Healthcare Realty Trust Inc (HR) 2021 Q2 法說會逐字稿

Good day, and welcome to the Healthcare Trust of America Second Quarter 2021 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to David Gershenson, Chief Account Officer. Please go ahead.

Thank you, and welcome to Healthcare Trust of America's Second Quarter 2021 Earnings Call. We filed our earnings release and our financial supplement today after the close. These documents can be found in the Investor Relations section of our website or with the SEC. Please note, this call is being webcast and will be available for replay for the next 90 days. We'll be happy to take your questions at the conclusion of our prepared remarks.

During the course of the call, we will make forward-looking statements. These forward-looking statements are based on the current beliefs of management and information currently available to us. Our actual results will be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance. Therefore, our actual future results could materially differ from our current expectations. For a detailed description on potential risks, please refer to our SEC filings, which can be found in the Investor Relations section of our website.

I will now turn the call over to Brad Blair, Chairman of Healthcare Trust America. Brad?

Thank you, David. Good afternoon, and thank you for joining us today for Healthcare Trust of America's Second Quarter 2021 Investor Update Call. Joining me on the call today is Peter Foss, our newly announced Chief Executive Officer; Robert Milligan, our Chief Financial Officer; and Amanda Houghton, our Executive Vice President of Asset Management.

Before we discuss HTA's performance for the quarter, I first wanted to comment on the voluntary resignation of our Chairman and CEO, Scott Peters. Scott founded the company in 2006 and directed its progress as we successfully grew to become the largest owner and operator of medical office buildings in the United States. We're extraordinarily proud of the company HTA has become and know that we are all very well positioned to exceed in our next phase as the leader in this evolving sector. All of us on the Board thank Scott for his 15 years of service to HTA and wish him well on his future endeavors.

As a result of this resignation, as I've said, we have appointed Peter Foss as our Chief Executive Officer, to lead us during this transitionary period. Peter is an established leader and executive serving over 35 years at GE while leading multiple divisions and spearheading key growth initiatives for the company. He has served on HTA's Board since 2015, with the relationships and insights to partner with our strong leadership team as we execute our existing business plans.

One final thing to note. As noted in the 8-K, the Board is currently engaged in a review of several items related to the company's whistleblower line. These reviews are in their early stages. And at this point, we do not anticipate them having any material adverse financial impact on the company's operation. However, we will be unable to provide any additional color on this matter at this time.

I'll now turn it over to Peter.

Thank you, Brad, and thanks to all of you who have joined us today on this call. I've been with HTA for over 6 years now, and I know firsthand the strength of the company and of the management team that I am joining, a company that has balanced short-term performance with investments that will pay off in the long run. In my time here, the company has more than doubled in size and grown earnings over 20%, a tremendous performance led by Scott Peters.

As we survey the health care landscape, HTA is uniquely positioned to be a leader in medical office as broader health care continues to grow and shift to an outpatient model that is more convenient and closer to the consumer. We positioned our portfolio with scale in great markets. We have full service capability that are focused on delivering for our tenants. We have a strong balance sheet that allows us to invest. We have demonstrated the ability to grow our earnings and our dividends. And most importantly, a strong leadership team that has been critical to this execution. We may certainly look to add talent to meet the opportunity for us, the core is strong.

In short, I'm stepping into a company that Scott Peters created is in great shape with tremendous opportunities in front of us. Our second quarter performance certainly demonstrates that fact with record earnings, tremendous investment pipeline and the ability to reiterate our guidance and to raise our dividend for the eighth year in a row.

Now I'm going to turn it over to Robert and Amanda for our operating performance. Before I do that, I want to make a couple more comments. As a 77-year-old coming into this, I've been around a lot of years and seen a lot. And I was encouraged yesterday when I saw a 63-year-old Australian won a gold medal, it made me feel a lot younger. But I come here today, it wasn't my plan to be doing this, but I am honored to be here. I am used to driving organizations focused on growth and employee development, and I couldn't be happier to be able to do this at HTA with an outstanding team, a team that's demonstrated on a continuing basis their ability to drive results, as I said before, doubling the size of the business and growing earnings over 20% over the past 5 years.

