Good afternoon, and welcome to the Healthcare Realty Trust third quarter financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask your question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Kara Smith, Investor Relations. Please go ahead. Thank you for joining us today for Healthcare Realty's third quarter 2021 earnings conference call. Joining me on the call today are Todd Meredith, Bethany Mancini, Rob Hull, and Kris Douglas. A reminder that except for historical information contained within, the matters discussed in this call may contain forward-looking statements that involve estimates, assumptions, risks, and uncertainties. These risks are more specifically discussed in a Form 10-K filed with the SEC for the year ended December 31, 2020. These forward-looking statements represent the company's judgment as of the date of this call. The company disclaims any obligation to update this forward-looking material. The matters discussed in this call may also contain certain non-GAAP financial measures, such as funds from operations, FFO, normalized FFO, FFO per share, normalized FFO per share, funds available for distribution, FAD, net operating income, NOI, EBITDA, and adjusted EBITDA. A reconciliation of these measures to the most comparable GAAP financial measures may be found in the company's earnings press release for the third quarter ended September 30, 2021. The company's earnings press release, supplemental information, and Forms 10-Q and 10-K are available on the company's website. I'll now turn the call over to our Chief Executive Officer, Todd Meredith. Thank you, Kara. Good morning, everyone, and thank you for joining us for our third quarter earnings call. Yesterday, we reported quarterly FFO per share growth of 6.4%. This growth was largely driven by over $800 million of acquisitions over the past 12 months. Just as important, we're seeing operational improvements across the portfolio. Healthcare providers in our buildings are incredibly busy as outpatient utilization normalizes. Not surprisingly, our leasing activity is up too, and momentum is building. In the near term, like everyone, we're working through supply chain issues. As build-out time frames for new tenants stabilize and these tenants take occupancy, we expect our same-store NOI growth to return to our historical 3% range. The MOB sector's proven resiliency is attracting more capital. Like many real estate asset classes, MOB valuations are trending higher. Cap rates into the fours are now common for large portfolios and certain individual assets with bond-like characteristics. In contrast, so far this year, we've acquired 26 high-quality, mostly multi-tenant properties for $481 million at a 5.3% cap rate. We've been able to acquire these properties asset by asset at meaningfully higher initial returns through our direct sourcing model. Beyond initial pricing, our targeted acquisition approach and operational platform deliver superior same-store growth over time. We're buying these properties in clusters within our existing markets, where population growth is meaningfully above the norm. These are dense supply-constrained markets, places like Los Angeles, Dallas, Denver, and San Diego. We continue to acquire stabilized properties that are on and adjacent to campus. As we build scale within a submarket, our local knowledge and relationships lead to more investments and allow us to safely expand our strike zone. This extends our range to include ultra-core on-campus, value-add, and nearby off-campus properties. We use our cluster strategy and our JV partnership to balance risk and return across these settings. Years of diligent refinement and execution allowed us to build the highest quality, growth-oriented MOB portfolio. Combined with our proven operating platform, this creates an attractive long-term return profile. Looking to the future, we're keeping our foot on the gas pedal. After achieving record acquisition volumes in 2019 and 2020, we're on pace to exceed these levels in 2021. We've increased our guidance again due to the strength of our pipeline and see the ability to sustain annual investment volumes of more than 10% of enterprise value in the years ahead. With an aging population driving continued growth in healthcare utilization, our strategy and ability to execute is poised to deliver strong FFO growth like we're doing this year, consistently and on a long-term basis. The compounding effect of this level of growth and safety over many quarters and years is very compelling. Before I turn the call over, I want to mention we recently published our third annual corporate responsibility report, which is available on our website. We're proud of the numerous ESG goals and milestones we've achieved, including our GRESB participation. I want to thank Carla Baca and our sustainability committee for leading these important initiatives, and we look forward to making further strides in the years ahead. I'll now turn the call over to Bethany for an update on healthcare trends. Thanks, Todd. The healthcare sector continues to ramp up operations. Positive momentum across the board, both inpatient and outpatient, signals a move toward growth. Delayed routine care and treatment for