS CREDIT AGREEMENT SOLELY TO AMEND AND RESTATE THE TERMS OF, AND THE OBLIGATIONS OWING UNDER AND IN CONNECTION WITH, THE EXISTING CREDIT AGREEMENT. THE PARTIES DO NOT INTEND THIS CREDIT AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY TO BE, AND THIS CREDIT AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL NOT BE CONSTRUED TO BE, A NOVATION OF ANY OF THE OBLIGATIONS OWING BY THE BORROWER UNDER OR IN CONNECTION WITH THE EXISTING CREDIT AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS (AS DEFINED IN THE EXISTING CREDIT AGREEMENT). 9.25 Acknowledgement Regarding Any Supported QFCs. To the extent that the Credit Documents provide support, through a guarantee or otherwise, for Swap Contract or any other agreement or instrument that is a QFC (such support, “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Credit Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States): (a) In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit -127- LEGAL02/47543734v6
Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Credit Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Credit Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support. (b) As used in this Section 9.25, the following terms have the following meanings: “BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party. “Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §382.2(b). “Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§252.81, 47.2 or 382.1, as applicable. “QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D). [REMAINDER OF PAGE INTENTIONALLY LEFT BLANKSIGNATURE PAGES ON FILE WITH ADMINISTRATIVE AGENT] -128- LEGAL02/47543734v6
Document
Exhibit 10.2
Healthcare Realty Trust Incorporated
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the “Agreement”) is dated as of January 7, 2026 and is effective as of January 12, 2026 (“Effective Date”) by and between HEALTHCARE REALTY TRUST INCORORATED, a Maryland corporation (“Corporation”), and Daniel Gabbay (“Officer”).
Recitals
WHEREAS, the Corporation desires to employ Officer and Officer desires to be employed by the Corporation; and
WHEREAS, the parties desire for this Agreement to set forth the terms and conditions of such employment;
NOW, THEREFORE, in consideration of the foregoing premises, and other good and valuable consideration, the receipt and sufficiency of which are hereby affirmed, the parties hereto agree to the following, effective as of the Effective Date:
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Duties. During the term of this Agreement, Officer agrees to be employed by and to serve Corporation as its Executive Vice President and Chief Financial Officer and Corporation agrees to employ and retain Officer in such capacity. Officer shall have such duties and responsibilities as may be reasonably prescribed by the Corporation’s Board of Directors \(the “Board”\) and/or the Corporation’s Chief Executive Officer, consistent with his position as its Executive Vice President and Chief Financial Officer. Officer shall devote such of his business time, energy, and skill to the affairs of Corporation as shall be necessary to perform his duties under this Agreement. Officer’s principal place of business with respect to his services to Corporation shall be the Corporation’s headquarters in Nashville, Tennessee. -
Term of Employment.
2.1 Definitions. For purposes of this Agreement the following terms shall have the following meanings:
(a) “Bonus Compensation” shall mean any cash bonus and any non-equity incentive plan compensation, whether pursuant to the Incentive Plans or awarded through the discretion of the Corporation.
(b) “Change in Control” shall have the meaning set forth in the Corporation’s Amended and Restated 2006 Incentive Plan, as in effect on the Effective Date.
(c) “Constructive Termination” shall mean (i) any material breach of this Agreement by the Corporation, (ii) any substantial reduction in the authority or responsibility of Officer or other substantial reduction in the terms and conditions of Officer’s employment under circumstances which would not justify a Termination For Cause and which are not the result of a breach by Officer of this Agreement, (iii) any act(s) by the Corporation which are designed to or have the effect of rendering Officer’s working conditions so intolerable or demeaning on a recurring basis that a reasonable person would resign such employment, (iv) the Corporation’s relocation of Officer to a location that is more than 35 miles from the location
Exhibit 10.2
of the Corporation’s headquarters on the date this Agreement is executed or (v) any reduction in Officer’s Base Salary or Target Bonus (as each such term is defined below) without Officer’s prior written consent. Notwithstanding the foregoing, Officer will not be deemed to have resigned due to a Constructive Termination unless (1) Officer provides the Corporation with written notice setting forth in reasonable detail the facts and circumstances claimed by Officer to constitute a Constructive Termination within 45 days after the date of the occurrence of any event that Officer knows or should reasonably have known to constitute a Constructive Termination, (2) the Corporation fails to cure such acts or omissions within 30 days following its receipt of such notice, and (3) the effective date of Officer’s termination due to a Constructive Termination occurs no later than 30 days after the expiration of the Corporation’s cure period.
(d) “Continuing Directors” shall mean, as of any date of determination, any member of the Board who (i) was a member of the Board on the Effective Date, (ii) has been a member of the Board for the two years immediately preceding such date of determination, or (iii) was nominated for election or elected to the Board with the affirmative vote of the greater of (x) a majority of Continuing Directors who were members of the Board at the time of such nomination or election or (y) at least four Continuing Directors.
(e) “Incentive Plans” shall mean the Corporation’s Amended and Restated 2006 Incentive Plan, and any successor plans, or other equity-based plan or arrangement adopted by the Corporation from time to time.
(f) “Termination For Cause” shall mean termination by the Corporation of Officer’s employment by reason of Officer’s (i) dishonesty that results in material harm to the Corporation, (ii) fraud upon the Corporation, (iii) deliberate injury or attempted injury to the Corporation, in each such case causing material injury to the Corporation, (iv) by reason of Officer’s breach of this Agreement causing material injury to the Corporation, (v) gross negligence or willful misconduct in the performance of Officer’s job duties, in either case, with respect to any material aspect of to the Corporation’s business, (vi) Officer’s conviction of, or plea of guilt or nolo contendere to, a felony (excluding a felony relating to vehicular offenses that do not result in death or serious bodily injury) or any crime involving moral turpitude, (vii) Officer’s use of illegal drugs that materially impairs Officer’s ability to perform his duties hereunder or (viii) Officer’s material violation of the Corporation’s (or its subsidiaries’) Code of Business Conduct and Ethics or other written policy pursuant to which Officer would be subject to immediate dismissal. The Corporation shall have the burden of establishing that any such termination of Officer’s employment by the Corporation is a Termination For Cause.
(g) “Termination Other Than For Cause” shall mean any termination by the Corporation of Officer’s employment by the Corporation, other than (i) a Termination For Cause or (ii) termination by reason of Officer’s death or disability as described in Sections 2.5 and 2.6. Termination Other Than For Cause shall also mean (including for purposes of Sections 4 and 5) the occurrence of either a (i) resignation of employment by Officer on account of a Constructive Termination or (ii) a notice of non-renewal of the Agreement by the Corporation pursuant to Section 2.2 of the Agreement (when Officer is willing and able, at the time of such notice, to continue performing services on the terms and conditions set forth herein), which shall result in the Officer’s employment terminating on the last day of the then applicable term.
Exhibit 10.2
(h) “Termination Upon a Change in Control” shall mean a termination of Officer’s employment with the Corporation on or within 12 months following a “Change in Control” that constitutes a Termination Other Than For Cause described in Section 2.1(g).
(i) “Voluntary Termination” shall mean termination by Officer of Officer’s employment by the Corporation other than (i) a Constructive Termination as described in subsection 2.1(c), (ii) “Termination Upon a Change in Control” as described in Section 2.1(h), or (iii) termination by reason of Officer’s death or disability as described in Sections 2.5 and 2.6.
2.2 Basic Term. The term of this Agreement shall commence on the Effective Date and continue through the second anniversary of the Effective Date (the “Initial End Date”), unless terminated pursuant to this Section 2. On the Initial End Date, and on each annual anniversary thereafter, the first sentence of this Section 2.2 shall be automatically amended to provide that the term of the Agreement shall be renewed for a one-year period commencing on the Initial End Date (or annual anniversary thereof), such that this Agreement shall be deemed to have been renewed each year for a one-year period prior to the expiration of the current term unless either party provides the other party with written notice, in accordance with Section 8.4, of intent not to renew the term of this Agreement at least 60 days prior to the end of the then-current term. Notwithstanding anything to the contrary in the foregoing, Officer’s employment hereunder is terminable at-will by the Corporation or by Officer at any time (for any reason or for no reason), subject to the provisions of Section 4.
2.3 Termination For Cause. Termination For Cause may be effected by Corporation at any time during the term of this Agreement and shall be effected by written notification to Officer. Upon a Termination For Cause, Officer shall be paid all accrued Base Salary adjusted for any elective deferral, Bonus Compensation, if any, to the extent awarded but not yet paid, any benefits under any plans of the Corporation (including any defined contribution or health and welfare benefit plans) in which Officer is a participant to the full extent of Officer’s rights under such plans, accrued vacation pay and any appropriate business expenses incurred by Officer in connection with his duties hereunder, all to the date of termination, but Officer shall not be paid any other compensation or reimbursement of any kind, including without limitation, severance compensation. Amounts payable to Officer pursuant to this Section 2.3 shall be paid on the first payroll date following Officer’s termination of employment, unless a different date is provided under the terms of the applicable plan to which amounts are payable or required under applicable law.
2.4 Termination Other Than For Cause, Constructive Termination or Nonrenewal of Agreement. Notwithstanding anything else in this Agreement, the Corporation may effect a Termination Other Than For Cause at any time upon giving written notice to Officer of such termination or the Officer may effect a resignation on account of a Constructive Termination upon giving written notice to the Corporation. Upon any Termination Other Than For Cause (including in connection with a nonrenewal of the Agreement by the Corporation as described in Section 2.1(g)), or upon a Constructive Termination, Officer shall be paid all accrued Base Salary adjusted for any elective deferral, Bonus Compensation, if any, to the extent awarded but not yet paid, any benefits under any plans of the Corporation (including any benefits under any defined contribution or health and welfare benefit plans) in which Officer is a participant to the full extent of Officer’s rights under such plans, accrued vacation pay and any
Exhibit 10.2
appropriate business expenses incurred by Officer in connection with his duties hereunder, all to the date of termination, and all severance compensation provided in Section 4.2, but no other compensation or reimbursement of any kind (other than to the extent set forth in an applicable award agreement evidencing a performance-vesting equity-based award held by Officer). Amounts payable to Officer pursuant to this Section 2.4 (other than the severance as provided in Section 4.2) shall be paid on the first payroll date following Officer’s termination of employment, unless a different date is provided under the terms of the applicable plan to which amounts are payable or required under applicable law.
