Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 18, 2017 (June 13, 2017)
HEALTHCARE TRUST OF AMERICA, INC.
HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
(Exact name of registrant as specified in its charter)

Maryland
 
001-35568
 
20-4738467
Delaware
 
333-190916
 
20-4738347
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
 
 
 
 
 
16435 N. Scottsdale Road, Suite 320
 
 
 
 
Scottsdale, Arizona
 
 
 
85254
(Address of principal executive offices)
 
 
 
(Zip Code)
(480) 998-3478
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter):
Healthcare Trust of America, Inc.
Emerging growth company o
Healthcare Trust of America Holdings, LP
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Healthcare Trust of America, Inc.
o
 
 
Healthcare Trust of America Holdings, LP
o
 
 




EXPLANATORY NOTE
This Form 8-K/A amends and supplements the Form 8-K filed on June 13, 2017 (the “Initial Report”) reporting the completion of the acquisition of 63 properties by Healthcare Trust of America, Inc. (the “Company”). This Form 8-K/A will report the completion of the acquisition (the “Initial Acquisition”) by the Company of 68 properties and a parcel of land which includes the 63 properties previously reported in the Initial Report (the “Initial Closing Assets”), including an investment in an unconsolidated joint venture (the “Other Duke Asset”) all prior to June 30, 2017. This Form 8-K/A is being filed to amend Item 2.01 with respect to assets and certain liabilities to include (i) the Initial Closing Assets (closed prior to June 30, 2017), (ii) the Other Duke Asset (closed prior to June 30, 2017), (iii) acquisitions completed subsequent to the acquisition of the Initial Closing Assets and the Other Duke Asset (the “Subsequent Acquisitions”) (closed post June 30, 2017), and (iv) one property and a parcel of land for which the acquisition is probable, but has not yet occurred (the “Pending Acquisitions”). Collectively, these acquisitions were contemplated as part of the entry into sixteen agreements of purchase and sale (collectively, the “Purchase Agreements”) on April 29, 2017 with Duke Realty Limited Partnership, Duke Construction Limited Partnership and certain of their subsidiaries and affiliated entities named therein (collectively, “Duke”).
In addition, this Form 8-K/A provides the historical financial statements and pro forma information required by Item 9.01(a) and (b) of Form 8-K in connection with the Initial Closing Assets, the Other Duke Asset, the Subsequent Acquisitions, and the Pending Acquisitions. This Form 8-K/A should be read in conjunction with the Initial Report.
Item 9.01
Financial Statements and Exhibits.
(a) Financial Statements. The following is financial information relating to the Initial Closing Assets, the Other Duke Asset, Subsequent Acquisitions, and Pending Acquisitions:
 
 
Page
Financial Statements of the Initial Closing Assets
 
 
Report of Independent Registered Public Accounting Firm
3
 
Combined Statements of Revenues in Excess of Certain Expenses for the Three Months Ended March 31, 2017 (unaudited) and Year Ended December 31, 2016
4
 
Notes to Combined Statements of Revenues in Excess of Certain Expenses for the Year Ended December 31, 2016
5
 
 
 
Financial Statements of Subsequent and Pending Acquisitions
 
 
Report of Independent Registered Public Accounting Firm
9
 
Combined Statements of Revenues in Excess of Certain Expenses for the Six Months Ended June 30, 2017 (unaudited) and Year Ended December 31, 2016
10
 
Notes to Combined Statements of Revenues in Excess of Certain Expenses for the Year Ended December 31, 2016
11
 
 
 
Financial Statements of the Other Duke Asset
 
 
Combined Statements of Income for the Three Months Ended March 31, 2017 (unaudited) and Year Ended December 31, 2016
13
 
HHC-Duke Realty Development, LLC Financial Statements and Independent Auditor’s Report for the Years Ended December 31, 2016 and 2015
14
(b) Unaudited Pro Forma Condensed Consolidated Information. The following is financial information relating to the Initial Closing Assets, the Other Duke Asset, Subsequent Acquisitions, and Pending Acquisitions:
 
 
Page
 
Unaudited Pro Forma Condensed Consolidated Financial Information
24
 
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2017
25
 
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2017
26
 
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Six Months Ended June 30, 2017
27
 
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2016
28
 
Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Six Months Ended June 30, 2017 and Year Ended December 31, 2016
29
(d) Exhibits.
The Exhibit Index appearing immediately after the signature page of this Form 8-K/A is incorporated herein by reference.




INDEPENDENT AUDITORS’ REPORT

The Shareholders and Directors of
Duke Realty Corporation:
Report on the Financial Statements
We have audited the accompanying combined statement of revenues in excess of certain expenses of Duke Realty Healthcare Properties (as defined in Note 2) for the year ended December 31, 2016, and related notes (the “Combined Statement”).
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of the statement in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the statement that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the Combined Statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined statement is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Combined Statement. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the Combined Statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the Combined Statement in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the Combined Statement.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the Combined Statement referred to above presents fairly, in all material respects, the combined revenues and certain expenses of the Duke Realty Healthcare Properties described in Note 2 for the year ended December 31, 2016, in accordance with U.S. generally accepted accounting principles.
Emphasis of Matter
We draw attention to Note 2 of the Combined Statement, which describes that the accompanying combined statement of revenues in excess of certain expenses was prepared for the purpose of complying with Rule 3-14 of Regulation S-X promulgated under the Securities Act of 1933, as amended (for inclusion in the combined filing of Form 8-K/A of Healthcare Trust of America, Inc. and Healthcare Trust of America Holdings, LP) and is not intended to be a complete presentation of revenues and expenses. Our opinion is not modified with respect to this matter.

/s/ KPMG LLP
August 18, 2017
 

3



DUKE REALTY HEALTHCARE PROPERTIES
FINANCIAL STATEMENTS OF THE INITIAL CLOSING ASSETS
COMBINED STATEMENTS OF REVENUES IN EXCESS OF CERTAIN EXPENSES



 
 
For the Three Months Ended March 31, 2017
(unaudited)
 
December 31, 2016
Revenues:
 
 
 
 
Rental revenues, including recoveries from tenants
 
$
32,987,081

 
$
122,758,903

Certain Expenses:
 
 
 
 
Operating expenses
 
5,220,089

 
20,968,755

Real estate taxes
 
4,775,871

 
16,196,469

 
 
9,995,960

 
37,165,224

Revenues in Excess of Certain Expenses
 
$
22,991,121

 
$
85,593,679

See accompanying notes to the Combined Statements of Revenues in Excess of Certain Expenses