chronic conditions are adding to high demand, undeterred by the Delta surge in the third quarter. Hospitals are seeing wage pressures, but cost controls are proving effective, reimbursement has been positive, and patient volumes are strong. Physician offices are also performing on track with consistent growth in outpatient visits and surgeries. Outpatient trends remain a bright spot in the sector. Physician office employment was steady in September, even amid economic uncertainty and higher demand for labor. Physician groups are looking to expand their presence and service lines, both within their markets and regionally. Their strength should continue to support Healthcare Realty's internal growth and demand for MOB space. Overall, healthcare providers continue to prove their resiliency. Government reimbursement has been a boost to margins since 2020. Temporary increases in Medicare rates due to COVID relief will sunset at the end of 2021. With strong performance this year, even amid declining pandemic volumes, the need for marginal federal relief is reduced. Congress has signaled support for healthcare providers and continues to look for ways to extend higher ACA subsidies and Medicaid coverage. More certainty in health insurance coverage for the future is a positive sign for patient demand and providers' plans for growth. If we have learned anything over the past two years, it is the necessity of our nation's healthcare system. We are pleased with the strength of HR's hospital partners and physician tenants and the steady performance of our MOBs. Now I will turn the call over to Rob for an update on our investment activity. Rob? Thanks, Bethany. Acquisition momentum continues to build. Year to date, we have invested $481 million across 26 properties in 21 separate transactions, all within our existing markets. For the year, we have moved our guidance up to $700 million at the high end. We are curating a high-quality MOB portfolio, not simply chasing volume for the sake of volume. This starts with our data-driven market research, vast network of industry relationships, and deep local market knowledge. For us, recognizing quality begins by identifying fast-growing markets where we can build scale alongside leading healthcare providers. We determine the buildings we want to own, whether for sale or not, and leverage our relationships to gain access and ultimately acquire these properties. Beyond acquisition volume, owning multiple buildings and clusters provides opportunities over time to enhance operational and leasing performance. To highlight the advantages of our process, it is worth contrasting our $481 million of activity with the widely marketed portfolios. So far this year, we have evaluated 10 widely marketed MOB portfolios above $100 million, representing over $3 billion of real estate. Our acquisitions have superior demographics when compared to these portfolios. Here are three data points. First, population growth around our acquisitions average 5.4%. This is nearly double that of the marketed portfolios and the national average. Second, our population density of 841,000 was 50% greater than the marketed deals. Third, our median household income of $94,000 is 40% higher than both these portfolios and the national average. In addition to superior demographics, our real estate fundamentals are better. 78% of our acquisitions were on or adjacent to campus, versus 35% for these marketed deals. It's also worth noting that 100% of our acquisitions were in our existing markets. Not only are we in great markets that we know well, but we are also directly partnered with leading health systems. In short, with a blended cap rate approximately 30 basis points higher than the average for these portfolios, we are buying better real estate at better valuations. In the third quarter, we acquired 10 properties for a total of $165 million. Two of these properties were in Raleigh, part of the fast-growing, tech-driven Research Triangle, a market we entered just 18 months ago. Six buildings were in Colorado, a market we've been investing in since 2008. We now own 28 buildings totaling over 1.8 million sq ft in this state, mostly concentrated in Denver and Colorado Springs. Looking ahead, we will finish the year with a strong fourth quarter. We have over $250 million under contract or LOI, all in our existing markets, at an average cap rate in the low fives. Driven by the strength of the market, dispositions remain an accretive source of capital to fund acquisitions. Year to date, we have completed $128 million in sales at an average cap rate of 4.1. We expect to sell a few more buildings in this year in markets where we don't see a path to add significant square footage and drive long-term growth. We are increasing the upper end of our disposition guidance to $200 million. Development activity remains on track and focused around our target markets. We have $100 million of development currently underway in Nashville, Seattle, and Dallas. Our projects are primarily sourced from our embedded pipeline of over $1 billion. We are having meaningful discussions with several existing health system partners in Georgia, North Carolina, and Texas. A strong sign that providers continue to