2.5 Termination by Reason of Disability. If, during the term of this Agreement, Officer, in the reasonable judgment of the Board, has failed to perform his duties under this Agreement on account of illness or physical or mental incapacity, and such illness or incapacity continues for a period of more than 12 consecutive months (a “Disability”), Corporation shall have the right to terminate Officer’s employment hereunder by written notification to Officer and payment to Officer of (a) all accrued Base Salary adjusted for any elective deferral, (b) Bonus Compensation, if any, to the extent awarded but not yet paid, (c) any pro-rated portion of the Bonus Compensation that Officer would have earned for a given period in which the termination occurs (if he had remained employed for the entire period), based on the number of days in such period that had elapsed as of the termination date, payable at the time that the Corporation pays bonuses to its executive officers for such period; provided, however, that such Bonus Compensation shall be payable only if Officer remained employed for at least half of the period for which the Bonus Compensation would have been payable, (d) full vesting of all equity-based awards held by Officer that vest solely on the passage of time, (e) vesting of all outstanding performance-based equity awards held by Officer in accordance with the applicable award agreements, (f) any benefits under any plans of the Corporation (including any defined contribution or health and welfare benefit plans) in which Officer is a participant to the full extent of Officer’s rights under such plans, (g) accrued vacation pay, (h) a lump sum cash payment equivalent to the cost of COBRA coverage, at the time of termination of employment, for medical and dental benefits for Officer and his eligible dependents, for twelve (12) months, and (i) any appropriate business expenses incurred by Officer in connection with his duties hereunder, all to the date of termination, but Officer shall not be paid any other compensation or reimbursement of any kind, including without limitation, severance compensation. Amounts payable to Officer pursuant to subclauses (a), (b) and (f) – (i) of this Section 2.5 shall be paid on the first payroll date following Officer’s termination of employment, unless a different date is provided under the terms of the applicable plan to which amounts are payable or required under applicable law.
2.6 Death. In the event of Officer’s death during the term of this Agreement, Officer’s employment shall be deemed to have terminated as of the last day of the month during which his death occurs and Corporation shall pay to his estate or such beneficiaries as Officer may from time to time designate (a) all accrued Base Salary adjusted for any elective deferral, (b) Bonus Compensation, if any, to the extent awarded but not yet paid, (c) any pro-rated portion of the Bonus Compensation that Officer would have earned for a given period in which the termination occurs (if he had remained employed for the entire period), based on the number of days in such period that had elapsed as of the termination date, payable at the time that the Corporation pays bonuses to its executive officers for such period; provided, however, that such Bonus Compensation shall be payable only if Officer remained employed for at least half of the period for which the Bonus Compensation would have been payable, (d) full vesting of all
Exhibit 10.2
equity-based awards held by Officer that vest solely on the passage of time, (e) vesting of all outstanding performance-based equity awards held by Officer in accordance with the applicable award agreements, (f) any benefits under any plans of the Corporation (including any defined contribution or health and welfare benefit plans) in which Officer is a participant to the full extent of Officer’s rights under such plans, (g) accrued vacation pay, (h) a lump sum cash payment equivalent to the cost of COBRA coverage, at the time of termination of employment, for medical and dental benefits for Officer’s eligible dependents, for twelve (12) months, and (i) any appropriate business expenses incurred by Officer in connection with his duties hereunder, all to the date of termination, but Officer’s estate shall not be paid any other compensation or reimbursement of any kind, including without limitation, severance compensation. Amounts payable to Officer’s estate or designated beneficiaries pursuant to subclauses (a), (b) and (f) – (i) of this Section 2.6 shall be paid on the first payroll date following Officer’s termination of employment, unless a different date is provided under the terms of the applicable plan to which amounts are payable or required under applicable law.
2.7 Voluntary Termination. In the event of a Voluntary Termination, Corporation shall pay all accrued Base Salary adjusted for any elective deferral, Bonus Compensation, if any, to the extent awarded but not yet paid, any benefits under any plans of the Corporation (including any defined contribution or health and welfare benefit plans) in which Officer is a participant to the full extent of Officer’s rights under such plans, accrued vacation pay and any appropriate business expenses incurred by Officer in connection with his duties hereunder, all to the date of termination, but no other compensation or reimbursement of any kind, including without limitation, severance compensation. Amounts payable to Officer pursuant to this Section 2.7 shall be paid on the first payroll date following Officer’s termination of employment, unless a different date is provided under the terms of the applicable plan to which amounts are payable or required under applicable law.
2.8 Termination Upon a Change in Control. In the event of a Termination Upon a Change in Control, Officer shall be paid all accrued Base Salary adjusted for any elective deferral, Bonus Compensation, if any, to the extent awarded through the date of termination but not yet paid, any benefits under any plans of the Corporation (including any defined contribution or health and welfare benefit plans) in which Officer is a participant to the full extent of Officer’s rights under such plans, accrued vacation pay and any appropriate business expenses incurred by Officer in connection with his duties hereunder, all to the date of termination, and all severance compensation provided in Section 4.1 in the event of a Termination Upon a Change in Control, but no other compensation or reimbursement of any kind (other than to the extent set forth in an applicable award agreement evidencing a performance-vesting equity-based award held by Officer). Amounts payable to Officer pursuant to this Section 2.8 (other than the severance as provided in Section 4.1) shall be paid on the first payroll date following Officer’s termination of employment, unless a different date is provided under the terms of the applicable plan to which amounts are payable or required under applicable law.
2.9 Notice of Termination. The Corporation may effect a termination of this Agreement pursuant to the provisions of this Section 2 upon giving 10 days written notice to Officer of such termination. Officer may effect a termination of this Agreement pursuant to the provisions of this Section 2 upon giving 10 days written notice to the Corporation of such termination.
Exhibit 10.2
2.10 Termination of Offices and Directorships; Return of Property. Upon termination of Officer’s employment for any reason, unless otherwise specified in a written agreement between Officer and the Corporation, Officer shall be deemed to have resigned from all offices, directorships, and other employment positions if any, then held with the Corporation, and shall take all actions reasonably requested by the Corporation to effectuate the foregoing. In addition, upon the termination of Officer’s employment for any reason, Officer agrees to return to the Corporation all documents of the Corporation and its affiliates (and all copies thereof) and all other Corporation or Corporation affiliate property that Officer has in Officer’s possession, custody or control.
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Salary, Benefits and Bonus Compensation.
3.1 Base Salary. As payment for the services to be rendered by Officer as provided in Section 1 and subject to the terms and conditions of Section 2, Corporation agrees to pay to Officer a “Base Salary” at the rate of $500,000 per annum payable in equal semi-monthly installments, or in such other periodic installments as mutually agreed to by Corporation and Officer. The Base Salary may be adjusted for appropriate increases, in the discretion of the Compensation and Human Capital Committee of the Board (the “Compensation Committee”), and the term “Base Salary” as utilized in this Agreement shall refer to the Base Salary as so adjusted.
3.2 Bonus Compensation. Officer shall be eligible to receive bonus and/or incentive compensation each year (or portion thereof) during the term of this Agreement and any extensions thereof, in accordance with the Incentive Plans or other policy, plan or arrangement adopted by the Compensation Committee from time to time. With respect to calendar year 2026, Officer shall be eligible to earn a cash performance bonus under the Corporation’s bonus plan or program applicable to senior executives targeted at $625,000 (the “Target Bonus”). The actual amount of the Target Bonus shall be determined by the Compensation Committee in its reasonable and good faith discretion, based on the achievement of individual and/or Corporation performance goals as determined by the Compensation Committee; provided, however, that the Target Bonus with respect to 2026 shall be no less than $625,000. The payment of any annual bonus, to the extent any annual bonus becomes payable, will be made promptly in the calendar year following that to which the payment relates, on the date on which annual bonuses are paid generally to the Corporation’s senior executives, but in no event later than March 15th of the calendar year following the calendar year with respect to which such Annual Bonus relates. Except as provided in Section 2 or 4 hereof, payment of any bonus (including the Target Bonus) shall be subject to Officer’s continued employment through the applicable payment date.
3.3 Additional Benefits. During the term of this Agreement, Officer shall be entitled to the following additional benefits:
(a) Officer Benefits. Officer shall be eligible to participate in such of Corporation’s benefits and deferred compensation plans as are now generally available or later made generally available to executive officers of Corporation, including, without limitation, the Incentive Plans, dental and medical plans, group life and disability insurance, perquisites, and retirement plans.
Exhibit 10.2
(b) Vacation. Officer shall be entitled to four weeks of vacation during each year during the term of this Agreement (or such greater amount as provided in the Corporation’s vacation policy) and any extensions thereof, prorated for partial years.
(c) Reimbursement for Expenses. During the term of this Agreement, Corporation shall reimburse Officer for reasonable and properly documented out-of-pocket business and/or entertainment expenses incurred by Officer in connection with his duties under this Agreement. Officer’s legal fees and expenses actually incurred in connection with the drafting, review and negotiation of this Agreement and related materials (including any equity award agreements) shall be paid or reimbursed to Officer by the Corporation (to either Officer or Officer’s legal counsel, as applicable) within 90 days after the Effective Date, subject to Officer’s delivery to the Corporation of documentation evidencing such fees and expenses within 60 days after the Effective Date; provided, however, that such Corporation payment or reimbursement shall not exceed $25,000.
3.4 Relocation Bonus. The Corporation expects Officer to relocate his principal place of residence to the greater Nashville metro area prior to August 1, 2026 (such relocation, the “Relocation”). In furtherance of the Relocation, the Corporation shall pay to Officer a one-time bonus of $300,000 (the “Relocation Bonus”) that is intended to cover Officer’s expenses associated with the Relocation, which shall be paid on the first payroll date following the Effective Date. If Officer’s employment is terminated due to a Termination for Cause or a Voluntary Termination, in either case, prior to the first anniversary of the Effective Date, then (i) Officer shall be required to repay a pro-rata portion of the Relocation Bonus to the Corporation within 30 days following Officer’s termination date (calculated by multiplying the Relocation Bonus by a fraction, the numerator of which is the number of days during the period commencing on (but excluding) the date of such termination of employment and ending on (and including) the first anniversary of the Effective Date, and the denominator of which is 365), and (ii) the Corporation shall have a right to offset, to the extent permitted under Section 409A of the Code, any such reimbursement against any sums it might otherwise owe to Officer in any such event.