4



DUKE REALTY HEALTHCARE PROPERTIES
FINANCIAL STATEMENTS OF THE INITIAL CLOSING ASSETS
NOTES TO COMBINED STATEMENTS OF REVENUES IN EXCESS OF CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2016
(1) Operating Properties
The Duke Realty Healthcare Properties are part of an acquisition by a subsidiary of Healthcare Trust of America, Inc. (the “Company”) as of the issuance date of this Combined Statement of Revenues in Excess of Certain Expenses for the year ended December 31, 2016 (“Combined Statement”). The Company acquired (i) 59 properties that were in service at December 31, 2016; (ii) seven properties that were under development at December 31, 2016; (iii) one expansion project of a current property that was in progress at December 31, 2016; and (iv) an undeveloped parcel of land from Duke Realty Limited Partnership and affiliated entities on various dates during the second quarter of 2017. Ownership interests in HHC-Duke Realty Development, LLC a unconsolidated joint venture was also included in the transaction.
Of the 59 in service properties, six were placed in service in 2016. Two of the six properties placed in service during 2016 had less than three months of rental history as of December 31, 2016. Only the revenues and certain expenses of the 57 acquired properties that were in service as of December 31, 2016 (the “Duke Realty Healthcare Properties” or the “Properties”), and that had more than three months of rental history, are included in this Combined Statement.
The following tables list (i) the properties included in the Combined Statement for the year ended December 31, 2016, (ii) properties that are excluded from the Combined Statement due to having limited rental history, (iii) properties that are excluded from the Combined Statement due to still being under development and expansion and (iv) a property that is excluded from the Combined Statement due to being owned by the aforementioned unconsolidated joint venture:
I. Properties Included in Combined Statement
Property Name
 
City
 
State
 
Square Feet
 
Month/Year Placed in Service/Acquired
Baylor Scott & White Plano Pavilion II
 
Plano
 
TX
 
140,455

 
June-09
Baylor Scott & White McKinney POB I
 
McKinney
 
TX
 
115,278

 
July-12
Baylor Scott & White McKinney POB II
 
McKinney
 
TX
 
77,047

 
September-16
Baylor Scott & White Hillcrest MOB 1
 
Waco
 
TX
 
102,177

 
October-12
Baylor Scott & White Hillcrest MOB 2
 
Waco
 
TX
 
54,744

 
October-12
Baylor Scott & White Administration Building
 
Dallas
 
TX
 
81,429

 
June-09
Baylor Scott & White Marble Falls MOB
 
Marble Falls
 
TX
 
66,500

 
May-13
Baylor Scott & White Roney Bone & Joint Institute
 
Temple
 
TX
 
77,679

 
October-13
Baylor Scott & White Emergency Medical Center-Burleson
 
Burleson
 
TX
 
36,718

 
May-14
Baylor Scott & White Emergency Medical Center-Rockwall
 
Rockwall
 
TX
 
36,709

 
March-14
Baylor Scott & White Emergency Medical Center-Murphy
 
Murphy
 
TX
 
36,705

 
March-14
Baylor Scott & White Emergency Medical Center-Mansfield
 
Mansfield
 
TX
 
36,691

 
July-14
Baylor Scott & White Emergency Medical Center-Keller
 
Keller
 
TX
 
36,013

 
December-13
Baylor Scott & White Emergency Medical Center-Colleyville
 
Colleyville
 
TX
 
16,091

 
August-14
Columbia St. Mary’s-Water Tower
 
Milwaukee
 
WI
 
153,820

 
October-12
St. Thomas DePaul Medical Center A
 
Murfreesboro
 
TN
 
100,525

 
April-08
St. Thomas DePaul Medical Center B
 
Murfreesboro
 
TN
 
20,135

 
April-08
Seton Medical Center Hays MOB
 
Kyle
 
TX
 
96,829

 
December-09
St. Vincent Joshua Max Simon MOB
 
Indianapolis
 
IN
 
84,436

 
November-11
Columbia St. Mary’s-Mequon
 
Mequon
 
WI
 
66,927

 
October-12
Good Samaritan Western Ridge MOB II
 
Cincinnati
 
OH
 
29,490

 
July-11
Mountain View Regional Medical Center MOB
 
Las Cruces
 
NM
 
107,506

 
October-12
Longview Regional Medical Center 1
 
Longview
 
TX
 
100,740

 
October-12
Longview Regional Medical Center 2
 
Longview
 
TX
 
77,797

 
April-16
Cedar Park Regional Medical Center MOB 1
 
Cedar Park
 
TX
 
83,393

 
December-11

5



DUKE REALTY HEALTHCARE PROPERTIES
FINANCIAL STATEMENTS OF THE INITIAL CLOSING ASSETS
NOTES TO COMBINED STATEMENTS OF REVENUES IN EXCESS OF CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2016
Property Name
 
City
 
State
 
Square Feet
 
Month/Year Placed in Service/Acquired
South Texas Regional Medical Center MOB-Jourdanton
 
Jourdanton
 
TX
 
48,556

 
October-14
Florida Hospital Wesley Chapel Wellness Plaza
 
Pasco County
 
FL
 
95,939

 
March-13
Florida Hospital Celebration MOB
 
Celebration
 
FL
 
83,896

 
October-12
Florida Hospital Kissimmee MOB
 
Kissimmee
 
FL
 
79,438

 
October-12
Florida Hospital East Orlando MOB/ASC
 
Orlando
 
FL
 
56,903

 
October-12
Florida Hospital Heartland Medical Center MOB/ASC
 
Sebring
 
FL
 
38,949

 
October-12
Harbin Clinic Martha Berry
 
Rome
 
GA
 
122,111

 
September-12
Harbin Clinic Specialty Center
 
Rome
 
GA
 
75,054

 
September-12
Harbin Clinic Cancer Center
 
Rome
 
GA
 
55,195

 
September-12
Harbin Clinic Heart Center
 
Rome
 
GA
 
47,438

 
September-12
Harbin Clinic Cedartown Dialysis
 
Cedartown
 
GA
 
19,497

 
September-12
Harbin Clinic Summerville Dialysis
 
Summerville
 
GA
 
7,520

 
September-12
Harbin Clinic Rome Dialysis
 
Rome
 
GA
 
6,766

 
September-12
Kindred Community Rehabilitation Hospital-Indianapolis
 
Indianapolis
 
IN
 
61,398

 
June-13
Kindred University Rehabilitation Hospital-Cleveland
 
Avon
 
OH
 
54,800

 
January-16
Kindred Baptist Rehabilitation Hospital-Memphis
 
Germantown
 
TN
 
54,416

 
October-14
William “Bill” Kling VA Clinic-Sunrise
 
Sunrise
 
FL
 
107,000

 
October-12
Conifer Administration Building
 
Frisco
 
TX
 
199,800

 
February-14
Carolinas Health Morehead MOB
 
Charlotte
 
NC
 
190,773

 
December-10
Houston Methodist St. Catherine MOB 1
 
Katy
 
TX
 
48,542

 
November-11
Houston Methodist St. Catherine MOB 2
 
Katy
 
TX
 
72,107

 
November-11
Houston Methodist St. Catherine MOB 3
 
Katy
 
TX
 
48,201

 
November-11
SCL Health Community Hospital-Southwest
 
Littleton
 
CO
 
37,485

 
May-16
SCL Health Community Hospital-Westminster
 
Westminster
 
CO
 
37,130

 
November-15
Loyola University Medicine-Burr Ridge
 
Burr Ridge
 
IL
 
104,912

 
January-12
Inova Fair Oaks MOB 3
 
Fairfax
 
VA
 
100,952

 
October-12
Jewish Hospital MOB
 
Cincinnati
 
OH
 
80,074

 
December-01
UNC REX Holly Springs
 
Holly Springs
 
NC
 
30,370

 
December-11
Hackensack UMC Palisades MOB
 
North Bergen
 
NJ
 
57,411

 
February-15
Edward-Elmhurst Plainfield MOB
 
Plainfield
 
IL
 
56,531

 
February-07
WellStar North Fulton MOB 2
 
Roswell
 
GA
 
52,175

 
October-12
Eastside New Hampton Place MOB
 
Snellville
 
GA
 
39,759

 
May-11
II. Properties Excluded from Combined Statement due to Less than Three Months of Rental History
Property Name
 