My role as I see is to assist this team in continuing that level of performance by ensuring an environment that has clear goals and measurements and has the tools available to help focus on the execution of those goals. My job is to help this team, to make this team as good as they can be. Thank you very much.

All right. Thanks, Peter. Turning to financial performance. In the second quarter, our performance remained extremely strong, highlighted by steady portfolio performance with same-store NOI growth of 2.1% and continued rent collections, including on our 2020 rent deferrals, of which less than $700,000 is remaining as of today, to be paid through September.

We had normalized FFO per share of $0.44, an increase of almost 5% versus 2020. Recurring capital expenditures of $16.6 million or approximately 13% of NOI, which included almost $2 million spent on energy efficiency projects. As a result of this performance, our normalized FAD grew almost 5% to $81 million and allowed us to announce our eighth annual dividend increase for the third quarter. We also had G&A of $10.9 million, continuing our efficient overhead at less than 10% of NOI.

From an investment perspective, we remain focused on growing in our key markets through acquisitions and increasingly development while funding our growth through the use of our forward equity raised as well as attractively priced dispositions out of non-key markets that we believe have fewer opportunities for growth over the long term.

Since our last call, we have seen a significant pickup in opportunities that fit our criteria. As a result, we currently sit with $373 million in 2021 investments that we have either closed or have under exclusive contract with first year yields of over 6%. This includes roughly $100 million closed year-to-date as of the second quarter, with the majority of the rest expected to close in the third quarter. We have $110 million of development projects on track for completion in 2021. This includes $50 million related to projects that we substantially completed in the quarter, one with CommonSpirit in California and the second with Jackson South Hospital in Miami. We also have a $60 million project going on at HCA's Medical City Heart and Spine Campus in Dallas that we expect to be completed in the third quarter. These projects will add an incremental $0.03 to $0.04 per annum upon full stabilization.

We also have seen our development pipeline build with approximately $375 million of projects that are currently in the pre-leasing stage that we expect to begin and start construction on as early as the end of 2021 and into 2022. This pipeline includes 5 projects totaling more than 850,000 square feet of space located in our markets in Houston, Orlando and Raleigh with average stabilized yields over 7%. This includes the $215 million, 485,000 square foot Horizon tower located on the Texas A&M Innovation Plaza in the Texas Medical Center, the largest medical center in the world.

We're also taking advantage of competitive markets for investments by strategically selling noncore assets, including $67 million sale of the portfolio in rural East Tennessee and Southwest Virginia at very attractive pricing that will lock in double-digit annual return since our original investment more than 10 years ago and generating a gain on book value of approximately $33 million.

We've also entered into agreement to sell 2 additional properties, including one that was subject to a tenant purchase option. Although these sales are expected to total approximately $30 million, although may not close until early 2022. On these, specifically related to the purchase option, we took an impairment charge of approximately $17 million.

Finally, we are currently in discussions to sell additional properties as we look to exit non-key markets. As a result, in total, we expect our dispositions in '21 to total as much as $125 million with pricing between 5% up to 6.5% attractive levels as we redeploy into our higher-growth key markets.

To support this growth, we maintained a very strong balance sheet with more than 13 -- or $1.3 billion in liquidity, and leverage of just 5.5x and incorporating the forward equity we had previously raised. As a result of this performance, we're able to update and tighten our earnings guidance for 2021 to $1.74 to $1.78, which incorporates our view that the same-store for the year will come back to a range of 2% to 2.5%, with acquisitions that are increasing to $375 million to $600 million while selling between $70 million and $125 million of assets and funding the remainder, which -- with already raised capital, which will keep our leverage between 5.5x and 6x.

I'll now turn it to Amanda to discuss our operations.

Thanks, Robert. Our team has remained committed to working with our tenants and health systems as they navigate the COVID pandemic and its impacts on health care delivery. We focused on strengthening key relationships and improving building operations and tenant quality while increasing the long-term value of our buildings.

During the peak of the COVID pandemic last year, many of our health system partners pushed pause on growth and expansion plans, redirecting focus on the testing and care of the increased patient population affected by the virus. This year and specifically the second quarter, we started to see a resumption in prior plans that had been put on hold as well as new plans for growth.