look ahead and plan for growth. As we look to 2022, our investment pipeline is as large as it's ever been. It is constantly being replenished through sourcing efforts in our target markets. We have grown our team and refined our process to sustain higher levels of activity. Our ability to consistently execute has set us apart, and we are better positioned than ever before for accelerated accretive external growth. Now I'll turn it over to Kris for a review of our financial results. Thanks, Rob. Strong third quarter results demonstrate how our steady operating performance and healthy acquisition volume contribute to meaningful FFO per share growth. Year-to-date, FFO per share is up 3.5%, and for the quarter, it was up 6.4%. While many have experienced extreme earnings volatility over the last couple of years, we have reported reliably positive quarterly FFO per share growth. Exactly what our quality MOB platform is built to deliver. Our same-store NOI growth has been between 2% and 3% throughout the challenges of the last eighteen months. Currently, our same-store NOI is running at approximately 2%. This even includes the impact of a 50 basis points decline in average occupancy. This drop was due to a pause in tenant activity in the summer of 2020 and ongoing delays in build-out timelines. We saw the build-out timelines and occupancy stabilize sequentially. The stabilizing occupancy will allow our same-store NOI to trend back towards our in-place contractual escalators of 2.9% over the next several quarters. What is really encouraging is that our leasing team is reporting strong interest from new and existing tenants for more space. Our ability to drive consistent internal performance is supported by our embedded portfolio growth drivers. This quarter, cash leasing spreads were 3%. Our in-place contractual escalators were 2.91%, and for leases commencing in the quarter, our bumps were also 3%. These built-in increases compound annually and fuel our earnings growth engine. This quarter, we added new disclosure to help better communicate the escalators across our portfolio. We are now breaking out the in-place rent increases for acquisitions. Typically, acquisitions have lower escalators than our portfolio average. What is important is that this provides a very attractive opportunity to improve the growth profile of these assets. As leases roll, we expect to improve these escalators. Our success in doing so provides meaningful incremental value over and above day one cap rate accretion. Regarding our balance sheet and liquidity, we continue to benefit from access to multiple sources of capital to accretively fund our external growth. We have $116 million of forward equity contracts to be settled over the next 12 months. With low leverage, our debt ratings were recently affirmed by Fitch and S&P. Beyond the public markets, we have a unique source of long-term capital through our joint venture with TIAA. Over the last 12 months, we invested almost $250 million with this partnership, and there is significant capacity for more. With respect to our dividend coverage, our FAD payout ratio was 87% year to date and 90.8% on a trailing 12-month basis. Maintenance CapEx is typically seasonally higher in the fourth quarter, but even so, we're on track to end the year with a FAD payout ratio below 90%. As we look ahead to next year, we are encouraged by strong demand for outpatient care across our markets and a robust investment pipeline. This will drive improving internal growth and accelerating acquisition volume with a margin of safety unique to medical office. A flexible balance sheet and multiple sources of capital position us well to translate this into continued attractive FFO per share growth. Operator, we're now ready to open the line for questions. We will now begin the question-and-answer session. To ask your question, you may press star then one on your touch tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question today comes from Juan Sanabria with BMO Capital Markets. Please go ahead. Hi. Good morning. Thanks for the time. Just curious on your comments about cap rates moving lower. You said kind of into the fours. Are the deals that you've been signing recently indicative of kind of old pricing that has tightened since? Or are the cap rates you're quoting somehow benefiting from your strategy of building local presences and the kind of operating platform? Just trying to get a sense of the disconnect, or is it purely that the one-off deals are not as sought after and there's not as much competition, and that's where you can find that kind of value-add opportunity? Well, that it's certainly more the latter of what you just said. I think clearly we've been pointing out for some time that there has been for a while substantial portfolio premiums being paid. It's just the sort of sought-after nature of getting scale in MOB, a lot of private capital, a lot of folks chasing it. When those portfolios come to scale, you see a lot of fever around that, cap rates come down. We're also seeing, as I mentioned in my prepared remarks, in certain individual assets where you see these bond-like characteristics, super long lease term, our view is, you know, that doesn't fit our