3.5 Sign-On Equity Award. On the Effective Date, the Corporation shall grant to Officer a restricted stock grant for shares of Class A Common Stock of the Corporation with a grant date value of $2,750,000 (the “Sign-On Award”). Notwithstanding the foregoing, Corporation and Officer agree that the grant date value of the Sign-On Award shall be reduced by an amount equal to the amount, if any, that Officer receives from his current employer in settlement of outstanding deferred compensation. Subject to Officer’s continued employment with the Corporation through the applicable vesting date, the Sign-On Award shall vest with respect to 25% of the shares underlying the award on each annual anniversary of the Effective Date. Should there be a termination of Officer’s employment under Sections 2.4, 2.5, and or 2.6 of this Agreement, all unvested portions of the Sign-On Award shall vest in full. The terms and conditions of the Sign-On Award will be set forth in a separate award agreement in a form prescribed by the Corporation and consistent with the terms and provisions hereof. Except as otherwise provided in this Agreement, the Sign-On Award shall be governed in all respects by the terms and conditions of the award agreement for such grant under the Incentive Plans.
3.6 2026 Equity Award. For calendar year 2026, Officer shall receive an equity-based compensation award with a target value of $1,375,000 (the “2026 Award”). The
Exhibit 10.2
2026 Award shall be granted at the same time that the Corporation makes equity grants to its executive officers, but no later than February 28, 2026. The Compensation Committee shall determine in its sole discretion the grant timing, forms(s), performance metrics, and such other terms and conditions applicable to the 2026 Award, which shall be consistent with the terms and conditions applicable to performance-based equity awards granted to similarly-situated executives at the Corporation. The terms and conditions of the 2026 Award will be set forth in a separate award agreement in a form prescribed by the Corporation. Except as otherwise provided in this Agreement, the 2026 Award shall be governed in all respects by the terms and conditions of the award agreement for such grant under the Incentive Plans. Should there be a termination of Officer’s employment under Sections 2.4, 2.5, and or 2.6 of this Agreement, the 2026 Award shall vest in accordance with the terms of the award agreement with respect to the achievement of applicable performance metrics and any proration requirements.
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Severance Compensation.
4.1 Severance Compensation in the Event of a Termination Upon a Change in Control. In the event Officer’s employment is terminated in a Termination Upon a Change in Control, Officer shall be paid as severance compensation an amount equal to (a) 2.5 times his annual Base Salary (at the rate payable at the time of such termination, but prior to any reduction that triggers Constructive Termination), plus (b) 2.5 times the greater of: (i) the average annual Bonus Compensation, if any, earned by Officer with respect to the two full calendar years immediately preceding the date of termination and (ii) Officer’s Target Bonus for the year in which the date of termination occurs (but prior to any reduction that triggers Constructive Termination), plus (c) any pro-rated portion of the Bonus Compensation that Officer would have earned for a given period in which the termination occurs (if he had remained employed for the entire period), based on the number of days in such period that had elapsed as of the termination date, payable at the time that the Corporation pays bonuses to its executive officers for such period, and (d) subject to the terms of this Section 4.1 relating to outstanding equity-based awards, all deferred compensation that has not vested shall vest and be distributed. The severance payment described in subclauses (a) and (b) shall be paid in substantially equal installments in accordance with the Corporation’s normal payroll practices over 30 months following the date of termination, with the first payment commencing within 30 days following the date of termination (and amounts otherwise payable prior to such first payment date shall be paid on such date without interest thereon) and the remaining installments payable over the remain of such 36 month period; provided, however, that if the Termination Upon a Change in Control occurs following a Change in Control that constitutes a “change in control event” for purposes of Section 409A (as defined below), the payment shall be paid in a single lump sum cash payment within thirty (30) days after the date of such termination, subject to the limitations of Section 4.4. In addition to the foregoing, Officer shall receive a lump sum cash payment equivalent to the cost of COBRA coverage, at the time of termination of employment, for medical and dental benefits for Officer and his eligible dependents, for eighteen (18) months, paid within 30 days following Officer’s date of termination. In addition, all outstanding equity-based awards held by Officer that vest solely on the passage of time shall vest in full and all outstanding equity-based awards held by Officer that vest based on the level of achievement of performance shall vest based on the greater of the level of achievement of the applicable performance goals or target. Officer is under no obligation to mitigate the amount owed Officer pursuant to this Section 4.1 by seeking other employment or otherwise.
Exhibit 10.2
4.2 Severance Compensation in the Event of a Termination Other Than For Cause. In the event Officer’s employment is terminated in a Termination Other Than For Cause, Officer shall be paid as severance compensation an amount equal to (a) two times his annual Base Salary (at the rate payable at the time of such termination, but prior to any reduction that triggers Constructive Termination) plus (b) two times the greater of: (i) the average annual Bonus Compensation, if any, earned by Officer with respect to the two full calendar years immediately preceding the date of termination and (ii) Officer’s Target Bonus for the year in which the date of termination occurs (but prior to any reduction that triggers Constructive Termination), plus (c) any pro-rated portion of the Bonus Compensation that Officer would have earned for a given period in which the termination occurs (if he had remained employed for the entire period), based on the number of days in such period that had elapsed as of the termination date, payable at the time that the Corporation pays bonuses to its executive officers for such period; provided, however, that such Bonus Compensation shall be payable only if Officer remained employed for at least half of the period for which the Bonus Compensation would have been payable, and (d) subject to the terms of this Section 4.2 relating to outstanding equity-based awards, all deferred compensation that has not vested shall vest and be distributed.. The severance payment described in subclauses (a) and (b) shall be paid in substantially equal installments in accordance with the Corporation’s normal payroll practices over 24 months following the date of termination, but with the first payment commencing within 30 days day following the date of termination (and amounts otherwise payable prior to such first payment shall be paid on such date without interest thereon) and the remaining installments payable over the remain of such 24 month period, subject to the limitations of Section 4.4. In addition to the foregoing, Officer shall receive a lump sum cash payment equivalent to the cost of COBRA coverage, at the time of termination of employment, for medical and dental benefits for Officer and his eligible dependents, for eighteen (18) months, paid within 30 days following Officer’s date of termination. In addition, all outstanding equity-based awards held by Officer that vest solely on the passage of time shall vest in full and all outstanding equity-based awards held by Officer that vest based on the level of achievement of performance shall vest (x) on a pro rata basis as provided in the award agreement and (y) based on the level of achievement of the applicable performance goals. Officer is under no obligation to mitigate the amount owed Officer pursuant to this Section 4.2 by seeking other employment or otherwise.
4.3 No Severance Compensation Upon Other Termination. In the event of a Voluntary Termination, Termination For Cause, termination by reason of Officer’s disability pursuant to Section 2.5, or termination by reason of Officer’s death pursuant to Section 2.6, Officer or his estate shall not be paid any severance compensation and shall receive only the benefits as provided in the appropriate section of Article II applicable to the respective termination.
4.4 Section 409A Payment Restrictions. The provisions of this Agreement shall be construed in a manner that is consistent with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) (Section 409A of the Code, together, with any state law of similar effect, “Section 409A”) in order to avoid any adverse tax consequences to the Officer. It is intended that each installment of the payments of the severance compensation described in this Section 4 together with all other payments and benefits provided to Officer by Corporation, whether under this Agreement or otherwise, is a separate “payment” and separate installment payment for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i) and satisfies, to the greatest extent possible, the exemptions from the application of Section 409A
Exhibit 10.2
provided under Treas. Reg. §§ 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9). However, to the extent it is determined that any such payments constitute “deferred compensation” under Section 409A and Officer is a “specified employee,” as such term is defined in Section 409A(a)(2)(B)(i) of the Code, then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A, the timing of such payments shall be delayed as follows: on the earlier of six months and one day after Officer’s separation from service (as defined below) or the date of Officer’s death, the Corporation shall (A) pay to Officer a lump sum amount equal to the sum of the payments that Officer would otherwise have received through the delayed payment date, and (B) commence any remaining payments in accordance with the terms of this Agreement or such other plan or arrangement of deferred compensation, as applicable. To the extent that any such deferred compensation benefit is payable upon an event involving the Officer’s cessation of services, such payment(s) shall not be made unless such event constitutes a “separation from service” pursuant to the default definition in Treas. Reg. § 1.409A-1(h). Any payments that constitute deferred compensation subject to Section 409A that are subject to execution of a waiver and release which may be executed and/or revoked in a calendar year following the calendar year in which the payment event (such as termination of employment) occurs shall commence payment only in the calendar year in which the consideration period or, if applicable, release revocation period ends, as necessary to comply with Section 409A. To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred compensation” for purposes of Section 409A, (A) all expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Officer, (B) any right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit and (C) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.
4.5 Golden Parachute Restrictions. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by or on behalf of the Corporation to or for the benefit of the Officer as a result of and contingent on a “change in control,” as defined in section 280G of the Code, (such amounts contingent on a change in control as described in Treas. Reg. § 1.280G-1 Q/A-22) whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, (together, the “Contingent Payment”) would constitute a “parachute payment,” as defined in Treas. Reg. § 1.280G-1 Q/A-30, the amount of the Contingent Payment to Officer shall be (A) reduced to an amount that is one dollar less than 300% of the Officer’s “base amount” (as defined in section 280G(b)(3)(A) of the Code), so that the amount of such payments do not constitute a parachute payment (the “Safe Harbor Payment”), or, if greater, (B) the entire Contingent Payment, unreduced by the calculation in clause (A), provided that the net value of such Contingent Payment to the Officer exceeds the net value of the Safe Harbor Payment, after taking into account taxes to Officer that apply to the Safe Harbor Payment and the unreduced Contingent Payment, as applicable, including the excise taxes imposed on the unreduced Contingent Payment under section 4999 of the Code. The determination of the amount to be paid to Officer on account of this Section 4.5 shall be made by the accountant, tax counsel or other similar expert advisor to Officer (the “Tax Advisor”), which shall, if requested, provide detailed supporting calculations both to the Corporation and the Officer and if requested, a written opinion. The supporting calculations shall include a valuation of the non-competition provisions
Exhibit 10.2
of Section 5. The costs and expenses of the Tax Advisor shall be the responsibility of the Corporation.
4.6. Release of Claims. The payments set forth in Sections 4.1 and 4.2 of this Agreement and the vesting of any unvested awards granted under the Incentive Plans upon a termination are subject to (i) the execution and delivery by Officer of a waiver and general release of claims (the “Release”) to Corporation substantially in the form attached hereto as Exhibit A (and having not revoked such Release for a period of seven (7) days following its execution by Officer and its delivery to the Corporation) and (ii) Officer’s continued compliance with the restrictive covenants set forth in Sections 5-7 and in any other written agreement between Officer and the Corporation.
