10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

or

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to              

Commission file number: 001-36007

PHYSICIANS REALTY TRUST

(Exact Name of Registrant as Specified in its Charter)

Maryland	46-2519850
(State of Organization)	(IRS Employer Identification No.)

735 N. Water Street Suite 1000 Milwaukee, Wisconsin	53202
(Address of Principal Executive Offices)	(Zip Code)

(414) 978-6494

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x Yes o No

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).  x Yes o No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer o	Accelerated Filer o
Non-Accelerated Filer x	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  o Yes x No

The number of the Registrant’s common shares outstanding as of November 7, 2014 was 47,381,216.

PHYSICIANS REALTY TRUST

Quarterly Report on Form 10-Q
for the Quarter Ended September 30, 2014

Table of Contents

		Page
		Number
Part I	Financial Information
Item 1	Financial Statements (Unaudited)
	Consolidated Balance Sheets — as of September 30, 2014 and December 31, 2013	3
	Consolidated and Combined Statements of Operations — for the Three and Nine Months Ended September 30, 2014 and 2013	4
	Consolidated and Combined Statements of Equity — for the Nine Months Ended September 30, 2014	5
	Consolidated and Combined Statements of Cash Flow— for the Nine Months Ended September 30, 2014 and 2013	6
	Notes to Unaudited Consolidated and Combined Financial Statements	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operation	22
Item 3	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4	Controls and Procedures	38
Part II	Other Information
Item 1	Legal Proceedings	38
Item 1A	Risk Factors	38
Item 6	Exhibits	41
SIGNATURES		42

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts may be forward-looking statements. In particular, statements pertaining to our capital resources, property performance and results of operations contain forward-looking statements. Likewise, all of our statements regarding anticipated growth in our funds from operations and anticipated market conditions, demographics and results of operations are forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.

These forward-looking statements reflect the views of our management regarding current expectations and projections about future events and are based on currently available information. These forward-looking statements are not guarantees of future performance and involve numerous risks and uncertainties and, thus, you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

·general economic conditions;

·adverse economic or real estate developments, either nationally or in the markets in which our properties are located;

·our failure to generate sufficient cash flows to service our outstanding indebtedness;

·fluctuations in interest rates and increased operating costs;

·the availability, terms and deployment of debt and equity capital, including our unsecured revolving credit facility;

·our ability to make distributions on our shares of beneficial interest;

·general volatility of the market price of our common shares;

·our limited operating history;

·our increased vulnerability economically due to the concentration of our investments in healthcare properties;

·our geographic concentrations in Texas causes us to be particularly exposed to downturns in this local economy or other changes in local real estate market conditions;

·changes in our business or strategy;

·our dependence upon key personnel whose continued service is not guaranteed;

·our ability to identify, hire and retain highly qualified personnel in the future;

·the degree and nature of our competition;

·changes in governmental regulations, tax rates and similar matters;

·defaults on or non-renewal of leases by tenants;

·decreased rental rates or increased vacancy rates;

·difficulties in identifying healthcare properties to acquire and complete acquisitions;

·competition for investment opportunities;

·our failure to successfully develop, integrate and operate acquired properties and operations;

·the impact of our investment in joint ventures;

·the financial condition and liquidity of, or disputes with, joint venture and development partners;

1

·our ability to operate as a public company;

·changes in accounting principles generally accepted in the United States (or GAAP);

·lack of or insufficient amounts of insurance;

·other factors affecting the real estate industry generally;

·our failure to qualify and maintain our qualification as a real estate investment trust (or REIT) for U.S. federal income tax purposes;

·limitations imposed on our business and our ability to satisfy complex rules in order for us to qualify as a REIT for U.S. federal income tax purposes;

·changes in governmental regulations or interpretations thereof, such as real estate and zoning laws and increases in real property tax rates and taxation of REITs; and

·various other factors may materially adversely affect us, including the per share trading price of our common shares, such as:

·higher market interest rates;

·the number of our common shares available for future issuance or sale;

·our issuance of equity securities or the perception that such issuance might occur;

·future offerings of debt; and

·if securities analysts do not publish research or reports about our industry or if they downgrade our common shares or the healthcare-related real estate sector.

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. You should not place undue reliance on any forward-looking statements, which speak only as of the date of this report. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes after the date of this prospectus, except as required by applicable law. For a further discussion of these and other factors that could impact our future results, performance or transactions, see Part I, Item 1A (Risk Factors) of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and Part II, Item 1A (Risk Factors) of our Quarterly Reports on Form 10-Q for the quarterly periods ended during this fiscal 2014 and Part II, Item 1A (Risk Factors) of this report.

In this report, the terms “we,” “us,” “our,” “our company,” the “Trust,” the “Company,” and “Physicians Realty” refer to Physicians Realty Trust, a Maryland real estate investment trust, together with its consolidated subsidiaries, including Physicians Realty L.P., a Delaware limited partnership, which we refer to in this report as our “Operating Partnership,” and the historical business and operations of four healthcare real estate funds that we have classified for accounting purposes as our “Predecessor” and which we sometimes refer to as the “Ziegler Funds.”

2

PART I.Financial Information

Item 1.Financial Statements.

Physicians Realty Trust

Consolidated Balance Sheets

(In thousands, except share and per share data)

	September 30,			December 31,
	2014			2013
	(unaudited)
ASSETS
Investment properties:
Land and improvements	$	70,561		$	26,088
Building and improvements	567,342			193,184
Tenant improvements	5,986			5,458
Acquired lease intangibles	60,831			31,236
	704,720			255,966
Accumulated depreciation	(39,105		)	(28,427		)
Net real estate property	665,615			227,539
Real estate loan receivable	6,907			—
Investment in unconsolidated entity	1,324			—
Net real estate investments	673,846			227,539
Cash and cash equivalents	17,025			56,478
Tenant receivables, net	1,282			837
Deferred costs, net	5,097			2,105
Other assets	11,412			5,901
Total assets	$	708,662		$	292,860
LIABILITIES AND EQUITY
Liabilities:
Credit facility	$	70,000		$	—
Mortgage debt	83,420			42,821
Accounts payable	633			836
Dividend payable	11,379			5,681
Accrued expenses and other liabilities	7,222			2,685
Acquired lease intangible, net	344			—
Total liabilities	172,998			52,023
Equity:
Common shares, $0.01 par value, 500,000,000 shares authorized, 45,376,115 and 21,548,597 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively.	453			215
Additional paid-in capital	511,500			213,359
Accumulated deficit	(37,674		)	(8,670		)
Total shareholders’ equity	474,279			204,904
Noncontrolling interests:
Operating partnership	60,679			35,310
Partially owned properties	706			623
Total noncontrolling interest	61,385			35,933
Total equity	535,664			240,837
Total liabilities and equity	$	708,662		$	292,860

The accompanying notes are an integral part of these consolidated and combined financial statements.

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Physicians Realty Trust

Consolidated and Combined Statements of Operations

(Unaudited)
(In thousands, except share and per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Revenues:
Rental revenues	$	12,506		$	2,920		$	29,555		$	7,952
Expense recoveries	1,355			798			3,445			2,399
Interest income on real estate loans and other	300			11			640			206
Total revenues	14,161			3,729			33,640			10,557
Expenses:
Interest expense, net	1,911			826			4,849			3,114
General and administrative	4,445			1,285			8,867			1,507
Operating expenses	2,531			1,130			6,367			3,578
Depreciation and amortization	4,413			1,146			10,565			3,123
Acquisition expenses	2,922			756			9,254			756
Management fees	—			—			—			475
Impairment loss	250			—			250			—
Total expenses	16,472			5,143			40,152			12,553
Loss before equity in income of unconsolidated entity, gain (loss) on sale of property, and noncontrolling interests:	(2,311		)	(1,414		)	(6,512		)	(1,996		)
Equity in income of unconsolidated entity	26			—			69			—
Gain (loss) on sale of property	34			(2		)	34			(2		)
Net loss	(2,251		)	(1,416		)	(6,409		)	(1,998		)
Less: Net (income) loss attributable to Predecessor	—			(6		)	—			576
Less: Net loss (income) attributable to noncontrolling interests —operating partnership	233			(61		)	887			(61		)
Less: Net (income) loss attributable to noncontrolling interests — partially owned properties	(76		)	323			(226		)	323
Net loss attributable to common shareholders	$	(2,094	)	$	(1,160	)	$	(5,748	)	$	(1,160	)
Net loss per share:
Basic and diluted	$	(0.06	)	$	(0.10	)	$	(0.21	)	$	(0.10	)
Weighted average common shares:
Basic and diluted	36,313,644			11,486,011			27,980,408			11,486,011
Dividends and distributions declared per common share and unit	$	0.23		$	0.18		$	0.68		$	0.18

The accompanying notes are an integral part of these consolidated and combined financial statements.

4

Physicians Realty Trust and Predecessor

Consolidated and Combined Statement of Equity

(In thousands, except shares)

(Unaudited)

	Number of Common Shares	Par Value		Additional Paid in Capital			Accumulated Deficit			Predecessor Equity			Total Shareholders’ and Predecessor Equity			Operating Partnership Noncontrolling interest			Partially Owned Properties Noncontrolling Interest			Total Non- Controlling Interests			Total Equity
Predecessor Balance
January 1, 2013	—	$	—	$	—		$	—		$	19,068		$	19,068		$	—		$	29		$	29		$	19,097
Net (loss) income	—	—		—			—			(712		)	(712		)	—			136			136			(576		)
Transfer	—	—		—			—			36			36			—			(36		)	(36		)	—
Distributions	—	—		—			—			(211		)	(211		)	—			(209		)	(209		)	(420		)
Balance July 24, 2013	—	—		—			—			18,181			18,181						(80		)	(80		)	18,101
Physicians Realty Trust
Net proceeds from sale of common shares	21,298,597	213		225,707			—			—			225,920			—			—			—			225,920
Formation Transactions	—	—		35			—			(18,181		)	(18,146		)	18,181			(389		)	17,792			(354		)
Restricted share award grants	250,000	2		431			—			—			433			—			—			—			433
Dividends declared	—	—		—			(7,009		)	—			(7,009		)	(1,326		)	—			(1,326		)	(8,335		)
Adjustment for Noncontrolling Interests ownership in Operating Partnership	—	—		(7,391		)	—			—			(7,391		)	7,391			—			7,391			—
Contributions	—	—		(5,423		)	—			—			(5,423		)	11,534			1,276			12,810			7,387
Distributions	—	—		—			—			—			—			—			(255		)	(255		)	(255		)
Net (loss) income	—	—		—			(1,661		)	—			(1,661		)	(470		)	71			(399		)	(2,060		)
Balance December 31, 2013	21,548,597	215		213,359			(8,670		)	—			204,904			35,310			623			35,933			240,837
Net proceeds from sale of shares	23,575,000	236		295,374			—			—			295,610			—			—			—			295,610
Restricted share award grants	127,605	1		1,185			—			—			1,186			—			—			—			1,186
Issuance of shares in connection with the Ziegler shared service amendment payment	124,913	1		1,799			—			—			1,800			—			—			—			1,800
Dividends/distributions declared	—	—		—			(23,256		)	—			(23,256		)	(2,550		)	—			(2,550		)	(25,806		)
Adjustment for Noncontrolling Interests ownership in Operating Partnership	—	—		(217		)	—			—			(217		)	217			—			217			—
Issuance of Operating Partnership Units in connection with acquisitions	—	—		—			—			—			—			28,589			—			28,589			28,589
Distributions	—	—		—			—			—			—			—			(143		)	(143		)	(143		)
Net (loss) income	—	—		—			(5,748		)	—			(5,748		)	(887		)	226			(661		)	(6,409		)
Balance September 30, 2014	45,376,115	$	453	$	511,500		$	(37,674	)	$	—		$	474,279		$	60,679		$	706		$	61,385		$	535,664

The accompanying notes are an integral part of these consolidated and combined financial statements.

5

Physicians Realty Trust and Predecessor

Consolidated and Combined Statements of Cash Flows

(In thousands) (Unaudited)

	Nine Months Ended
	September 30,
	2014			2013
Cash Flows from Operating Activities:
Net loss	$	(6,409	)	$	(1,998	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation and amortization	10,565			3,026
Amortization of deferred financing costs	626			330
Accelerated amortization of deferred financing costs	141			—
Amortization of lease inducements and above/below market lease intangibles	331			70
Straight-line rental revenue/expense	(2,785		)	(100		)
(Gain) loss on sale of property	(34		)	2
Equity in income of unconsolidated entity	(69		)	—
Distribution from unconsolidated entity	45			—
Change in fair value of derivative	(138		)	(206		)
Provision for bad debts	5			36
Non-cash share compensation	1,681			191
Ziegler shared service amendment payment	1,800			—
Impairment on investment property	250			—
Change in operating assets and liabilities:
Tenant receivables	(521		)	(64		)
Other assets	(1,285		)	(773		)
Accounts payable to related parties	—			(1,530		)
Accounts payable	(203		)	(316		)
Accrued expenses and other liabilities	3,445			1,298
Net cash provided by (used in) operating activities	7,445			(34		)
Cash Flows from Investing Activities:
Proceeds on sales of property	235			448
Acquisition of investment properties, net	(404,715		)	(100,084		)
Capital expenditures on existing investment properties	(551		)	—
Real estate loan receivable	(6,836		)	—
Leasing commissions	(5		)	(163		)
Lease inducement	(1,532		)	(1,543		)
Net cash used in investing activities	(413,404		)	(101,342		)
Cash Flows from Financing Activities:
Net proceeds from sale of common shares	295,610			122,873
Formation transactions	—			(354		)
Proceeds from credit facility borrowings	286,200			19,850
Payment on credit facility borrowings	(216,200		)	—
Proceeds from issuance of mortgage debt	26,550			163
Payments on mortgage debt	(1,234		)	(37,978		)
Debt issuance costs	(3,848		)	(1,074		)
Dividends paid - shareholders	(17,443		)	—
Distributions to noncontrolling interest— operating partnership	(2,665		)	—
Distributions to members and partners	—			(211		)
Distributions to noncontrolling interest — partially owned properties	(143		)	(274		)
Common shares repurchased and retired	(321		)	—
Net cash provided by financing activities	366,506			102,995
Net (decrease) increase in cash and cash equivalents	(39,453		)	1,619
Cash and cash equivalents, beginning of period	56,478			2,614
Cash and cash equivalents, end of period	$	17,025		$	4,233
Supplemental disclosure of cash flow information — interest paid during the period	$	4,113		$	2,967
Supplemental disclosure of noncash activity — assumed debt	$	15,283		$	—
Supplemental disclosure of noncash activity — issuance of Operating Partnership units in connection with acquisitions	$	28,589		$	—
Supplemental disclosure of noncash activity — contingent consideration	$	840		$	—

The accompanying notes are an integral part of these consolidated and combined financial statements.

6

Physicians Realty Trust and Predecessor

Notes to Consolidated and Combined Financial Statements

Note 1—Organization and Business

Physicians Realty Trust (the “Trust”) was organized in the state of Maryland on April 9, 2013. As of September 30, 2014, the Trust was authorized to issue up to 500,000,000 common shares of beneficial interest, par value $0.01 per share (“common shares”). The Trust filed a Registration Statement on Form S-11 with the Securities and Exchange Commission (the “Commission”) with respect to a proposed underwritten initial public offering (the “IPO”) and completed the IPO of its common shares and commenced operations on July 24, 2013.

The Trust contributed the net proceeds from the IPO to Physicians Realty L.P. (the “Operating Partnership”), a Delaware limited partnership, and is the sole general partner of the Operating Partnership. The Trust’s operations are conducted through the Operating Partnership and wholly-owned and majority-owned subsidiaries of the Operating Partnership. The Trust, as the general partner of the Operating Partnership, controls the Operating Partnership and consolidates the assets, liabilities and results of operations of the Operating Partnership.

The Trust is a self-managed real estate investment trust (“REIT”) formed primarily to acquire, selectively develop, own and manage healthcare properties that are leased to physicians, hospitals and healthcare delivery systems.

Initial Public Offering and Formation Transactions and Follow-On Public Offerings

Pursuant to the IPO, the Trust issued an aggregate of 11,753,597 common shares, including common shares issued upon exercise of the underwriters’ overallotment option, and received approximately $123.8 million of net proceeds.  The Trust contributed the net proceeds of the IPO to the Operating Partnership in exchange for 11,753,597 common units of partnership interest (“OP Units”).  Concurrently with the completion of the IPO, the Trust acquired, through a series of contribution transactions, the entities that own the 19 properties that comprised the Trust’s initial properties from four healthcare real estate funds (the “Ziegler Funds”), as well as certain operating assets and liabilities, including the assumption of approximately $84.3 million of debt related to such properties. The Trust determined that the Ziegler Funds constitute the Trust’s accounting predecessor (the “Predecessor”). The Predecessor, which is not a legal entity, is comprised of the four Ziegler Funds that owned directly or indirectly interests in entities that owned the initial 19 properties in the Trust’s portfolio. The combined historical data for the Predecessor is not necessarily indicative of the Trust’s future financial position or results of operations. In addition, at the completion of the IPO, the Trust entered into a shared services agreement with B.C. Ziegler & Company (“Ziegler”) pursuant to which Ziegler provides office space, IT support, accounting support and other services to the Trust in exchange for an annual fee.

To acquire the ownership interests in the entities that own the 19 properties included in the Trust’s initial properties, and certain other operating assets and liabilities, from the Ziegler Funds, the Operating Partnership issued to the Ziegler Funds an aggregate of 2,744,000 OP Units, having an aggregate value of approximately $31.6 million based on the price to the public per share in the IPO. These formation transactions were effected concurrently with the completion of the IPO.

The net proceeds from the IPO, inclusive of shares issued pursuant to the exercise of the underwriters’ overallotment option, were approximately $123.8 million (after deducting the underwriting discount and expenses of the IPO and the formation transactions payable by the Trust). The Trust contributed the net proceeds of the IPO to the Operating Partnership in exchange for 11,753,597 OP Units on July 24, 2013, and upon closing of the IPO, the Trust owned a 79.6% interest in the Operating Partnership. The Operating Partnership used a portion of the IPO proceeds received from the Trust to purchase the 50% interest in the Arrowhead Commons property not owned by the Ziegler Funds for approximately $850,000, after which the Operating Partnership became the 100% owner of the property, and to pay certain expenses related to debt assumptions and the Trust’s senior secured revolving credit facility. The balance of the net proceeds was subsequently invested in healthcare properties.

7

On December 11, 2013, the Trust completed a public offering of 9,545,000 common shares, including 1,245,000 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to the Trust of approximately $103.1 million. The Trust contributed the net proceeds of this offering to the Operating Partnership in exchange for 9,545,000 OP Units, and the Operating Partnership used the net proceeds of the public offering to repay borrowings under the Trust’s senior secured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

On May 27, 2014, the Trust completed a public offering of 12,650,000 common shares, including 1,650,000 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to the Trust of approximately $149.9 million. The Trust contributed the net proceeds of this offering to the Operating Partnership in exchange for 12,650,000 OP Units, and the Operating Partnership used the net proceeds of the public offering to repay borrowings under the Trust’s senior secured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

On August 19, 2014, the Trust’s Registration Statement on Form S-3 (File No. 333-197842), which we filed with the Commission on August 4, 2014, was declared effective by the Commission. (the “Shelf Registration Statement”).  The Shelf Registration Statement covers the offering, from time to time, of various securities with an aggregate value of up to $900 million and the secondary offering of common shares by certain selling shareholders.