portfolio as well. It may complement a cluster. Occasionally, we may look at those, but generally speaking, those are slower growth vehicles. Maybe as Kris just described, not places where we can enhance the growth profile of those assets. Our view is our platform and our approach going asset by asset in our markets does give us an advantage of not paying those extra premiums. I think as Rob pointed out, the deals under contract or LOI are at very similar cap rates to what you've seen us do year to date. I think those are very current, fresh cap rates. Okay. Then just curious on your comments about delays in, I guess, fitting out the space. When do you think we'll start to see occupancy kick back up and the confidence that the issues with regards to labor availability won't get worse before they get better? Yeah. You're right. We have seen, you know, some extended timelines in our build-outs. We talked about that a little bit last quarter. It's extended from pre-pandemic levels by, call it, about 30%. The positive was that this quarter, it kind of stabilized, so we weren't seeing those timelines extend. Even with just the stabilization, that will help us in terms of occupancy to be able to stabilize and hopefully start to rebound over the next several quarters into next year. Then if they can, you know, start to shorten. If the build-out timelines can start to shorten, then that, you know, that just helps in terms of being able to speed up the positive absorption. You know, one of the things that we've looked at that I think is interesting is, you know, our amount of leased but unoccupied space has also expanded in concert with what's been happening with the longer build-outs. It's also about 30% longer than or larger than what we were seeing before the last 18 months. If you look back and said that if our leased but unoccupied space was the same as it was in first quarter of 2020, occupancy this quarter would have been 40 basis points higher, you know, just because of that difference in that leased but unoccupied space, which would have a meaningful difference in occupancy as well as our same store NOI growth. You know, all that to say, stabilization is good. We think that will allow us, going next year, to start to see that same store NOI trend back up in line with our contractual escalators, you know, in the high twos approaching 3%. If we can see any benefits that will just, you know, and also provide some incremental additional growth. Thank you very much. Our next question comes from Jordan Sadler with KeyBanc Capital Markets. Please go ahead. Thanks. I just wanted to clarify that last point on sort of the leased but not occupied and maybe, you know, compressing or watching that trend normalize. What's sort of the timeframe for that 40 basis points, if you will, to, you know, come online? Yeah. I guess the way I'm looking at it right now, Jordan, is just the fact of it stabilizing and it's not growing, so it's kind of staying in that 30% higher than what we saw before. That in and of itself provides a benefit 'cause you're not losing ground, so you're not losing occupancy. So that in and of itself will provide some uplift to be able to see that over the next several quarters, the NOI rebound closer to our escalators. You know, at this point, we're not gonna pick a date and tell you when we expect those build-out timelines to rebound to normal. You know, when that does happen, that just will be incremental improvement over and above the benefit we're already seeing from just the stabilization. Just specifically, how would you characterize, you know, what's driving that those delays. Like, is it you don't have materials? You know, because I think you mentioned supply chain, and I was, you know, taken aback a little bit because I wasn't looking or thinking there'd be, you know, supply chain issues rearing their heads necessarily within, you know, the medical office space in particular. Just kind of curious to hear, you know, some of the detail around what may be, you know, causing these issues. Yeah, it's a combination of things. A portion of it is permitting. So it's getting longer to get through the permitting depending on the local municipality, especially in, you know, high growth markets like a Dallas or a Nashville, Denver, those types of areas. So that's one issue. As it relates to the supply chain, it really has to do with the build-out of the space and the materials. And frankly, it's not consistent across the board on every project of what you see. In some areas, we're seeing, you know, paint could be more difficult to source. The HVAC equipment, it frankly kind of differs depending on the project. We are doing all that we can to try to offset some of those delays, you know, trying to buy some. If we know that we have a consistent color scheme that we use, when we find supplies of that going ahead and make sure we have that on hand. I think everybody is adjusting to the timelines and trying to get better about ordering things ahead of time so that it doesn't create a backlog in waiting on supplies to arrive. I think everybody's just trying to figure out how to work through it. It's really the combination of this material supply chain as well as the