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Non-Competition. During the term of this Agreement and for one year following a Termination Upon a Change in Control or a Termination Other Than for Cause, so long as the payments provided for in Section 4.1 or 4.2 are made on a timely basis:
(a) Officer shall not, without the prior written consent of Corporation, directly or indirectly, own, manage, operate, control, be connected with as an officer, employee, partner, consultant or otherwise, or otherwise engage or participate in any corporation or other business entity engaged in the business of buying, selling, developing, building and/or managing real estate facilities for the medical and healthcare sectors of the real estate industry. Officer understands and acknowledges that Corporation carries on business nationwide and that the nature of Corporation’s activities cannot be confined to a limited area. Accordingly, Officer agrees that the geographic scope of this Section 5 shall include the United States of America. Notwithstanding the foregoing, the ownership by Officer of less than 2% of any class of the outstanding capital stock of any corporation conducting such a competitive business which is regularly traded on a national securities exchange or in the over-the-counter market shall not be a violation of the foregoing covenant.
(b) Simultaneously with Officer’s execution of this Agreement and upon each anniversary of the Effective Date, Officer shall notify the Chairman of the Compensation Committee of the nature and extent of Officer’s investments, stock holdings, employment as an employee, director, or any similar interest in any business or enterprise engaged in buying, selling, developing, building, and/or managing real estate facilities for the medical and healthcare sectors of the real estate industry other than Corporation; provided, however, that Officer shall have no obligation to disclose any investment under $100,000 in value or any holdings of publicly traded securities which are not in excess of one percent of the outstanding class of such securities.
(c) Officer shall not contact or solicit, directly or indirectly, any customer, client, tenant or account whose identity Officer obtained through association with Corporation, regardless of the geographical location of such customer, client, tenant or account, nor shall Officer, directly or indirectly, entice or induce, or attempt to entice or induce, any employee of Corporation to leave such employ, nor shall Officer employ any such person in any business similar to or in competition with that of Corporation. Officer hereby acknowledges and agrees that the provisions set forth in this Section 5 constitute a reasonable restriction on his ability to
Exhibit 10.2
compete with Corporation and will not adversely affect his ability to earn income sufficient to support him and/or his family.
(d) The parties hereto agree that, in the event a court of competent jurisdiction shall determine that the geographical or durational elements of this covenant are unenforceable, such determination shall not render the entire covenant unenforceable. Rather, the excessive aspects of the covenant shall be reduced to the threshold which is enforceable, and the remaining aspects shall not be affected thereby.
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Trade Secrets and Customer Lists. Officer agrees to hold in strict confidence all information concerning any matters affecting or relating to the business of Corporation and its subsidiaries and affiliates, including, without limiting the generality of the foregoing, its manner of operation, business plans, business prospects, agreements, protocols, processes, computer programs, customer lists, market strategies, internal performance statistics, financial data, marketing information and analyses, or other data, without regard to the capacity in which such information was acquired. Officer agrees that he will not, directly or indirectly, use any such information for the benefit of any person or entity other than Corporation or disclose or communicate any of such information in any manner whatsoever other than to the directors, officers, employees, agents, and representatives of Corporation who need to know such information, who shall be informed by Officer of the confidential nature of such information and directed by Officer to treat such information confidentially. Such information does not include information which \(i\) was disclosed to the public by Corporation or becomes generally available to the public other than as a result of an unauthorized disclosure by Officer or his representatives, or \(ii\) was or becomes available to Officer on a non‑confidential basis from a source other than Corporation or its advisors provided that such source is not known to Officer to be bound by a confidentiality agreement with Corporation, or otherwise prohibited from transmitting the information to Officer by a contractual, legal or fiduciary obligation; notwithstanding the foregoing, if any such information does become generally available to the public, Officer agrees not to further discuss or disseminate such information except in the performance of his duties as Officer. Upon Corporation's request, Officer will return all information furnished to him related to the business of Corporation. The parties hereto stipulate that all such information is material and confidential and gravely affects the effective and successful conduct of the business of Corporation and Corporation's goodwill, and that any breach of the terms of this Section 6 shall be a material breach of this Agreement. The terms of this Section 6 shall remain in effect following the termination of this Agreement. -
Use of Proprietary Information. Officer recognizes that Corporation possesses a proprietary interest in all of the information described in Section 6 and has the exclusive right and privilege to use, protect by copyright, patent or trademark, manufacture or otherwise exploit the processes, ideas and concepts described therein to the exclusion of Officer, except as otherwise agreed between Corporation and Officer in writing. Officer expressly agrees that any products, inventions, discoveries or improvements made by Officer, his agents or affiliates based on or arising out of the information described in Section 6 shall be \(i\) deemed a work made for hire under the terms of United States Copyright Act, 17 U.S.C. § 101 et seq., and Corporation shall be the owner of all such rights with respect thereto and \(ii\) the property of and inure to the exclusive benefit of Corporation.
Exhibit 10.2
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Miscellaneous.
8.1 Payment Obligations. Corporation’s obligation to pay Officer the compensation and to make the arrangements provided herein shall be unconditional, and Officer shall have no obligation whatsoever to mitigate damages hereunder. In the event that any arbitration, litigation or other action after a Change in Control is brought to enforce or interpret any provision contained herein, Corporation, to the extent permitted by applicable law and Corporation’s Articles of Incorporation and Bylaws, hereby indemnifies Officer for Officer’s reasonable attorneys’ fees and disbursements incurred in such arbitration, litigation, or other action and shall advance payment of such attorneys’ fees and disbursements.
8.2 Waiver. The waiver of the breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach of the same or other provision hereof.
8.3 Entire Agreement; Modifications. Except as otherwise provided herein, this Agreement represents the entire understanding among the parties with respect to the subject matter hereof, and, as of the Effective Date, this Agreement supersedes any and all prior understandings, agreements, plans and negotiations, whether written or oral, with respect to the subject matter hereof. All modifications to the Agreement must be in writing and signed by the party against whom enforcement of such modification is sought. Notwithstanding anything herein to the contrary, this Agreement and the obligations and commitments hereunder shall neither commence nor be of any force or effect prior to the Effective Date.
8.4 Notices. All notices and other communications under this Agreement shall be in writing and shall be given by personal delivery, nationally recognized overnight courier, email, or first class mail, certified or registered with return receipt requested, and shall be deemed to have been duly given upon receipt in the event of personal delivery or overnight courier, three days after mailing to the respective persons named below:
If to Corporation:
Healthcare Realty Trust Incorporated
3310 West End Avenue, Suite 700
Nashville, Tennessee 37203
Phone: (615) 269-8175 Fax:
(615) 269-8260
Attention: General Counsel
If to Officer, by hand delivery to Officer on the premises of the Corporation or to the most recent address of Officer maintained in the records of the Corporation.
Any party may change such party’s address for notices by notice duly give pursuant to this Section 8.4.
8.5 Headings. The Section headings herein are intended for reference and shall not by themselves determine the construction or interpretation of this Agreement.
Exhibit 10.2
8.6 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Tennessee.
8.7 Arbitration. Any controversy or claim arising out of or relating to this Agreement, or breach thereof, shall be settled by arbitration in Nashville, Tennessee in accordance with the Rules of the American Arbitration Association, and judgment upon any proper award rendered by the Arbitrators may be entered in any court having jurisdiction thereof. There shall be three arbitrators, one to be chosen directly by each party at will, and the third arbitrator to be selected by the two arbitrators so chosen. To the extent permitted by the Rules of the American Arbitration Association, the selected arbitrators may grant equitable relief. The cost of the arbitration, including the cost of the record or transcripts thereof, if any, administrative fees, and all other fees shall be borne by Corporation. Except as otherwise provided in Section 8.1 with respect to events following a Change in Control, to the extent that Officer prevails with respect to any portion of an arbitration award, Officer shall be reimbursed by Corporation for the costs and expenses incurred by Officer, including reasonable attorneys’ fees, in connection with the arbitration in an amount proportionate to the award to Officer as compared to the amount in dispute.
8.8 Severability. Should a court or other body of competent jurisdiction determine that any provision of this Agreement is excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, and all other provisions of this Agreement shall be deemed valid and enforceable to the extent possible.
8.9 Survival of Corporation’s Obligations. Corporation’s obligations hereunder shall not be terminated by reason of any liquidation, dissolution, bankruptcy, cessation of business, or similar event relating to Corporation. This Agreement shall not be terminated by any merger or consolidation or other reorganization of Corporation. In the event any such merger, consolidation or reorganization shall be accomplished by transfer of stock or by transfer of assets or otherwise, the provisions of this Agreement shall be binding upon and inure to the benefit of the surviving or resulting corporation or person. This Agreement shall be binding upon and inure to the benefit of the executors, administrators, heirs, successors and assigns of the parties; provided, however, that except as herein expressly provided, this Agreement shall not be assignable either by Corporation (except to an affiliate of Corporation in which event Corporation shall remain liable if the affiliate fails to meet any obligations to make payments or provide benefits or otherwise) or by Officer.
8.10 Counterparts. This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same Agreement.
8.11 Withholdings. All compensation and benefits to Officer hereunder shall be reduced only by all federal, state, local and other withholdings and similar taxes and payments that are required by applicable law.
8.12 Indemnification. In addition to any rights to indemnification to which Officer is entitled to under Corporation’s Articles of Incorporation and Bylaws, Corporation shall indemnify Officer at all times during and after the term of this Agreement to the maximum extent permitted under Section 2-418 of the General Corporation Law of the State of Maryland
Exhibit 10.2
or any successor provision thereof and any other applicable state law, and shall pay Officer’s expenses in defending any civil or criminal action, suit, or proceeding (unrelated to a dispute under this Agreement) in advance of the final disposition of such action, suit, or proceeding, to the maximum extent permitted under such applicable state laws. The Corporation will provide advance payment of legal costs and expenses that are reasonable and appropriate for defending such action, suit or proceeding. The indemnification provisions contained in this Section 8.12 shall survive the termination of this Agreement and Officer’s employment by Corporation indefinitely.