City
 
State
 
Square Feet
 
Month/Year Placed in Service/Acquired
SCL Health Community Hospital-Northglenn
 
Northglenn
 
CO
 
55,228

 
December-16
SCL Health Community Hospital-Aurora
 
Aurora
 
CO
 
37,486

 
November-16

6



DUKE REALTY HEALTHCARE PROPERTIES
FINANCIAL STATEMENTS OF THE INITIAL CLOSING ASSETS
NOTES TO COMBINED STATEMENTS OF REVENUES IN EXCESS OF CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2016
III. Properties Under Development and Expansion Projects Excluded from Combined Statement
Property Name
 
City
 
State
 
Square Feet
Baylor Scott & White Emergency Med. Ctr-Grand Prairie
 
Grand Prairie
 
TX
 
27,149

Main Line Bryn Mawr MOB
 
Bryn Mawr
 
PA
 
101,228

Centegra Health MOB
 
Huntley
 
IL
 
80,973

Baptist Memorial Oxford MOB
 
Oxford
 
MS
 
79,585

Facey Medical
 
Santa Clarita
 
CA
 
37,000

Memorial Hermann MOB 1
 
Humble
 
TX
 
71,224

Memorial Hermann MOB II
 
Humble
 
TX
 
98,862

UNC Rex Holly Springs (expansion)
 
Holly Springs
 
NC
 
45,000

IV. Unconsolidated Joint Venture Properties Excluded from Combined Statement
Property Name
 
City
 
State
 
Square Feet
 
Month/Year Placed in Service/Acquired
Eskenazi Administration Building
 
Indianapolis
 
IN
 
273,479

 
November-13
(2) Basis of Presentation
The accompanying Combined Statement has been prepared for the purpose of complying with Rule 3-14 of Regulation S-X promulgated under the Securities Act of 1933, as amended. The Combined Statement is not representative of the actual results of operations of the Duke Realty Healthcare Properties for the year ended December 31, 2016, due to the exclusion of the following expenses, which may not be comparable to the proposed future operations of the Duke Realty Healthcare Properties:
Depreciation and amortization.
Property management fees.
Amortization of above and below market rents, concessions and deferred revenue.
Other costs not directly related to the proposed future operations of the Duke Realty Healthcare Properties.
(3) Summary of Significant Accounting Policies
(A) Revenue Recognition
Rental income from leases with scheduled rental increases during their term are recognized for financial reporting purposes on a straight-line basis.
(B) Use of Estimates
Management has made a number of estimates and assumptions relating to the reporting and disclosure of revenues and certain expenses during the reporting period to prepare the Combined Statement in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates.
(4) Rental Revenue
Space is leased to tenants under various operating leases with initial terms ranging up to twenty years. The leases provide for reimbursement of real estate taxes, common area maintenance and certain other operating expenses.

7



DUKE REALTY HEALTHCARE PROPERTIES
FINANCIAL STATEMENTS OF THE INITIAL CLOSING ASSETS
NOTES TO COMBINED STATEMENTS OF REVENUES IN EXCESS OF CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2016
Future minimum rentals related to the 57 properties included in the Combined Statement to be received under noncancelable operating leases in effect at December 31, 2016 are as follows:
Future Minimum Rentals
 
Amount
2017
 
$
90,351,867

2018
 
86,271,789

2019
 
82,081,231

2020
 
75,141,130

2021
 
66,998,641

Thereafter
 
422,932,463

Total
 
$
823,777,121

In addition to minimum rentals, certain leases require reimbursements of specified operating expenses that amounted to $31,130,635 during the year ended December 31, 2016, which are included in the Combined Statement.
(5) Unaudited Interim Statement
The combined statement of revenues and certain expenses for the three months ended March 31, 2017 (the “Interim Statement”) is unaudited.
The interim statement includes the results for the two properties disclosed in Note 1, which did not have sufficient rental history to be included in the Combined Statement. In addition to the properties disclosed in Note 1, the following properties were excluded from the Interim Statement either due to (i) having limited rental history; (ii) still being under development and expansion or (iii) being owned by the aforementioned unconsolidated joint venture:
I. Properties Excluded from Interim Statement due to Less than Three Months of Rental History
Property Name
 
City
 
State
 
Square Feet
 
Month/Year Placed in Service/Acquired
Main Line Bryn Mawr MOB
 
Bryn Mawr
 
PA
 
101,228

 
March -17
Centegra Health MOB
 
Huntley
 
IL
 
80,973

 
February -17
Memorial Hermann MOB 1
 
Humble
 
TX
 
71,224

 
March -17
II. Properties Under Development and Expansion Projects Excluded from Combined Statement
Property Name
 
City
 
State
 
Square Feet
Baylor Scott & White Emergency Med. Ctr-Grand Prairie
 
Grand Prairie
 
TX
 
27,149

Baptist Memorial Oxford MOB
 
Oxford
 
MS
 
79,585

Facey Medical
 
Santa Clarita
 
CA
 
37,000

UNC Rex Holly Springs (expansion)
 
Holly Springs
 
NC
 
45,000

Memorial Hermann MOB II
 
Humble
 
TX
 
98,862

III. Unconsolidated Joint Venture Properties Excluded from Combined Statement
Property Name
 
City
 
State
 
Square Feet
 
Month/Year Placed in Service/Acquired
Eskenazi Administration Building
 
Indianapolis
 
IN
 
273,479

 
November-13
(6) Subsequent Events
The Properties evaluated subsequent events through August 18, 2017, the date the financial statements were available to be issued.


8



INDEPENDENT AUDITORS’ REPORT

The Shareholders and Directors of
Duke Realty Corporation:
Report on the Financial Statements
We have audited the accompanying combined statement of revenues in excess of certain expenses of Duke Realty Healthcare Properties (as defined in Note 2) for the year ended December 31, 2016, and related notes (the “Combined Statement”).
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of the statement in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the statement that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the Combined Statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined statement is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Combined Statement. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the Combined Statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the Combined Statement in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the Combined Statement.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the Combined Statement referred to above presents fairly, in all material respects, the combined revenues and certain expenses of the Duke Realty Healthcare Properties described in Note 2 for the year ended December 31, 2016, in accordance with U.S. generally accepted accounting principles.
Emphasis of Matter
We draw attention to Note 2 of the Combined Statement, which describes that the accompanying combined statement of revenues in excess of certain expenses was prepared for the purpose of complying with Rule 3-14 of Regulation S-X promulgated under the Securities Act of 1933, as amended (for inclusion in the combined filing of Form 8-K/A of Healthcare Trust of America, Inc. and Healthcare Trust of America Holdings, LP) and is not intended to be a complete presentation of revenues and expenses. Our opinion is not modified with respect to this matter.