permitting. Jordan, I wouldn't call this out as something unique to medical office. I think these are the same things you're hearing across real estate, you know, individual issues. If you order a refrigerator right now for your house, it's gonna take a lot longer. It's the same issues, and it's materials all the way from electronics down to paint, as Kris said. Yeah. No, and I wasn't insinuating it was just MOBs. I just. No. Sure. ... I wasn't expecting to hear it within MOBs. I just, that wasn't something I was thinking of as a- The materials Risk factor per se. Okay. No, that's helpful color. Maybe, Todd, while I have you. You guys spent a ton of time over the last several years, you know, refining the portfolio really aggressively, asset managing the portfolio, and working to maximize the portfolio's growth, and growth potential, especially as it related to escalators, but, you know, also refining the quality of the asset base. Can you maybe offer some insight around the current strategy in terms of the external growth piece of it and how the addition of these assets is accretive to the company's overall growth? Yeah, I think it's certainly, you're right. It goes back to sort of refining the portfolio over the years, really focusing in on the markets we wanna be in, looking for those quality assets, places where we can build scale and have great relationships, as Rob said, alongside these healthcare providers. We've done that for a long time, and I think our view now is we're getting a lot of traction from our reputation and our expertise in the space and all of the relationships that we have, where we're finding more and more opportunities to expand that. Seattle's the perfect example. We have a page in our investor presentation where we talk about the benefits of scale in Seattle. It's certainly on the expense side, but I'd say it's even more powerful on the leasing side. You've heard several of us talk about how we can not only have day one accretion, to your point, but then also go in and create value through our platform, meaning we have the leasing expertise locally to continue to push and enhance those escalators, as Kris said, on the acquisitions we make. If we buy assets and they're at 2% escalators or 2.5%, we can work through the lease roll as that occurs over, you know, several years after we buy it and move that up towards the average we have in place. That's 2.91%. There's clear accretion benefits beyond the initial acquisition from that. Then clearly beyond that, you also build relationships with healthcare providers. When we go off campus, we're usually looking at providers, whether it's hospital or doctor groups that are identifying locations they wanna expand their business away from campus, so we can follow those quality providers. In many cases, it helps us also find some acquisitions that may have higher, a little higher return, a little higher risk-reward profile. As you know, we put a lot of that in the JV and kind of balance that risk. We view that as building out the whole strategy and enhancing growth, and we see external growth, always have, but now more so than ever, in a very focused way, see external growth adding to the power of that internal growth that we've been building up. That makes sense. Thank you. Our next question comes from Nick Joseph with Citi. Please go ahead. Thanks. Maybe following up on the disposition. You mentioned a handful maybe for the remainder of this year. You know, what's beyond those asset sales in terms of assets that don't fit within the current strategy and portfolio? Yeah, I think that if you look at what we have planned to sell for the remainder of this year, it's sort of fine-tuning, continuing to fine-tune the portfolio. You know, we have a handful of assets out there that are what we've deemed to be orphan assets. So these are certainly candidates, places where we don't think we can continue to build scale and drive growth as Todd described. So I think as we move into next year and look at any opportunities for the dispositions, it'll be similar to that, things that we just don't see a good opportunity to grow and build out the clusters and benefit from the enhanced scale within a market. Okay, that could be a source of capital for next year's external growth as well, additional dispositions that don't fit. Yes. You know, I certainly would view it that way. I think if you look at the cap rates where we're selling today, certainly taking advantage of the strength of the pricing in the market and, you know, taking those dollars and rotating into assets where we can grow meaningful clusters and drive long-term growth. That'll continue to be our strategy with dispositions going forward. Thanks. Maybe just following up on the same store growth. Appreciate the commentary on kind of getting back to that long-term run rate and the additional disclosure. You maintained 2021 same store cash NOI guidance. You know, is there anything in the fourth quarter that could get you up to that midpoint, or are things trending towards the low end, at least for 2021? Yeah, for full year, we'll probably be below that midpoint. There are, you know, as we talked about last quarter, there's a lot of comparability issues quarter