To better position ourselves to provide maximum flexibility and service to our health care partners, we've increased our investment in tenant space completing 185,000 square feet of speculative move-in ready space over the last 12 months with another 100,000 square feet anticipated in the coming 12 months. We've added to our leasing staff building internal teams in markets like Tampa, Raleigh, Orange County and Denver, core markets where we expect to continue to grow.

From an operational performance perspective, in the second quarter, we were able to achieve same-store NOI growth of 2.1% with over 1.5% of revenue growth despite a decline in year-over-year occupancy. We signed 647,000 square feet of leases, including 150,000 square feet of new leases. We had almost 0.5 million square feet of renewals that resulted in 80% retention and rent growth of 2.1%, solid results that are more in line with what we have historically achieved. Our annual escalators for new leases signed in the period were 2.8%, continuing our trend of increasing escalators towards 3% as we continue to roll our leases. TIs remained efficient at $1.45 per square foot per year of term on renewals that increased to $5.04 per square foot per year of term on new as we have seen some inflation come through construction costs.

One area of success has been in the leasing of both our development and redevelopment projects. During this period, we increased our leased rate of our Cary, North Carolina development to over 97%, a sign of a strength in that market. We are also close to completing more than 70,000 square feet of redevelopment space in Denver and Houston, which will come online in the third quarter. While these do not impact our same-store performance, this lease-up is critical to our bottom line performance.

As we look at the rest of the year and into 2022, we are intently focused on growing our occupancy and believe it will start to turn in the third quarter. Our new leasing activity continues to be strong, and over half of our portfolio vacancy is in core markets that are seeing population growth, especially coming out of COVID. Combined with focused improvements to our space and an expansion of our sales team, we believe we have good opportunities for occupancy growth over the coming quarters and years.

On the expense front, we continue to show the benefit of our economies of scale and specialty service offerings. For the quarter, we were able to keep expense increases relatively limited despite increased utilization of our property. Our same-store expenses increased just 2% despite experiencing significant utility pressure in certain jurisdictions and overall pressure in property taxes.

I will now turn the call back to Peter.

Thank you, Amanda. I will now open it up for questions.

(Operator Instructions) And the first question comes from Juan Sanabria with BMO Capital Markets.

I know you probably are limited to what you can say, but I was hoping you could speak to the whistleblower allegations. And what gives you the confidence to say in the 8-K that you don't expect any material impact or material adverse impact to financials for the company? Previously, there was allegations of smoothing on the same-store results. Is that involved in any way or form?

Yes. Juan, thanks for getting on the call. We can answer that absolutely has nothing to do with it. And I think as we've reviewed everything, it certainly is in the early stages. But we are able to say at this point in time, we certainly don't anticipate those to have any material financial effect on anything. But it's not related to the same-store, no.

Can you delve into what it is related to in any fashion?

I don't believe we can at this time. It's too early in the process to start talking about any of the issues raised therein, and we're just not at liberty to do that.

And Peter, for you, have you looked at hiring any outside parties to look for a more permanent CEO at this point. Given your background isn't necessarily in real estate, granted you have significant leadership experience? And/or have you hired any advisers in case the company may be has to explore other alternatives, including a sale or whatnot?

We have not at this point, but that would be our intention. This is our first day -- half day, actually. So certainly, we'll go on a search for a more permanent management team, be it internal or external search, but we certainly will bring in some new talent. That's our intention.

Okay. And just a question for Robert. I mean are you comfortable with the financials you've kind of signed off on? Or given the audit committees involved, can you speak to your comfort with historic results?

Yes. I think, Juan, I think that's a perfectly fair question. And unfortunately, we do have to be very specific about what we can say on things. But no, you're going to see that we're signed off on our financial statements. As we release our Q, I think we anticipate that coming out in kind of the normal course of activity. I think everything that we do is obviously reviewed both internally with internal audit as well as external audit. It goes through a very thorough review process, and I think we are very comfortable with the financial statements that we have out there, which is why we're able to put in the 8-K that we anticipate that there's not going to be any material financial impact.