/s/ KPMG LLP
August 18, 2017
 

9



DUKE REALTY HEALTHCARE PROPERTIES
FINANCIAL STATEMENTS OF THE SUBSEQUENT AND PENDING ACQUISTIONS
COMBINED STATEMENTS OF REVENUES IN EXCESS OF CERTAIN EXPENSES



 
 
For the Six Months Ended June 30, 2017
(unaudited)
 
December 31, 2016
Revenues:
 
 
 
 
Rental revenues, including recoveries from tenants
 
$
7,703,776

 
$
12,793,306

Certain Expenses:
 
 
 
 
Operating expenses
 
1,031,273

 
1,828,153

Real estate taxes
 
1,037,311

 
1,571,699

 
 
2,068,584

 
3,399,852

Revenues in Excess of Certain Expenses
 
$
5,635,192

 
$
9,393,454

See accompanying notes to the Combined Statements of Revenues in Excess of Certain Expenses

10



DUKE REALTY HEALTHCARE PROPERTIES
FINANCIAL STATEMENTS OF THE SUBSEQUENT AND PENDING ACQUISTIONS
NOTES TO COMBINED STATEMENTS OF REVENUES IN EXCESS OF CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2016
(1) Operating Properties
The Duke Realty Healthcare Properties are part of an acquisition by a subsidiary of Healthcare Trust of America, Inc. (the “Company”) as of the issuance date of this Combined Statement of Revenues in Excess of Certain Expenses for the year ended December 31, 2016 (“Combined Statement”). The Company acquired three properties subsequent to June 30, 2017. In addition, a property (in service at December 31, 2016) and a undeveloped parcel of land was considered probable as of the issuance date of the Combined Statement.
Of the four in service properties mentioned above, one was placed in service in 2016. The revenues and certain expenses of the three acquired and one property considered probable to be acquired were in service as of December 31, 2016 (the “Duke Realty Healthcare Properties” or the “Properties”) which had more than three months of rental history, are included in this Combined Statement.
The following tables list the properties included in the Combined Statement for the year ended December 31, 2016.
I. Properties Included in Combined Statement
Property Name
 
City
 
State
 
Square Feet
 
Month/Year Placed in Service/Acquired
Baylor Scott & White Rock Prairie MOB (1)
 
College Station
 
TX
 
119,030

 
July-13
TriHealth Rehabilitation Hospital
 
Cincinnati
 
OH
 
69,511

 
                May-16
Kindred Mercy Rehabilitation Hospital-Springfield
 
Springfield
 
MO
 
58,727

 
April-14
James A. Haley VA Primary Care MOB-Tampa
 
Tampa
 
FL
 
117,037

 
February-14
 
 
 
 
 
 
 
 
 
(1) Property considered probable for acquisition as of the six months ended June 30, 2017 and year ended December 31, 2016.
(2) Basis of Presentation
The accompanying Combined Statement has been prepared for the purpose of complying with Rule 3-14 of Regulation S-X promulgated under the Securities Act of 1933, as amended. The Combined Statement is not representative of the actual results of operations of the Duke Realty Healthcare Properties for the year ended December 31, 2016, due to the exclusion of the following expenses, which may not be comparable to the proposed future operations of the Duke Realty Healthcare Properties:
Depreciation and amortization.
Property management fees.
Amortization of above and below market rents, concessions and deferred revenue.
Other costs not directly related to the proposed future operations of the Duke Realty Healthcare Properties.
(3) Summary of Significant Accounting Policies
(A) Revenue Recognition
Rental income from leases with scheduled rental increases during their term are recognized for financial reporting purposes on a straight-line basis.
(B) Use of Estimates
Management has made a number of estimates and assumptions relating to the reporting and disclosure of revenues and certain expenses during the reporting period to prepare the Combined Statement in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates.


11



DUKE REALTY HEALTHCARE PROPERTIES
FINANCIAL STATEMENTS OF THE SUBSEQUENT AND PENDING ACQUISTIONS
NOTES TO COMBINED STATEMENTS OF REVENUES IN EXCESS OF CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2016
(4) Rental Revenue
Space is leased to tenants under various operating leases with initial terms ranging up to twenty years. The leases provide for reimbursement of real estate taxes, common area maintenance and certain other operating expenses.
Future minimum rentals related to the four properties included in the Combined Statement to be received under noncancelable operating leases in effect at December 31, 2016 are as follows:
Future Minimum Rentals
 
Amount
2017
 
$
10,858,934

2018
 
11,003,990

2019
 
11,274,810

2020
 
11,446,590

2021
 
11,601,169

Thereafter
 
115,363,372

Total
 
$
171,548,865

In addition to minimum rentals, certain leases require reimbursements of specified operating expenses that amounted to $1,817,613 during the year ended December 31, 2016, which are included in the Combined Statement.
(5) Unaudited Interim Statement
The combined statement of revenues and certain expenses for the six months ended June 30, 2017 is unaudited.
(6) Subsequent Events
The Properties evaluated subsequent events through August 18, 2017, the date the financial statements were available to be issued.


12



HHC - DUKE REALTY DEVELOPMENT, LLC
FINANCIAL STATEMENTS OF THE OTHER DUKE ASSET
COMBINED STATEMENTS OF INCOME


 
 
For the Three Months Ended March 31, 2017
(unaudited) (1)
 
December 31, 2016 (1)
REVENUES
 
 
 
 
Rental income
 
$
1,457,530

 
$
5,925,146

Variable rent
 
547,786

 
2,145,357

Straight-line rental income
 
344,484

 
1,367,738

Total Revenues
 
2,349,800

 
9,438,241

 
 
 
 
 
EXPENSES
 
 
 
 
Utilities
 
109,844

 
458,791

Housekeeping
 
154,286

 
577,578

Repairs and maintenance
 
112,027

 
448,304

Insurance
 
30,264

 
127,285

Security
 
10,000

 
40,000

Ground rent
 
48,382

 
193,528

Property management
 
81,257

 
291,102

General and administrative
 
34,409

 
88,526

Depreciation and amortization
 
508,914

 
2,081,117

Total Expenses
 
1,089,383

 
4,306,231

NET INCOME
 
$
1,260,417

 
$
5,132,010

 
 
 
 
 
(1) The combined statement of income for the three months ended March 31, 2017 is unaudited and should be read in conjunction with HHC-Duke Realty Development, LLC detailed audited financial statements of independent auditors’ report for the years ended December 31, 2016 and 2015 starting on page 14 herein.