On August 19, 2014, the Trust and the Operating Oartnership entered into separate At Market Issuance Sales Agreements (the “Sales Agreements”) with each of MLV & Co. LLC, KeyBanc Capital Markets Inc., JMP Securities LLC, and RBC Capital Markets, LLC (the “Agents”), pursuant to which we may issue and sell common shares having an aggregate offering price of up to $150 million, from time to time, through the Agents pursuant to the Shelf Registration Statement. In accordance with the Sales Agreements, we may offer and sell our common shares through any of the Agents, from time to time, by any method deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), which includes sales made directly on the New York Stock Exchange (the “NYSE”), or other existing trading market, or sales made to or through a market maker. With the Trust’s express written consent, sales also may be made in negotiated transactions or any other method permitted by law. The common shares are registered under the Securities Act pursuant to the Shelf Registration Statement. During the quarterly period ended September 30, 2014, the Trust did not issue and sell any common shares pursuant to any of the Sales Agreements.

On September 12, 2014, the Trust completed a public offering of 10,925,000 common shares, including 1,425,000 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to the Trust of approximately $145.7 million. The Trust contributed the net proceeds of this offering to the Operating Partnership in exchange for 10,925,000 OP Units, and the Operating Partnership used the net proceeds of the public offering to repay borrowings under the Trust’s senior secured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

Because the IPO and the formation transactions were completed on July 24, 2013, the Trust had no operations prior to that date.  References in these notes to the consolidated and combined financial statements of Physicians Realty Trust signify the Trust for the period from July 24, 2013, the date of completion of the IPO and the formation transactions, and of the Predecessor for all prior periods.

Note 2—Summary of Significant Accounting Policies

The accompanying unaudited consolidated and combined financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the periods ended September 30, 2014 and 2013 pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited financial statements included in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on March 21, 2014.

8

Principles of Consolidation

Property holding entities and other subsidiaries of which the Trust owns 100% of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest are consolidated. All inter-company balances and transactions are eliminated. For entities in which the Trust owns less than 100% of the equity interest, the Trust consolidates the property if it has the direct or indirect ability to control the entities’ activities based upon the terms of the respective entities’ ownership agreements. For these entities, the Trust records a non-controlling interest representing equity held by non-controlling interests.

The Trust continually evaluates all of its transactions and investments to determine if they represent variable interests in a variable interest entity (“VIE”). If the Trust determines that it has a variable interest in a VIE, the Trust then evaluates if it is the primary beneficiary of the VIE. The evaluation is a qualitative assessment as to whether the Trust has the ability to direct the activities of a VIE that most significantly impact the entity’s economic performance. The Trust consolidates each VIE in which it, by virtue of or transactions with the Trust’s investments in the entity, is considered to be the primary beneficiary.

Noncontrolling Interests

Operating Partnership: Net income or loss is allocated to noncontrolling interests based on their respective ownership percentage of the Operating Partnership. The ownership percentage is calculated by dividing the number of OP Units held by the noncontrolling interests by the total OP Units held by the noncontrolling interests and the Trust. Issuance of additional common shares and OP Units changes the ownership interests of both the noncontrolling interests and the Trust. Such transactions and the related proceeds are treated as capital transactions.

In connection with the closing of the IPO, the Trust and the Operating Partnership completed related formation transactions pursuant to which the Operating Partnership acquired from the Ziegler Funds, the Ziegler Funds’ ownership interests in 19 medical office buildings located in ten states in exchange for an aggregate of 2,744,000 OP Units.

In connection with the acquisition of a surgical center hospital in the New Orleans, Louisiana metropolitan area for approximately $37.5 million, on September 30, 2013, the Operating Partnership partially funded the purchase price by issuing 954,877 OP Units valued at approximately $11.5 million on the date of issuance.

During the quarterly period ended June 30, 2014, the Operating Partnership partially funded two property acquisitions by issuing an aggregate of 243,758 OP Units valued at approximately $3.1 million on the date of issuance.  The two acquisitions had a total purchase price of approximately $21.4 million.

During the quarterly period ended September 30, 2014, the Operating Partnership partially funded three property acquisitions by issuing an aggregate of 1,798,555 OP Units valued at approximately $25.5 million on the date of issuance.  The three acquisitions had a total purchase price of approximately $82.2 million.

Noncontrolling interests in the Trust represent OP Units held by the Predecessor’s prior investors and other investors.  As of September 30, 2014, the Trust held a 88.7% interest in the Operating Partnership.  As the sole general partner and the majority interest holder, the Trust consolidates the financial position and results of operation of the Operating Partnership.

Holders of OP Units may not transfer their units without the Trust’s prior written consent, as general partner of the Operating Partnership.  Beginning on the first anniversary of the issuance of OP Units, OP Unit holders may tender their units for redemption by the Operating Partnership in exchange for cash equal to the market price of the Trust’s common shares at the time of redemption or, for common shares on a one-for-one basis.  Such election to pay cash or issue shares to satisfy an OP Unit holder’s redemption request is solely within the control of the Trust.  Accordingly, the Trust presents the OP Units of the Operating Partnership held by the Predecessor’s prior investors and other investors as noncontrolling interests within equity in the consolidated balance sheets.

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Partially Owned Properties: The Trust reflects noncontrolling interests in partially owned properties on the balance sheet for the portion of properties consolidated by the Trust that are not wholly owned by the Trust. The earnings or losses from those properties attributable to the noncontrolling interests are reflected as noncontrolling interests in partially owned properties in the consolidated and combined statements of operations.

Investment Properties

A property acquired not subject to an existing lease is treated as an asset acquisition and recorded at its purchase price, inclusive of acquisition costs, allocated between land and building based upon their relative fair values at the date of acquisition.  A property acquired with an existing lease is accounted for as a business combination pursuant to the acquisition method in accordance with ASC Topic 805, Business Combinations, and assets acquired and liabilities assumed, including lease intangibles, are recorded at fair value.

Investments in Unconsolidated Entities

The Trust reports investments in unconsolidated entities over whose operating and financial policies it has the ability to exercise significant influence under the equity method of accounting.  Under this method of accounting, the Trust’s share of the investee’s earnings or losses is included in its consolidated and combined statements of operations.  The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the entity interest.

Real Estate Loans Receivable

Real estate loans receivable consists of a mezzanine loan which is collateralized by an equity interest in a medical office building development.  Interest income on the loan is recognized as earned based on the terms of the loan subject to evaluation of collectability risks and is included in the Trust’s consolidated and combined statement of operations.

Dividends and Distributions

On September 26, 2014, the Trust’s Board of Trustees declared a cash dividend of $0.225 per common share for the quarterly period ended September 30, 2014.  The dividend was paid on October 30, 2014 to common shareholders and common OP Unit holders of record on October 16, 2014.

Impairment of Real Estate Property

The Trust evaluates the recoverability of the recorded amount of real estate property whenever events or changes in circumstances indicate that the recorded amount of an asset may not be fully recoverable. Impairment is assessed when the undiscounted expected future cash flows derived from an asset are less than its carrying amount. If the Trust determines that an asset is impaired, the impairment to be recognized is measured as the amount by which the recorded amount of the asset exceeds its fair value. Assets to be disposed of are reported at the lower of the recorded amount or fair value less cost to sell. Fair value is determined using a discounted future cash flow analysis.

The Trust recognized $0.3 million of an impairment loss on a medical office building in Pickerington, OH for the three and nine months ended September 30, 2014.  The property currently is vacant and the fair value was determined based on a previously accepted offer to purchase the property. The impairment was assessed because the property’s carrying amount exceeded its estimated fair value.  The Trust did not recognize any impairment for the three and nine months ended September 30, 2013.

Rental Revenue

Rental revenue is recognized on a straight-line basis over the terms of the related leases when collectability is reasonably assured. Recognizing rental revenue on a straight-line basis for leases may result in recognizing revenue for amounts more or less than amounts currently due from tenants. Amounts recognized in excess of amounts currently due from tenants are included in other assets and were $4.8 million and $2.0 million as of

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September 30, 2014 and December 31, 2013, respectively. If the Trust determines that collectability of straight-line rents is not reasonably assured, the Trust limits future recognition to amounts contractually owed and, where appropriate, establishes an allowance for estimated losses.  Rental revenue is reduced by amortization of lease inducements and above-market lease intangibles and increased by amortization of below-market lease intangibles on certain leases.  Lease inducements, above-market lease intangibles and below-market lease intangibles are amortized over the average remaining life of the lease.

Expense Recoveries

Expense recoveries relate to tenant reimbursement of real estate taxes, insurance and other operating expenses that are recognized as expense recovery revenue in the period the applicable expenses are incurred. The reimbursements are recorded at gross amounts, as the Trust is generally the primary obligor with respect to real estate taxes and purchasing goods and services from third-party suppliers and has discretion in selecting the supplier and bears the credit risk of tenant reimbursement.

The Trust has certain tenants with absolute net leases. Under these lease agreements, the tenant is responsible for operating and building expenses. For absolute net leases, the Trust does not recognize the operating expenses or expense recoveries.

Contingent Liability

The Trust will record a liability for contingent consideration (included in accrued expenses and other liabilities on its consolidated balance sheets) at fair value as of the acquisition date and reassess the fair value at the end of each reporting period, with any changes being recognized in earnings. Increases or decreases in the fair value of contingent consideration can result from changes in discount periods, discount rates and probabilities that contingencies will be met.

Management Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated and combined financial statements and the amounts of revenue and expenses reported in the period. Significant estimates are made for the valuation of investment property, valuation of financial instruments, impairment assessments and fair value assessments with respect to purchase price allocations. Actual results could differ from these estimates.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the consolidated financial position or results of operations.

New Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board issued Accounting Standards Updated, or ASU, 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360) which changes the requirements for reporting discontinued operations. ASU 2014-08 changes the threshold for disclosing discontinued operations and the related disclosure requirements. Pursuant to ASU 2014-08, only disposals representing a strategic shift, such as a major line of business, a major geographical area or majority equity investment, should be presented as a discontinued operation. If the disposal does qualify as a discontinued operation under ASU 2014-08, the entity will be required to provide expanded disclosures. The guidance will be applied prospectively to new disposals and new classifications of disposal groups held for sale after the effective date. ASU 2014-08 is effective for annual periods beginning on or after December 14, 2014 with early adoption permitted.  The Trust early adopted the provisions of the guidance in the first quarter of 2014.  Such adoption has had no impact on the Trust’s financial statements as no dispositions have occurred during the nine months ended September 30, 2014.

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In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which creates a new Topic Accounting Standards Codification (Topic 606).  The standard is principle-based and provides a five-step model to determine when and how revenue is recognized.  The core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.  This standard is effective for interim or annual periods beginning after December 15, 2016 and allows for either full retrospective or modified retrospective adoption.  Early adoption of this standard is not allowed.  The Trust is currently evaluating the impact the adoption of Topic 606 will have on its financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, to address financial reporting considerations about an entity’s ability to continue as a going concern.  ASU 2014-15 is effective for annual periods ending after December 15, 2016 and for interim periods within annual periods beginning after December 15, 2016.  The Trust is currently evaluating the impact the adoption will have on its financial statements.

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Note 3—Acquisitions and Investments

During the nine months ended September 30, 2014, the Trust completed acquisitions of 38 operating healthcare properties located in 10 states for an aggregate purchase price of approximately $447.2 million as summarized below:

Property(1)	Location	Acquisition Date	Purchase Price(in thousands)
Foundations San Antonio Surgical Hospital(2)	San Antonio, TX	February 19, 2014	$	25,556
Eagles Landing Family Practice 4 MOBs(2)	Atlanta, GA	February 19, 2014	$	20,800
21st Century Oncology 4 MOBs(3)	Sarasota, FL	February 26, 2014	$	17,486
Foundations San Antonio MOB(3)	San Antonio, TX	February 28, 2014	$	6,800
Peachtree Dunwoody MOB(3)	Atlanta, GA	February 28, 2014	$	36,726
LifeCare LTACH(2)	Fort Worth, TX	March 28, 2014	$	27,160
LifeCare LTACH(2)	Pittsburgh, PA	March 28, 2014	$	12,840
Pinnacle Health Cardiology Portfolio 2 MOBs (3)	Carlisle & Wormleyburg, PA	April 22, 2014	$	9,208
South Bend Orthopedic MOB (3)	South Bend, IN	April 30, 2014	$	14,900
Grenada Medical Complex MOB (3)	Grenada, MS	April 30,2014	$	7,100
Mississippi Sports Medicine and Orthopaedics Center MOB (2)(4)	Jackson, MS	May 23, 2014	$	16,700
Carmel Medical Pavilion MOB (3)(4)	Carmel, IN	May 28, 2014	$	4,664
Summit Urology MOB (2)	Bloomington, IN	June 30, 2014	$	4,783
Renaissance Center (3)	Oshkosh, WI	June 30, 2014	$	8,500
Presbyterian Medical Plaza MOB (3)	Monroe, NC	June 30, 2014	$	7,750
Landmark Medical Portfolio (Premier) 3 MOBs (2)(5)	Bloomington, IN	July 1, 2014	$	23,837
Carlisle II MOB (3)	Carlisle, PA	July 25, 2014	$	4,500
Surgical Institute of Monroe ASC (2)	Monroe, MI	July 28, 2014	$	6,000
The Oaks Medical Building MOB (3)	Lady Lake, FL	July 31, 2014	$	10,600
Baylor Surgicare ASC — Mansfield (3)	Mansfield, TX	September 2, 2014	$	8,500
Eye Center of Southern Indiana (2)(5)	Bloomington, IN	September 5, 2014	$	12,174
Wayne State Medical Center and MOB (2)	Troy, MI	September 10, 2014	$	46,500
El Paso Portfolio (specialty surgical hospital and 2 MOBs) (3)(5)	El Paso, TX	September 30, 2014	$	46,235
The Mark H. Zangmeister Center (3)	Columbus, OH	September 30, 2014	$	36,600
Berger Medical Center (3)	Orient, OH	September 30, 2014	$	6,785
Orthopedic One 2 MOBs (3)	Columbus, OH	September 30, 2014	$	24,500
	Westerville, OH
Total			$	447,204

(1)“MOB” means medical office building, “LTACH” means long-term acute care hospital and “ASC” means ambulatory surgical center.

(2)The Trust accounted for these acquisitions as asset acquisitions and capitalized $1.5 million of total acquisition costs to the basis of the properties.

(3)The Trust accounted for these acquisitions as business combinations pursuant to the acquisition method and expensed total acquisition costs of $9.3 million.

(4)The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 243,758 OP Units valued at approximately $3.1 million in the aggregate on the date of issuance.

(5)The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 1,798,555 OP Units valued at approximately $25.5 million in the aggregate on the date of issuance.

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During the three months ended September 30, 2014, the Trust recorded revenues and net income of $7.3 million and $1.1 million, respectively, from its 2014 acquisitions.  During the nine months ended September 30, 2014, the Trust recorded revenues and net loss of $13.2 million and $1.3 million, respectively, from its 2014 acquisitions.

The following table summarizes the preliminary purchase price allocations of the assets acquired and the liabilities assumed, which we determined using level two and level three inputs (in thousands):

	1ST Quarter			2nd Quarter			3rd Quarter			Total
Land	$	18,331		$	7,275		$	18,942		$	44,548
Building and improvements	121,472			57,401			195,662			374,535
In-place lease intangible	7,585			7,061			12,374			27,020
Above market in-place lease intangible	891			465			1,219			2,575
Below market in-place lease intangible	—			(133		)	(221		)	(354		)
Investment in unconsolidated entity	1,300			—			—			1,300
Issuance of OP units	—			(3,135		)	(25,454		)	(28,589		)
Mortgage debt assumed	(10,800		)	405			(4,888		)	(15,283		)
Lease inducement	—			1,500			32			1,532
Derivative liability	—			—			(197		)	(197		)
Contingent consideration	—			—			(840		)	(840		)
Net assets acquired	$	138,779		$	70,839		$	196,629		$	406,247

These preliminary allocations are subject to revision within the measurement period, not to exceed one year from the date of the acquisitions.

Unaudited Pro Forma Financial Information

The following table illustrates the pro forma combined revenue, net income, and earnings per share —basic and diluted as if the Trust had acquired the above acquisitions as of January 1, 2013 (in thousands, except per share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Revenue	$	17,796	$	14,634	$	52,452	$	42,536
Net income	2,254		1,227		10,666		4,521
Net income available to common shareholders	2,066		859		9,656		3,820
Earnings per share - basic and diluted	$	0.06	$	0.07	$	0.35	$	0.33
Weighted average common shares - basic and diluted	36,313,644		11,486,011		27,980,408		11,486,011

Note 4—Intangibles

The following is a summary of the carrying amount of acquired lease intangibles as of September 30, 2014 and December 31, 2013 (in thousands):

	September 30, 2014							December 31, 2013
	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
Assets
In-place leases	$	56,076	$	(10,804	)	$	45,272	$	29,056	$	(8,080	)	$	20,976
Above market leases	4,755		(254		)	4,501		2,180		(48		)	2,132
Total	$	60,831	$	(11,058	)	$	49,773	$	31,236	$	(8,128	)	$	23,108
Liability
Below market lease	$	354	$	(10	)	$	344	—		—			—

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The following is a summary of the acquired lease intangible amortization for the three and nine months ended September 30, 2014 and 2013 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Amortization expense related to in-place leases	$	1,002	$	312	$	2,724	$	512
Amortization recorded against rental income related to above market leases	86		—		205		—
Amortization recorded to rental income related to below market leases	9		—		10		—

Future aggregate amortization of the acquired lease intangibles as of September 30, 2014, is as follows (in thousands):

	Assets		Liability
2014	$	1,589	$	13
2015	6,357		50
2016	6,345		50
2017	6,124		50
2018	5,632		50
Thereafter	23,726		131
Total	$	49,773	$	344

The weighted average amortization period for asset lease intangibles and liability lease intangible is 10 years and 7 years, respectively.

Note 5—Debt

The following is a summary of debt as of September 30, 2014 and December 31, 2013 (in thousands):

	September 30, 2014		December 31, 2013
Mortgage notes, bearing fixed interest from 4.82% to 6.58%, with a weighted average interest rate of 5.24%, and due in 2016, 2017, 2018, 2019, 2021 and 2022 collateralized by ten properties with a net book value of $52,138.	$	78,987	$	38,288
Mortgage note, bearing variable interest of LIBOR plus 2.65% and due in 2017, collateralized by one property with a net book value of $2,530.	4,433		4,533
Total Mortgage Debt	83,420		42,821
$400 million unsecured revolving credit facility bearing interest at floating rates, due September 2018.	70,000		—
Total debt	$	153,420	$	42,821

New Unsecured Credit Facility; Termination of Senior Secured Credit Facility:

Effective September 18, 2014, the Credit Agreement, dated as of August 29, 2013 (as amended, restated, increased, extended, supplemented or otherwise modified from time to time, the “Prior Credit Agreement”), among the Operating Partnership, as borrower, the Trust, certain subsidiaries and other affiliates of the Operating Partnership, as guarantors, Regions Bank, as administrative agent, Regions Capital Markets, as sole lead arranger and sole book runner, and the lenders party thereto, and all commitments provided thereunder, were terminated. All amounts due and outstanding under the Prior Credit Agreement were repaid on or prior to such date.

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On September 18, 2014, the Operating Partnership, as borrower, and the Trust and certain subsidiaries and other affiliates of the Trust, as guarantors, entered into a Credit Agreement (the “Credit Agreement”) with KeyBank National Association as administrative agent, KeyBanc Capital Markets Inc., Regions Capital Markets and BMO Capital Markets, as joint lead arrangers and joint bookrunners, Regions Capital Markets and BMO Capital Markets, as co-syndication agents, and the lenders party thereto in connection with an unsecured revolving credit facility in the maximum principal amount of $400 million. The Credit Agreement includes a swingline loan commitment for up to 10% of the maximum principal amount and provides an accordion feature allowing the Trust to increase borrowing capacity by up to an additional $350 million, subject to customary terms and conditions, resulting in a maximum borrowing capacity of $750 million. The Credit Agreement replaced the Trust’s senior secured revolving credit facility in the maximum principal amount of $200 million under the Prior Credit Agreement.