8.13 Clawback Policy. Officer acknowledges receipt of and having read and understands Corporation’s Policy for the Recovery of Erroneously Awarded Compensation (the “Clawback Policy”). Officer shall be subject to the terms of the Clawback Policy or other recoupment, clawback or similar policy of Corporation as may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of erroneously awarded incentive-based compensation, or other cash, securities or property received with respect to such incentive-based compensation (including any value received from a disposition of such securities or property). The Corporation and Employee acknowledge that this Section 8.13 is not intended to limit any clawback and/or disgorgement of such compensation pursuant to Section 304 of the Sarbanes-Oxley Act of 2002.
8.14 Representations. Officer hereby represents and warrants to the Corporation that (a) Officer is entering into this Agreement voluntarily and that the performance of Officer’s obligations hereunder will not violate any agreement between Officer and any other person, firm, organization or other entity, or any policy, program or code of such other person, firm, organization or other entity person, and (b) Officer is not bound by the terms of any agreement with any previous employer or other party to refrain from competing, directly or indirectly, with the business of such previous employer or other party that would be violated by Officer’s entering into this Agreement and/or providing services to the Corporation pursuant to the terms of this Agreement.
8.15 Exceptions. Notwithstanding anything in this Agreement to the contrary, nothing contained in this Agreement shall prohibit either party (or either party’s attorney(s)) from (a) filing a charge or complaint with the Equal Employment Opportunity Commission (the “EEOC”) or any similar state or local government agency or commission; (b) reporting to, communicating with, cooperating with, or providing information to, or receiving any monetary reward or bounty from, any federal, state or local government agency, including, but not limited to, the U.S. Securities and Exchange Commission, the U.S. Commodity Futures Trading Commission, the U.S. National Labor Relations Board, or the U.S. Department of Justice, without notice to the Corporation; (c) testifying pursuant to a court order, subpoena, or written request from an administrative agency or the legislature, or making any truthful statements or disclosures required by law, regulation or legal process; (d) exercising any rights Officer may have under Section 7 of the U.S. National Labor Relations Act; or (e) discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination based on a protected characteristic or any other conduct that Officer has reason to believe is unlawful. Further, Officer acknowledges that the Corporation has provided Officer notice of the immunity provisions of the U.S. Defend Trade Secrets Act of 2016, which state as follows: “(1) An individual shall not be held criminally or civilly liable under any Federal or State trade secret law
Exhibit 10.2
for the disclosure of a trade secret that: (a) is made in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (2) an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.”
[Execution Page Follows]
Exhibit 10.2
EXECUTION PAGE
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective as of the Effective Date.
CORPORATION:
HEALTHCARE REALTY TRUST INCORPORATED
By: /s/ Peter A. Scott
Name: Peter A. Scott
Title: President and Chief Executive Officer
OFFICER:
/s/ Daniel Gabbay
Daniel Gabbay
Exhibit 10.2
Exhibit A
Form of Release
GENERAL RELEASE, dated as of [_______________], 20[__] (the “Effective Date”), entered into by Daniel Gabbay (“Officer”) in favor of Healthcare Realty Trust Incorporated (along with its affiliates and subsidiaries, the “Corporation”) and the current and prior directors, officers, employees, agents and representatives of the Corporation and its subsidiaries, in their capacity as such (collectively, the “Released Parties”).
WHEREAS, Officer and the Corporation previously entered into an Employment Agreement (the “Employment Agreement”), effective as of ______, 202_ that has governed the terms and conditions of Officer’s employment by the Corporation, and Officer’s retention thereunder has been terminated in accordance with the terms thereof.
WHEREAS, this General Release (this “Release”) is the release referred to in Section 4.6 of the Employment Agreement.
WHEREAS, following execution of this Release and expiration of the seven-day revocation period referred to in Section 5 below, Officer will be entitled to payment of certain amounts (such amounts, collectively, “Termination Payments”) and other rights and benefits (such other rights and benefits, collectively, “Termination Benefits”) referred to in Sections 4.1 and/or 4.2 of the Employment Agreement, as applicable.
WHEREAS, Officer desires to compromise, finally settle and fully release actual or potential claims, including, without limitation, those related to Officer’s retention and termination of retention that Officer in any capacity may have or claim to have against the Corporation or any of the other Released Parties, excepting only those claims expressly provided herein to be excluded.
WHEREAS, Officer acknowledges that he is waiving his rights or claims only in exchange for consideration in addition to anything of value to which he already is entitled.
NOW, THEREFORE, in consideration of the foregoing and the Corporation’s agreement to pay the Termination Benefits and to provide the Termination Benefits, Officer, intending to be legally bound hereby, for himself and his heirs, executors, administrators, legal representatives, successors and assigns, does hereby agree as follows:
The recitals above are true and correct.
Except as expressly provided in Section 4 below, Officer does hereby completely release and forever discharge the Corporation and the other Released Parties of and from any and all actions, causes of action, suits, counterclaims, debts, dues, covenants, contracts, bonuses, controversies, agreements, promises, rights, claims, charges, complaints, expenses, costs (including, without limitation, attorneys’ fees and other costs of defense or prosecution), damages, losses, liabilities and demands whatsoever in law or equity (all of the foregoing, collectively, “Claims”) whatsoever and of every nature and description, whether known or unknown, suspected or unsuspected, foreseen or unforeseen, real or imaginary, actual or
Exhibit 10.2
potential, liquidated or unliquidated, contingent or certain, and whether arising at law or in equity, under the common law, state law, federal law or any other law or otherwise, that Officer ever had, may now have or hereafter can, shall or may have against the Corporation or any of the other Released Parties, for, upon or by reason of any matter, cause or thing whatsoever from the beginning of time to the date of this Release.
The release set forth in Section 2 above shall extend and apply, without limitation, to any and all Claims in connection with Officer's employment or the termination thereof, including, without limitation, wrongful termination, breach of express or implied contract or unpaid wages or pursuant to any federal, state or local employment laws, regulations or executive orders prohibiting, inter alia, discrimination on the basis of age, race, sex, national origin, religion, handicap and/or disability; and any and all other federal, state and local laws and regulations prohibiting, without limitation, discrimination in employment, retaliation, conspiracy, tortious or wrongful discharge, breach of an express or implied contract, breach of a covenant of good faith and fair dealing, intentional and/or negligent infliction of emotional distress, defamation, misrepresentation or fraud, negligence, negligent supervision, hiring or retention, assault, battery, detrimental reliance or any other offense.
Officer’s release provided in Sections 2 and 3 above does not extend or apply to any Claims with respect to the following (“Excluded Claims”): (a) the Corporation’s obligations to pay the Termination Payments or to pay or provide the Termination Benefits, (b) Officer’s entitlement to amounts payable to Officer pursuant to Sections 2.4 and/or 2.8 of the Employment Agreement, as applicable, following termination of employment, which have not been paid to Officer prior to the date of this Release, (c) Officer’s entitlement to be indemnified and/or reimbursed by the Corporation with respect to Claims relating to any action or inaction, or any conduct or misconduct, by Officer in his capacity as Executive Vice President and Chief Financial Officer of the Corporation or otherwise as an officer or employee of the Corporation (or in any similar capacity with any parent, subsidiary or affiliate of the Corporation), whether pursuant to (i) the Corporation’s articles of incorporation (as amended, restated or otherwise modified and in effect at the relevant time), (ii) the Corporation’s bylaws (as amended, restated or otherwise modified and in effect at the relevant time), (iii) any resolution duly adopted by the Corporation’s Board of Directors or shareholders and in effect at the relevant time, (iv) the Maryland General Corporation Law, (v) any other applicable law, rule or regulation or court order or judgment or any other agreement in effect at the relevant time and/or (vi) Corporation’s obligations to indemnify Officer pursuant to Section 8.12 of the Employment Agreement, or (d) any other rights or claims that may arise after the date of this Release. For avoidance of doubt, nothing contained herein shall be deemed a waiver or release by Officer with respect to any protections or other rights to which he may be entitled under any D&O or other insurance policy.
Pursuant to the provisions of the Older Workers Benefit Protection Act (“OWBPA”), which applies to Officer’s waiver of rights under the Age Discrimination in Employment Act, Officer has had a period of at least twenty-one (21) days within which to consider whether to execute this Release. Also pursuant to the OWBPA, Officer may revoke the Release within seven (7) days of its execution. It is specifically understood that this Release shall not become effective or enforceable until the seven-day revocation period has expired. Consideration for this Release will not be paid until the later of (a) expiration of the seven-day revocation period or (b) the date provided for in the Employment Agreement.
Exhibit 10.2
Officer acknowledges that, pursuant to the OWBPA, the Corporation has advised Officer, in writing, to consult with an attorney before executing this Release.
Officer covenants and agrees that he will not bring, initiate, enter into, maintain or participate in any suit, arbitration or other administrative or judicial proceeding, by means of a direct claim, cross claim, counterclaim, setoff or otherwise, against any Released Party based or premised on any of the Claims released above.
Officer acknowledges that the Corporation will not pay or be obligated to pay, and Officer shall not be entitled to, any consideration other than as expressly provided for by this Release or the Employment Agreement or with respect to Excluded Claims.
This Release does not constitute an admission by the Corporation or any other Released Party of a violation of any law, order, regulation or enactment or of wrongdoing of any kind.
Officer acknowledges that the provisions of Sections 5 and 6 of the Employment Agreement shall survive Officer’s termination of employment.
Any controversy or claim arising out of or relating to this Release, or breach thereof, shall be settled by arbitration in Nashville, Tennessee in accordance with the Rules of the American Arbitration Association, and judgment upon any proper award rendered by the Arbitrators may be entered in any court having jurisdiction thereof. There shall be three arbitrators, one to be chosen directly by each party at will, and the third arbitrator to be selected by the two arbitrators so chosen. To the extent permitted by the Rules of the American Arbitration Association, the selected arbitrators may grant equitable relief. The cost of the arbitration, including the cost of the record or transcripts thereof, if any, administrative fees, and all other fees shall be borne by Corporation. To the extent that Officer prevails with respect to any portion of an arbitration award, Officer shall be reimbursed by Corporation for the costs and expenses incurred by Officer, including reasonable attorneys’ fees, in connection with the arbitration in an amount proportionate to the award to Officer as compared to the amount in dispute.
The failure of any provision of this Release shall in no manner affect the right to enforce the same, and the waiver by any party of any breach of any provision of this Release shall not be construed to be a waiver of such party of any succeeding breach of such provision or a waiver by such party of any breach of any other provision. In the event that any provision or portion of this Release shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Release shall be unaffected thereby and shall remain in full force and effect.