to quarter that are going on, given the unusual circumstances that have occurred over the last 18 months, you know, related to parking and rent deferrals and some of those things. You know, for this quarter, the rebound in parking and the reversal of some of our rent deferral reserves pretty much offset each other. They provided a bit of a lift last quarter, and so you have those things that are bouncing around. The main piece that is driving right now that lower same-store NOI is the occupancy that we talked about. You know, our hope and expectation is that stabilizing will start to rebound, but that will take several quarters to build back up to those, you know, more in line with the contractual escalators. Still within the 2%-3% range, but as you pointed out, probably, you know, below the midpoint. Thank you. Our next question comes from Rich Anderson with SMBC. Please go ahead. Thanks. Good morning down there. So Kris, I think you said tenant delays, you know, getting back to the same store conversation, tenant delays started in the summer of 2020. Did I hear you correctly? Yeah, you had a couple of things. You just had such a pause in terms of leasing activity during the summer of 2020. That did play through a bit of the leasing momentum that was going on at that point. You know, once things did late last year start to kind of get back to normal in terms of tours and leasing velocity, that was then compounded by the delays in being able to convert those from leased into occupancy because of the supply chain. As you look at it on a kind of trailing 12-month basis, you've got the combination of both of those items. Why were you able to produce, you know, in line, if not better, same store growth in the first and second quarter of this year? Why didn't it play into those numbers, this occupancy issue? That was, as we talked about, you know, specifically last quarter, it has a lot to do with those comparability issues. It's the rebounding of the parking, it's the offset from quarter to quarter and year over year as you look at the deferrals, the repayment of the deferrals, the reversal of some of the reserves that we took going on. That's, you know, as we've talked about earlier in the year, that creates some noise from a comparability issue. We still had some of that going on this quarter as well, but frankly, they just kind of offset each other. Okay. It's those items and the impact of them in any one particular quarter is gonna be what is creating some of the variability that you're seeing. If I'm hearing you right, then if I take out the variability from parking and rent deferral noise, that this occupancy issue would have been, you know, kind of present in the first and second quarter as well as in terms of this bottom line same store growth that you see. Yeah, certainly. I look at it just goes back to the kind of the algorithm and the math. If you go our growth from our contractual escalators is 2.9%, our cash leasing spreads are, you know, +3%. The underlying growth that you're seeing should be kind of ±3%, all else equal. Occupancy for us, given our margin, has about a 2-to-1 impact to your NOI. So if you're running, if the expectation is you should be running kind of high twos, and then whatever your change in your overall occupancy, that is gonna have a 2-to-1 impact to your NOI. For this quarter, you know, a 50 basis points drop in occupancy kind of moves you from the threes down to the twos. That's what you should expect, and that's what I would expect to see from other portfolios. Now, like I said, it's those comparability issues that would make you see results that might differ from that algorithm and what you would expect. Okay. Second question for whomever. I'm trying to triangulate. You know, you get. Let's just say you recover this 50 basis points of occupancy over the coming year, and that obviously is a factor in the same-store calculation. How much of the cost to create that occupancy gain are capitalized and hence, you know, not included in the same-store calculation? I'm just trying to. I know that's how the business works, but I'm just curious, you know, what's hiding behind the scenes a little bit in terms of the expense side of the same-store calculation. On the expense inside of your same-store NOI, you're really not gonna have much of an impact. Where you're gonna see it is related to your maintenance CapEx, and the TI build that you're gonna have there. It's all capitalized. All this is capitalized. Yes, exactly. The TI is gonna be capitalized associated with that. Okay. That's one of the reasons you have seen, you know, with this longer timelines and build out, we haven't spent the money as fast this year, and so it's one of the reasons that, you know, we're trending on the low end, especially on our TI spend, compared to what we expected at the beginning of the year. Again, I know this is how it works, but you know, you kind of get the benefit of the revenue, but you don't. I mean, it all comes down to the bottom line earnings, so I'm not troubled by it. You know, but the optics are what they are. Last question. Hey, Rich, one thing I would point out there is it's almost the opposite to the AFFO. Yes You end up spending all of that