The Credit Agreement has a maturity date of September 18, 2018 and includes a one year extension option. Borrowings under the Credit Agreement bear interest on the outstanding principal amount at a rate equal to LIBOR plus 1.50% to 2.20%. In addition, the Credit Agreement includes an unused fee equal to 0.15% or 0.25% per annum, which is determined by usage under the Credit Agreement.

The Credit Agreement contains financial covenants that, among other things, require compliance with leverage and coverage ratios and maintenance of minimum tangible net worth, as well as covenants that may limit the Trust’s and the Operating Partnership’s ability to incur additional debt or make distributions. The Trust may, at any time, voluntarily prepay any loan under the Credit Agreement in whole or in part without premium or penalty. As of September 30, 2014, the Trust was in compliance with all financial covenants.

The Credit Agreement includes customary representations and warranties by the Operating Partnership, the Trust and each other guarantor and imposes customary covenants on the Operating Partnership, the Trust and each other guarantor. The Credit Agreement also contains customary events of default, and if an event of default occurs and continues, the Operating Partnership is subject to certain actions by the administrative agent, including without limitation, the acceleration of repayment of all amounts outstanding under the Credit Agreement.

The Credit Agreement provides for revolving credit loans to the Operating Partnership. Base Rate Loans, Adjusted LIBOR Rate Loans and Letters of Credit (each, as defined in the Credit Agreement) will be subject to interest rates, based upon the consolidated leverage ratio of the Trust, the Operating Partnership and its subsidiaries as follows:

Consolidated Leverage Ratio	Adjusted LIBOR Rate Loans and Letter of Credit Fee	Base Rate Loans
<35%	LIBOR + 1.50%	0.50	%
>35% and <45%	LIBOR + 1.65%	0.65	%
>45% and <45%	LIBOR + 1.75%	0.75	%
>45% and <50%	LIBOR + 1.85%	0.85	%
>50% and <55%	LIBOR + 2.00%	1.00	%
>55%	LIBOR + 2.20%	1.20	%

Scheduled principal payments due on debt as of September 30, 2014, are as follows (in thousands):

2014	$	490
2015	2,008
2016	9,567
2017	33,285
2018	71,100
Thereafter	36,970
Total	$	153,420

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Note 6—Stock-based Compensation

The Trust follows ASC 718 in accounting for its share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee’s requisite service period. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized when incurred.  Share-based payments classified as liability awards are marked to fair value at each reporting period.

Certain of the Trust’s employee stock awards vest only upon the achievement of performance targets. ASC 718 requires recognition of compensation cost only when achievement of performance conditions is considered probable.  Consequently, the Trust’s determination of the amount of stock compensation expense requires a significant level of judgment in estimating the probability of achievement of these performance targets.  Additionally, the Trust must make estimates regarding employee forfeitures in determining compensation expense.  Subsequent changes in actual experience are monitored and estimates are updated as information is available.

In connection with the IPO, the Trust adopted the 2013 Equity Incentive Plan which made available 600,000 restricted shares to be administered by the Compensation and Nominating Governance Committee of the Board of Trustees.  On August 7, 2014, at the Annual Meeting of Shareholders of Physicians Realty Trust, the Trust’s shareholders approved an amendment to the 2013 Equity Incentive Plan to increase the number of common shares authorized for issuance under the 2013 Equity Incentive Plan by 1,850,000 common shares.

The committee has broad discretion in administering the terms of the plan.  Restricted shares granted under the plan are eligible for dividends as well as the right to vote.  The Trust granted to management and the Board of Trustees 250,000 restricted common shares upon completion of the IPO under the Trust’s 2013 Equity Incentive Plan at a value per share of $11.50 and total value of $2.9 million with a vesting period of three years. In March 2014, an additional 84,266 restricted common shares were granted to management and the Board of Trustees. During the quarters ended June 30, 2014 and September 30, 2014, an additional 5,263 and 60,230 restricted common shares, respectively, were granted to certain Trust employees.

	Shares		Weighted Average Grant Date Fair Value
Non-vested at December 31, 2013	250,000		$	11.50
Granted	149,759		13.76
Vested	(83,333	)	11.50
Share repurchase	(22,154	)	14.49
Non-vested at September 30, 2014	294,272		$	13.85

For all service awards, we record compensation expense for the entire award on a straight-line basis (or, if applicable, on the accelerated method) over the requisite service period.  For the three and nine months ended September 30, 2014, the Trust recognized non-cash share compensation of $0.6 million and $1.5 million, respectively.  Unrecognized compensation expense at September 30, 2014 was $3.0 million.  For the three and nine months ended September 30, 2013, the Trust recognized non-cash share compensation of $0.2 million. The Trust’s compensation expense recorded in connection with grants of restricted stock reflects an initial estimated cumulative forfeiture rate of 0% over the requisite service period of the awards. That estimate will be revised if subsequent information indicates that the actual number of awards expected to vest is likely to differ from previous estimates.

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Restricted Share Units:

In March 2014, under the Trust’s 2013 Equity Incentive Plan, the Trust granted 55,680 restricted share units at target level to management, which are subject to various criteria and a three-year service period.  Also, each restricted share unit contains one dividend equivalent.  The recipient will accrue dividend equivalents on awarded share units equal to the cash dividend that would have been paid on the awarded share unit had the awarded share unit been an issued and outstanding common share on the record date for the dividend.  The Trust recognized $0.1 million and $0.2 million of non-cash share unit compensation expense for the three and nine month periods ended September 30, 2014, respectively.  Unrecognized compensation expense at September 30, 2014 was $0.6 million.

Note 7—Fair Value Measurements

Accounting standards require certain assets and liabilities be reported and/or disclosed at fair value in the financial statements and provides a framework for establishing that fair value. The framework for determining fair value is based on a hierarchy that prioritizes the valuation techniques and inputs used to measure fair value.

In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access. Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset. These Level 3 fair value measurements are based primarily on management’s own estimates using pricing models, discounted cash flow methodologies, or similar techniques taking into account the characteristics of the asset or liability. In instances where inputs used to measure fair value fall into different levels of the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.

The derivative instruments (Note 8) consists solely of two interest rate swaps that are not traded on an exchange and are recorded at fair value based on a variety of observable inputs including contractual terms, interest rate curves, yield curves, measure of volatility, and correlations of such inputs.

The Trust measures its interest rate swaps at fair value on a recurring basis. The fair values are based on primarily Level 2 inputs described above.

The Trust also has assets that under certain conditions are subject to measurement at fair value on a non-recurring basis.  The following table sets forth by level the fair value hierarchy of the Trust’s asset that was accounted for on a non-recurring basis as of September 30, 2014.  There were no such assets measured at fair value as of September 30, 2013.

			Non-recurring Fair Value Measurements At Report Date using:
	Fair Value as of December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Losses for Nine Months Ended September 30, 2014
Pickerington, OH, Medical office building	$	1,779	$	1,529	$	—	$	—	$	(250	)

The carrying amounts of cash and cash equivalents, tenant receivables, payables, and accrued interest are reasonable estimates of fair value because of the short term maturities of these instruments. Fair values for real

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estate loan receivable and mortgage notes are estimated based on rates currently prevailing for similar instruments of similar maturities and are based primarily on level 2 inputs

The following table presents the fair value of other financial instruments (in thousands). The swaps are measured at fair value on a recurring basis.

	September 30,				December 31,
	2014				2013
	(unaudited)
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Real estate loan receivable	$	6,907	$	6,907	$	—	$	—
Credit Facility	$	70,000	$	70,000	—		—
Mortgage debt	$	83,420	$	83,507	$	42,821	$	44,130
Derivative liabilities	$	456	$	456	$	397	$	397

Note 8—Derivative Financial Instruments

The Trust is exposed to certain risks in the normal course of its business operations. One risk relating to the variability of interest on variable rate debt is managed through the use of derivatives. All derivative financial instruments are reported in the balance sheet at fair value.  The Trust has elected not to apply hedge accounting to its derivative financial instrument.

Generally, the Trust enters into swap relationships such that changes in the fair value or cash flows of items and transactions being hedged are expected to be offset by corresponding changes in the values of the derivatives.

The Trust holds two swaps to pay fixed/receive variable interest rates with a total notional amount of $12.6 million and $7.9 million as of September 30, 2014 and December 31, 2013, respectively.  Gains recognized on interest rate swaps of $0.07 million and $0.1 million were included in interest income on real estate loans and other in the consolidated and combined statements of operations for the three and nine months ended September 30, 2014, respectively. Gains recognized on the interest rate swap of $0.02 million and $0.2 million were included in interest income on real estate loans and other in the consolidated and combined statements of operations for the three and nine months ended September 30, 2013, respectively.

Note 9—Tenant Operating Leases

The Trust is lessor of medical office buildings and other healthcare facilities. Leases have expirations from 2014 through 2028. As of September 30, 2014, the future minimum rental payments on non-cancelable leases, exclusive of expense recoveries, were as follows (in thousands):

2014	$	14,291
2015	57,539
2016	57,400
2017	57,561
2018	55,747
Thereafter	435,125
Total	$	677,663

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Note 10—Rent Expense

The Trust leases the rights to a parking structure at one of its properties and the land upon which five of its properties are located from third party land owners pursuant to separate ground and parking leases.  The parking and ground leases require fixed annual rental payments and may also include escalation clauses and renewal options. These leases have terms up to 68 years remaining, excluding extension options. As of September 30, 2014, the future minimum lease obligations under non-cancelable parking and ground leases were as follows (in thousands):

2014	$	328
2015	1,345
2016	1,383
2017	1,423
2018	1,465
Thereafter	23,232
Total	$	29,176

Rent expense for the parking and ground leases of $0.2 million and $0.01 million for the three months ended September 30, 2014 and 2013, respectively, and $0.5 million and $0.01 million for the nine months ended September 30, 2014 and 2013, respectively, are reported in operating expenses in the consolidated and combined statements of operations.

Note 11—Earnings Per Share

The following table shows the amounts used in computing the Trust’s basic and diluted earnings per share. As the three and nine months ended September 30, 2014 resulted in a net loss, there is no dilution to earnings per share (in thousands, except share and per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Numerator for earnings per share — basic and diluted:
Net loss	$	(2,251	)	$	(1,416	)	$	(6,409	)	$	(1,998	)
Less: Net (income) loss attributable to Predecessor	—			(6		)	—			576
Less: Net loss (income) attributable to noncontrolling interests —operating partnership	233			(61		)	887			(61		)
Less: Net (income) loss attributable to noncontrolling interests — partially owned properties	(76		)	323			(226		)	323
Numerator for earnings per share — basic and diluted	$	(2,094	)	$	(1,160	)	$	(5,748	)	$	(1,160	)
Denominator for earnings per share - basic and diluted shares:	36,313,644			11,486,011			27,980,408			11,486,011
Basic and diluted earnings per share	$	(0.06	)	$	(0.10	)	$	(0.21	)	$	(0.10	)

There were 202,446 potentially dilutive shares outstanding related to the 2013 Equity Incentive Plan during the three and nine months ended September 30, 2014. However, the shares were excluded from the computation of diluted shares as their impact would have been anti-dilutive.  As a result, the number of outstanding shares was the same for basic and diluted earnings per share.

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Note 12—Related Party Transactions

The Trust has entered into a shared services agreement with Ziegler pursuant to which Ziegler provides office space, IT support, accounting support and other services to the Trust in exchange for an annual fee. The shared service fee was $0.1 million and $0.1 million and $0.4 million and $0.1 million for the three and nine months ended September 30, 2014 and 2013, respectively, and is recorded in general and administrative expense in the consolidated statement of operations.

Ziegler charged the Predecessor an annual management fee equal to 2 percent of the total capital commitments. Total management fees charged to the Predecessor were $0.2 million and $0.5 million for the three and nine months ended September 30, 2013, respectively. The Trust did not incur a management fee for the three and nine months ended September 30, 2014.

The Operating Partnership and the Trust entered into the First Amendment to Shared Services Agreement, dated July 31, 2014 (the “First Amendment”), with Ziegler, which amended certain terms of the shared services agreement. Among other things, the First Amendment reduced the shared services to be provided by Ziegler, the term of the shared services agreement, and the monthly fee to be paid by the Trust for the remainder of the term.  In consideration of these changes, the Trust was obligated to make a one-time payment to Ziegler in the amount of $1,800,000 (the “Amendment Payment”), which may be paid in cash or in unrestricted common shares of the Trust as determined by the Trust in its sole discretion.  On August 19, 2014, the Shelf Registration Statement was declared effective by the Commission and the Trust made the Amendment Payment by issuing 124,913 common shares to Ziegler. The common shares are registered under the Securities Act pursuant to the Shelf Registration Statement, and are being offered by the Trust pursuant to a prospectus dated August 19, 2014, as supplemented by a prospectus supplement dated August 19, 2014, filed with the Commission pursuant to Rule 424(b) of the Securities Act. The $1,800,000 one-time payment in unrestricted shares is included in general and administrative expense in the consolidated statements of operations for the three and nine months ended September 30, 2014.

Note 13 — Subsequent Events

Pursuant to that certain First Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated July 24, 2013, among the Trust and the limited partners set forth therein (the “partnership agreement”), limited partners, other than the Trust, have redemption rights, to cause the Operating Partnership to redeem their OP Units in exchange for cash or, at the Trust’s option, for common shares on a one-for-one basis, generally commencing one year from the date of issuance of such OP units. Pursuant to the terms of the partnership agreement, certain limited partners, including each of the Ziegler Funds, exercised their respective redemption rights and in connection therewith, the Trust purchased on October 1, 2014 an aggregate of 545,750 OP Units in exchange for an aggregate of approximately $7.5 million in cash and the Trust issued 2,005,101 common shares to purchase 2,005,101 OP Units. The common shares issued were issued (a) in private placements in reliance on Section 4(2) of the Securities Act, and the rules and regulations promulgated thereunder and (b) to “accredited investors” within the meaning of Rule 501 of Regulation D under the Securities Act. The resale of the common shares by the then selling shareholders and former limited partners has been registered by the Trust under the Securities Act pursuant to the Trust’s Registration Statement on Form S-3 (File No. 333-197842), filed with the Commission on August 4, 2014, which was declared effective by the Commission on August 19, 2014 (the “Shelf Registration Statement”).

Upon the effectiveness of the above transactions, the Trust held a 93.7% interest in the Operating Partnership as of October 1, 2014.

On October 29, 2014 the Trust closed on the purchase of five medical office buildings (the “Facilities”) located in the greater Harrisburg, Pennsylvania area for a purchase price of $23.1 million. The Facilities have approximately 117,765 square feet and are 97% occupied. Pinnacle Health System is the largest tenant occupying approximately 67% of the Facilities.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with our unaudited consolidated financial statements, including the notes to those statements, included in Part I, Item 1 of this report, and the Section entitled “Cautionary Statement Regarding Forward-Looking Statements” in this report. As discussed in more detail in the Section entitled “Cautionary Statement Regarding Forward-Looking Statements,” this discussion contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause those differences include those discussed in Part I, Item 1A (Risk Factors) of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and Part II, Item 1A (Risk Factors) of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014 and Part II, Item 1A (Risk Factors) of this report.

Overview

We are a self-managed healthcare real estate company organized in April 2013 to acquire, selectively develop, own and manage healthcare properties that are leased to physicians, hospitals and healthcare delivery systems. We invest in real estate that is integral to providing high quality healthcare services. Our properties are typically located on a campus with a hospital or other healthcare facilities or strategically located and affiliated with a hospital or other healthcare facilities. We believe the impact of government programs and continuing trends in the healthcare industry create attractive opportunities for us to invest in healthcare related real estate. Our management team has significant public healthcare REIT experience and has long established relationships with physicians, hospitals and healthcare delivery system decision makers that we believe will provide quality investment and growth opportunities. Our principal investments include medical office buildings, outpatient treatment facilities, specialty surgical hospitals, and long-term acute care hospitals, as well as other real estate integral to health care providers. We seek to invest in stabilized medical facility assets with initial cash yields of 7% to 10%. We seek to generate attractive risk-adjusted returns for our shareholders through a combination of stable and increasing dividends and potential long-term appreciation in the value of our properties and our common shares. We elected to be taxed as a REIT for U.S. federal income tax purposes beginning with our short taxable year ended December 31, 2013.

As of September 30, 2014, our portfolio consisted of 64 properties located in 17 states with approximately 2,524,950 net leasable square feet, which were approximately 95.4% leased with a weighted average remaining lease term of approximately 9.9 years and approximately 60.0% of the net leasable square footage of our portfolio was affiliated with a healthcare delivery system and approximately  50.3% of the net leasable square footage of our properties is located within approximately 1/4 mile of a hospital campus. We receive a cash rental stream from these healthcare providers under our leases.

Approximately 91.0% of the annualized base rent payments from our properties as of September 30, 2014 are from triple net leases, pursuant to which the tenants are responsible for all operating expenses relating to the property, including but not limited to real estate taxes, utilities, property insurance, routine maintenance and repairs, and property management. This structure helps insulate us from increases in certain operating expenses and provides more predictable cash flow. We seek to structure our triple net leases to generate attractive returns on a long-term basis. Our leases typically have initial terms of five to 15 years and include annual rent escalators of approximately 2%. Our operating results depend significantly upon the ability of our tenants to make required rental payments. We believe that our portfolio of medical office buildings and other healthcare facilities will enable us to generate stable cash flows over time because of the diversity of our tenants, staggered lease expiration schedule, long-term leases, and low historical occurrence of tenants defaulting under their leases. As of September 30, 2014, leases representing 0.4%, 1.2% and 3.4% of leasable square feet in our portfolio will expire in 2014, 2015 and 2016, respectively.

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On September 18, 2014, the Operating Partnership, as borrower, and we and certain of our subsidiaries and other affiliates, as guarantors, entered into a Credit Agreement (the “Credit Agreement”) with KeyBank National Association as administrative agent, KeyBanc Capital Markets Inc., Regions Capital Markets and BMO Capital Markets, as joint lead arrangers and joint bookrunners, Regions Capital Markets and BMO Capital Markets, as co-syndication agents, and the lenders party thereto in connection with an unsecured revolving credit facility in the maximum principal amount of $400 million. The Credit Agreement includes a swingline loan commitment for up to 10% of the maximum principal amount and provides an accordion feature allowing the Company to increase borrowing capacity by up to an additional $350 million, subject to customary terms and conditions, resulting in a maximum borrowing capacity of $750 million.

Effective September 18, 2014, the Credit Agreement, dated as of August 29, 2013 (as amended, restated, increased, extended, supplemented or otherwise modified from time to time, the “Prior Credit Agreement”), among the Operating Partnership, as borrower, us, certain subsidiaries and other affiliates of the Operating Partnership, as guarantors, Regions Bank, as administrative agent, Regions Capital Markets, as sole lead arranger and sole book runner, and the lenders party thereto, and all commitments provided thereunder, were terminated. All amounts due and outstanding under the Prior Credit Agreement were repaid on or prior to such date. The Credit Agreement replaces our existing senior secured revolving credit facility in the maximum principal amount of $200 million under the Prior Credit Agreement.

As of September 30, 2014, we had approximately $83.4 million of mortgage indebtedness outstanding secured by first mortgages on certain of our properties and $70.0 million outstanding borrowings under our unsecured revolving credit facility.