13
















HHC - DUKE REALTY DEVELOPMENT, LLC

FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS’ REPORT

December 31, 2016 and 2015

14



HHC - DUKE REALTY DEVELOPMENT, LLC


CONTENTS



 
Page

Independent Auditor’s Report
16

 
 
Balance Sheets
17

 
 
Statements of Income
18

 
 
Statements of Changes in Members’ Equity
19

 
 
Statements of Cash Flows
20

 
 
Notes to Financial Statements
21-23



15



INDEPENDENT AUDITOR’S REPORT

Members
HHC - Duke Realty Development, LLC

We have audited the accompanying financial statements of HHC - Duke Realty Development, LLC, which comprise the balance sheets as of December 31, 2016 and 2015, and the related statements of income, changes in members’ equity, and cash flows for the years then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of HHC - Duke Realty Development, LLC as of December 31, 2016 and 2015, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.



/s/ Katz, Sapper & Miller, LLP

Indianapolis, Indiana February 17, 2017

16



HHC - DUKE REALTY DEVELOPMENT, LLC
 
BALANCE SHEETS
December 31, 2016 and 2015
 
 
 
 
 
 
 
 
ASSETS
 
2016
 
2015
ASSETS
 
 
 
Rental property
 
 
 
Building
$
62,937,496

 
$
62,937,496

Building improvements
13,759,226

 
12,539,355

Construction in progress

 
472,845

 
76,696,722

 
75,949,696

Less: Accumulated depreciation
 6,344,218

 
 4,323,394

Net Rental Property
 70,352,504

 
 71,626,302

Cash
339,799

 
1,604,329

Rent receivables
 
 
90,611

Straight-line rent receivable
4,027,865

 
2,720,418

Escrow deposits and other assets
 229,191

 
 235,355

TOTAL ASSETS
$
74,949,359

 
$
76,277,015

 
 
 
 
 
 
 
 
LIABILITIES AND MEMBERS’ EQUITY
 
 
 
 
LIABILITIES
 
 
 
Accounts payable
$
15,845

 
$
472,845

Other accrued expenses
714,732

 
617,398

Total Liabilities
730,577

 
1,090,243

MEMBERS’ EQUITY
74,218,782

 
75,186,772

TOTAL LIABILITIES AND MEMBERS’ EQUITY
$
74,949,359

 
$
76,277,015

 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 

17



HHC - DUKE REALTY DEVELOPMENT, LLC
 
STATEMENTS OF INCOME
Years Ended December 31, 2016 and 2015
 
 
 
 
 
2016
 
2015
REVENUES
 
 
 
Rental income
$
5,925,146

 
$
5,843,718

Variable rent
2,145,357

 
2,074,021

Straight-line rental income
1,367,738

 
1,255,577

Total Revenues
9,438,241

 
9,173,316

 
 
 
 
EXPENSES
 
 
 
Utilities
458,791

 
463,352

Housekeeping
577,578

 
487,729

Repairs and maintenance
448,304

 
449,347

Insurance
127,285

 
143,613

Security
40,000

 
40,004

Ground rent
193,528

 
193,528

Property management
291,102

 
275,880

General and administrative
88,526

 
99,832

Depreciation and amortization
2,081,117

 
1,989,561

Total Expenses
4,306,231

 
4,142,846

NET INCOME
$
5,132,010

 
$
5,030,470

 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 

18



HHC - DUKE REALTY DEVELOPMENT, LLC
 
STATEMENTS OF CHANGES IN MEMBERS’ EQUITY
Years Ended December 31, 2016 and 2015
 
 
 
 
 
Duke Realty
The Health and
Total
 
Browning F.O.B.
Hospital Corporation
Members’
 
Development, LLC
of Marion County
Equity
BALANCE AT DECEMBER 31, 2014
$
37,223,007

$
37,223,007

$
74,446,014

Distributions to members
(2,144,856
)
(2,144,856
)
(4,289,712
)
Net income
2,515,235

2,515,235

5,030,470

BALANCE AT DECEMBER 31, 2015
37,593,386

37,593,386

75,186,772

Distributions to members
(3,050,000
)
(3,050,000
)
(6,100,000
)
Net income
2,566,005

2,566,005

5,132,010

BALANCE AT DECEMBER 31, 2016
$
37,109,391

$
37,109,391

$
74,218,782

 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 

19



HHC - DUKE REALTY DEVELOPMENT, LLC
 
STATEMENTS OF CASH FLOWS
Years Ended December 31, 2016 and 2015
 
 
 
 
 
2016
 
2015
OPERATING ACTIVITIES
 
 
 
Net income
$
5,132,010

 
$
5,030,470

Adjustments to reconcile net income to net cash
 
 
 
provided by operating activities:
 
 
 
Depreciation and amortization
2,081,117

 
1,989,561

(Increase) decrease in certain assets:
 
 
 
Rent receivables
90,611

 
(89,688
)
Straight-line rent receivable
(1,307,447
)
 
(1,255,577
)
Escrow deposits and other assets
(54,129
)
 
199,797

Increase (decrease) in certain liabilities:
 
 
 
Accounts payable
(457,000
)
 
(415
)
Other accrued expenses
97,334

 
(564,546
)
Net Cash Provided by Operating Activities
5,582,496

 
5,309,602

INVESTING ACTIVITIES
 
 
 
Cash purchases of building improvements
(747,026
)
 

Net Cash Used by Investing Activities
(747,026
)
 

FINANCING ACTIVITIES
 
 
 
Distributions to members
(6,100,000
)
 
(4,289,712
)
Net Cash Used by Financing Activities
(6,100,000
)
 
(4,289,712
)
 
 
 
 
NET INCREASE (DECREASE) IN CASH
(1,264,530
)
 
1,019,890

CASH
 
 
 
Beginning of Year
1,604,329

 
584,439

End of Year
$
339,799

 
$
1,604,329

 
 
 
 
SUPPLEMENTAL DISCLOSURES
 
 
 
Noncash investing activities:
 
 
 
Purchases of rental property included in accounts payable
 
 
$
472,845

 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 

20



HHC - DUKE REALTY DEVELOPMENT, LLC

NOTES TO FINANCIAL STATEMENTS
December 31, 2016 and 2015

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

HHC - Duke Realty Development, LLC (the Company) was organized on August 29, 2011, as a limited liability company under the laws of the state of Indiana. The Company constructed and maintains a five-story office building (the Project) on the Eskenazi Health Campus, known as the Fifth-Third Faculty Office Building, totaling approximately 274,000 square feet, on land owned by one member. The Company operates the rentable square footage which is located at 640 Wishard Way in Indianapolis, Indiana. The property held by the Company was placed in service on November 1, 2013.

The members of the Company are Duke Realty Browning F.O.B. Development, LLC (50% member interest) (Duke) and The Health and Hospital Corporation of Marion County (50% member interest) (HHC). Pursuant to the Operating Agreement, all items of income, loss and cash flows are allocated pro-rata based upon membership interest.