And one last question for me, excuse me. Is Scott entitled to any severance package given it seems like this was a cause?

No, there is...

It's not for cause?

It was not for cause?

Okay. So he will get severance then?

No, he resigned and he doesn't -- is not entitled on any severance..

(Operator Instructions) The next question comes from Nick Joseph with Citi.

It's Mike Bilerman here with Nick. I guess, Brad or Peter or both of you, it's not every day we see a founder of 15 years who's got I think he has over 3 million units, so let's call it over $100 million invested in the company, voluntarily resign and rush you guys to put -- I mean, Peter, I admire your dedication to step up at 77 and take this job. But it's not every day, you see someone just walk away from the company they founded and the team, they founded. Sir, can you elaborate on his decision to resign and does it have any result of any of the whistleblower complaints that were made?

It's Peter. It is not a result of any little lower. It was a personal decision on Scott's part to resign that we can't put any more information on it at this point in time. I don't know what else to say if we can't comment...

Well, I guess it's just not. I mean how does someone just step away? Was it the result of any disagreement on the business, the operations, the strategy, the financial conditions, the internal control, the processes, strategic direction of the company. I mean you have to give us -- I mean he was the founder with a significant stake in the company. It's not every day that you see that with zero explanation. It could be for personal reasons and then just say that, but that's not even said.

Well, we did say, it's for personal reasons. It was Scott's decision, and I can tell you it isn't any of the things you just listed.

Into why no transition, right? The guy can step away and continue to help so that Peter, you have an easier job to do. It just doesn't -- something doesn't feel right for someone just to step away. You had to accelerate your conference call. There is no transition period. And what comfort can you provide shareholders that something is not larger of an issue here?

First of all, it's not $100 million he has in the company, but it's a substantial amount. His decision was a personal decision, where we have nothing we can add to that equation. It's unusual that it would occur on such short notice. We weren't prepared for it. We have a succession sort of plan that we've been working on, but it was no way we could jump into that plan at this early stage with a short notice. So I can't -- we're not at liberty to talking more about it. We don't know.

We don't have a very good answer for you other than to say, look, we stepped up to continuation of this great company and run it and we love it, but we don't have a good answer for you because we don't know.

Well, I guess, can you give some confidence that you'll involve some strategic financial advisers as you evaluate what the best course is, because perhaps investing in a new CEO, which could cost a lot of money and a lot of people are chasing MOB talent, maybe that's not the right direction to go. Perhaps the right direction could be to explore a sale of the company. So I think your shareholders, especially given how quickly this has transpired, should get from the Board of Directors some clarity about the process from a CEO search as well as an exploration of potential alternatives if that is something that you would even come to mind.

Yes. We will be expanding our communications on that as we proceed down that road. We're going to look internally and externally. I don't think we're going to rush to any conclusions. We've got some business at hand we want to continue to take care of. We need to focus on that, most importantly, and we will replace Peter in due course with the appropriate talent, and we'll keep you informed as we move along. But at this stage, I was...

Does that mean, you're just -- right, so you're just going to stay the course and be a standalone company, hiring a new CEO. I don't sound like you -- I mean there's a ton of money in MOBs. Why wouldn't you take the opportunity today to at least explore when the company doesn't have a CEO in place to see if a combination with another public company or a complete sale to private capital may make more sense at this juncture versus continuing on a stay-the-course stand-alone public company basis?

Well, should in the course of our continuation of the business opportunities we have, that circumstance would be presented to us, we would as a Board, have to consider all those situations. But we don't consider ourselves in any rush to have to deal with that situation at this time.

The next question comes from Vikram Malhotra with Morgan Stanley.

Maybe just to start, if you can clarify, when did Scott actually resign?

Yes. The effective date was yesterday and the notice was about 30 days before that.

29th was the notice.

Could you clarify the notice was when?

29th.

29th.

Vikram, we have the exact dates, I believe, in the 8-K when resignation was tendered on the effective date.

And then I just want to make sure I heard. You said there is no link between the whistleblower complaint and his resignation, correct?

That's correct.