We completed our IPO in July 2013, pursuant to which we issued an aggregate of 11,753,597 common shares, including shares issued upon exercise of the underwriters’ overallotment option, and received approximately $123.8 million of net proceeds. We contributed the net proceeds of the IPO to our Operating Partnership in exchange for 11,753,597 OP Units. Simultaneously with the closing of our IPO, we completed a series of related formation transactions pursuant to which we acquired 19 medical office buildings located in ten states with approximately 524,048 net leasable square feet in exchange for 2,744,000 OP Units, and the assumption of approximately $84.3 million of debt related to such properties. We used the net proceeds of the IPO to repay approximately $36.9 million of such debt, to purchase the 50% interest in the Arrowhead Common property not owned by the Ziegler Funds for approximately $850,000, after which we became the 100% owner of that property, and to pay certain expenses related to the assumption of debt and our senior secured revolving credit facility. In addition, at the completion of the IPO, we entered into a shared services agreement with Ziegler pursuant to which Ziegler provides office space, IT support, accounting support and other services to us in exchange for an annual fee.

Following completion of our IPO and related formation transactions through December 31, 2013, we completed the acquisitions of eight healthcare properties located in six states containing an aggregate of 377,295 net leasable square feet for an aggregate of approximately $136.4 million using proceeds from the IPO, borrowings under our senior secured revolving credit facility and issuance of OP units. One of the eight healthcare property acquisitions was the Crescent City Surgical Centre in New Orleans, Louisiana, which was acquired in September 2013 for approximately $37.5 million. As partial payment of the purchase price for the property, we issued an aggregate of 954,877 OP Units to the sellers of that property valued at approximately $11.5 million (based on the average three-day closing price of our common shares on the NYSE prior to closing).  Also, during 2013, we acquired approximately 40% and 35% of the joint venture interests we did not own with respect to two of our existing properties, which resulted in our 100% ownership of those properties.

On December 11, 2013, we completed a public offering of 9,545,000 common shares of beneficial interest, including 1,245,000 shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to us of approximately $103.1 million. We contributed the net proceeds of this offering to our Operating Partnership in exchange for 9,545,000 OP Units, and our Operating Partnership used the net proceeds of the public offering to repay borrowings under our senior secured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

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During the quarterly period ended March 31, 2014, we completed seven acquisitions of 13 healthcare properties located in five states containing an aggregate of 550,670 net leasable square feet for an aggregate of approximately $147.4 million using proceeds from our December 2013 public offering, borrowings under our senior secured revolving credit facility and mortgage financing on existing properties.  Also, we completed the acquisition of a 40% ownership interest in the entity that owns the land under Crescent City Surgical Centre for $1.3 million on February 21, 2014.  Such land is leased to us pursuant to a long-term ground lease.

On May 27, 2014, we completed a public offering of 12,650,000 common shares of beneficial interest, including 1,650,000 shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to us of approximately $149.9 million. We contributed the net proceeds of this offering to our Operating Partnership in exchange for 12,650,000 OP Units, and our Operating Partnership used the net proceeds of the public offering to repay borrowings under our senior secured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

During the quarterly period ended June 30, 2014, we completed eight acquisitions of nine healthcare properties located in five states containing an aggregate of 279,056 net leasable square feet for an aggregate of approximately $73.6 million using proceeds from our December 2013 and May 2014 public offerings, borrowings under our senior secured revolving credit facility and mortgage financing on existing properties.  The Operating Partnership partially funded the purchase price of two of these acquisitions by issuing a total of 243,758 OP Units valued at approximately $3.2 million on the date of issuance.

The Operating Partnership and we entered into the First Amendment to Shared Services Agreement, dated July 31, 2014 (the “First Amendment”), with Ziegler, which amended certain terms of our shared services agreement with Ziegler. Among other things, the First Amendment reduced the shared services to be provided by Ziegler, the term of the shared services agreement, and the monthly fee to be paid by the Trust for the remainder of the term.  In consideration of these changes, we were obligated to make a one-time payment to Ziegler in the amount of $1,800,000 (the “Amendment Payment”), which may be paid in cash or in unrestricted common shares of the Trust as determined by the Trust in its sole discretion.

Our Registration Statement on Form S-3 (File No. 333-197842), which we filed with the Commission on August 4, 2014, was declared effective by the Commission on August 19, 2014 (the “Shelf Registration Statement”).  The Shelf Registration Statement covers the offering, from time to time, of various securities with an aggregate value of up to $900 million and the secondary offering of common shares by certain selling shareholders.

On August 19, 2014, we made the Amendment Payment by issuing 124,913 common shares to Ziegler. The common shares are registered under the Securities Act pursuant to the Shelf Registration Statement, and were offered by us pursuant to a prospectus dated August 19, 2014, as supplemented by a prospectus supplement dated August 19, 2014, filed with the Commission pursuant to Rule 424(b) of the Securities Act.

On August 19, 2014, we and the Operating Partnership entered into separate At Market Issuance Sales Agreements (the “Sales Agreements”) with each of MLV & Co. LLC, KeyBanc Capital Markets Inc., JMP Securities LLC, and RBC Capital Markets, LLC (the “Agents”), pursuant to which we may issue and sell common shares having an aggregate offering price of up to $150 million, from time to time, through the Agents pursuant to the Shelf Registration Statement. In accordance with the Sales Agreements, we may offer and sell our common shares through any of the Agents, from time to time, by any method deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act, which includes sales made directly on the NYSE, or other existing trading market, or sales made to or through a market maker. With our express written consent, sales also may be made in negotiated transactions or any other method permitted by law. The common shares are registered under the Securities Act pursuant to the Shelf Registration Statement, and are being offered pursuant to a prospectus dated August 19, 2014, as supplemented by a prospectus supplement dated August 19, 2014, filed with the Commission pursuant to Rule 424(b) of the Securities Act. During the quarterly period ended September 30, 2014, we did not issue and sell any common shares pursuant to any of the Sales Agreements.

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On September 12, 2014, we completed a public offering of 10,925,000 common shares of beneficial interest, including 1,425,000 shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to us of approximately $145.7 million. We contributed the net proceeds of this offering to our Operating Partnership in exchange for 10,925,000 OP Units, and our Operating Partnership used the net proceeds of the public offering to repay borrowings under our senior secured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

During the quarterly period ended September 30, 2014, we completed 11 acquisitions of 16 healthcare properties located in six states containing an aggregate of 795,139 net leasable square feet for an aggregate of approximately $226.2 million as summarized below using proceeds from our May 2014 and September 2014 public offerings, borrowings under our former senior secured revolving credit facility and borrowings under our new unsecured revolving credit facility.

Property(1)	Location	Acquisition Date	Square Footage	Purchase Price (in thousands)
Landmark Healthcare Portfolio (Premier) 3 MOBs (2)	Bloomington, IN	July 1, 2014	90,000	$	23,837
Carlisle II MOB	Carlisle, PA	July 25, 2014	13,245	$	4,500
Surgical Institute of Monroe ASC	Monroe, MI	July 28, 2014	24,500	$	6,000
The Oaks Medical Building MOB	Lady Lake, FL	July 31, 2014	27,992	$	10,600
Baylor Surgicare ASC - Mansfield	Mansfield, TX	September 2, 2014	15,662	$	8,500
Eye Center of Southern Indiana(2)	Bloomington, IN	September 5, 2014	32,096	$	12,174
Wayne State Medical Center and MOB	Troy, MI	September 10, 2014	176,000	$	46,500
El Paso Portfolio (specialty surgical hospital and 2 MOBs)(2)	El Paso, TX	September 30, 2014	178,700	$	46,235
The Mark H. Zangmeister Center	Columbus, OH	September 30, 2014	109,667	$	36,600
Berger Medical Center	Orient, OH	September 30, 2014	31,528	$	6,785
Orthopedic One 2 MOBs	Columbus, OH Westerville, OH	September 30, 2014	95,749	$	24,500
Total			795,139	$	226,231

(1)“MOB” means medical office building and “ASC” means ambulatory surgical center.

(2)The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 1,798,555 OP Units valued at approximately $25.5 million in the aggregate on the date of issuance.

We have grown our portfolio of gross real estate investments from approximately $124 million at the time of our IPO in July 2013 to $713.0 million as of September 30, 2014. We expect our portfolio to grow to between $750 million to $800 million in gross real estate investments by the end of this fiscal year.

We did not conduct business operations prior to completion of our IPO on July 24, 2013, therefore, the financial information herein for periods prior to July 24, 2013 reflects the operations of the four healthcare real estate funds managed by Ziegler, which we refer to as the Ziegler Funds or the Predecessor, from whom we acquired the equity interests in the 19 properties that constituted our initial properties upon completion of our IPO and formation transactions. We determined the Ziegler Funds to be our accounting predecessor. The financial information herein since July 24, 2013 reflect our operations since completion of the IPO and formation transactions.

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We are a Maryland real estate investment trust and elected to be taxed as a REIT for U.S. federal income tax purposes beginning with our short taxable year ended December 31, 2013. We conduct our business through an UPREIT structure in which our properties are owned by our Operating Partnership directly or through limited partnerships, limited liability companies or other subsidiaries. We are the sole general partner of our Operating Partnership and, as of September 30, 2014, own approximately 88.7% of the partnership interests in our Operating Partnership.

Property Acquisitions Subsequent to September 30, 2014

On October 29, 2014 the Company closed on the purchase of five medical office buildings (the “Facilities”) located in the greater Harrisburg, Pennsylvania area for a purchase price of $23.1 million. The Facilities have approximately 117,765 square feet and are 97% occupied. Pinnacle Health System (“Pinnacle”) is the largest tenant occupying approximately 67% of the Facilities. Pinnacle is one of the premier healthcare systems in central Pennsylvania with the leading market share based on inpatient discharges in Harrisburg. Pinnacle provides a wide array of services, including diagnostic, therapeutic, inpatient, outpatient, cardiovascular and cardiothoracic surgery, orthopedics, and neurosurgery.

Other Recent Developments

Pursuant to that certain First Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated July 24, 2013, among us and the limited partners set forth therein (the “partnership agreement”), limited partners, other than us, have redemption rights, to cause the Operating Partnership to redeem their OP Units in exchange for cash or, at our option, for common shares on a one-for-one basis, generally commencing one year from the date of issuance of such OP units. Pursuant to the terms of the partnership agreement, certain limited partners, including each of the Ziegler Funds, exercised their respective redemption rights and in connection therewith, we purchased on October 1, 2014 an aggregate of 545,750 OP Units in exchange for an aggregate of approximately $7.5 million in cash and we issued 2,005,101 common shares to purchase 2,005,101 OP Units. The common shares issued were issued (a) in private placements in reliance on Section 4(2) of the Securities Act and the rules and regulations promulgated thereunder and (b) to “accredited investors” within the meaning of Rule 501 of Regulation D under the Securities Act. The resale of the common shares by the then selling shareholders and former limited partners has been registered by us under the Securities Act pursuant to our Shelf Registration Statement.

Upon the effectiveness of the above transactions, the Trust held a 93.7% interest in the Operating Partnership as of October 1, 2014.

We expect to join the MSCI US REIT Index at the close of business on November 25, 2014.

Components of Our Revenues, Expenses and Cash Flow

The financial information of our Predecessor, the Ziegler Funds, prior to completion of the IPO, reflects a different structure than our operations following the inception of operations upon completion of our IPO and as a result, the results of operations of the Predecessor and our results since our inception of operations may not be comparable.  While the financial presentation of revenues pursuant to the leases at the properties in our initial portfolio and certain expenses, such as depreciation and amortization, are substantially consistent for the Predecessor and for us, the expense structure of our company since completion of the IPO and the formation transactions differs from the historical expense structure of the Predecessor.  During the periods of financial information for the Predecessor, the Ziegler Funds had no direct employees and paid a fixed annual management fee to Ziegler, which managed the operations of the Ziegler Funds.  By contrast, as a self-managed REIT, we do not pay management fees to third parties (other than to third party property management companies with respect to certain of our properties) but rather we pay cash and other forms of compensation to our officers and employees.  Also, effective upon completion of the formation transactions, we entered into a Shared Services Agreement with Ziegler pursuant to which we pay Ziegler a fixed annual fee for office space, IT support, accounting support and similar services.  In addition, as a public reporting company, we have incurred and expect to continue to incur certain expenses, such as legal and accounting expenses relating to SEC reporting and other matters that were not incurred historically by the Predecessor, which was not a public reporting company.

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Revenues

Revenues consist primarily of the rental revenues and property operating expense recoveries we collect from tenants pursuant to our leases. Additionally, we recognize certain cash and non-cash revenues. These cash and non-cash revenues are highlighted below.

Rental revenues. Rental revenues represent rent under existing leases that is paid by our tenants and straight-lining of contractual rents reduced by lease inducement and above-market lease amortization.

Expense recoveries.  Certain of our leases require our tenants to make estimated payments to us to cover their proportional share of operating expenses, including but not limited to real estate taxes, property insurance, routine maintenance and repairs, utilities, and property management expenses. We collect these estimated expenses and are reimbursed by our tenants for any actual expenses in excess of our estimates or reimburse tenants if our collected estimates exceed our actual operating expenses. The net reimbursed operating expenses are included in revenues as expense recoveries.

We have certain tenants with absolute net leases. Under these lease agreements, the tenant is responsible for operating and building expenses. For absolute net leases, we do not recognize operating expense or expense recoveries.

Interest income on real estate loans and other. Represents interest income on a mezzanine loan and change in fair value of derivative liability.  Interest income on the loan is recognized as earned based on the terms of the loan subject to evaluation of collectability risks.

We have implemented Accounting Standards Codification (ASC) 815, Derivatives and Hedging (ASC 815), which establishes accounting and reporting standards requiring that all derivatives, including certain derivative instruments embedded in other contracts, be recorded as either an asset or liability measured at their fair value unless they qualify for a normal purchase or normal sales exception. When specific hedge accounting criteria are not met, ASC 815 requires that changes in a derivative’s fair value be recognized currently in earnings. All of the changes in the fair market values of our derivative instruments are recorded in the consolidated and combined statements of operations.

Expenses

Expenses consist primarily of interest expense, general and administrative costs associated with operating our properties, operating expenses of our properties, depreciation and amortization, and costs we incur to acquire properties.

Interest expense, net.  We recognize the interest expense we incur on our borrowings as interest expense.  Additionally, we incur amortization expense for charges such as legal fees, commitment fees and arrangement fees that reflect costs incurred with arranging certain debt financings.  We generally recognize these costs over the term of the respective debt instrument for which the costs were incurred as a component of interest expense.

General and administrative. General and administrative expenses include certain expenses such as compensation, accounting, legal and other professional fees as well as certain other administrative and travel costs, and expenses related to bank charges, franchises taxes, corporate filing fees, exchange listing fees, officer and trustee insurance costs and other costs associated with being a public company.  In addition, effective upon completion of the IPO, we entered into a Shared Services Agreement with Ziegler with respect to certain overhead expenses.  The fees paid under the Shared Services Agreement are included in general and administrative expenses.

Operating Expenses.  Operating expenses include property operating expenses such as real estate taxes, property insurance, routine maintenance and repairs, utilities and property management expenses, some of which are reimbursed to us by tenants under the terms of triple net leases.

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Depreciation and amortization. We incur depreciation and amortization expense on all of our long-lived assets. This non-cash expense is designed under generally accepted accounting principles, or GAAP, to reflect the economic useful lives of our assets.

Acquisition expenses.  Acquisition costs are costs we incur in pursuing and closing property acquisitions accounted for as business combinations.  These costs include legal, accounting, valuation, other professional or consulting fees and the compensation of certain employees who dedicate substantially all of their time to acquisition related job functions.  We account for acquisition-related costs as expenses in the period in which the costs are incurred and the services are received.

Management fees. Ziegler and another subsidiary of the Ziegler Companies, Inc. historically charged a management fee to the Ziegler Funds. These management fees were discontinued upon our acquisition of our initial properties upon completion of our IPO and the formation transactions.

Equity in income of unconsolidated entity.  We recognize our 40% share of earnings and losses from the entity that owns the land under Crescent City Surgical Centre.

Cash Flow

Cash flows from operating activities. Cash flows from operating activities are derived largely from net income by adjusting our revenues for those amounts not collected in cash during the period in which the revenue is recognized and for cash collected that was billed in prior periods or will be billed in future periods. Net income is further adjusted by adding back expenses charged in the period that is not paid for in cash during the same period. We expect to make our distributions based largely from cash provided by operations.

Cash flows from investing activities. Cash flows from investing activities consist of cash that is used during a period for making new investments and capital expenditures offset by cash provided from sales of real estate investments.

Cash flows from financing activities. Cash flows from financing activities consist of cash we receive from debt and equity financings. This cash provides the primary basis for investments in new properties and capital expenditures. While we may invest a portion of our cash from operations into new investments, as a result of the distribution requirements to maintain our REIT status, it is likely that additional debt or equity financings will finance the majority of our investment activity. Cash used in financing activities consists of repayment of debt and distributions paid to shareholders and OP Unit holders.

Results of Operations

Overview

As described above, following the completion of the IPO and the formation transactions, our structure and operations differ from the historical structure and operations of the Ziegler Funds.  For this and other reasons set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we do not believe that the Predecessor’s historical results of operations are indicative of our future operating results.

Three months ended September 30, 2014 compared to the three months ended September 30, 2013

The Trust was organized on April 9, 2013 and commenced operations on July 24, 2013.  The 2013 results disclosed in this report include the Trust’s results from July 24, 2013 through September 30, 2013, combined with the results of our Predecessor from July 1, 2013 through July 23, 2013.

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The following table summarizes our results of operations for the three months ended September 30, 2014 and 2013 (in thousands):

	2014			2013			Change			%
Revenues:
Rental revenues	$	12,506		$	2,920		$	9,586		328.3
Expense recoveries	1,355			798			557			69.8
Interest income on real estate loans and other	300			11			289			2,627.3
Total revenues	14,161			3,729			10,432			279.8
Expenses:
Interest expense, net	1,911			826			1,085			131.4
General and administrative	4,445			1,285			3,160			245.9
Operating expenses	2,531			1,130			1,401			124.0
Depreciation and amortization	4,413			1,146			3,267			285.1
Acquisition expenses	2,922			756			2,166			286.5
Impairment loss	250			—			250			NM
Total expenses	16,472			5,143			11,329			220.3
Loss before equity in income of unconsolidated entity and gain (loss) on sale of property:	(2,311		)	(1,414		)	(897		)	63.4
Equity in income of unconsolidated entity	26			—			26			NM
Gain (loss) on sale of property	34			(2		)	36			-1,800.0
Net loss	$	(2,251	)	$	(1,416	)	$	(835	)	59.0

NM = Not Meaningful

Revenues

Total revenues increased $10.4 million, or 279.8%, for the three months ended September 30, 2014 as compared to ours and the Predecessor’s three months ended September 30, 2013. An analysis of selected revenues follows.

Rental revenues. Rental revenues increased $9.6 million, or 328.3%, from $2.9 million for the three months ended September 30, 2013 to $12.5 million for the three months ended September 30, 2014.  The increase in rental revenues primarily resulted from property acquisitions which closed in the fourth quarter of 2013 and the 38 property acquisitions that closed in the nine months ended September 30, 2014 which resulted in an additional $9.7 million in revenue

Expense recoveries. Expense recoveries increased $0.6 million, or 69.8%, for the three months ended September 30, 2014 as compared to ours and the Predecessor’s three months ended September 30, 2013.  The increase is primarily due to additional expense recoveries related to the properties acquired in the fourth quarter of 2013 and nine months ended September 30, 2014.

Interest income on real estate loans and other.  Interest income on real estate loans and other increased $0.3 million for the three months ended September 30, 2014 as compared to ours and the Predecessor’s three months ended September 30, 2013. An increase of $0.2 million is due to the mezzanine loan transaction completed on January 2, 2014, and a $0.1 million increase in the gain from the change in fair value of a derivative liability.

Expenses

Total expenses increased by $11.4 million, or 220.3%, for the three months ended September 30, 2014 as compared to ours and the Predecessor’s three months ended September 30, 2013. An analysis of selected expenses follows.