capital upfront, and it goes through your maintenance CapEx, where, you know, the revenue you're gonna get over the life of that lease. You know, as you start to think about the impact to AFFO in terms of positive absorption, there is a little bit of a headwind there. Over the long term, that positive earnings growth you know is more than worth it. I 100% agree, and I, you know, always say people should be focusing on earnings and on same store for perhaps that very reason, among others. Yeah, I get that completely. Last question, you know, maybe for Rob or whoever. Acquisitions, you know, +5% type cap rates, dispositions close to 4%. Are they being calculated the same way, apples to apples? Because that spread seems pretty wide, assuming you're selling, you know, hairier stuff and buying better stuff, of course. Yeah. I mean, I think in terms of the cap rates, it's certainly figured on a trailing NOI number. I would also say that many of those properties or some of those properties that we've sold, they are low occupancy properties. You know, they're not growing. We don't see a lot of opportunity for growth in the marketplace. There is some impact from selling those at low occupancy. All right. Dispositions on trailing 12, acquisitions on forward 12? Generally speaking, that's right, 'cause it's the dispositions are what you're taking out of your. Yeah ... model, for example, and then obviously going forward, what you'd project with those acquisitions. That's about the only difference. It's price and NOI otherwise. Yep. Okay. Thanks, guys. Sure. Our next question comes from Connor Siversky with Berenberg. Please go ahead. Hey, all. Thanks for having me on the call. Just wanna zero in on second gen TI. With the reiterated guidance range, I think it was $28 million-$34 million. I'm just wondering if you could comment on how this is trending into Q4. I'm wondering because just to get to that midpoint requires a pretty hefty spend for the fourth quarter, even relative to what we would typically assume in seasonality. Yeah, I think you're right. It goes back to what we were just talking about with Rich in terms of the second gen TI in particular. You know, with the longer timelines there that spend is coming in on the low end of the guidance range. You know, on the leasing commissions and the CapEx, you know, they're gonna be probably closer to the midpoint. But yeah, I think you're I think that is reasonable and appropriate to assume that it'll be, you know, at or below the midpoint. I would point out, and you are right, that there is typically a seasonally higher spend in the fourth quarter. We expect that to occur this year as well. Even with that, our expectation is to be able to generate a dividend FAD payout ratio that's below 90%, which is how we're trending so far on year to date. Okay. Are you seeing any kind of trends in terms of TI? I mean, are tenants looking for anything new within these improvements relative to what you've seen in years past? Not materially different. Not at all. I mean, certainly we see, like everyone in real estate, you know, cost increases, but not from a design standpoint that would materially change that. Just, you know, the typical pressures of construction costs. Nothing that would materially change that cost level or the design. I mean, we've been on the lookout for that ever since, you know, the pandemic started and haven't really seen a material shift. Okay, that helps. A bit of a higher level question. Just considering your operating segments, are you seeing or hearing any commentary that would suggest increased demand for assets that can facilitate certain specializations, whether that's oncology or cardio, for example, compared to perhaps something in a lower acuity setting? Different demand based on specialty. I mean, I would say that concept's been in the market for a long time. Clearly, as we focus more heavily on and around campus, we tend to see a lot of that on the specialty side. You know, if you look at our list and our presentation of our top specialties, the ones you just cited are very high because we're near campus. You'll see cardiology and oncology be very strong in our on-campus. You can kinda see it, we break it down on versus off. I wouldn't say we're seeing a dramatic shift here at this point. I mean, we continue to see a lot of that congregating around campus. I think more broadly speaking, you see, groups have gotten larger over time, and they tend to have more and more locations, and they wanna be in really all the locations they can be to cover the market and attract patients and expand. Bethany talked about that a little bit in her remarks. Usually a group today, wherever you might be, you know, they may be on campus and on multiple campuses around a market, and then they have a whole lot of off-campus sprinkled around as well. It's really, you know, kinda everywhere, not just one versus the other. Okay. Makes sense. Thank you. Our next question comes from John Pawlowski with Green Street Advisors. Please go ahead. Thanks for the time. Maybe just one follow-up question on that topic of kinda structural changes in tenant preferences. Do you guys expect over the coming years any shift in average lease term