Okay. So I guess just -- you've obviously had a lot of questions on this topic. And my sense is that -- well, maybe just first, if you can clarify this, the whistleblower complaint, is that something that the Board has been focused on for -- is that just something you've got to know very recently? Has there been -- Has it been a week or so you've been focused on this. Can you just give us a bit more color on the time line around the whistleblower complaint?

About 2 to 3 weeks now.

Okay. And in those 2 -- given you have 2 to 3 weeks, you're not -- you can't even give us a broad sense of like what aspect it could be related to high level. Is it something to do with accounting? Is it something with some calculations? Is it something to do with -- any broad topic, could you give us a sense of like what aspect it could be related to? Just I ask this only because this is, again, going back to the prior question, this is so unprecedented and so abrupt that it would help to just give us a bit of -- and give investors a bit of color.

The investigation started by independent attorneys about 2 weeks ago. The last week really was the first week. And the whistleblower complaints are not financial. So the company is in great shape. That's not the concern.

And I think, Vikram, this is Robert. I think when you look at that, obviously, Peter and Brad can comment around it as it goes to the Board. From a financial numbers perspective, there's a number of things that it could be related to. We have the comfort to be able to sign off on our financials. I think we have complete sign-off within the organization about the certainty of what we're putting forth and be able to make the statement as something that has been reviewed by all parties that we don't anticipate there's going to be any financial -- material financial impact to this. So I think that gives you at least some color as to what it might -- that we have that comfort of being able to say that.

Okay. And then just last question. I may have missed this. But is there a -- I think you said there's outside counsel looking into this. Is there a dollar amount that you expect will be spent? And can you give us a rough time line as to how long you think this will take?

I don't know we can put a dollar amount on it, but our expectation is it should be 4 to 6 weeks.

I think, Vikram, from a financial perspective, cost at least is what we've been able to see here. Obviously, we've reiterated our financial guidance for the year. I think we have the confidence to continue down that path. I think we have the confidence to put out earnings today. I think we have the confidence knowing what to continue with the investments that we're seeing, to continue to run the business operations. Obviously, we understand you have to ask all of these questions related to it and, unfortunately, there's not a lot of additional color we can provide.

But we did obviously reiterate our guidance. We do continue to see the operations moving forward. I think we do continue to see investments that are out there. And I think what Michael said was right, MOBs are a great place to be in. The asset value is very high right now. I think it's a very attractive place, and we've got a very attractive platform that we've been able to put together. So...

Okay. That's helpful. I guess, Robert, while I have you, I'll just ask you a quick numbers question. The same-store NOI guide, I think, is modestly lower now at the midpoint. Can you just highlight what drove that?

Yes. I think as we've been looking at our same-store growth for the year, we've come into it with slightly lower occupancy coming into the year. I think we've seen extremely strong leasing activity as the health systems come out of COVID and focus more on growth, as Amanda talked about. I think some of the timing of actually getting leases signed and moved in and thus resulting in occupancy has been a bit delayed. I think everybody has talked about some shortage of materials. I think as we look at contractors, it's been a very tough market in order to get them in order.

So there's been some construction delay and things, but I think it's a modest change down 2% to 2.5%. We came in at 1.6% in the first quarter, driven by higher snow removal, higher utility costs. So there's some expenses in there. And I think now that we're 6 months into the year, it's just prudent to take it to that area that we think we're going to be in, which I think is still a very good number. I think when you look at our performance over the last 2 years, we've been able to continue to grow. I think we'll be able to continue to move the portfolio performance up. And so against the backdrop of every other REIT, I think we reviewed our performance as being quite strong.

The next question comes from Rich Anderson with SMBC Nikko.

I've got 2 questions, I promise. So you said the whistleblower is not financial. But then you say in the 8-K that there's no financial -- and I'm -- is it or is it not financial impact because you -- or a financial matter because you kind of throw out the disclaimer that you don't expect material financial impact, but not 0 financial impact? I'm just trying to frame what this whistleblower topicality is if you could say it in general terms. Personal, financial, anything like that?

Rich, this is Robert. I think I'll say just a little bit about it. And I do think you're -- as appropriate, you're looking at specific text. And everything that we do within the business, obviously, could have a financial impact to it. So I think as we look at things, everybody has been able to sign off that we don't anticipate this having a material topic at hand. We don't anticipate it having any sort of material financial impact to the company.