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Interest expense, net. Interest expense for the three months ended September 30, 2014 was $1.9 million compared to $0.8 million for the three months ended September 30, 2013, representing an increase of $1.1 million, or 131.4%. The $1.1 million increase was the result of a $0.5 million increase in interest on new mortgage debt and $0.8 million resulting from outstanding balances, non-use fees and amortization of deferred financing costs on our revolving line of credit (including a $0.1 million deferred financing cost write off relating to the Prior Credit Agreement), partially offset by $0.2 million decrease relating to a mortgage re-finance and debt pay-down.

General and administrative. General and administrative expenses increased $3.2 million or 245.9%, from $1.3 million during the three months ended September 30, 2013 to $4.5 million during the three months ended September 30, 2014. The increase included salaries and benefits of $1.1 million (including non-cash share compensation of $0.6 million), professional fees of $0.2 million and other administrative costs of $1.9 million (including one-time Amendment Payment of $1.8 million to Ziegler).

Operating expenses. Operating expenses increased $1.4 million or 124.0%, from $1.1 million during the three months ended September 30, 2013 to $2.5 million during the three months ended September 30, 2014.  The increase is primarily due to the properties acquired in the fourth quarter of 2013 and the nine months ended September 30, 2014 which resulted in an additional $1.3 million of operating expenses.

Depreciation and amortization. Depreciation and amortization increased $3.3 million, or 285.1%, from $1.1 million during the three months ended September 30, 2013 to $4.4 million during the three months ended September 30, 2014.  The increase in depreciation and amortization was primarily from the properties acquired in the fourth quarter of 2013 and the nine months ended September 30, 2014 which resulted in an additional $3.3 million in depreciation and amortization for the three months ended September 30, 2014.

Acquisition expenses. Acquisition expenses increased $2.2 million or 286.5%, from $0.8 million during the three months ended September 30, 2013 to $2.9 million for the three months ended September 30, 2014. During the third quarter of 2014, we acquired $137.7 million of real estate that were considered business combinations and as such, the related acquisition costs were expensed, compared to $111.3 million for the third quarter of 2013.

Impairment loss. The Trust recognized a $0.3 million impairment on a Predecessor purchased medical office building.

Equity in income of unconsolidated entity.  The change in equity income from unconsolidated entity for the three months ended September 30, 2014 was $0.03 million. The increase is the result of the acquisition of a 40% ownership interest in the entity that owns the land under Crescent City Surgical Centre for $1.3 million on February 21, 2014.

Gain (loss) on sale of property.  On September 19, 2014, the Trust sold a 2,000 square foot medical office building condominium unit located in Florida for approximately $0.3 million. On September 30, 2013, the Trust sold a 4,000 square foot medical office building condominium unit located in Florida for approximately $0.5 million.

Nine months ended September 30, 2014 compared to the nine months ended September 30, 2013

The Trust was organized on April 9, 2013 and commenced operations on July 24, 2013.  The 2013 results disclosed in this report include the Trust’s results from July 24, 2013 through September 30, 2013, combined with the results of the Predecessor from January 1, 2013 through July 23, 2013.

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The following table summarizes our results of operations for the nine months ended September 30, 2014 and 2013 (in thousands):

	2014			2013			Change			%
Revenues:
Rental revenues	$	29,555		$	7,952		$	21,603		271.7
Expense recoveries	3,445			2,399			1,046			43.6
Interest income on real estate loans and other	640			206			434			210.7
Total revenues	33,640			10,557			23,083			218.7
Expenses:
Interest expense, net	4,849			3,114			1,735			55.7
General and administrative	8,867			1,507			7,360			488.4
Operating expenses	6,367			3,578			2,789			77.9
Depreciation and amortization	10,565			3,123			7,442			238.3
Acquisition expenses	9,254			756			8,498			1,124.1
Management fee	—			475			(475		)	-100.0
Impairment loss	250			—			250			NM
Total expenses	40,152			12,553			27,599			219.9
Loss before equity in income of unconsolidated entity:	(6,512		)	(1,996		)	(4,516		)	226.3
Equity in income of unconsolidated entity	69			—			69			NM
Gain (loss) on sale of property	34			(2		)	36			-1,800.0
Net loss	$	(6,409	)	$	(1,998	)	$	(4,411	)	220.8

NM = Not Meaningful

Revenues

Total revenues increased $23.1 million, or 218.7%, for the nine months ended September 30, 2014 as compared to the nine months ended September 30, 2013. An analysis of selected revenues follows.

Rental revenues. Rental revenues increased $21.6 million, or 271.7%, from $8.0 million for the nine months ended September 30, 2013 to $29.6 million for the nine months ended September 30, 2014.  The increase in rental revenues primarily resulted from eight property acquisitions which closed in the third and fourth quarters of 2013 and 38 property acquisitions that closed in the nine months ended September 30, 2014 and resulted in an additional $21.9 million in revenue.

Expense recoveries. Expense recoveries increased $1.0 million, or 43.6%, for the nine months ended September 30, 2014 as compared to the nine months ended September 30, 2013.  The increase in expense recoveries primarily resulted from eight property acquisitions which closed in the third and fourth quarters of 2013 and 38 property acquisitions that closed in the nine months ended September 30, 2014 and resulted in an additional $0.9 million.

Interest income on real estate loans and other.  Interest income on real estate loans and other increased $0.4 million for the nine months ended September 30, 2014 as compared to the nine months ended September 30, 2013. The increase was the result of a $0.4 million increase due to the mezzanine loan transaction completed on January 2, 2014 and an increase of $0.07 million of other income, which was partially offset by a $0.07 million decrease in the gain from the change in fair value of a derivative liability.

Expenses

Total expenses increased by $27.6 million, or 219.9%, for the nine months ended September 30, 2014 as compared to the nine months ended September 30, 2013. An analysis of selected expenses follows.

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Interest expense, net. Interest expense for the nine months ended September 30, 2014 was $4.8 million compared to $3.1 million for the nine months ended September 30, 2013, representing an increase of $1.7 million, or 55.7%. The $1.7 million increase was the result of a $1.3 million increase in interest on new mortgage debt and  $1.8 million resulting from outstanding balances, non-use fees and amortization of deferred financing costs on our revolving line of credit (including a $0.1 million deferred financing cost write off relating to the Prior Credit Agreement), partially offset by a $1.1 million decrease in interest on mortgage debt due to the repayment of $36.9 million of mortgage notes payable in connection with the formation transactions using proceeds from our IPO and $0.3 million decrease relating to a mortgage re-finance and debt pay-downs.

General and administrative. General and administrative expenses increased $7.4 million or 488.4%, from $1.5 million during the nine months ended September 30, 2013 to $8.7 million during the nine months ended September 30, 2014. The increase included salaries and benefits of $3.0 million (including non-cash share compensation of $1.4 million), professional fees of $1.4 million and other administrative costs of $3.0 million (including one-time Amendment Payment of $1.8 million to Ziegler).

Operating expenses. Operating expenses increased $2.8 million or 77.9%, from $3.6 million during the nine months ended September 30, 2013 to $6.4 million during the nine months ended September 30, 2014.  The increase is primarily due to the properties acquired in the third and fourth quarters of 2013 and the nine months ended September 30, 2014 which resulted in an additional $2.8 million of operating expenses.

Depreciation and amortization. Depreciation and amortization increased $7.4 million, or 238.3%, from $3.1 million during the nine months ended September 30, 2013 to $10.5 million during the nine months ended September 30, 2014.  The increase in depreciation and amortization was primarily from the properties acquired in the third and fourth quarters of 2013 and the nine months ended September 30, 2014 which resulted in an additional $7.5 million in depreciation and amortization for the nine months ended September 30, 2014.

Acquisition expenses. Acquisition expenses increased $8.5 million or 1,124.1%, from $0.8 million during the nine months ended September 30, 2013 to $9.3 million for the nine months ended September 30, 2014.  During the nine months ended September 30, 2014 and 2013, we acquired $277.9 million and $111.3 million, respectively, of real estate that were considered business combinations and as such, the related acquisition costs were expensed.

Impairment loss. The Trust recognized a $0.3 million impairment on a Predecessor purchased medical office building.

Management fees. The Predecessor incurred $0.5 million of management fees in the nine months ended September 30, 2013.  We do not incur these management fees.  No management fees were incurred by the Trust in the nine months ended September 30, 2014.

Equity in income of unconsolidated entity.  The change in equity income from unconsolidated entity for the nine months ended September 30, 2014 was $0.1 million. The increase is the result of the acquisition of a 40% ownership interest in the entity that owns the land under Crescent City Surgical Centre for $1.3 million on February 21, 2014.

Gain (loss) on sale of property.  On September 19, 2014, the Trust sold a 2,000 square foot medical office building condominium unit located in Florida for approximately $0.3 million. On September 30, 2013, the Trust sold a 4,000 square foot medical office building condominium unit located in Florida for approximately $0.5 million.

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Cash Flows

Nine months ended September 30, 2014 compared to nine months ended September 30, 2013 (In thousands):

	2014			2013
Net cash provided by (used in) operating activities	$	7,445		$	(34	)
Net cash used in investing activities	(413,404		)	(101,342		)
Net cash provided by financing activities	366,506			102,995
(Decrease) increase in cash and cash equivalents	$	(39,453	)	$	1,619

Cash flows from operating activities. Cash flows provided by operating activities was $7.4 million during the nine months ended September 30, 2014 compared to cash flow used in operating activities of $0.03 million during the nine months ended September 30, 2013, representing an increase of $7.5 million. This change was primarily attributable to a $7.3 million increase in amortization and depreciation, a $1.5 million increase in non-cash stock compensation, a $1.6 million increase in other assets and accounts payable, a $2.2 million increase in accrued expense, and a $1.8 million increase in shared service agreement due to the Amendment Payment to Ziegler, partially offset by a $4.4 million increase in net loss and $2.7 million increase in straight line rents.

Cash flows from investing activities. Cash flows used in investing activities was $413.4 million during the nine months ended September 30, 2014 compared to cash flows used in investing activities of $101.3 million during the nine months ended September 30, 2013, representing a change of $312.1 million. The increase in cash flows used in investing activities was primarily attributable to the acquisition of 38 properties and one land purchase for $404.7 million and funding of the mezzanine loan for $6.8 million, and $0.6 million increase in capital expenditures on investment properties, which was partially offset by $100.0 million of acquisitions in the nine months ended September 30, 2013.

Cash flows from financing activities. Cash flows provided by financing activities was $366.5 million during the nine months ended September 30, 2014 compared to cash flows provided by financing activities of $103.0 million during the nine months ended September 30, 2013, representing an increase of $263.5 million. The increase was primarily attributable to an increase of $172.7 million in net proceeds from follow-on public offerings, net increase of proceeds and payments on credit facility borrowings of $50.2 million, increase of $26.4 million in proceeds from issuance of mortgage debt and a decrease of $36.7 million of payments on mortgage debt, partially offset by an increase of $20.1 million of dividends and distributions paid and an increase of $2.8 million of debt issuance costs on our credit facility.

Liquidity and Capital Resources

Our short-term liquidity requirements consist primarily of operating and interest expenses and other expenditures directly associated with our properties, including:

·property expenses;

·interest expense and scheduled principal payments on outstanding indebtedness;

·general and administrative expenses; and

·capital expenditures for tenant improvements and leasing commissions.

In addition, we will require funds for future distributions expected to be paid to our common shareholders and OP Unit holders in our Operating Partnership.

As of September 30, 2014, we had a total of $17.0 million of cash and cash equivalents and $255.8 million of near-term availability on our unsecured revolving credit facility.  Also, we had an additional $74.2 million of availability under our unsecured revolving credit facility as of September 30, 2014 which is subject to customary property underwriting standards.  We believe that our existing cash and cash equivalents, cash flow from operating activities and borrowings available under our senior secured revolving credit facility will be adequate to fund any

33

existing contractual obligations to purchase properties and other obligations through the next twelve months. However, because of the 90% distribution requirement under the REIT tax rules under the Code, we may not be able to fund all of our future capital needs from cash retained from operations, including capital needed to make investments and to satisfy or refinance maturing obligations. As a result, we expect to rely upon external sources of capital, including debt and equity financing, to fund future capital needs. If we are unable to obtain needed capital on satisfactory terms or at all, we may not be able to make the investments needed to expand our business or to meet our obligations and commitments as they mature. We will rely upon external sources of capital to fund future capital needs, and, if we encounter difficulty in obtaining such capital, we may not be able to make future acquisitions necessary to grow our business or meet maturing obligations.

Our long-term liquidity needs consist primarily of funds necessary to pay for acquisitions, recurring and non-recurring capital expenditures and scheduled debt maturities. We expect to satisfy our long-term liquidity needs through cash flow from operations, unsecured borrowings, issuances of equity securities, and, in connection with acquisitions of additional properties, the issuance of OP Units of our Operating Partnership, and proceeds from select property dispositions and joint venture transactions.

We intend to invest in additional properties as suitable opportunities arise and adequate sources of financing are available. We currently are evaluating additional potential investments consistent with the normal course of our business. There can be no assurance as to whether or when any portion of these investments will be completed. Our ability to complete investments is subject to a number of risks and variables, including our ability to negotiate mutually agreeable terms with sellers and our ability to finance the investment. We may not be successful in identifying and consummating suitable acquisitions or investment opportunities, which may impede our growth and negatively affect our results of operations and may result in the use of a significant amount of management resources. We expect that future investments in properties will depend on and will be financed by, in whole or in part, our existing cash, borrowings, including under our unsecured revolving credit facility or the proceeds from additional issuances of common or preferred shares, issuances of OP Units or other securities.

On August 4, 2014, we filed the Shelf Registration Statement with the Commission, allowing us to offer up to $900 million of an indeterminate amount of common shares, preferred shares, convertible preferred shares, debt securities, convertible debt securities or other types of securities, from time to time.  The Commission declared the Shelf Registration Statement effective on August 19, 2014. There can be no assurance that we will be able to complete any such securities offerings.  Factors influencing the availability of additional financing include investor perception of our prospects and the general condition of the financial markets.  Future issuances of our securities may be dilutive to existing shareholders.

On August 19, 2014, we and the Operating Partnership entered into separate At Market Issuance Sales Agreements (the “Sales Agreements”) with each of MLV & Co. LLC, KeyBanc Capital Markets Inc., JMP Securities LLC, and RBC Capital Markets, LLC (the “Agents”), pursuant to which we may issue and sell common shares having an aggregate offering price of up to $150 million, from time to time, through the Agents pursuant to the Shelf Registration Statement. In accordance with the Sales Agreements, we may offer and sell our common shares through any of the Agents, from time to time, by any method deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act, which includes sales made directly on the NYSE, or other existing trading market, or sales made to or through a market maker. With our express written consent, sales also may be made in negotiated transactions or any other method permitted by law. The common shares are registered under the Securities Act pursuant to the Shelf Registration Statement, and are being offered pursuant to a prospectus dated August 19, 2014, as supplemented by a prospectus supplement dated August 19, 2014, filed with the Commission pursuant to Rule 424(b) of the Securities Act. During the quarterly period ended September 30, 2014, we did not issue and sell any common shares pursuant to any of the Sales Agreements.

Effective September 18, 2014, the Credit Agreement, dated as of August 29, 2013 (as amended, restated, increased, extended, supplemented or otherwise modified from time to time, the “Prior Credit Agreement”), among the Operating Partnership, as borrower, the Company, certain subsidiaries and other affiliates of the Operating Partnership, as guarantors, Regions Bank, as administrative agent, Regions Capital Markets, as sole lead arranger and sole book runner, and the lenders party thereto, and all commitments provided thereunder, were terminated. All amounts due and outstanding under the Prior Credit Agreement were repaid on or prior to such date.

34

On September 18, 2014, the Operating Partnership, as borrower, and the Company and certain subsidiaries and other affiliates of the Company, as guarantors, entered into a Credit Agreement (the “Credit Agreement”) with KeyBank National Association as administrative agent, KeyBanc Capital Markets Inc., Regions Capital Markets and BMO Capital Markets, as joint lead arrangers and joint bookrunners, Regions Capital Markets and BMO Capital Markets, as co-syndication agents, and the lenders party thereto in connection with an unsecured revolving credit facility in the maximum principal amount of $400 million. The Credit Agreement includes a swingline loan commitment for up to 10% of the maximum principal amount and provides an accordion feature allowing the Trust to increase borrowing capacity by up to an additional $350 million, subject to customary terms and conditions, resulting in a maximum borrowing capacity of $750 million. The Credit Agreement replaced our senior secured revolving credit facility in the maximum principal amount of $200 million under the Prior Credit Agreement.

The Credit Agreement has a maturity date of September 18, 2018 and includes a one-year extension option. Borrowings under the Credit Agreement bear interest on the outstanding principal amount at a rate equal to LIBOR plus 1.50% to 2.20%. In addition, the Credit Agreement includes an unused fee equal to 0.15% or 0.25% per annum, which is determined by usage under the Credit Agreement.  Any additional indebtedness incurred or issued by us may be secured or unsecured, may have a short, medium, or long term fixed or variable interest rate and may be subject to other terms and conditions. We may also enter into financing arrangements on terms that we might not otherwise accept if we were in need of liquidity and had limited options.

The Credit Agreement contains financial covenants that, among other things, require compliance with leverage and coverage ratios and maintenance of minimum tangible net worth, as well as covenants that may limit our and the Operating Partnership’s ability to incur additional debt or make distributions. We may, at any time, voluntarily prepay any loan under the Credit Agreement in whole or in part without premium or penalty. As of September 30, 2014, we were in compliance with all financial covenants.

The Credit Agreement includes customary representations and warranties by the Operating Partnership, us and each other guarantor and imposes customary covenants on the Operating Partnership, us and each other guarantor. The Credit Agreement also contains customary events of default, and if an event of default occurs and continues, the Operating Partnership is subject to certain actions by the administrative agent, including without limitation, the acceleration of repayment of all amounts outstanding under the Credit Agreement.

We currently do not expect to sell any of our properties to meet our liquidity needs, although we may do so in the future.

We intend to refinance at maturity the mortgage notes payable that have balloon payments at maturity.

We currently are in compliance with all debt covenants in our outstanding indebtedness.

Off-Balance Sheet Arrangements

As of September 30, 2014, we have no off-balance sheet debt.

Seasonality

Our business has not been and we do not expect it to become subject to material seasonal fluctuations.

Critical Accounting Policies

Our consolidated and combined financial statements included in Part I, Item 1 of this report are prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards Board (“FASB”) , which require us to make estimates and assumptions regarding future events that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated and combined financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. We base these estimates on our experience and assumptions we

35

believe to be reasonable under the circumstances. However, if our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, we may have applied a different accounting treatment, resulting in a different presentation of our financial statements. We periodically reevaluate our estimates and assumptions, and in the event they prove to be different from actual results, we make adjustments in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. Please refer to our Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on March 21, 2014, for further information regarding the critical accounting policies that affect our more significant estimates and judgments used in the preparation of our consolidated and combined financial statements included in Part I, Item 1 of this report.

Jumpstart Our Business Startups Act of 2012

The Jumpstart Our Business Startups Act of 2012, or JOBS Act, permits us, as an “emerging growth company,” to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to “opt out” of this provision and, as a result, we will be required to comply with new or revised accounting standards as required when they are adopted. The decision to opt out of the extended transition period under the JOBS Act is irrevocable.

REIT Qualification Requirements

We are subject to a number of operational and organizational requirements necessary to qualify and maintain our qualification as a REIT. If we fail to qualify as a REIT or fail to remain qualified as a REIT in any taxable year, our income would be subject to federal income tax at regular corporate rates and potentially increased state and local taxes and could incur substantial tax liabilities which could have an adverse impact upon our results of operations, liquidity and distributions to our shareholders.

Item 3.Quantitative and Qualitative Disclosures about Market Risk.

Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. We use certain derivative financial instruments to manage, or hedge, interest rate risks related to our borrowings. We do not use derivatives for trading or speculative purposes and only enter into contracts with major financial institutions based upon their credit rating and other factors. Our derivative instrument consists solely of an interest rate swap that is not traded on an exchange and is recorded on the consolidated balance sheet at its fair value.  See Note 8 to our consolidated and combined financial statements included in Item 1 to this report.

An interest rate swap is a contractual agreement entered into by two counterparties under which each agrees to make periodic payments to the other for an agreed period of time based on a notional amount of principal. Under the most common form of interest rate swap, known from our perspective as a floating-to-fixed interest rate swap, a series of floating, or variable, rate payments on a notional amount of principal is exchanged for a series of fixed interest rate payments on such notional amount.

No assurance can be given that any future hedging activities by us will have the desired beneficial effect on our results of operations or financial condition.

The variable rate component of our consolidated indebtedness at September 30, 2014 is LIBOR based. Assuming no increase in the amount of our variable rate debt, if LIBOR were to increase by 100 basis points, interest expense on our variable rate debt at September 30, 2014, would increase by approximately $0.7 million annually, and if LIBOR were to decrease by 100 basis points, interest expense on our variable rate debt at September 30, 2014, would decrease by approximately $0.7 million annually.

36

Interest risk amounts are our management’s estimates and were determined by considering the effect of hypothetical interest rates on our consolidated financial instruments. These analyses do not consider the effect of any change in overall economic activity that could occur in that environment. Further, in the event of a change of that magnitude, we may take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure.

Indebtedness

As of September 30, 2014, we had total consolidated indebtedness of approximately $153.4 million. The weighted average interest rate on our consolidated indebtedness was 3.54% (based on the 30-day LIBOR rate as of September 30, 2014, of 0.154%). As of September 30, 2014, we had approximately $74.4 million, or approximately 49%, of our outstanding long-term debt exposed to fluctuations in short-term interest rates.

The following table sets forth certain information with respect to our consolidated indebtedness outstanding as of September 30, 2014.

(in thousands)	Principal		Fixed/Floating Rate	Rate		Maturity
Unsecured Revolving Credit Facility	$	70,000	Floating	LIBOR + 1.50	%	09/18/18
Canton Medical Office Building(1)	6,233		Fixed	5.94	%	06/06/17
Firehouse Square	2,781		Fixed	6.58	%	09/06/17
Hackley Medical Center	5,433		Fixed	5.93	%	01/06/17
MeadowView Professional Center	10,454		Fixed	5.81	%	06/06/17
Mid Coast Hospital Medical Office Building(2)	7,921		Fixed	4.93	%(3)	05/16/16
Remington Medical Commons	4,433		Floating	LIBOR + 2.75	%	09/28/17
Valley West Hospital Medical Office Building	4,905		Fixed	4.83	%	12/01/20
Oklahoma City, OK Medical Office Building	7,690		Fixed	4.71	%	01/10/21
Crescent City Surgical Center	18,750		Fixed	5.00	%	01/23/19
San Antonio, TX Hospital	9,944		Fixed	5.00	%(4)	06/26/22
Baylor Surgicare AS - Mansfield	4,876		Fixed	4.97	%(5)
Total	$	153,420

(1) We own a 50.0% interest in the joint venture that owns this property. Debt shown in this schedule is the full amount of the mortgage indebtedness on this property.

(2) We own a 66.3% interest in the joint venture that owns this property. Debt shown in this schedule is the full amount of the mortgage indebtedness on this property.

(3) This loan bears interest at a rate of LIBOR + 2.25%. We have entered into an interest rate swap to effectively fix the rate on this loan at 4.93% through the date of maturity.

(4) This loan bears interest at a fixed rate of 5.00% until July 2018, then the interest rate is the higher of the prime rate plus 1.75% or 5.00%.

(5) This loan bears interest at a rate of LIBOR + 2.65%. We have entered into an interest rate swap to effectively fix the rate on this loan at 4.97% through the date of maturity.

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Item 4.Controls and Procedures.

We have carried out an evaluation, under the supervision and with the participation of management, including our principal executive officer and principal financial officer, regarding the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2014, the end of the period covered by this report. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our principal executive officer and principal financial officer have concluded, as of September 30, 2014, that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in reports filed or submitted under the Exchange Act (i) is processed, recorded, summarized and reported within the time periods specified in the Commission’s rules and forms and (ii) is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate to allow for timely decisions regarding required disclosure.

No changes to our internal control over financial reporting were identified in connection with the evaluation referenced above that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II.            Other Information

Item 1.           Legal Proceedings.

From time to time, we may be party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. We are not currently a party, as plaintiff or defendant, to any legal proceedings which, individually or in the aggregate, would be expected to have a material effect on our business, financial condition or results of operations if determined adversely to us.

Item 1A.                Risk Factors.

In addition to the following description of risk factors, information on risk factors can be found in Part I, Item 1A (Risk Factors) of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the Commission on March 21, 2014 (the “Annual Report”), and in Part II, Item 1A (Risk Factors) of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014, filed with the Commission on May 7, 2014 (the “First Quarter Quarterly Report”). There have been no material changes from the risk factors previously disclosed in the Annual Report as superseded by the First Quarter Quarterly Report. Our business, financial condition and operating results can be materially adversely affected by a number of factors, whether currently known or unknown, including, but not limited to, those described below, any one or more of which could, directly or indirectly, cause our actual results of operations and financial condition to vary materially from past, or from anticipated future, results of operations and financial condition. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, results of operations and common stock price. In such case, the market value of our securities could be detrimentally affected, and investors may lose part or all of the value of their investment.

The following discussion of risk factors contains forward-looking statements. These risk factors may be important to understanding any statement in this report or elsewhere. The following information should be read in conjunction with our consolidated and combined financial statements included and related notes in Part I, Item 1, “Financial Statements” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report.

Because of the following risk factors, as well as other risk factors affecting our financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. You should carefully consider the risks and uncertainties described below and the risk factors previously disclosed in the Annual Report as superseded by the First Quarter Quarterly Report.

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Increases in market interest rates may have an adverse effect on the trading prices of our common shares as prospective purchasers of our common shares may expect a higher dividend yield and as an increased cost of borrowing may decrease our funds available for distribution.

One of the factors that influences the trading prices of our common shares is the dividend yield on the common shares (as a percentage of the price of our common shares) relative to market interest rates. An increase in market interest rates, which are currently at low levels relative to historical rates, may lead prospective purchasers of our common shares to expect a higher dividend yield (with a resulting decline in the trading prices of our common shares) and higher interest rates would likely increase our borrowing costs and potentially decrease funds available for distribution. Thus, higher market interest rates could cause the market price of our common shares to decrease.

The number of our common shares available for future issuance or sale could materially adversely affect the per share trading price of our common shares.

As of November 7, 2014, we have issued and outstanding approximately 47,381,216 common shares and 3,190,339 common shares reserved for issuance upon redemption of our outstanding OP Units. Of these common shares, all are freely tradable, except for any common shares owned or any common shares owned by our affiliates, as that term is defined by Rule 144 under the Securities Act. We have registered the common shares issuable upon redemption of the OP Units so that such shares will be freely tradable under the securities laws.

Pursuant to the partnership agreement, limited partners, other than us, have redemption rights, to cause our Operating Partnership to redeem their OP Units in exchange for cash or, at our option, for common shares on a one-for-one basis, generally commencing one year from the date of issuance of such units. Pursuant to the terms of the partnership agreement, certain limited partners, including each of the Ziegler Funds, exercised their respective redemption rights and in connection therewith, we purchased on October 1, 2014 an aggregate of 545,750 OP Units in exchange for an aggregate of approximately $7.5 million in cash and the Trust issued 2,005,101 common shares to redeem 2,005,101 OP Units. The common shares issued were issued (a) in private placements in reliance on Section 4(2) of the Securities Act Securities Act and the rules and regulations promulgated thereunder and (b) to “accredited investors” within the meaning of Rule 501 of Regulation D under the Securities Act. The resale of the common shares by the then selling shareholders and former limited partners has been registered by us under the Securities Act pursuant to the Shelf Registration Statement.

These and other future issuances or sales of our common shares or the availability of shares for resale in the open market may decrease the per share trading price of our common shares.

Our issuance of equity securities, including OP Units, or the perception that such issuances might occur could materially adversely affect us, including the per share trading price of our common shares.

The vesting of any restricted shares granted to trustees, executive officers and other employees under our 2013 Equity Incentive Plan, the issuance of our common shares or OP Units in connection with future property, portfolio or business acquisitions and other issuances of our common shares could have an adverse effect on the per share trading price of our common shares may adversely affect the terms upon which we may be able to obtain additional capital through the sale of equity securities. In addition, future issuances of our common shares may be dilutive to existing shareholders.

Our effective Shelf Registration Statement covers the offering, from time to time, of various securities with an aggregate value of up to $900 million.

On August 19, 2014, we and the Operating Partnership entered into separate At Market Issuance Sales Agreements (the “Sales Agreements”) with each of MLV & Co. LLC, KeyBanc Capital Markets Inc., JMP Securities LLC, and RBC Capital Markets, LLC (the “Agents”), pursuant to which we may issue and sell common shares having an aggregate offering price of up to $150 million, from time to time, through the Agents pursuant to the Shelf Registration Statement. In accordance with the Sales Agreements, we may offer and sell our common shares through any of the Agents, from time to time, by any method deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act, which includes sales made directly on the NYSE, or other existing

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trading market, or sales made to or through a market maker. With our express written consent, sales also may be made in negotiated transactions or any other method permitted by law. The common shares are registered under the Securities Act pursuant to the Shelf Registration Statement, and are being offered pursuant to a prospectus dated August 19, 2014, as supplemented by a prospectus supplement dated August 19, 2014, filed with the Commission pursuant to Rule 424(b) of the Securities Act. During the quarterly period ended September 30, 2014, we did not issue and sell any common shares pursuant to any of the Sales Agreements.

Any offering pursuant to the Shelf Registration Statement, whether an “at the market offering” or otherwise, may cause dilution to our shareholders and could cause the per share trading price of our common shares to decline.

Future offerings of debt, which would be senior to our common shares upon liquidation, or preferred equity securities which may be senior to our common shares for purposes of dividend distributions or upon liquidation, may materially adversely affect us, including the per share trading price of our common shares.

In the future, we may attempt to increase our capital resources by making additional offerings of debt or equity securities (or causing our Operating Partnership to issue debt securities), including medium-term notes, senior or subordinated notes and classes or series of preferred shares. Upon liquidation, holders of our debt securities and preferred shares and lenders with respect to other borrowings will be entitled to receive our available assets prior to distribution to the holders of our common shares. Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common shares and may result in dilution to owners of our common shares. Holders of our common shares are not entitled to preemptive rights or other protections against dilution. Our preferred shares, if issued, could have a preference on liquidating distributions or a preference on dividend payments that could limit our ability pay dividends or other distributions to the holders of our common shares. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our shareholders bear the risk that our future offerings could reduce the per share trading price of our common shares and dilute their interest in us.

If securities analysts do not publish research or reports about our industry or if they downgrade our common shares or the healthcare-related real estate sector, the market price of our common shares could decline.

The trading market for our common shares depends in part upon the research and reports that industry or financial analysts publish about us or our industry. We have no control over these analysts. Furthermore, if one or more of the analysts who do cover us downgrades our shares or our industry, or the stock of any of our competitors, the price of our common shares could decline. If one or more of these analysts ceases coverage of our company, we could lose attention in the market which in turn could cause the market price of our common shares to decline.

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Item 6.                   Exhibits.

Exhibit No.	Description
10.1 (1)	First Amendment to Shared Services Agreement dated July 31, 2014, among B.C. Ziegler and Company, Physicians Realty Trust, and Physicians Realty L.P.
10.2*(2)	Physicians Realty Trust 2013 Equity Incentive Plan, as amended effective August 7, 2014
10.3  (3)	Credit Agreement, dated September 18, 2014, among Physicians Realty L.P., Physicians Realty Trust and certain subsidiaries and other affiliates party thereto, KeyBank National Association, KeyBanc Capital Markets Inc., Regions Capital Markets, BMO Capital Markets, and the lenders party thereto
10.4	Agreement of Sale and Purchase, dated as of September 8, 2014, by and between Cassady Gateway Partners, LLC, an Ohio limited liability company, and DOC-3100 Plaza Properties Boulevard MOB, LLC, a Wisconsin limited liability company
10.5	Contribution Agreement, dated as of September 8, 2014, by and between Cure Building, Ltd., a Texas limited partnership, and DOC-1755 Curie Drive MOB, LLC, a Wisconsin limited liability company
10.6	Agreement of Sale and Purchase, dated as of September 8, 2014, by and between University Physician Group, d/b/a Wayne State University Physician Group, a Michigan nonprofit corporation, and DOC-WSUPG Troy MOB, LLC, a Wisconsin limited liability company
31.1	Certification of John T. Thomas, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Jeffrey Theiler, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of John T. Thomas, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
32.2	Certification of Jeffrey Theiler, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
101.INS	XBRL Instance Document (+)
101.SCH	XBRL Extension Schema Document (+)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document(+)
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document(+)
101.LAB	XBRL Taxonomy Extension Label Linkbase Document(+)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document(+)

* Indicates a management contract or compensatory plan or arrangement.

(1) Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 6, 2014.

(2) Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Commission on August 7, 2014.

(3) Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Commission on September 23, 2014.

(+) Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement for purposes of Section 11 or 12 of the Securities Act, is deemed not filed for purposes of Section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PHYSICIANS REALTY TRUST
Date: November 13, 2014	/s/ John T. Thomas
	John T. Thomas
	Chief Executive Officer and President
	(Principal Executive Officer)
Date: November 13, 2014	/s/ Jeffrey Theiler
	Jeffrey Theiler
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

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EX-10.4

Exhibit 10.4

AGREEMENT OF SALE AND PURCHASE

CASSADY GATEWAY PARTNERS, LLC (SELLER)

&

DOC — 3100 PLAZA PROPERTIES BOULEVARD MOB, LLC (BUYER)

PROPERTY:3100 PLAZA PROPERTIES BOULEVARD, COLUMBUS, OHIO

EFFECTIVE DATE:SEPTEMBER 8, 2014

TABLE OF CONTENTS

1.	Agreement to Sell and Purchase	1
2.	Purchase Price	2
3.	Intentionally Omitted	3
4.	Closing	3
5.	Title	3
6.	A.  Seller Representations and Warranties	4
7.	Conditions of Buyer’s Obligations	10
8.	Possession	13
9.	Prorations and Charges	13
10.	Condemnation; Rezoning, Historic Designation	14
11.	Default by Buyer	15
12.	Default by Seller	15
13.	Risk of Loss	16
14.	Brokerage	16
15.	Operation of the Property Prior to and After Closing	17
16.	Notice	18
17.	Indemnities	19
18.	Further Assurances	19
19.	Tax Treatment of Transaction	19
20.	As-Is Condition	20
21.	Miscellaneous	22
22.	Disclosure	23
23.	Cooperation with S-X 3-14 Audit	23
24.	Execution	24

ii

AGREEMENT OF SALE AND PURCHASE

THIS AGREEMENT OF SALE AND PURCHASE (this “Agreement”) is made by and between CASSADY GATEWAY PARTNERS, LLC, an Ohio limited liability company (“Seller”), and DOC — 3100 PLAZA PROPERTIES BOULEVARD MOB, LLC, a Wisconsin limited liability company or its assignee or nominee (“Buyer”).  This Agreement is to be effective as of the date set forth on the cover page hereof (the “Effective Date”).

RECITALS:

A.Zangmeister Center LLC, a Delaware limited liability company (the “Company”) is, or will be prior to Closing, the owner of the Property (as hereinafter defined).

B.Seller is the record and beneficial owner of one hundred percent (100%) of the membership interests in the Company (the “Purchased Assets”).

C.Seller desires to sell the Purchased Assets to Buyer, and Buyer desires to purchase the Purchased Assets from Seller, on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the covenants and provisions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1.Agreement to Sell and Purchase.(a)

(a)For purposes of this Agreement, “Property” shall mean and include the following:

(i)That certain real property known as The Mark H. Zangmeister Cancer Center located at 3100 Plaza Properties Boulevard, Columbus, Ohio, and legally described in Exhibit A attached hereto, including, without limitation, the land, buildings, improvements, fixtures (including, without limitation, the sprinkling, plumbing, heating, cooling, ventilating, air conditioning, electrical, lighting and other systems), easements and all other right, title and interest appurtenant and otherwise relating thereto, (collectively, the “Real Property”);

(ii)All personal property attached to or located on or used in connection with the operation of the Real Property and owned by the Company, including, without limitation, furniture, furnishings, fittings, appliances, machinery and equipment, building materials, operating inventories and supplies; all of which are listed on Schedule 1(a)(ii) attached hereto (collectively, the “Personal Property”);

(iii)All leases, contracts and other agreements incident to the operation of the business conducted on the Real Property, including, without limitation, management contracts, on-site maintenance contracts, janitorial contracts, and leasing commission agreements; all of which are listed on Schedule 1(a)(iii) attached hereto (collectively, the “Contract Rights”);

(iv)All financial and other books and records maintained in connection with the operation of the Real Property, all preliminary, final and proposed building plans and

specifications relating to the Real Property, and all surveys, structural reviews, grading plans, topographical maps, architectural drawings and engineering, soils, seismic, geologic, environmental, and architectural reports, studies, certificates, and similar documents relating to the Real Property, all of which are listed on Schedule 1(a)(iv) attached hereto (collectively, the “Records and Plans”);

(v)All guarantees and warranties relating to the Property and the fixtures and equipment located therein, all of which are listed on Schedule 1(a)(v) attached hereto (collectively, the “Warranties”); and

(vi)All trade names, licenses, permits, certificates of occupancy, approvals, dedications, subdivision maps, and entitlements issued, approved or granted by governmental or quasi-governmental entities or otherwise relating to the Property, and any and all development rights and other intangible rights, titles, interests, privileges, and appurtenances owned by the Company and in any way relating to or used in connection with the Property and/or the operation of the business conducted on the Real Property, all of which are listed on Schedule 1(a)(vi) attached hereto (collectively, the “Licenses and Permits”).

(b)Subject to the terms and conditions of this Agreement, Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the Purchased Assets, free and clear of all liens, encumbrances, security interests, prior assignments or conveyances, conditions, restrictions, claims, and other matters affecting title thereto.

(c)Buyer and Seller acknowledge that an affiliate of Buyer and an affiliate of the Managing Member of Seller have entered into a Purchase and Sale Agreement of even date herewith for the purchase of all of the right title and interest of Southern Point Medical, LLC in Southern Point, LLC, which owns certain real property located at 9085 Southern Street, Orient, Ohio (the “Related Purchase Agreement”).  In the event of a termination of this Agreement for any reason, either party may terminate the Related Purchase Agreement by serving written notice of termination upon the other party.  Similarly, in the event of a termination of the Related Purchase Agreement for any reason, either party may terminate this Agreement by serving written notice of termination upon the other party.  Upon termination as provided hereunder or thereunder, the Deposit together with accrued interest will be refunded to Buyer and thereupon neither party will have any further obligations to the other except as expressly provided herein.