This Release represents the entire understanding and agreement of Officer and the Released Parties with respect to the subject matter hereof, and there are no promises, agreements, conditions, undertakings, warranties or representations, whether written or oral, express or implied, by or among Officer and the Released Parties with respect to such subject matter other than as set forth herein. This Release cannot be amended, supplemented or modified except by an instrument in writing signed by Officer and the Corporation, and no waiver of this Release or any provision hereof shall be effective except to the extent such waiver is in writing, specifies that
Exhibit 10.2
the purpose thereof is to waive this Release or a provision hereof and is executed and delivered by the party to be charged therewith.
This Release shall be binding upon and be enforceable against Officer and his heirs, executors, administrators, legal representatives, successors and assigns and shall inure to the benefit of and be enforceable by each of the Released Parties and his, her or its heirs, executors, administrators, legal representatives, successors and assigns.
OFFICER REPRESENTS AND CONFIRMS THAT HE HAS CAREFULLY READ THIS RELEASE, THAT THIS RELEASE HAS BEEN FULLY EXPLAINED TO HIM, THAT HE HAS HAD THE OPPORTUNITY TO HAVE THIS RELEASE REVIEWED BY AN ATTORNEY, THAT HE FULLY UNDERSTANDS THE FINAL AND BINDING EFFECT OF THIS RELEASE, THAT THE ONLY PROMISES MADE TO HIM TO SIGN THE RELEASE ARE THOSE STATED IN THIS RELEASE AND THAT OFFICER IS SIGNING THIS RELEASE VOLUNTARILY WITH THE FULL INTENT OF RELEASING THE RELEASED PARTIES OF ALL CLAIMS DESCRIBED HEREIN.
Officer has executed and delivered this Release as of the date set forth below and this Release is and shall be effective, subject to expiration of the seven-day revocation period referred to in Section 5 above.
Dated: ____________________, 20__
___________________________
Daniel Gabbay
21
Document
Exhibit 21
Subsidiaries of the Registrant
| Subsidiary | State of Incorporation |
|---|---|
| 150 Taylor Station MOB, LLC | TN |
| 3310 West End, LLC | TN |
| 3960 Coon Rapids, LLC | DE |
| 4765 Carmel Mountain Road, LLC | TN |
| 5901 Westown Parkway MOB, LLC | DE |
| Ankeny North MOB, LLC | DE |
| Atlas MOB I, LLC | TX |
| Cotton Pasadena, LLC | TN |
| DOB III, LLC | TN |
| DPCI 6002 Professional, LLC | GA |
| DPCII 6001 Professional, LLC | GA |
| EBSW DFW JV Member, LLC | TN |
| Evergreen Medical Associates II, LLC | CT |
| Evergreen Medical Associates, LLC | CT |
| Hatteras 601 Broadway Unit A, LLC | DE |
| Hatteras 630 South Raymond, LLC | DE |
| Hatteras 2061 Peachtree, LLC | DE |
| Hatteras Aurora Medical Plaza, LLC | DE |
| Hatteras Allenmore C, LLC | DE |
| Hatteras Bryn Mawr, LLC | DE |
| Hatteras Clear Lake, LLC | DE |
| Hatteras Coral Reef, LLC | DE |
| Hatteras Congress Medical, LLC | DE |
| Hatteras Evergreen Totem Lake, LLC | DE |
| Hatteras Exeter, LLC | DE |
| Hatteras Hackensack, LLC | DE |
| Hatteras Hale Pawa'a | DE |
| Hatteras Highmark Medical Center, LLC | DE |
| Hatteras Holly Springs, LLC | DE |
| Hatteras HR Managing Member, LLC | DE |
| Hatteras Joshua Max Simon, LLC | DE |
| Hatteras MOB Investment Venture, LLC | DE |
| Hatteras Pavilion I, LLC | DE |
| Hatteras Pavilion II, LLC | DE |
| Hatteras Pinecroft III, LLC | DE |
| Hatteras Pinecroft IV, LLC | DE |
| Hatteras Round Rock, LLC | DE |
| Hatteras Tacoma Medical Center, LLC | DE |
| Haynes Street Medical Associates II, LLC | CT |
| Haynes Street Medical Associates, LLC | CT |
| Healthcare Acquisition of Texas, LLC | AL |
| Healthcare Management of America, Inc. | DE |
| --- | --- |
| Healthcare Realty Holdings, L.P. | DE |
| Healthcare Realty Services, LLC | TN |
| Healthcare Realty Trust Incorporated | MD |
| HHC-HTA, LLC | IN |
| HR 3705 Medical Parkway, LLC | DE |
| HR 9191 Pinecroft SPE, LLC | DE |
| HR Acquisition I, LLC | MD |
| HR Acquisition of Pennsylvania, LLC | PA |
| HR Acquisition of San Antonio, Ltd. | AL |
| HR Assets, LLC | DE |
| HR Bel Air, LLC | MD |
| HR Briargate, LLC | DE |
| HR Fair Oaks 3650, LLC | TN |
| HR Fair Oaks 3700, LLC | TN |
| HR First Hill Medical Building SPE, LLC | DE |
| HR Forest Glen, LLC | TN |
| HR Fridley, LLC | MN |
| HR HMP Unit 1 SPE, LLC | DE |
| HR Interests, LLC | TX |
| HR Lowry Medical Center SPE, LLC | DE |
| HR MAC II, LLC | DE |
| HR McNaughten SPE, LLC | DE |
| HR MPC II, LLC | TN |
| HR MRMC MOB II SPE, LLC | DE |
| HR MRMC MOB III SPE, LLC | DE |
| HR North Carolina, LLC | DE |
| HR of California, LLC | AL |
| HR of Carolinas, LLC | DE |
| HR of Indiana, LLC | DE |
| HR of Iowa, LLC | DE |
| HR of Los Angeles, LLC | AL |
| HR of Los Angeles, Ltd. | AL |
| HR of Sarasota, LLC | AL |
| HR RC One Scottsdale JV, LLC | DE |
| HR Research One, LLC | TN |
| HR Richmond Community SPE, LLC | DE |
| HR Santa Rosa, LLC | TN |
| HR St. Mary’s MOB NW SPE, LLC | DE |
| HR St. Mary’s MOB South SPE, LLC | DE |
| HR St. Mary’s MOB West SPE, LLC | DE |
| HR Three Tree, LLC | DE |
| HR Unity, LLC | TN |
| HR Valley North, LLC | DE |
| HR West Des Moines SPE, LLC | DE |
| HRP MAC III, LLC | DE |
| --- | --- |
| HRP MAC IV, LLC | DE |
| HR-Pima, LLC | DE |
| HRT of Alabama, LLC | AL |
| HRT of Delaware, LLC | DE |
| HRT of Illinois, LLC | DE |
| HRT of Mississippi, LLC | DE |
| HRT of Tennessee, LLC | TN |
| HRT of Virginia, LLC | VA |
| HRT Properties of Texas, Ltd. | TX |
| HRTI, LLC | MD |
| HTA-10115 Kincey Avenue, LLC | DE |
| HTA-1060 Day Hill, LLC | DE |
| HTA-1080 Day Hill, LLC | DE |
| HTA-125 Rampart MOB, LLC | DE |
| HTA-130 Rampart MOB, LLC | DE |
| HTA-13020 Telecom, LLC | DE |
| HTA-13620 Reese Blvd East, LLC | DE |
| HTA-13801 Reese Blvd West, LLC | DE |
| HTA-1515 Flagler, LLC | DE |
| HTA-1737 N Loop, LLC | DE |
| HTA-1740 South Street, LLC | DE |
| HTA-1905 Clint Moore Road, LLC | DE |
| HTA-2 Northwestern, LLC | DE |
| HTA-2080 Whitney MOB, LLC | DE |
| HTA-2200 Whitney MOB, LLC | DE |
| HTA-2750 Monroe, LLC | DE |
| HTA-3 Long Wharf Drive, LLC | DE |
| HTA-4 Northwestern, LLC | DE |
| HTA-406 Farmington, LLC | DE |
| HTA-533 Cottage, LLC | DE |
| HTA-600 Cattlemen, LLC | DE |
| HTA-6655 Travis Street, LLC | DE |
| HTA-704 Hebron, LLC | DE |
| HTA-80 Fisher, LLC | DE |
| HTA-9920/9930 Kincey Avenue, LLC | DE |
| HTA-Acquisition Sub, LLC | DE |
| HTA-Ahwatukee Foothills, LLC | DE |
| HTA-Amarillo Hospital, LLC | DE |
| HTA-Augusta SS Hospital, LLC | DE |
| HTA-Austell, LLC | DE |
| HTA-Austin Bluffs MOB, LLC | DE |
| HTA-Avon Hospital, LLC | DE |
| HTA-AW, LLC | DE |
| HTA-AW Florida Medical Center Central, LLC | DE |
| HTA-AW Florida Medical Center East, LLC | DE |
| --- | --- |
| HTA-AW Florida Medical Center Land, LLC | DE |
| HTA-AW Florida Medical Center North, LLC | DE |
| HTA-AW Hialeah, LLC | DE |
| HTA-AW North Shore, LLC | DE |
| HTA-AW Palmetto, LLC | DE |
| HTA-AW Victor Farris, LLC | DE |
| HTA-Babylon MOB, LLC | DE |
| HTA-Babylon Sonogram, LLC | DE |
| HTA-Bakersfield MOB, LLC | DE |
| HTA-Bayboro, LLC | DE |
| HTA-Bedford MOB, LLC | DE |
| HTA-BHL, LLC | DE |
| HTA-Biewend, LLC | DE |
| HTA-Blue Ridge, LLC | DE |
| HTA-Bonnie Brae, LLC | DE |
| HTA-Bowman Center, LLC | DE |
| HTA-Brandon Medical, LLC | DE |
| HTA-Calvert, LLC | DE |
| HTA-Cannon Park Place, LLC | DE |
| HTA-Carney MOB, LLC | DE |
| HTA-Cedar Park MOB 1, LLC | DE |