Okay. Second question. I'm curious why the acceleration of the release in the call. You're supposed to report on Thursday night call on Friday. He gave notice on the 29th and resigned officially on the 2nd. Why it rings frantic to me? Why not just -- if you're going to wait from the 29th to the 3rd, why not wait from the 29th to the 5th. What was the reason for accelerating the call?

Yes. No, that's -- Rich, it really comes down to the disclosure date. It comes from the date of notice upon receipt. We have a specific SEC requirement, obviously, to put out information in as timely of a manner as possible. But I believe this is what this is within 3 to 4 days. And so I think when we received the notice on Thursday, that started a clock-ticking. And I think, obviously, given the questions that are out there, we wanted to make sure that we could, again, put it in the context of a business that's continuing to perform, a business that continues to have opportunities, a business that continues to have various investment opportunities, including development that is better than we've seen and continues to put out earnings. So I think we -- the clock was ticking based on the date of the notice period.

I get that. I'm just wondering why Scott wouldn't time it a little bit differently. I understand disclosure issues, but it doesn't seem like there's a whole lot of cooperation here, just an observation. That's all I got.

Thanks, Rich.

The next question comes from Lukas Hartwich with Green Street.

Will the process for a CEO successor be conducted in tandem with the investigation? Or does the investigation need to be completed first?

No, it can be conducted in tandem with that. There's no pecking order.

Okay. And then are there any other employees subject to the investigations or former employees, I guess?

Lukas, just to clarify, I don't think we put out any notice of any particular person being subject to the whistleblower. I think the specific disclosure, and this is an important fact. I think the specific disclosure was just that there was something out there and it's being investigated, but that does not imply that it's related to anybody or anything in specific -- in any specific manner.

The next question comes from Mike Mueller with JPMorgan.

So was the whistleblower directly related to Scott? Because I know you said Scott departed. But is there a separate issue? Or is this tied to Scott? I guess that's the first question. And the second question is, is this, I guess, whistleblower complaint tied to operations or tenant relationships or in any way?

Mike, I think we've got to be specific to what we put out in the 8-K. It's just -- every company has a whistleblower hotline that's put in place. Every public company certainly does. And these things do come in from time to time. The Board does take everything seriously as is their obligation to do that and then to again investigate it with the appropriate amount of due course. So I think we put that out from a specific manner. I think as we look at the disclosures that we put out related to that, I think we just are able to note that we don't anticipate it to have a significant material financial impact.

Yes. I mean not that whistleblowers are random. But it just seems like if this was a random event, it would necessarily be in the same 8-K with Scott's departure.

Well, I think it's just a matter of disclosure that you have to put out any time that there is a significant material event, such as an officer leaving. I think it is incumbent upon companies to disclose anything else that is going on. So I think it's for the specific reason that that's why the 2 were together. And I think specifically in the 8-K, we don't tie them together, right? So I don't think that's what we specifically stated.

The next question comes from Nick Yulico with Scotiabank.

I just wanted to go back to the topic of severance and be clear on this. I think you said that there's no payments whatsoever going to, Scott, related to the resignation. Is that correct?

I think Nick, and Brad and Peter will opine, Scott's employment contract, obviously, has a number of provisions in it. This, as Brad and Peter said, this was a resignation by Scott for personal reasons. That is what we know. I think in due course of the rest of it, we just came in the last couple of days. In due course, I think it's going to play out, and so we don't have a specific estimate if there's going to be a payout or -- if any.

Okay. Yes. So I just want to be clear on that, Robert, because if you read through the proxy, there's a resignation without good reason and then there's a resignation for good reason. And the resignation for good reason entitle, Scott, potentially $14 million according to the proxy, whereas the resignation without good reason is only a potential $2 million payment if he decides to enforce the noncompete. So just to be clear, the Board hasn't determined yet which -- if this is a resignation for a good reason or not?

Well, the letter we received had no condition. It was just a resignation without good reason. It was just without a reason. He just -- he didn't answer that question.

Okay. I appreciate that. And then I guess just to follow up on that, are you going to enforce a noncompete?