in your negotiations? Not materially, no. We certainly keep an eye on that, keep an ear on that with our leasing team and all the feedback that they get. You know, we're usually not pushing hard in one direction or the other. We're comfortable with what we generally see out there, which is, you know, typically either side of five years. A lot of times a new tenant comes in, wants a longer lease, 'cause they may be spending some dollars and wanna spread it out. That is certainly true in the development area as well. But I would say, generally speaking, we're not seeing a dramatic change in lease terms for any of those reasons. Okay. Second question. Are you guys cash leasing spread distribution, where you break out less than 0% spread all the way up to greater than 4% spread? Could you just help me understand the type of markets and the type of product type within the markets that fall within those goalposts? What type of properties are seeing cash leasing spreads decline, and which ones are the outsized growth areas? You know, we look at that every quarter. We track that by market. I will tell you look for patterns, and you usually find it as soon as you think you're onto something that, you know, something happened in Memphis versus Nashville, it reverses. I would say we haven't seen a very discerning trend that suggests, oh, we're just having, you know, the lower spreads here versus there. I would say maybe at the extremes, we've certainly seen some geographic concentrations of maybe at the high end. You know, we saw a fair bit in the D.C. corridor, that area in our portfolio for quite a long time. You know, in Hawaii, we saw some really strong as well. I wouldn't say that, you know, there's a very clear pattern that, oh, it's, you know, really consistently poor here. If we do pick up on that, it kind of feeds what Rob talked about, which is, hey, that's a little bit how we think about dispositions. If we start picking up on that, it might inform how we think about our ability to grow and expand performance, and the portfolio in a particular market. One thing I would add to that is not big extremes of, you know, the plus four versus the negatives, but just incrementally, we do see slightly higher average escalators and cash leasing spreads for the smaller leases. Which makes sense. You know, you end up with, you know, a small tenant close to campus that's not as, you know, may not have as much, you know, pricing power, as well as it's maybe a smaller percentage of their overall cost structure on the lease. We do see some incremental better spreads in those locations, and that's one of the reasons that we like the multi-tenant MOBs 'cause you start getting up to your larger single tenant and it just frankly changes some of the dynamics in the lease negotiation. Okay, great. No, I appreciate all the color. Thanks for the time. The next question comes from Mike Mueller with JP Morgan. Please go ahead. Yeah. Hi. I was wondering, given the number of development inquiries you've been seeing, when would you expect the annual spend on the development front to start to ramp up? Yeah. I think... Hey, Mike. I think that, you know, this year we've got about $100 million that we're working on. Most of that has come from our embedded pipeline. We've talked about that before, where we control those opportunities, have great relationships with the health systems where we're developing and have the opportunity to develop. I think that's where you'll continue to see us live on the development side. You know, we've kind of looked at that portfolio and think that over the next, you know, eight-10 years, we can produce, you know, around that $125 million of starts every year, in terms of new developments. We've got a number of conversations going on right now with systems in North Carolina, Texas, and Colorado in terms of new developments. You know, we think it's gonna kind of continue to be at that level in the $100 million range year in and year out. Quite frankly, that's the level that we're comfortable with. We think that developing to the spreads where we think we can develop, you know, 100-200 basis points above where cap rates are today for stabilized assets. We think that provides some meaningful value and also provides a service to our health system partners where we can grow with them. We like where we stand on the development side. You know, certainly if we have the opportunity to move that up slightly, we might. The great thing is that by developing out of our embedded pipeline, you know, we feel like the sort of traditional development risk is mitigated by we know the markets, we know the health system, we know the demands in terms of space demands that are needed. We think it mitigates a lot of the traditional development risk. Got it. Okay. Thank you. Thanks, Mike. Ladies and gentlemen, this will conclude our question and answer session. I would like to turn the conference back over to Todd Meredith for any closing remarks. Thank you, everybody, for joining us today, and we appreciate your time and interest in Healthcare Realty, and we look forward to speaking with many of you next week at Nareit. Have a great day. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.