| HTA-Celebration Hospital MOB, LLC | DE |
| HTA-Central Park, LLC | DE |
| HTA-Chandler Medical, LLC | DE |
| HTA-Cherokee Medical Center, LLC | DE |
| HTA-Chesterfield Rehab Hospital, LLC | DE |
| HTA-Cliff, LLC | DE |
| HTA-Clove Road MOB, LLC | DE |
| HTA-Commons V, LLC | DE |
| HTA-Corsicana, LLC | DE |
| HTA-County Line Road, LLC | DE |
| HTA-Crawfordsville, LLC | DE |
| HTA-Crossroads, LLC | DE |
| HTA-Crown Heights MOB, LLC | DE |
| HTA-Dallas Admin Bldg, LLC | DE |
| HTA-Dallas LTAC, LLC | DE |
| HTA-Dallas Parkway Admin Bldg, LLC | DE |
| HTA-Dallas Pavilion III, LLC | DE |
| HTA-Dallas SS Hospital, LLC | DE |
| HTA-Davidson MOB, LLC | DE |
| HTA-Del Sol MOB, LLC | DE |
| HTA-Denton, LLC | DE |
| HTA-DePaul Medical Center, LLC | DE |
| HTA-Des Peres, LLC | DE |
| HTA-Desert Ridge, LLC | DE |
| --- | --- |
| HTA-Diley Ridge, LLC | DE |
| HTA-Duke Chesterfield Rehab, LLC | DE |
| HTA-Dupont MOB, LLC | DE |
| HTA-East Cooper 1, LLC | DE |
| HTA-East Cooper Medical Arts, LLC | DE |
| HTA-East Cooper, LLC | DE |
| HTA-Elms North Charleston, LLC | DE |
| HTA-Epler Parke Building B, LLC | DE |
| HTA-Eskenazi Admin Bldg, LLC | DE |
| HTA-Evergreen 2400-2600, LLC | DE |
| HTA-Evergreen 2800, LLC | DE |
| HTA-Fairfax Medical Center, LLC | DE |
| HTA-Fairfax MOB 3, LLC | DE |
| HTA-Fannin LP, LLC | DE |
| HTA-Fannin, LLC | DE |
| HTA-Farrington Eat, LLC | DE |
| HTA-TELECOM ASC, LLC (fka HTA-FL Ortho Institute ASC, LLC) | DE |
| HTA-Flatbush MOB, LLC | DE |
| HTA-Forest Park Frisco, LLC | DE |
| HTA-Fort Wayne, LLC | DE |
| HTA-Gahanna MOB, LLC | DE |
| HTA-Gateway 1, LLC | DE |
| HTA-Gateway 2E, LLC | DE |
| HTA-Gateway 3F, LLC | DE |
| HTA-Gateway 4G, LLC | DE |
| HTA-Gateway Land, LLC | DE |
| HTA-Gaylord, LLC | DE |
| HTA-Gemini MOB 1, LLC | DE |
| HTA-Gemini MOB 2, LLC | DE |
| HTA-Gilbert Health, LLC | DE |
| HTA-Glendale Memorial, LLC | DE |
| HTA-Good Sam Cancer Center, LLC | DE |
| HTA-Good Sam MOB, LLC | DE |
| HTA-Gunn MOB, LLC | DE |
| HTA-Gwinnett, LLC | DE |
| HTA-Hamilton Healthcare, LLC | DE |
| HTA-Haynes I, LLC | DE |
| HTA-Haynes II, LLC | DE |
| HTA-Hampden Place, LLC | DE |
| HTA-Heart & Family Health, LLC | DE |
| HTA-Hillcrest MOB 1, LLC | DE |
| HTA-Hillcrest MOB 2, LLC | DE |
| HTA-Hilliard II, LLC | DE |
| HTA-Hilliard MOB II, LLC | DE |
| --- | --- |
| HTA-Hilliard MOB, LLC | DE |
| HTA-Hilliard, LLC | DE |
| HTA-Hock Plaza II, LLC | DE |
| HTA-Holy Family MOB, LLC | DE |
| HTA-Horizon Tower, LLC | DE |
| HTA-Humble Medical Plaza 1, LLC | DE |
| HTA-Humble Medical Plaza 2, LLC | DE |
| HTA-Huntley MOB, LLC | DE |
| HTA-Independence Medical Village, LLC | DE |
| HTA-Indianapolis Hospital, LLC | DE |
| HTA-Investments I, LLC | DE |
| HTA-Jackson's Row, LLC | DE |
| HTA-Jacksonville, LLC | DE |
| HTA-Jamaica Estates MOB, LLC | DE |
| HTA-Jasper, LLC | DE |
| HTA-Jourdanton Regional MOB, LLC | DE |
| HTA-Jupiter Medical Center Plaza, LLC | DE |
| HTA-Jupiter Medical Park West, LLC | DE |
| HTA-Jupiter Outpatient Center, LLC | DE |
| HTA-Kapolei Medical Park, LLC | DE |
| HTA-Kendall, LLC | DE |
| HTA-King Street, LLC | DE |
| HTA-Kissimmee Hospital MOB, LLC | DE |
| HTA-Kokomo Medical Office Park, LLC | DE |
| HTA-Lake Norman, LLC | DE |
| HTA-Largo Medical Center, LLC | DE |
| HTA-Lewisville MOB, LLC | DE |
| HTA-Liberty Falls Medical Plaza, LLC | DE |
| HTA-Lincoln Park Boulevard, LLC | DE |
| HTA-Lone Tree, LLC | DE |
| HTA-Longview MOB I, LLC | DE |
| HTA-Longview MOB II, LLC | DE |
| HTA-Macon Pond Road MOB, LLC | DE |
| HTA-Marble Falls MOB, LLC | DE |
| HTA-Marian Hancock, LLC | DE |
| HTA-Marian Medical, LLC | DE |
| HTA-Marietta Health Park, LLC | DE |
| HTA-Market Exchange, LLC | DE |
| HTA-MatureWell, LLC | DE |
| HTA-McAuley, LLC | DE |
| HTA-Medical Center Hays MOB, LLC | DE |
| HTA-Medical Portfolio 1, LLC | DE |
| HTA-Medical Portfolio 2, LLC | DE |
| HTA-Medical Portfolio 3, LLC | DE |
| HTA-Medical Portfolio 4, LLC | DE |
| --- | --- |
| HTA-Medical Portfolio 4-Phoenix, LLC | DE |
| HTA-Medistar Bridge, LLC | DE |
| HTA-Medistar III, LLC | DE |
| HTA-Memphis Hospital, LLC | DE |
| HTA-Mequon MOB, LLC | DE |
| HTA-Mercy North, LLC | DE |
| HTA-Mercy South, LLC | DE |
| HTA-Mercy Springfield MOB, LLC | DE |
| HTA-Mesa MOB, LLC | DE |
| HTA-Mezzanine I, LLC | DE |
| HTA-Mezzanine II, LLC | DE |
| HTA-Middletown, LLC | DE |
| HTA-MOB Acquisition, LLC | DE |
| HTA-Monroeville, LLC | DE |
| HTA-Morehead MOB, LLC | DE |
| HTA-Morton MOB, LLC | DE |
| HTA-Mount Carmel East MOB, LLC | DE |
| HTA-MPOC, LLC | DE |
| HTA-Nacogdoches Terrace, LLC | DE |
| HTA-Nacogdoches Towers, LLC | DE |
| HTA-Nashoba MOB 1, LLC | DE |
| HTA-Nashoba MOB 2, LLC | DE |
| HTA-New Hampton Place MOB, LLC | DE |
| HTA-North Cypress I, LLC | DE |
| HTA-North Cypress II, LLC | DE |
| HTA-North Cypress Towne Lake, LLC | DE |
| HTA-North Cypress Willowbrook, LLC | DE |
| HTA-North Fulton MOB 2, LLC | DE |
| HTA-Northglenn Hospital, LLC | DE |
| HTA-Northpark I, LLC | DE |
| HTA-Northpark II, LLC | DE |
| HTA-Northpoint Medical Arts, LLC | DE |
| HTA-Northridge I, LLC | DE |
| HTA-Northridge II, LLC | DE |
| HTA-Northwest Medical Park, LLC | DE |
| HTA-Norwood Cancer Center, LLC | DE |
| HTA-Norwood MOB, LLC | DE |
| HTA-Oklahoma City, LLC | DE |
| HTA-Olentangy MOB, LLC | DE |
| HTA-Olentangy, LLC | DE |
| HTA-Olympus I, LLC | DE |
| HTA-Orlando Hospital MOB, LLC | DE |
| HTA-Orlando SS Hospital, LLC | DE |
| HTA-Overlook, LLC | DE |
| --- | --- |
| HTA-Oviedo, LLC | DE |
| HTA-Oxford MOB, LLC | DE |
| HTA-Paces Pavillion, LLC | DE |
| HTA-Palmetto II, LLC | DE |
| HTA-Park Meadows Eat, LLC | DE |
| HTA-Park Plaza, LLC | DE |
| HTA-ParkRidge, LLC | DE |
| HTA-Patroon Creek, LLC | DE |
| HTA-Pearl Street Medical Center, LLC | DE |
| HTA-Pearland Cullen, LLC | DE |
| HTA-Penn Ave, LLC | DE |
| HTA-Phoenix Estrella, LLC | DE |
| HTA-Phoenix Medical Center, LLC | DE |
| HTA-Phoenix Paseo, LLC | DE |
| HTA-Phoenixville Garage, LLC | DE |
| HTA-Phoenixville MOB I, LLC | DE |
| HTA-Phoenixville MOB II, LLC | DE |
| HTA-Piedmont-Statesville, LLC | DE |
| HTA-Plainfield MOB, LLC | DE |
| HTA-Plano Pavillion II, LLC | DE |
| HTA-Polaris MOB, LLC | DE |
| HTA-Polaris, LLC | DE |
| HTA-Pomeroy, LLC | DE |
| HTA-Post Oak Centre North, LLC | DE |
| HTA-Presidential, LLC | DE |
| HTA-Providence, LLC | DE |
| HTA-Putnam Center, LLC | DE |
| HTA-Raleigh Medical Center II, LLC | DE |
| HTA-Raleigh, LLC | DE |
| HTA-Region Health, LLC | DE |
| HTA-Regional Medical Center MOB, LLC | DE |
| HTA-Renaissance GP, LLC | DE |
| HTA-Renaissance LP, LLC | DE |
| HTA-Renaissance, LLC | DE |
| HTA-Rex Cary MOB, LLC | DE |
| HTA-Riverside, LLC | DE |
| HTA-Rosedale Medical Center, LLC | DE |
| HTA-Rush, LLC | DE |
| HTA-Salt Lake Regional MOB, LLC | DE |
| HTA-San Martin, LLC | DE |
| HTA-Sandy Forks, LLC | DE |
| HTA-SC Boswell Medical, LLC | DE |
| HTA-SC Boswell West, LLC | DE |
| HTA-SC Cardiac Care, LLC | DE |
| --- | --- |
| HTA-SC Lakes Club, LLC | DE |
| HTA-SC Lakes Medical Plaza I, LLC | DE |
| HTA-SC Lakeview Medical Arts, LLC | DE |
| HTA-SC Royal Oaks, LLC | DE |
| HTA-SCW Colonnade, LLC | DE |
| HTA-SCW Granite Valley MOB II, LLC | DE |
| HTA-SCW Granite Valley MOB, LLC | DE |
| HTA-SCW Mountain View, LLC | DE |
| HTA-SCW Webb Medical A, LLC | DE |
| HTA-SCW Webb Medical B, LLC | DE |
| HTA-SCW West Medical Arts, LLC | DE |