Those are judgments we'll make here shortly, but I would imagine we would.

Sorry, you imagine you would?

Yes, we imagine, we would.

(Operator Instructions) The next question comes from Michael Gorman from BTIG.

And I apologize to beat a dead horse here. But Robert, I wanted to just go back to one of the questions Mike asked, and I understand the sensitivity. But you did file 3 8-Ks today. So I'm just -- I just want to make sure I understand if there's no relationship between the 2, it does just look a little bit odd that of the 3 8-Ks, this was put into that one rather than the disclosure of your financial results or the dividend or anything like that? Is there some technical reason that I'm missing that it was in that specific 8-K instead of the other two?

Mike, I think, it's a good question. And I think from an 8-K perspective, we just had them kind of all in line together. I think the earnings release covers specifically the earnings release as we've always had. I think the dividend is consistent with everything else that we put. And then from just an 8-K perspective, we put the rest of the matters into that one as opposed to just doing an omnibus type 8-K that would include all sorts of stuff. I think we were trying to just aim for transparency of putting them out there.

So I think in the 8-K, we did not tie them together, but I do think it is important to note that we are following the obligations that we have just from a disclosure perspective. And again, as I think both Brad and Peter have said, it was a personal resignation for personal reasons. It's a disclosure of several just reviews taking place, of which, at this point, we don't anticipate to have any material financial impact. So...

Remember that the resignation event required an 8-K filing within a 4-day period. So we prepared that and filed it as a separate 8-K.

Okay. And then, I guess, maybe if we could step back for just a second. Can you maybe walk us through -- obviously, Scott was Founder, CEO, Chairman. What are the internal whistleblower procedures at HTA, right? And what determines when it rises to the level or who determines that it rises to the level that it requires outside counsel? When would the Chairman and CEO -- it sounds like this investigation started a couple of weeks before the resignation date. When in the normal course of a whistleblower does it rise to the Chairman and CEO in terms of them being looped in?

Well, Mike, I think from a company set up perspective and since the company sets it up under Sarbanes-Oxley, every company has a whistleblower or specifically gets routed, I think, as we disclosed in our whistleblower policy, it gets routed to the Chair of the Audit Committee and the Lead-Independent Director. That's what happens every single time. I think, in that, it determines the direction that it goes from there. Again, these are put in place so that people -- every public company has it. So I think that's procedure. I think we publish it, and it's consistent with most other public companies.

This concludes our question-and-answer session. I will now turn the conference back over to Peter Foss for any closing remarks.

Thank you very much, and thanks for all of you for joining us today and asking questions.

Operator, do we have any other questions in the queue? We can still take 1 or 2 more questions if they're still in there.

We do. We have Juan Sanabria from BMO Capital Markets.

Just one follow-up question for me. Curious on why or the strategy or the policy behind involving the Audit Committee if the whistleblower complaint and Scott's departure is not tied to financial issues.

Well, all whistleblower complaints go through the Audit Committee. Chair of the Audit Committee is responsible for managing those.

And they don't all relate to financial matters. It's just the standard policy how the hotline is set up, and the administrative procedures is that's where it goes for proper routing to make sure it gets the proper attention. But certainly, not all matters relate to financial matters at all.

(Operator Instructions) Next question is from Lukas Hartwich with Green Street.

I appreciate you taking the follow-up. Can you comment on whether the whistleblower complaint is related to conduct at the company or outside of the company?

I don't think we can -- we're not trying to abate it. I just don't think we can answer that question.

The next question is from Nick Joseph with Citi.

It's Michael Bilerman, considering Nick and I both, the first questions were Nick's questions. I had a couple of follow-ups. Just in terms of the just sticking on the whistleblower complaints. Were those external to the company, i.e., did external parties make call the whistleblower hotline or process? Or were they internal matters, internal people?

Michael, I think those are very fair questions. I think many of these things can be anonymous in nature. I think it's just a general setup of whistleblower hotline NOIC requirements, things like that. Give the opportunity for people to both name themselves as well as be anonymous. So that's the point of the program from a transparency perspective. So I don't think, a, we might not even know. And I'll allow Brad, Peter, Robert, at the company. I just -- we just helped set it up from a SOX perspective. We don't actually receive them or see them. But from just a purely setup perspective, it can be anybody internal or external to the company, and it can also be very well anonymous. So...