Basis of Accounting: The Company prepares its financial statements using the accrual basis of accounting.

Estimates: The Company uses estimates and assumptions in preparing financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual results could vary from those estimates.

Rental Revenue: Rental income is recognized over the lease terms on a straight-line basis. The amount of rental income recognized during each year over the base rent is recorded as straight-line rent receivable. The lease between the Company and HHC is an operating lease. Rental income received in advance is recorded as a liability.

Cash: The Company maintains its cash in bank deposit accounts which, at times, may exceed the federally insured limits. There have been no losses in such accounts.

Rent Receivables are stated at the amount due from HHC based on the terms of its lease agreement.

Rental Property is recorded at cost and is being depreciated using the straight-line method over the estimated useful lives as follows:

Building                                40 years
Building improvements                        10 years

The Company’s rental property is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the asset’s carrying amount to future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair market value. To date, no adjustments to the carrying amount of rental property have been required.

Income Taxes: As a limited liability company, the Company’s taxable income or loss is allocated to the members in accordance with the Company’s Operating Agreement. Consequently, no provision or liability for income taxes has been included in the accompanying financial statements.

21



NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Company files U.S. federal and Indiana state income tax returns. The Company is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 2013.

Subsequent Events: The Company has evaluated the financial statements for subsequent events occurring through February 17, 2017, the date the financial statements were available to be issued.

NOTE 2 - OPERATING LEASE

Effective November 30, 2013, the Company entered into an operating lease with HHC through October 31, 2043. The lease was amended effective February 1, 2016 to increase the amount of square footage leased and correspondingly increase the rental payments. The base rent is due annually and includes rent escalations over the term of the lease. As of December 31, 2016, the future minimum base rental payments, as amended, to be received under the long-term operating lease are as follows:
Receivable In
 
Rental Payments
2017
 
5,929,116

2018
 
6,005,700

2019
 
6,388,620

2020
 
6,388,620

2021
 
6,388,620

Thereafter
 
166,234,790

Total
 
$
197,335,466


Rental income from HHC was $7,292,884, including straight-line rental income of $1,367,738, for the year ended December 31, 2016. Rental income from HHC was $7,099,295, including straight-line rental income of $1,255,577, for the year ended December 31, 2015. The Company receives variable rent based on reimbursable common area maintenance expenses. Variable rental income was was $2,145,357 and $2,074,021, for the years ended December 31, 2016 and 2015, respectively.

NOTE 3 - RELATED PARTY TRANSACTIONS

For the year ended December 31, 2016, Duke was paid approximately the following: $13,000 in reimbursed maintenance labor; $121,000 in reimbursed insurance premium expense; $291,000 in property management fees; and $84,000 in asset management and tax reporting fees.

For the year ended December 31, 2015, Duke was paid approximately the following: $149,000 in reimbursed maintenance labor; $134,000 in reimbursed insurance premium expense; $276,000 in property management fees; and $83,000 in asset management and tax reporting fees.

HHC paid approximately $524,000 in 2016 and $933,000 in 2015 for utility, landscaping and security bills. Included in other accrued expenses at the end of 2016 was $277,390 and in 2015 was $119,219 of utility expenses incurred but not yet paid.

22



NOTE 3 - RELATED PARTY TRANSACTIONS (CONTINUED)

The Company leases the land underlying the Project from HHC. Payments due under the lease are $202,300 per year through August 2061. Ground rent expense, including straight-line rent adjustment, was $193,528 for the years ended December 31, 2016 and 2015. As of December 31, 2016, the future minimum lease payments due under the long-term lease are as follows:
Payable In
 
Rental Payments
2017
 
$
202,300

2018
 
202,300

2019
 
202,300

2020
 
202,300

2021
 
202,300

Thereafter
 
8,024,567

Total
 
$
9,036,067


See Note 2 for operating lease with HHC for the rental property.


23



HEALTHCARE TRUST OF AMERICA, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial information was derived from the application of pro forma adjustments to our historical consolidated financial statements. This unaudited pro forma condensed consolidated financial information should be read in conjunction with the Company’s Form 8-K filed with the Securities and Exchange Commission (“SEC”) on June 13, 2017, announcing the acquisition of a portion of the Initial Closing Assets and amended hereby; the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2017 and June 30, 2017, and the Statements of Revenues in Excess of Certain Expenses of the Initial Closing Assets, including the Other Duke Asset, Subsequent Acquisitions, and Pending Acquisitions included elsewhere in this Form 8-K/A. In the opinion of management, all adjustments necessary to reflect these acquisitions and in the notes to the unaudited pro forma condensed consolidated financial information have been included and are based upon available information and assumptions that we believe are reasonable.
The unaudited pro forma condensed consolidated financial information is not necessarily indicative of what the Company’s actual results of operations would have been had the transaction been consummated on the dates indicated, nor does it purport to represent the Company’s results of operations of financial position for any future period. The pro forma results of operations for the periods ended December 31, 2016 and June 30, 2017 are not necessarily indicative of the operating results for these periods.
Further, the historical financial information presented herein has been adjusted to give pro forma effect to events that we believe are factually supportable and which are expected to have a continuing impact on our results, including certain preliminary purchase price allocation adjustments required by applicable accounting guidance. Because a few of the acquisitions were either acquired subsequent to June 30, 2017 or have not been completed and we plan to engage a third party provider to perform the purchase price allocations, any such purchase price allocation adjustments are estimates and are subject to risks and uncertainties that could cause actual results to differ materially from the assumptions used in this unaudited pro forma condensed consolidated financial information.
The Company purchased the Initial Closing Assets and Other Duke Asset which consisted of 68 properties and a parcel of land at various dates during the second quarter of 2017. The pro forma balance sheet as of June 30, 2017 presents consolidated financial information as if the acquisition of the Subsequent Acquisitions and Pending Acquisitions had taken place on June 30, 2017. The pro forma statements of operations for the year ended December 31, 2016, and the six months ended June 30, 2017, present the pro forma results of operations as if the Initial Closing Assets, the Other Duke Asset, Subsequent Acquisitions, and Pending Acquisitions had taken place as of January 1, 2016. Explanations or details of the pro forma adjustments are in the notes to the financial statements.