| HTA-Shelby I, LLC | DE |
| HTA-Shelby II, LLC | DE |
| HTA-Sierra Vista, LLC | DE |
| HTA-Sierra, LLC | DE |
| HTA-SJ Providence, LLC | DE |
| HTA-Southpointe, LLC | DE |
| HTA-St. Annes MOB 1, LLC | DE |
| HTA-St. Annes MOB 2, LLC | DE |
| HTA-St. Ann's MOB, LLC | DE |
| HTA-St. Catherine MOB 1, LLC | DE |
| HTA-St. Catherine MOB 2, LLC | DE |
| HTA-St. Catherine MOB 3, LLC | DE |
| HTA-St. Elizabeths MOB 1, LLC | DE |
| HTA-St. Elizabeths MOB 2, LLC | DE |
| HTA-St. Francis Medical Pavilion, LLC | DE |
| HTA-St. Lucie Medical Center, LLC | DE |
| HTA-St. Pete MOB, LLC | DE |
| HTA-Stetson Medical Center, LLC | DE |
| HTA-Streeterville Center, LLC | DE |
| HTA-Sugar Land, LLC | DE |
| HTA-Sunrise, LLC | DE |
| HTA-Sunset Ridge One, LLC | DE |
| HTA-Sunset Ridge Two, LLC | DE |
| HTA-Sunset, LLC | DE |
| HTA-SWC, LLC | DE |
| HTA-Tallahassee SS Hospital, LLC | DE |
| HTA-Temple Bone & Joint, LLC | DE |
| HTA Tenant Services TRS, Inc. | DE |
| HTA-Thunderbird Medical, LLC | DE |
| HTA-Tides Eat, LLC | DE |
| HTA-Tides Medical Arts Center, LLC | DE |
| HTA-Triad, LLC | DE |
| HTA-TriHealth Rehabilitation Hospital, LLC | DE |
| --- | --- |
| HTA-Trilogy Center I, LLC | DE |
| HTA-Triumph, LLC | DE |
| HTA-Tryon Office Center, LLC | DE |
| HTA-Tupper, LLC | DE |
| HTA-Twelve Oaks MOB, LLC | DE |
| HTA-Underhill, LLC | DE |
| HTA-University Place MOB, LLC | DE |
| HTA-Vista Professional Center, LLC | DE |
| HTA-Washington Heights MOB, LLC | DE |
| HTA-Water Tower MOB, LLC | DE |
| HTA-Westchester 210, LLC | DE |
| HTA-Westchester 220-230, LLC | DE |
| HTA-Westchester 244, LLC | DE |
| HTA-Western Ridge MOB II, LLC | DE |
| HTA-Westport Center, LLC | DE |
| HTA-Wisconsin MOB Portfolio, LLC | DE |
| HTA-Woodburn MOB, LLC | DE |
| HTA-Wylie Medical Plaza, LLC | DE |
| HTA-YLW New Haven, LLC | DE |
| HTA-Yosemite Eat, LLC | DE |
| Juniper Arapahoe Center MOB, LLC | DE |
| Juniper Audubon MOB, LLC | DE |
| Juniper City Center Plymouth, LLC | DE |
| Juniper Common Street MOB, LLC | DE |
| Juniper Dry Creek MOB, LLC | DE |
| Juniper Fountaingrove MOB, LLC | DE |
| Juniper Laguna MOB, LLC | DE |
| Juniper Lakeside MOB, LLC | DE |
| Juniper Marin Cancer Center, LLC | DE |
| Juniper MOB Investment Venture, LLC | DE |
| Juniper MOB Managing Member, LLC | TN |
| Juniper SB MOB, LLC | DE |
| Juniper SB Professional, LLC | DE |
| Juniper Sonterra MOB, LLC | DE |
| Juniper Tenderfoot Hills MOB, LLC | DE |
| Juniper Town Centre PB, LLC | DE |
| Juniper Valley Medical Fee Owner, LLC | DE |
| Juniper Valley Medical Plaza, LLC | DE |
| Juniper Westover MOB, LLC | DE |
| KCC 340 Kennestone, LLC | GA |
| KPCI 55 Whitcher, LLC | GA |
| KPCII 61 Whitcher, LLC | GA |
| La Plata Street Co., LLC | CA |
| Lakewood MOB, LLC | DE |
| --- | --- |
| Maplewood MOB, LLC | DE |
| Med Realty Insurance, LLC | AZ |
| North Cypress I Land, LLC | DE |
| North Cypress II Land, LLC | DE |
| Oat Properties, LLC | TN |
| OHMOB Member, LLC | TN |
| Parker MOB, LLC | TN |
| Pasadena Medical Plaza SSJ, Ltd. | FL |
| Paulding III Land Partners, LLC | GA |
| Penrose Pavilion, LLC | TN |
| Plan B - MOB, LP | TX |
| Pomerado Pavilion MOB, LLC | TN |
| POP 144 Bill Carruth, LLC | GA |
| Porter MOB, LLC | TN |
| PPC 148 Bill Carruth, LLC | GA |
| Project Sullivan JV, LLC | DE |
| Renaissance Venture, LP | DE |
| Ridgeline Medical, LLC | TN |
| School Road MOB, LLC | TN |
| SMCMOB II, L.L.C. | AL |
| SMCMOB, L.L.C. | AL |
| Southwest General Medical Building (TX) SPE, LLC | DE |
| Split Rock HR Managing Member LLC | TN |
| Stevens Pavilion LLC | DE |
| Sullivan Mission Center 1, LLC | DE |
| Sullivan Mission Center 2, LLC | DE |
| Sullivan Mission Center 3, LLC | DE |
| Sullivan Mission Medical, LLC | DE |
| Sullivan MOB Managing Member, LLC | TN |
| TM Medical Center, LLC | TN |
| Torrey Hills Member SPE, LLC | TN |
| Town Center Woodbridge MOB, LLC | TN |
| Union Plaza Holdings, LLC | TN |
| USCWF HRT Split Rock 355 Tower Road LLC | DE |
| USCWF HRT Split Rock 400 Tower Road LLC | DE |
| USCWF HRT Split Rock Charlotte Medical LLC | DE |
| USCWF HRT Split Rock Littleton Hospital LLC | DE |
| USCWF HRT Split Rock Lincoln Medical LLC | DE |
| USCWF HRT Split Rock Plano Pavilion LLC | DE |
| USCWF HRT Split Rock Pledgor LLC | DE |
| USCWF HRT Split Rock Stone Oak LLC | DE |
| USCWF HRT Split Rock Venture LLC | DE |
| Walker Med Tower, L.L.C. | AL |
| West Norman SPE, LLC | TN |
| --- | --- |
| Yakima Valley Subsidiary LLC | DE |
Document
Exhibit 22
LIST OF SUBSIDIARY ISSUERS OF GUARANTEED SECURITIES
As of December 31, 2025, Healthcare Realty Trust Incorporated is the guarantor of the outstanding debt securities of its subsidiaries, as listed below.
| Debt Instrument | Issuer |
|---|---|
| 3.50% Senior Notes due 2026 | Healthcare Realty Holdings, L.P. |
| 3.75% Senior Notes due 2027 | Healthcare Realty Holdings, L.P. |
| 3.63% Senior Notes due 2028 | Healthcare Realty Holdings, L.P. |
| 3.10% Senior Notes due 2030 | Healthcare Realty Holdings, L.P. |
| 2.40% Senior Notes due 2030 | Healthcare Realty Holdings, L.P. |
| 2.05% Senior Notes due 2031 | Healthcare Realty Holdings, L.P. |
| 2.00% Senior Notes due 2031 | Healthcare Realty Holdings, L.P. |
Document
Exhibit 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-273784) and Form S-8 (No. 333-257755) of Healthcare Realty Trust Incorporated (the "Company") of our reports dated February 13, 2026, relating to the consolidated financial statements and schedules, and the effectiveness of the Company’s internal control over financial reporting, which appear in this Annual Report on Form 10-K.
/s/ BDO USA, P.C.
Nashville, Tennessee
February 13, 2026
Document
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302
Exhibit 31.1
Healthcare Realty Trust Incorporated
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Peter A. Scott, certify that:
1.I have reviewed this annual report on Form 10-K of Healthcare Realty Trust Incorporated;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: | February 13, 2026 | |
|---|---|---|
| /s/ PETER A. SCOTT | ||
| Peter A. Scott | ||
| President and Chief Executive Officer |
Document
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302
Exhibit 31.2
Healthcare Realty Trust Incorporated
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Daniel Gabbay, certify that:
1.I have reviewed this annual report on Form 10-K of Healthcare Realty Trust Incorporated;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: | February 13, 2026 | |
|---|---|---|
| /s/ DANIEL GABBAY | ||
| Daniel Gabbay | ||
| Executive Vice President and Chief Financial Officer |
Document
CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350 SECTION 906
Exhibit 32
Healthcare Realty Trust Incorporated
Certification Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report of Healthcare Realty Trust Incorporated (the “Company”) on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Peter A. Scott, President and Chief Executive Officer of the Company, and I, Daniel Gabbay, Executive Vice President and Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: | February 13, 2026 | |
|---|---|---|
| /s/ PETER A. SCOTT | ||
| Peter A. Scott | ||
| President and Chief Executive Officer | ||
| /s/ DANIEL GABBAY | ||
| Daniel Gabbay | ||
| Executive Vice President and Chief Financial Officer |