2.Purchase Price.  The purchase price for the Purchased Assets is Thirty-Six Million Six Hundred Thousand and 00/100 Dollars ($36,600,000.00) (the “Purchase Price”), payable as follows:

(a)Four Hundred Thousand and 00/100 Dollars ($400,000.00) (the “Deposit”) by wire transfer payable to First American Title Insurance Company (“Escrow Agent”), which sum shall be delivered to Escrow Agent within three (3) business days following the Effective Date.  The Deposit shall be held in an interest bearing, federally insured account, by Escrow Agent in accordance with the Escrow Agreement attached hereto as Exhibit B (the “Escrow Agreement”) and this Agreement pending consummation of this transaction.  Any interest earned on the Deposit shall be paid to Buyer unless Seller shall be entitled to the Deposit by reason of a default by Buyer, in which case such interest shall be paid to Seller.  Upon expiration of the Due Diligence Period, if Buyer has not terminated this Agreement as provided herein, the Deposit shall become nonrefundable except in the event of a Seller default.  Buyer’s

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Federal Tax I.D. Number is 80-0941870; Seller’s Federal Tax I.D. Number is 20-2486274.

(b)The balance of the Purchase Price (the Purchase Price minus the Deposit), subject to adjustments pursuant to this Agreement, including, but not limited to, those adjustments set forth in Section 8 of this Agreement, shall be paid to Seller at Closing (as defined below) in cash by wire transfer of immediately available federal funds.

3.Intentionally Omitted.

4.Closing.  Closing shall be held on the date that is fifteen (15) days after the later of (i) expiration date of the Due Diligence Period (as defined below) (the “Closing Date”), or on such earlier date as Buyer shall designate by at least five (5) days advance written notice to Seller.  Closing shall be an escrow closing with the Title Company (as defined below) acting as the closing escrow agent (“Closing”). It is agreed that the time of Closing and the obligation of Seller to deliver the Purchased Assets to Buyer at Closing are of the essence of this Agreement.  Notwithstanding anything to the contrary contained herein, upon written notice to Seller, Buyer, in its sole discretion, shall have the right to extend the Closing Date for up to an additional thirty (30) days by payment to Seller at the time of such extension of the sum of $1,000 for each day that Buyer elects to extend the Closing Date, which $1,000 per day payment shall be non-refundable, but shall be a credit against the Purchase Price.

5.Title.  Within five (5) days after the Effective Date, Buyer shall order a title insurance commitment prepared in accordance with all of the terms and conditions of this Agreement (the “Title Commitment”), a copy of which shall be provided to Seller immediately upon receipt.

(a)The Title Commitment shall be prepared in accordance with the current ALTA Form, issued by First American Title Insurance Company — Milwaukee Office acceptable to Buyer (the “Title Company”), agreeing to issue an ALTA owner’s title insurance policy to Buyer and an ALTA Lender’s title insurance policy issued to Buyer’s lender(s), if applicable, in the amount of the Purchase Price insuring title to the Real Property to be in the condition called for by this Agreement and containing a “fifty-year chain-of-title search,” a zoning endorsement on ALTA Form 3.1 (with parking), a survey endorsement insuring that the survey accurately depicts the Real Property (including boundaries, improvements, easements and encroachments), a contiguity endorsement, an access endorsement, an endorsement for “gap coverage,” a location endorsement and an owner’s comprehensive endorsement, a utility facilities endorsement, and a tax parcel endorsement, in the case of all such endorsements, only to the extent same are available for issuance in the State of Ohio.  Buyer shall cause the Title Company at or prior to Closing to down date the Title Commitment to the date and time of the Closing and provide a “title mark-up” showing the final form of the title insurance policy (including the above referenced endorsements) to be issued, which mark-up shall obligate the Title Company to issue the final title insurance policy in such form.  The title mark-up and final title insurance policy shall be free from the standard requirements and exceptions and shall be subject only to liens, encumbrances or exceptions specifically approved by Buyer (the “Permitted Exceptions”). A written statement of the obligee of the amount of any lien or encumbrance to be discharged by Seller shall be provided by Seller within ten (10) days after the title evidence is furnished to Buyer. The premium for the title policy and any fees for endorsements or other services provided by the Title Company (including the mortgagee policy, if any) shall be paid by Buyer on or

3

before Closing.

(b)Title Defects. Within ten (10) days of Buyer’s receipt of the latter of the Title Commitment or the Survey (as defined in Section 7(g) below), and in any event within twenty (20) days after the Effective Date,  Buyer shall object in writing to any condition of title or survey not satisfactory to Buyer, in Buyer’s sole discretion (hereinafter referred to as a “Title Defect”). If any objection is made, Seller shall advise Buyer in writing within five (5) days after receipt of Buyer’s written notice of Title Defects whether Seller will remove or cause to be removed any such Title Defect. If Seller does not elect to remove or cause to be removed any such Title Defect, Buyer shall notify Seller no later than the end of the Due Diligence Period whether Buyer will proceed to Closing notwithstanding the existence of such Title Defect that will not be removed. If Seller elects to remove or cause to be removed any such Title Defect, Seller shall have until Closing in which to exercise its best efforts to correct such Title Defect.  Seller’s best efforts requirement in this Section shall, without limitation, obligate Seller to cure any and all Title Defects of an ascertainable monetary value.  If Seller advised Buyer as above provided that Seller will not remove or cause to be removed any Title Defect or the Title Defect cannot be corrected prior to Closing despite Seller’s best efforts, or as otherwise extended by agreement of Buyer and Seller, Buyer may, at its option, (a) declare this Agreement null and void and as a result the Escrow Agent shall return the Deposit together with all accrued interest forthwith to Buyer or (b) elect to accept such title as Seller is able to convey and proceed to Closing, without adjustment of the Purchase Price.

(c)At the Closing, all of the Personal Property shall be free of all liens and encumbrances.  Buyer shall, at Buyer’s sole cost and expense, at least three (3) days prior to Closing, obtain documentation from Uniform Commercial Code (“U.C.C.”) searches confirming that there are no U.C.C. filings against Seller which would be a lien on the Property, including the Personal Property, involved in this transaction. The searches must be dated within fifteen (15) days prior to Closing.

6.A.  Seller Representations and Warranties.  Seller represents and warrants that all of Seller’s representations and warranties relating to this Agreement are true, correct and complete as of the Effective Date of this Agreement and shall be deemed reaffirmed as true, correct and complete as of Closing. Seller acknowledges that the representations and warranties made in this Agreement by Seller are a material inducement to Buyer’s entering into this Agreement and purchasing the Purchased Assets, and that Buyer is entitled to rely upon these representations and warranties despite any and all investigation undertaken by Buyer. Seller agrees to indemnify Buyer for any loss or damage, including, without limitation thereto, reasonable attorney’s fees and court costs, occurring as a result of the breach of any representation, warranty or covenant of Seller herein. All representations, warranties and covenants made by Seller in this Agreement that are stated to be “to the knowledge of Seller” or similar terms shall mean and be restricted to the actual knowledge of Denny Freudeman, the principal of the Managing Member of Seller; provided, however, that Mr. Freudeman shall have no personal liability hereunder in connection with any such representation, warranty or covenant.  Seller hereby represents and warrants that Mr. Freudeman is the person most knowledgeable regarding, and is primarily responsible for, the management, condition, and disposition of the Property.  All of Seller’s representations and warranties relating to this Agreement shall survive the Closing of the transactions contemplated herein for a period of twelve (12) months after the Closing Date (the “Survival Date”), at which time such representations and warranties shall

4

lapse and be of no further force or effect, except with respect to any such representation or warranty to which Buyer has submitted to Seller in writing a valid claim hereunder prior to the Survival Date, in which event, any such representation or warranty (and no other) shall survive until such time as Buyer and Seller have settled the dispute pertaining to any such representation or warranty. Seller agrees to indemnify Buyer for any loss or damage, including, without limitation thereto, reasonable attorney’s fees and court costs, occurring as a result of the breach of any representation, warranty or covenant of Seller herein; provided, however that, except for claims related to fraud, any such loss or damage, either individually or in the aggregate with other claimed loss or damage, must exceed the sum of $25,000 before Buyer shall be permitted to make any claim hereunder, and in any event, the maximum liability of Seller hereunder for all claimed loss or damage shall not exceed $1,000,000 in the aggregate.  Based on the foregoing, Seller hereby represents, warrants and covenants to Buyer as follows:

(a)Seller and the Company have each been duly formed and each are validly existing as a limited liability company in good standing in the state of their organization, with the requisite limited liability company power and authority to own, lease and operate their assets, conduct their businesses, and perform their obligations under this Agreement.  Seller and the Company are duly qualified to transact business and are in good standing under the laws of the jurisdiction in which they own or lease assets, or conduct any business, to the extent that such qualification is required under the laws of such jurisdiction.  Seller has provided Buyer with true and correct copies of the operating agreement and any amendments thereto, of the Company.  Such agreement is in full force and effect as of the date hereof.  Seller and the Company have performed all of their obligations under their respective operating agreements.

(b)Seller has the requisite limited liability company power and authority to enter into this Agreement and to consummate the transactions contemplated by this Agreement.  The execution and delivery of this Agreement by Seller and the consummation by Seller of the transactions contemplated by this Agreement has been duly authorized by all necessary action on the part of Seller and the members of Seller.  This Agreement has been duly executed and delivered by Seller and constitutes the legal, valid and binding agreement of Seller, enforceable against Seller in accordance with its terms, except as may be limited by: (i) applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally; and (ii) equitable principles of general applicability relating to the availability of specific performance, injunctive relief or other equitable remedies.

(c)Neither the execution and delivery of this Agreement, nor compliance with the terms and conditions of this Agreement by Seller, nor the consummation of the sale of the Purchased Assets to Buyer, constitutes or will constitute a violation or breach of the operating agreement of Seller or the Company, as the same may have been amended from time to time, or of any agreement, instrument, mortgage, indenture, lien agreement, note, contract, permit, judgment, decree, order, restrictive covenant, statute, rule, or regulation applicable to Seller, the Purchased Assets, the Company, or the Property.

(d)The Purchased Assets constitute all of the issued and outstanding membership interests in the Company, and Seller is the sole owner of the Purchased Assets, free and clear of all liens and encumbrances.  The Purchased Assets are fully paid and nonassessable, have been issued in compliance with all applicable laws, and, except as set forth in Exhibit C are

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not subject to or in violation of any option to purchase or right of first refusal, nor are there any agreements or understandings between Seller or the Company and any other person or entity with respect to the disposition of the same.  There are no obligations, contingent or otherwise, of Seller or the Company to issue, repurchase, redeem or otherwise acquire, as applicable, any membership interests in the Company.  Following the Closing, Buyer will be the lawful owner of the Purchased Assets, free and clear of all liens and encumbrances, other than arising from Buyer’s acts.

(e)Prior to Closing, the Company will hold fee simple title to the Real Property and good title to the Personal Property, free and clear of all liens and encumbrances, except such liens and encumbrances as disclosed in the Title Commitment. Except as otherwise disclosed in Exhibit C hereto, the Property is not subject to any option to purchase or right of first refusal, nor are there any agreements or understandings between Seller or the Company and any other person or entity with respect to the disposition of the same.  The Property constitutes the only assets of the Company.

(f)As of the Effective Date, there is no litigation or proceeding, either judicial or administrative, pending or threatened, affecting Seller’s ability to consummate the transactions contemplated hereby.  As of the Effective Date, there is no outstanding order, writ, injunction or decree of any court, government, governmental entity or authority or arbitration against or affecting Seller, the Purchased Assets, the Company, or the Property.

(g)There are no management, employment, service, equipment, supply, maintenance, water, sewer or other utility or concession agreements or agreements with municipalities (including improvement or development escrows or bonds) with respect to or affecting the Property which will burden the Property, the Company, or Buyer after Closing in any manner whatsoever, except for instruments of record and except for the Contract Rights.  With respect to the Contract Rights listed on Schedule 1(a)(iii) attached hereto, as of the Effective Date, each of the Contract Rights is valid and subsisting and in full force and effect and has not been further amended, modified or supplemented, and the parties thereto are not in default thereunder.  As of the Effective Date, no party has asserted any claim against Seller or the Company under such Contract Rights, and no notice of default or breach on the part of the Seller or the Company under any of the Contract Rights has been received by Seller or the Company or any of their respective agents.

(h)As of the Effective Date, Seller has no knowledge of, and neither Seller nor the Company have received notice from, any governmental authority requiring any work, repairs, construction, alterations or installations on or in connection with the Property, or asserting any violation of any federal, state, county or municipal laws, ordinances, codes, orders, regulations or requirements affecting any portion of the Property, including, without limitation, the Americans with Disabilities Act and any applicable environmental laws or regulations.  As of the Effective Date, there is no action, suit or proceeding pending or threatened against or affecting Seller, the Company, the Purchased Assets, or the Property, or any portion thereof, or relating to or arising out of the ownership of the Purchased Assets or the Property, in any court or before or by any federal, state, county or municipal department, commission, board, bureau or agency or other governmental instrumentality.

(i)As of the Effective Date, to Seller’s knowledge, no assessments or charges

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of any kind or nature (deferred or otherwise) for any public improvements have been made against the Property which remain unpaid, no improvements to the Property or any roads or facilities abutting the Property have been made or ordered for which a lien, assessment or charge can be filed or made, and as of the Effective Date, Seller has no knowledge of any plans for improvements by any governmental or quasi-governmental authority which might result in a special assessment against the Property.  As of the Effective Date, neither Seller nor the Company has incurred any obligations relating to the installation of or connection to any sanitary sewers or storm sewers which shall be enforceable against the Property, and all public improvements ordered, advertised, commenced or completed prior to the date of this Agreement shall be paid for in full by Seller prior to Closing.

(j)As of the Effective Date, to Seller’s knowledge, there is no defective condition, structural or otherwise, in the buildings or other improvements on the Real Property, or in the buildings’ roof, heating, ventilating, air conditioning, mechanical, plumbing, electrical systems and equipment, and other building systems and equipment are in good condition and working order and adequate in quantity and quality for the comfortable and normal operation of the Property.  Any defective condition of which Seller gains knowledge after the Effective Date shall be disclosed to Buyer promptly.

(k)Seller warrants, represents and covenants that to Seller’s actual knowledge, without independent inquiry or analysis: (i) there has been no disposal, burial or placement of Hazardous Substances (as defined below) on or about the Property; (ii) the Property, the Company, and Seller are not in violation of any Environmental Laws (as defined below), and no other person or entity has used all or part of the Property or any lands contiguous to the Property in violation of any Environmental Laws; (iii) there is no contamination, pollution or danger of pollution resulting from a condition on or under the Property, or on or under any lands in the vicinity of the Property; (iv) there are no storage tanks on or under the Property; (v) environmental conditions associated with the Property are in compliance with all Environmental Laws; and (vi) Seller has disclosed to Buyer all information in Seller’s or the Company’s possession relating to the environmental condition of the Property.  Neither Seller nor the Company has received any information from neighboring property owners indicating they have any concerns about existing environmental conditions which could affect the Property or suggesting they might look to Seller or the Company for contribution to clean up such condition.

For purposes of this Agreement, the term “Environmental Law(s)” shall mean all federal, state and local laws including statutes, regulations, codes and other governmental standards, restrictions, rulings, judgments, orders and requirements in effect now or at any time in the future or past relating to the use, storage, disposal, release, emission, dispersal, spilling, leaking, burial, migration, seepage, movement, discharge, management, investigation, remediation, monitoring, regulation relating to air pollutants, water pollutants, process wastewater, solid or hazardous waste, chemicals, gases, vapors, water pollutants, groundwater, effluents, stormwater runoff, surface water runoff, the environment, Hazardous Substances or employee health and safety, including, but not limited to, the Federal Solid Waste Disposal Act, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976, the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Federal Hazardous Materials Transportation Act, the Toxic Substance

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Control Act, the Occupational Safety and Health Act of 1970 (all as the same may have been amended), regulations of the Environmental Protection Agency, regulations of the Nuclear Regulatory Agency, and regulations of any state department of natural resources or state environmental protection agency.

For purposes of this Agreement, the term “Hazardous Substance(s)” shall mean all hazardous, toxic, flammable, explosive or radioactive substances, wastes and materials; any pollutants or contaminants (including, but not limited to, petroleum products, asbestos, raw materials and natural substances that include hazardous constituents); and any other similar substances or materials that are regulated under Environmental Laws

(l)There are no existing leases, whether oral or written, agreements of sale, options, rights of first refusal, rights of first offer, tenancies, licenses or any other claims to possession or use affecting the Property, except as listed in Exhibit C attached hereto.  Exhibit C lists all: (i) leases and subleases for any portion of the Property and all assignments, amendments and any other writings related thereto in effect on the Effective Date (the “Leases”); and (ii) guarantees with respect to the Leases in effect on the Effective Date (the “Guarantees”).  As of the Effective Date, each of the Leases and Guarantees is valid and subsisting and in full force and effect and has not been further amended, modified or supplemented, and the tenant thereunder is in actual possession in the normal course and the tenant is not in default thereunder.  As of the Effective Date, no tenant has asserted any claim of which Seller or the Company has notice which would in any way affect the collection of rent from such tenant, and no written notice of default or breach on the part of the landlord under any of the Leases has been received by Seller or the Company or any of their respective agents from the tenant thereunder.  All painting, repairs, alterations and other work required to be performed thereunder, have been or will, prior to Closing, be fully performed and paid for in full by Seller or the Company.

(m)The rents set forth in Exhibit C are the actual rents, income and charges presently being collected by the Company.  No tenant under any of the Leases is entitled to any concessions, allowances, rebates or refunds or has prepaid any rents or other charges for more than the current month.  None of the Leases and none of the rents or other amounts payable thereunder have been assigned, pledged or encumbered, except to the extent, if any, that Seller or the Company has made collateral assignments of rents and leases to the holder of a mortgage on the Property.  No security deposits have been paid by any tenants which have not heretofore been returned, except as set forth in Exhibit C hereto, if any.

(n)No brokerage or leasing commissions or other compensation is or will be due or payable to any person, firm, corporation or other entity with respect to or on account of any of the Leases or any expansions or renewals thereof.

(o)The statement of income and expenses attached hereto as Exhibit D is true and correct, accurately reflecting the income and expenses for operating the Property for the year-to-date and the three (3) calendar years preceding the Effective Date.  The Company does not have any material liabilities other than those liabilities that are reflected on its balance sheet as  of June 30, 2014, a true and correct copy of which is attached hereto as Exhibit D.

(p)As of the Effective Date, there are no pending or, to Seller’s knowledge,

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threatened condemnation or eminent domain proceedings affecting the Property or any portion thereof, and there are no proposed actions by any governmental agencies or authorities which have or may create a lien upon the Property or any portion thereof.

(q)As of the Effective Date, to Seller’s knowledge, the Property is in full compliance with all federal, state, county, municipal or other government standards, laws, ordinances, statutes, regulations and requirements. As of the Effective Date, to Seller’s knowledge, the Property is in full compliance with all applicable private restrictions, covenants, rules, standards and requirements. No approvals from, or filings or recordings with, any person or entity are required to create, subdivide or separate the Real Property from any other parcel of land.

(r)All licenses, permits, and other governmental approvals necessary for the operation of the Property and the business conducted thereon have been obtained, are currently in force, and will be maintained in full force and effect by Seller and the Company until Closing.

(s)All work performed or materials furnished for Property have been fully paid for, Seller shall deliver an affidavit of Seller and the Company to that effect to the Title Company at Closing, and Seller shall provide Buyer with appropriate, full and complete lien waivers from any and all contractors, sub-contractors, laborers or materialmen furnishing labor or material for the improvement of the Real Property during the six months (or other applicable period for the filing of liens) preceding the date of Closing.