24



HEALTHCARE TRUST OF AMERICA, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except for share and per share data)
(Unaudited)
 
 
(A)
June 30, 2017
 
(B)
Subsequent and Pending Acquisitions
 
June 30, 2017
Pro Forma
ASSETS
 
 
 
 
 
 
Real estate investments, net
 
$
5,889,161

 
$
203,829

 
$
6,092,990

Investment in unconsolidated joint venture
 
68,901

 

 
68,901

Cash and cash equivalents
 
91,444

 
(77,377
)
 
14,067

Restricted cash and escrow deposits
 
33,176

 

 
33,176

Receivables and other assets, net
 
175,340

 

 
175,340

Other intangibles, net
 
108,736

 
2,765

 
111,501

Total assets
 
$
6,366,758

 
$
129,217

 
$
6,495,975

 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
Debt
 
$
2,784,162

 
$
126,668

 
$
2,910,830

Accounts payable and accrued liabilities
 
135,214

 

 
135,214

Derivative financial instruments - interest rate swaps
 
1,569

 

 
1,569

Security deposits, prepaid rent and other liabilities
 
55,286

 

 
55,286

Intangible liabilities, net
 
78,779

 
2,549

 
81,328

Total liabilities
 
3,055,010

 
129,217

 
3,184,227

 
 
 
 
 
 
 
Redeemable noncontrolling interests
 
4,663

 

 
4,663

Equity:
 
 
 
 
 
 
Preferred stock, $0.01 par value; 200,000,000 shares authorized; none issued and outstanding
 

 

 

Class A common stock, $0.01 par value; 1,000,000,000 shares authorized; 200,646,523 shares issued and outstanding as of June 30, 2017
 
2,006

 

 
2,006

Additional paid-in capital
 
4,384,483

 

 
4,384,483

Accumulated other comprehensive loss
 
(816
)
 

 
(816
)
Cumulative dividends in excess of earnings
 
(1,164,607
)
 

 
(1,164,607
)
Total stockholders’ equity
 
3,221,066

 

 
3,221,066

Noncontrolling interests
 
86,019

 

 
86,019

Total equity
 
3,307,085

 

 
3,307,085

Total liabilities and equity
 
$
6,366,758

 
$
129,217

 
$
6,495,975



25



HEALTHCARE TRUST OF AMERICA, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

(A) Historical amounts reported by us in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017. Historical amounts include the impacts of the Initial Closing Assets and the Other Duke Asset as completion of these acquisitions occurred prior to June 30, 2017.
(B) Represents the estimated fair value of Subsequent and Pending Acquisitions for the quarter ended June 30, 2017. We allocated real estate investments, net, approximately $167.7 million to buildings with an estimated useful life of 39 years, approximately $19.4 million to lease intangibles with an estimated useful life of 15 years, and approximately $17.0 million to land.


26



HEALTHCARE TRUST OF AMERICA, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands)
(Unaudited)
 
 
(A)
Three Months March 31, 2017
 
(B)
Initial Closing Assets
 
(C)
Other Duke Asset
 
(D)
Three Months
June 30, 2017
 
(E)
Initial Closing Assets
 
(F)Other Duke Asset
 
(G)
Subsequent and Pending Acquisitions
 
(H)Offerings
 

Other Pro Forma Adjustments
 
Pro Forma
Six Months
June 30, 2017
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
123,993

 
$
32,987

 
$

 
$
139,525

 
$
23,361

 
$

 
$
7,704

 
$

 
$
1,017

(I)(J)
$
328,587

 
Interest and other operating income
 
354

 

 

 
354

 

 

 

 

 
71

(I)
779

 
Total revenues
 
124,347

 
32,987

 

 
139,879

 
23,361

 

 
7,704

 

 
1,088

 
329,366

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental
 
39,020

 
5,220

 

 
43,523

 
3,900

 

 
1,031

 

 
11,239

(I)(J)
103,933

 
Real estate taxes
 

 
4,776

 

 

 
3,829

 

 
1,038

 

 
(9,643
)
(I)

 
General and administrative
 
8,423

 

 

 
8,472

 

 

 

 

 

 
16,895

 
Transaction
 
284

 

 

 
5,073

 

 

 

 

 

 
5,357

 
Depreciation and amortization
 
47,056

 

 

 
55,353

 

 

 

 

 
25,288

(K)
127,697

 
Impairment
 

 

 

 
5,093

 

 

 

 

 

 
5,093

 
Total expenses
 
94,783

 
9,996

 

 
117,514

 
7,729

 

 
2,069

 

 
26,884

 
258,975

 
Income before other income (expenses)
 
29,564

 
22,991

 

 
22,365

 
15,632

 

 
5,635

 

 
(25,796
)
 
70,391

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest related to derivative financial instruments
 
(324
)
 

 

 
(239
)
 

 

 

 

 

 
(563
)
 
Net gain on change in fair value of derivative financial instruments
 
839

 

 

 
45

 

 

 

 

 

 
884

 
Total interest related to derivative financial instruments, including net change in the fair value of derivative financial instruments
 
515

 

 

 
(194
)
 

 

 

 

 

 
321

 
Interest related to debt
 
(16,058
)
 

 

 
(17,706
)
 

 

 

 
(13,408
)
 
(6,477
)
(L)
(53,649
)
 
Gain on sales of real estate
 
3

 

 

 

 

 

 

 

 

 
3

 
Loss on extinguishment of debt, net
 
(32
)
 

 

 
(10,386
)
 

 

 

 

 

 
(10,418
)
 
Income (loss) from investments in unconsolidated joint venture
 

 

 
955

 
63

 

 
850

 

 

 
(971
)
(J)(K)
897

 
Other income
 
8

 

 

 
6

 

 

 

 

 

 
14

 
Net income (loss)
 
14,000

 
22,991

 
955

 
(5,852
)
 
15,632

 
850

 
5,635

 
(13,408
)
 
(33,244
)
 
7,559

 
Net income attributable to noncontrolling interests
 
(455
)
 

 

 
(66
)
 

 

 

 

 

 
(521
)
 
Net income (loss) attributable to common stockholders
 
$
13,545

 
$
22,991

 
$
955

 
$
(5,918
)
 
$
15,632

 
$
850

 
$
5,635

 
$
(13,408
)
 
$
(33,244
)
 
$
7,038

 
Earnings per common share - basic:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to common stockholders
 
$
0.10

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
0.04

(H)
Earnings per common share - diluted:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
Net income attributable to common stockholders
 
$
0.09

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
0.04

(H)
Weighted average number of common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
141,780

 
 
 
 
 
 
 
 
 
 
 
 
 
54,625

 
 
 
196,405

(H)
Diluted
 
146,117

 
 
 
 
 
 
 
 
 
 
 
 
 
54,625

 
 
 
200,742

(H)

27



HEALTHCARE TRUST OF AMERICA, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands)
(Unaudited)
 
 
(A)
December 31, 2016
 
(B)
Initial Closing Assets
 
(C)
Other Duke Asset
 
(G)
Subsequent and Pending Acquisitions
 
(H)Offerings
 

Other Pro Forma Adjustments
 
Pro Forma
December 31, 2016
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
460,563

 
$
122,759

 
$

 
$
12,793

 
$

 
$
2,080

(I)(J)
$
598,195

 
Interest and other operating income
 
365

 

 

 

 

 
95

(I)
460

 
Total revenues
 
460,928

 
122,759

 

 
12,793

 

 
2,175

 
598,655

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental
 
143,751

 
20,969

 

 
1,828

 

 
20,961

(I)(J)
187,509

 
Real estate taxes
 

 
16,196

 

 
1,572

 

 
(17,768
)
(I)

 
General and administrative
 
28,773

 

 

 

 