Right. So now it sounds like you've already made some determinations in terms of its severity, at least in account of the financials. It just wasn't clear to me whether you had sort of gone through some of the identification process. And it wasn't clear, it was mentioned that there were several items. And so I wasn't sure if we were dealing with multiple whistleblower complaints or if it's multiple to one issue to which the company and the Audit Committee have their independent legal counsel reviewing.

Yes, there are multiple complaints. They are -- they don't necessarily tie together, no. And we don't know in case necessarily who the complainant was. So we're processing and researching that and investigating.

All right. And then the last question I have just goes back to Scott. So it sounds like he tendered his resignation to the Board, I guess, last week, on Thursday. I guess prior to that, had there been any conversations with Scott about potential changes in his role? He obviously is Chairman, CEO and President. Was he at all involved in any of these investigations as his time as CEO? Just anything that press predated that Thursday in terms of just discussions. And then if you can just say, is he -- did he completely leave, i.e., he was completely cut off on Thursday and there's been no communications between the parties? So I just wanted to get a clarification on that.

No communication since his notice. Correct.

And then on the first part in terms of what -- what predated him giving you a notice? Just trying to get a little bit of color about what type of relationship there was between the Founder, Chairman, President and CEO and the rest of the Board prior to giving notice that he was walking out the door with his bags basically.

Well, this is Peter. I think Brad would agree. We had no pre-knowledge that anything was going to happen. He's been a great friend, and we were really surprised. I mean, in fact, we were here last week and worked with Scott for 2 days just going over some business plans and so on, and it was good discussions. And then we left here Wednesday, and his notice came on Thursday. So -- I know it doesn't help you much. It doesn't help as much...

Yes. No, no. And look, I appreciate the candor. It -- you've had a few days to process. We all have had -- we've had a few hours. And so there's multiple stages of grief, as you know, and so I don't know what stage we're at now after 50 minutes, but it is -- you don't see it. And I don't want the -- all of us are wondering what the next chapter could be, both for the company, for Scott individually and how it all sort of plays out. And I know we sort of beaten this hole trying to tie the whistleblower complaints, which I recognize are quite -- this happens all the time in all public companies. And then most -- in many cases, they're investigated.

They're dealt with and it doesn't rise, but that's the point of these hot lines to be able to provide opportunities for anybody who feel that they want to have something just looked into that they don't think is right. Had Scott -- Had this gotten to Scott's desk, i.e., was Scott involved in any of these complaints? By the time, again, if you're saying it was business as usual last Wednesday, was he involved in these things?

No. He can't be involved in the investigation of these nor can he receive them or know who they're from.

Was he aware of them?

Anonymous.

No. But was he aware that there was -- I guess that's what we're just trying to find out. Was he aware that there was processes and that some -- he may not know what it was, but he may have -- I guess at what point did he know that there was whistleblower complaints that the company had retained independent counsel, that the Audit Committee had retained independent counsel that this was going to have to be disclosed to the market because it reached to that point where you've engaged counsel and you wouldn't disclose it otherwise.

Mike, I think there's one thing just a clarification around disclosure on it. I think if you go through things and as you pointed out, these things come in all the time at various levels, serious various levels, who knows what, just because it is open to everybody by design, as you pointed out. And so I think many -- most times, they go through just a normal review process and to the point that you get through it. Whether it's right, wrong or indifferent, they're generally not disclosable. And I think that's where we said we don't anticipate that at this time, there would have been anything from a financial perspective that would be material enough to disclose. However, unfortunately, given the timing of these things, it's important and required that we disclose if anything else that's going on. So I think that's where we say we don't anticipate there would have been a financial disclosure on this, but that's what we've got. So...

I think, at this time, we should probably terminate the call. We appreciate the questions and...

And I want to make sure we reiterate what Robert had said before that we're still keeping our guidance. The business plan is fully intact, and we just raised our dividend. So we're moving forward and looking forward to continue growth and great results.

Thank you all.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.