 

 
28,773

 
Transaction
 
6,538

 

 

 

 

 

 
6,538

 
Depreciation and amortization
 
176,866

 

 

 

 

 
62,365

(K)
239,231

 
Impairment
 
3,080

 

 

 

 

 

 
3,080

 
Total expenses
 
359,008

 
37,165

 

 
3,400

 

 
65,558

 
465,131

 
Income before other income (expenses)
 
101,920

 
85,594

 

 
9,393

 

 
(63,383
)
 
133,524

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest related to derivative financial instruments
 
(2,377
)
 

 

 

 

 

 
(2,377
)
 
Net gain on change in fair value of derivative financial instruments
 
1,344

 

 

 

 

 

 
1,344

 
Total interest related to derivative financial instruments, including net change in the fair value of derivative financial instruments
 
(1,033
)
 

 

 

 

 

 
(1,033
)
 
Interest related to debt
 
(59,769
)
 

 

 

 
(30,550
)
 
(14,353
)
(L)
(104,672
)
 
Gain on sales of real estate
 
8,966

 

 

 

 

 

 
8,966

 
Loss on extinguishment of debt, net
 
(3,025
)
 

 

 

 

 

 
(3,025
)
 
Income (loss) from investments in unconsolidated joint venture
 

 

 
3,794

 

 

 
(2,025
)
(J)(K)
1,769

 
Other income
 
286

 

 

 

 

 

 
286

 
Net income (loss)
 
47,345

 
85,594

 
3,794

 
9,393

 
(30,550
)
 
(79,761
)
 
35,815

 
Net income attributable to noncontrolling interests
 
(1,433
)
 

 

 

 

 

 
(1,433
)
 
Net income (loss) attributable to common stockholders
 
$
45,912

 
$
85,594

 
$
3,794

 
$
9,393

 
$
(30,550
)
 
$
(79,761
)
 
$
34,382

 
Earnings per common share - basic:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to common stockholders
 
$
0.34

 
 
 
 
 
 
 
 
 
 
 
$
0.18

(H)
Earnings per common share - diluted:
 
 
 
 
 
 
 
 
 
 
 
 
 


 
Net income attributable to common stockholders
 
$
0.33

 
 
 
 
 
 
 
 
 
 
 
$
0.18

(H)
Weighted average number of common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
136,620

 
 
 
 
 
 
 
54,625

 
 
 
191,245

(H)
Diluted
 
140,259

 
 
 
 
 
 
 
54,625

 
 
 
194,884

(H)

28



HEALTHCARE TRUST OF AMERICA, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(A) Historical amounts reported by us in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 and in our Annual Report on Form 10-K for the year ended December 31, 2016.
(B) Represents historical and estimated revenues and expenses for the three months ended March 31, 2017 and year ended December 31, 2016, respectively, for the Initial Closing Assets. See the historical June 30, 2017 financials to our
unaudited pro forma condensed consolidated balance sheet above as the assets referenced in the respective headings were
acquired as of June 30, 2017.
(C) Represents historical and estimated net income for the three months ended March 31, 2017 and year ended December 31, 2016, respectively, for the Other Duke Asset. See Notes (J) and (K) below for depreciation and amortization included in Other Pro Forma Adjustments. See the historical June 30, 2017 financials to our unaudited pro forma condensed consolidated
balance sheet above as the assets referenced in the respective headings were acquired as of June 30, 2017.
(D) Historical amounts reported by us in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 and representing only the three months ended June 30, 2017.
(E) Represents the portion of estimated revenues and expenses for the period we did not own the Initial Closing Assets during the three months ended June 30, 2017.
(F) Represents the proportional share of estimated net income for the period we did not own the Other Duke Asset during the three months ended June 30, 2017.
(G) Represents historical and estimated revenues and expenses for the six months ended June 30, 2017 and year ended December 31, 2016, respectively, for the Subsequent and Pending Acquisitions. See Note (B) to our unaudited pro forma
condensed consolidated balance sheet above for a description of the assets referenced in the respective headings.
(H) Represents the equity and debt offerings that occurred to fund the Initial Closing Assets and Other Duke Asset during the six months ended June 30, 2017. The equity and debt offering adjustments consisted of the (i) weighted average number of shares of common stock outstanding and net income (loss) attributable to common shareholders per share of common stock are adjusted to reflect the issuance of 54,625,000 shares of common stock in this offering and assume that the shares were outstanding from January 1, 2016 and (ii) corresponding interest expense from the funding of $400 million in 2.950% senior notes due 2022 and $500 million in 3.750% senior notes due 2027.
(I) Represents certain reclassifying adjustments of historical data of the Initial Closing Assets, Subsequent Acquisitions, and Pending Acquisitions to conform to the Company’s historical presentation of these items in the condensed combined income statements.
(J) Represents estimated amortization of intangible liabilities and other lease intangible assets for the six months ended June 30, 2017 and year ended December 31, 2016 in rental income, rental expense and income (loss) from investments in unconsolidated joint venture, respectively, from the corresponding balance sheet impacts of allocated above or below market rents and above or below market leasehold interests as contemplated as part of our purchase price allocation for the Initial Closing Assets and the Other Duke Asset which is reported separately (only for the period which we did not own the assets during the six months ended June 30, 2017), the Subsequent Acquisitions, and the Pending Acquisitions based on an estimated weighted average amortization of 15 years.
(K) Represents estimated depreciation expense for the six months ended June 30, 2017 and year ended December 31, 2016, respectively, based on the estimated fair values of the Initial Closing Assets, Other Duke Asset, Subsequent Acquisitions, and Pending Acquisitions and their estimated useful lives. Actual fair values and useful lives are subject to the completion of purchase price allocations and may be materially different for those assets that were not acquired prior to June 30, 2017. Amounts for the Initial Closing Assets and the Other Duke Asset have been adjusted for the six months ended June 30, 2017 to exclude the period we owned the assets and reported in our three months ended June 30, 2017. See Note (D).
(L) We funded approximately $286 million of the total purchase price for a portion of the Initial Closing Assets with seller financing, bearing interest at 4% per annum. In addition, we assumed a draw on our unsecured revolving credit facility to fund the acquisitions of the Subsequent and Pending Acquisitions, bearing interest at 2.30% per annum.






29



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.

 
Healthcare Trust of America, Inc. 
 
Date: August 18, 2017
By:
/s/ Scott D. Peters  
 
 
 
Name: Scott D. Peters
 
 
 
Title: Chief Executive Officer, President and Chairman
 

 
Healthcare Trust of America Holdings, LP
 
 
 
 
 
 
By:
Healthcare Trust of America, Inc.,
 
 
 
its General Partner
 
 
 
 
 
Date: August 18, 2017
By:
/s/ Scott D. Peters  
 
 
 
Name: Scott D. Peters
 
 
 
Title: Chief Executive Officer, President and Chairman
 


30



(d) Exhibits.
23.1
Consent of KPMG LLP.
23.2
Consent of Katz, Sapper & Miller, LLP.



31