6.     B. Buyer Representations and Warranties.  Buyer represents and warrants that all of Buyer’s representations and warranties relating to this Agreement are true, correct and complete as of the Effective Date of this Agreement and shall be deemed reaffirmed as true, correct and complete as of Closing. Buyer acknowledges that the representations and warranties made in this Agreement by Buyer are a material inducement to Seller’s entering into this Agreement and selling the Purchased Assets, and that Seller is entitled to rely upon these representations and warranties despite any and all investigation undertaken by Seller. All of Buyer’s representations and warranties relating to this Agreement shall survive the Closing of the transactions contemplated herein until the Survival Date, at which time such representations and warranties shall lapse and be of no further force or effect, except with respect to any such representation or warranty to which Seller has submitted to Buyer in writing a valid claim hereunder prior to the Survival Date, in which event, any such representation or warranty (and no other) shall survive until such time as Buyer and Seller have settled the dispute pertaining to any such representation or warranty. Buyer agrees to indemnify Seller for any loss or damage, including, without limitation thereto, reasonable attorney’s fees and court costs, occurring as a result of the breach of any representation, warranty or covenant of Buyer herein; provided, however that, except for claims related to fraud, any such loss or damage, either individually or in the aggregate with other claimed loss or damage, must exceed the sum of $25,000 before Seller shall be permitted to make any claim hereunder, and in any event, the maximum liability of Buyer hereunder for all claimed loss or damage shall not exceed $1,000,000 in the aggregate.  Based on the foregoing, Buyer hereby represents, warrants and covenants to Seller as follows:

(a)Buyer has been duly formed and is validly existing as a limited partnership in good standing in the state of its organization, with the requisite limited partnership power and authority to own, lease and operate its assets, conduct its business, and perform its obligations under this Agreement.  Buyer is duly qualified to transact business and is in good

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standing under the laws of the jurisdiction in which it owns or leases assets, or conducts any business, to the extent that such qualification is required under the laws of such jurisdiction.

(b)Buyer has the requisite limited partnership power and authority to enter into this Agreement and to consummate the transactions contemplated by this Agreement.  The execution and delivery of this Agreement by Buyer and the consummation by Buyer of the transactions contemplated by this Agreement has been duly authorized by all necessary action on the part of Buyer and the partners of Buyer.  This Agreement has been duly executed and delivered by Buyer and constitutes the legal, valid and binding agreement of Buyer, enforceable against Buyer in accordance with its terms, except as may be limited by: (i) applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally; and (ii) equitable principles of general applicability relating to the availability of specific performance, injunctive relief or other equitable remedies.

(c)Neither the execution and delivery of this Agreement, nor compliance with the terms and conditions of this Agreement by Buyer, nor the consummation of the purchase of the Purchased Assets by Buyer, constitutes or will constitute a violation or breach of the operating agreement of Buyer, as the same may have been amended from time to time, or of any agreement, instrument, mortgage, indenture, lien agreement, note, contract, permit, judgment, decree, order, restrictive covenant, statute, rule, or regulation applicable to Buyer.

7.Conditions of Buyer’s Obligations.  For the purposes of this Agreement “Due Diligence Period” shall mean the thirty (30) day period from and after the Effective Date.  The obligation of Buyer under this Agreement to purchase the Purchased Assets from Seller is contingent on the satisfaction of the following conditions within each condition’s respective time-period (any one of which may be waived in whole or in part by Buyer within each condition’s time period):

(a)At Closing, all of the representations and warranties by Seller set forth in this Agreement shall be true and correct in all respects as though such representations and warranties were made at and as of Closing, and Seller shall have performed, observed and complied with all covenants, agreements and conditions required by this Agreement.

(b)Within the Due Diligence Period, Buyer reviewing and verifying that the Leases are in every respect acceptable to Buyer, including, without limitation, that the Leases are triple net leases, represent one hundred percent (100%) of the leaseable square footage of the Real Property, and that the net income from the Property is at least Two Million Five Hundred Fifty-Four Thousand Seventy-One and 00/100 Dollars ($2,554,071.00).

(c)Within the Due Diligence Period, Seller shall deliver to Buyer a duly executed original of a certificate from each tenant under the Leases in the form attached hereto as Exhibit E (“Estoppel Certificate”).  If the Leases are not acceptable to Buyer, or if the Estoppel Certificates have not been delivered to Buyer in the required form or in a form otherwise acceptable to Buyer within the aforesaid time period, then Buyer, at its option, may terminate this Agreement by delivering notice of such termination to Seller, and in such event the Deposit and all accrued interest shall be returned to Buyer, and this Agreement thereupon shall become void and there shall be no further obligations or liability on any of the parties hereto.  Seller’s failure to deliver the Estoppel Certificates required hereunder shall not constitute a default by Seller of its obligations under this Agreement.

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(d)Within the Due Diligence Period, Buyer verifying that the Property (including the Contract Rights, Records and Plans, Warranties and Licenses and Permits) is in every respect acceptable to Buyer in its sole discretion, based on an investigation and review by Buyer, its agents and contractors of the Property, all information that is required to be provided to Buyer by Seller pursuant to this Agreement, and all information that is available to Buyer relating to the Property and the transactions contemplated herein, including, but not limited to, the Disclosure Materials (as defined below).  Notwithstanding anything to the contrary contained herein, if Buyer proceeds to Closing hereunder, all Contract Rights shall be assigned to Buyer at Closing and Buyer shall honor all such Contract Rights in accordance with their respective terms.  This contingency shall also include, without limitation, Buyer obtaining, at Buyer’s expense, a physical inspection of the Property, which discloses no “Defects,” as that term is defined herein. For purposes of this Agreement, a “Defect” is defined as a condition or conditions, or evidence of a condition or conditions, that has the potential to: (i) impair the health or safety of occupants of the Property; (ii) result in the violation of any applicable public or private law, standard or covenant; or (iii) cost, in the aggregate, an amount in excess of $25,000 to repair, correct, or remediate.

(e)Within the Due Diligence Period, Buyer obtaining, at Buyer’s expense, written environmental assessments and/or evaluations of the Property (including “Phase I” assessments and, if Buyer deems necessary, “Phase II” assessments, including laboratory testing of soil, water and other substances (provided that any such Phase II assessment shall be performed only with the prior written consent of Seller as to scope and timing) from qualified environmental consultants of Buyer’s choice, confirming that: (i) the Property complies with all Environmental Laws; (ii) there are no liabilities (potential, contingent or otherwise) affecting the Property arising under any Environmental Laws; (iii) there are no underground or aboveground storage tanks, associated pipes or equipment located on or at the Real Property; (iv) there are no Hazardous Substances on, under, at, in or migrating to or from the Real Property; (v) no portion of the Real Property has been designated as wetland, shoreland, floodplain or conservancy land; (vi) no portion of the Real Property has been filled; and (viii) the Property is not affected in any manner or degree by a “recognized environmental condition” (as that phrase is defined by the most recent American Society for Testing and Materials practice standards).

(f)Within the Due Diligence Period, Buyer verifying to Buyer’s satisfaction that all applicable public and private laws, rules, standards, covenants and requirements, including, without limitation, all zoning, subdivision, building and use restrictions and all easements and matters of record, allow the conveyance of the Purchased Assets from Seller to Buyer, and are consistent with Buyer’s Intended Use; Buyer obtaining or verifying during the Due Diligence Period to Buyer’s satisfaction that Buyer and/or the Company will be able to obtain, all public and private permits, certificates and other approvals, consents and all variances, exemptions, waivers, zoning changes and land divisions required for the sale of the Purchased Assets from Seller to Buyer, and Buyer’s Intended Use. The term “Buyer’s Intended Use” shall mean and include, without limitation, medical and other healthcare related uses.

(g)Within fifteen (15) days after the Effective Date, Buyer obtaining a current ALTA survey of the Property (the “Survey”) at Buyer’s expense, that: (i) is satisfactory to Buyer in all respects (in Buyer’s sole discretion); (ii) is prepared by a licensed, insured and qualified surveyor selected by Buyer; (iii) is certified to the Company, Seller, Buyer, Buyer’s lender(s) (if any) and the applicable title company; (iv) includes all Table A requirements, except Item 5 of

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Table A; (v) shows and discloses no encroachments onto the Property or over the boundaries of the Property, and no easements or other matters that would affect Buyer’s Intended Use of the Property; and (vi) is sufficient to remove the standard title exceptions relating to surveys without adding any new exceptions.  In addition, the Survey shall locate all public utilities, water courses, drains, sewers and roads (including vacated streets and alleys) crossing or adjacent to the Property, and contain a acceptable certification by the surveyor

(h)Within ten (10) business days of the Effective Date, Seller shall deliver to Buyer the items listed on Schedule 7(h) attached hereto and incorporated by reference herein that are in Seller’s or the Company’s possession or control (the “Disclosure Materials”).

(i)At Closing, Seller shall deliver to Buyer duly executed originals of the following:

(i)An assignment in a form satisfactory to Buyer granting and conveying to Buyer good and indefeasible title to the Purchased Assets, free and clear of all liens and encumbrances, duly executed by Seller.

(ii)Consents of the parties to the Leases and pursuant to the Contract Rights, Licenses and Permits, if required and as necessary in connection with the transactions contemplated under this Agreement.

(iii)A Non-foreign Person Certification in the form attached hereto as Exhibit F, as required under Section 1445 of the Internal Revenue Code of 1986, as amended (the “Code”).

(iv)A certificate certifying that the representations and warranties of Seller, as set forth in this Agreement, are true and correct in all respects as of the Closing.

(v)Notwithstanding anything to the contrary in this Agreement, Seller shall provide Buyer original and complete waivers of any and all existing rights of first refusal, rights of first offer, options to purchase, or any other similar rights (including, but not limited to, any and all consents), executed by the necessary parties, so that Seller is able to consummate the transactions contemplated by this Agreement unencumbered by such rights.

(vi)Originals of the following instruments, documents and other items (or true and complete copies if originals are unavailable):

(1)all certificates of occupancy (and any required governmental approvals in connection with the transfer of the Property), licenses, plans, permits, authorizations and approvals required by law and issued by all governmental authorities having jurisdiction over the Property;

(2)the Leases and the Guarantees;

(3)the Estoppel Certificates;

(4)all building records in the possession or control of Seller or the Company with respect to the Property;

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(5)each bill of current real estate taxes, sewer charges and assessments, water charges and other utilities, together with proof of payment thereof (to the extent same have been paid);

(6)the Warranties;

(7)all keys and combinations to locks at the Property, all plans, specifications, site plans, equipment manuals, technical data and other documentation relating to the building systems, equipment and any other personal property forming part of the Property or any portion thereof in the possession of Seller, the Company, or any property manager(s);

(8)an affidavit of title in favor of Buyer and Buyer’s title insurer, together with such other affidavits as are required by Buyer’s title insurer, in each case in the forms commonly used by title insurance companies in Central Ohio;

(9)the Closing Statement; and

(10)such other documents as may be reasonably required to consummate this transaction in accordance with this Agreement.

Unless all of the foregoing conditions contained in this Section 7 are satisfied and completed within each condition’s applicable time period, or if no time period is specified, prior to or at Closing, Buyer, at its election (in its sole discretion), may, either:  (i) terminate this Agreement and have the Deposit refunded together with accrued interest as Buyer’s sole and exclusive remedy; or (ii) waive in writing the satisfaction of any such condition or conditions, in which event this Agreement shall be read as if such condition or conditions no longer existed.

Notwithstanding anything to the contrary contained in this Agreement, Buyer shall have the right to terminate this Agreement for any reason or no reason whatsoever, in Buyer’s sole and absolute discretion, upon written notice to Seller on or before the expiration of the Due Diligence Period, and thereupon this Agreement shall terminate, the Deposit together with accrued interest shall be refunded to Buyer, and neither party shall have any further rights or obligations hereunder, except as expressly provided herein.

8.Possession.  Possession of the Property shall be given to Buyer at Closing unoccupied and free of any leases except the Leases (and subject only to any tenants’ rights under the Leases).

9.Prorations and Charges.

(a)There shall be no proration at Closing or at any time thereafter of real estate taxes, personal property taxes or assessments pertaining to the Property; provided, however, in the event all or any portion of such real estate taxes, personal property taxes and/or assessments are not pass-through charges under the Leases or are not fully payable by the tenants under such Leases, then such portion of real estate taxes, personal property taxes and/or assessments shall be prorated at Closing (e.g., the Property is not 100% leased and therefore, Seller and/or the Company is obligated to pay a portion of such taxes).

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(b)All rents and pass-through charges collected to date under the Leases shall be prorated through the day before Closing. In the event any such rents and pass-through charges are not paid current as of the Closing, from and after Closing, all such rents and pass-through charges received from and after Closing shall be allocated first to rents and pass-through charges currently due and payable and then to past due rents and pass-through charges, with the party receiving any such rents, promptly paying over the same to the party to whom due. Seller shall retain the right to seek payment of past due rents and pass-through charges under Leases after Closing, but Seller shall have no right to seek lease terminations or evictions.  In the event there are any expenses attributable to the Seller, the Company and/or the Property that are not pass-through charges under the Leases or any such expenses that are not fully payable by the tenants under such Leases, then such expenses shall be prorated at Closing.

(c)To the extent any utility charges, including, but not limited to, sewer, water, electricity, gas, telephone and other private and municipal charges in the nature of utilities (collectively, “Utility Charges”) are not paid directly by tenants of the Property, Seller shall be responsible for obtaining all necessary billing information for the Utility Charges in order to accurately reflect the same on the Closing Statement.  Income derived from the Property that is earned as of the day of Closing shall accrue to the benefit of Buyer.

(d)Buyer shall be responsible for the payment of all title fees and premiums associated with the Title Policy (including the mortgagee policy, if any).  All other closing expenses shall be allocated between the parties in the customary manner for sales of real property in the locality where the Property is located. Each party is responsible for paying its own respective attorneys’ fees incurred in negotiating, preparing and closing the transaction contemplated by this Agreement.

(e)All rights, privileges, income, rents, liabilities, obligations, expenses and costs relating to a deemed assignment and transfer of the Contract Rights, Records and Plans, Warranties and Licenses and Permits as a result of the transactions contemplated by this Agreement shall be paid by Seller at Closing.

(f)Any and all other normal, on-going operating expenses attributable to the Seller, the Company and/or the Property that are not included in the pass-through charges to tenants of the Property shall be prorated between the parties through the day before Closing.

(g)Prior to December 31, 2014, Buyer and Seller shall reconcile all of the foregoing payments and prorations based on actual bills or invoices received after the Closing, but only if the prorations or payments were based on an estimate and not actual current bills or invoices. Any party owing to the other party any amount ascertained by the required reconciliations shall promptly, but in no event later than fifteen (15) business days after the date of the applicable reconciliation, pay the other party  such amount.  The obligations set forth in this Section 9(g) shall survive Closing until December 31, 2014.

As applicable, all of the foregoing items set forth in this Section 9, unless otherwise expressly stated, shall be prorated between the parties as of midnight of the day before Closing.

10.Condemnation; Rezoning, Historic Designation.  Seller represents and warrants that neither Seller nor the Company has heretofore received any notice of any eminent domain or

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condemnation proceeding in connection with the Property.  If prior to Closing any such eminent domain or condemnation proceeding is commenced or any change is made, or proposed to be made to: (i) any material portion or all of the Property; (ii) the current means of ingress and egress to the Property; or (iii) to the roads or driveways adjoining the Property, Seller agrees immediately to notify Buyer in writing thereof.  Buyer then shall have the right, at Buyer’s option, to terminate this Agreement by giving written notice to Seller prior to Closing.  If Buyer elects to terminate this Agreement pursuant to the terms set forth in this Section 10, the Deposit shall be immediately returned to Buyer together with all accrued interest, Buyer and Seller shall be released from any further liability hereunder and this Agreement shall be null and void, except as otherwise provided herein.   If Buyer does not so terminate this Agreement, Buyer shall proceed to Closing hereunder as if no such proceeding had commenced and will pay Seller the full Purchase Price in accordance with this Agreement, and Seller shall assign to Buyer all of its right, title and interest in and to any compensation for such condemnation.  Seller shall not negotiate or settle any claims for compensation prior to Closing or termination of this Agreement, and Buyer shall have the sole right (in the name of Buyer, Seller, the Company, or any combination thereof) to negotiate for, to agree to, and to contest all offers and awards so long as Buyer has not terminated this Agreement.

If, prior to closing, there is a designation of the Real Property (and/or any improvement located thereon) or any portion thereof as a historic structure or other historic designation, or is threatened, commenced or finalized, or there is a threatened, commenced or finalized rezoning of the Real Property, Seller shall promptly notify Buyer, and Buyer may elect to terminate this Agreement prior to Closing, in which event the Deposit and all accrued interest thereon shall be returned forthwith to Buyer, Buyer and Seller shall be released from any further liability hereunder and this Agreement shall be null and void, except as otherwise provided herein. If Buyer does not elect to terminate this Agreement, this Agreement shall remain in full force and effect and at Closing Seller shall assign to Buyer all Seller’s right, title and interest in and to any dollars paid by the governmental authority (if any) in connection with the rezoning of the Real Property or historic designation.

11.Default by Buyer.  If Buyer, without the right to do so and in default of its obligations hereunder, fails to complete Closing, the Deposit and all accrued interest shall be paid to Seller.  Such payment of the Deposit and all accrued interest to Seller shall be deemed to be liquidated damages for Buyer’s default and the receipt of same shall be Seller’s exclusive and sole remedy; and Seller hereby waives any right to recover the balance of the Purchase Price, or any part thereof, and the right to pursue any other remedy permitted at law or in equity against Buyer.  The parties agree that it would be impracticable and extremely difficult to ascertain the actual damages suffered by Seller as a result of Buyer’s failure to complete the transactions contemplated pursuant to this Agreement, and that under the circumstances existing as of the date of this Agreement, the liquidated damages provided for in this Section represent a reasonable estimate of the damages which Seller will incur as a result of such failure.  The parties acknowledge that the payment of such liquidated damages is not intended as a forfeiture or penalty under any legal or equitable theory, but is intended to constitute liquidated damages to Seller.  The provisions of this Section 11 are not intended to, and in no way limit, Buyer’s indemnification obligations under this Agreement.

12.Default by Seller.  If Seller defaults in the performance of any obligation

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contained in this Agreement or, without the right to do so and in default of its obligations hereunder, fails to complete Closing,  Buyer shall have the right to terminate this Agreement, in which case, the Deposit and all accrued interest shall be returned to Buyer and Seller shall reimburse Buyer for all of Buyer’s reasonable costs incurred in connection with the transaction contemplated by this Agreement, up to a maximum amount of $75,000 in the aggregate.  Alternatively, Buyer may elect not to terminate this Agreement and seek specific performance of this Agreement.  Buyer must elect one of the two alternate remedies set forth above.  Seller waives the right to assert the defense of lack of mutuality in any action for specific performance instituted by Buyer.  The provisions of this Section 12 are not intended to, and in no way limit, Seller’s indemnification obligations under this Agreement.

13.Risk of Loss.  Seller shall bear the risk of all loss or damage to the Property from all causes until Closing.  Seller represents that the Company has, and will maintain pending Closing, a policy of fire and extended coverage insurance in at least the full amount of the replacement cost of all buildings and improvements located on the Property.  If at any time prior to Closing any material portion of the Property is destroyed or damaged as a result of fire or any other casualty whatsoever, and as a consequence of such material damage or destruction, any tenant of the Property has the right to terminate its Lease,  Seller shall promptly give written notice thereof to Buyer and Buyer shall have the right: (i) to terminate this Agreement by written notice to Seller, whereupon Escrow Agent shall return the Deposit (with any accrued interest) to Buyer, and thereafter this Agreement shall be void and neither party shall have any further rights or obligations hereunder except as otherwise provided herein; or (ii) to proceed with this Agreement and to notify Seller that, at Buyer’s sole option, Seller either shall:  (A) use any available insurance proceeds to restore the Property prior to Closing to its condition as of the Effective Date, and if there are any excess insurance proceeds after completion of such restoration(excluding any loss or rents or business interruption insurance proceeds payable to Seller for periods prior to Closing, being collectively referred to herein as “Seller Loss of Rents Coverage”), Seller shall promptly deposit same in escrow with Escrow Agent and such funds, together with any interest thereon, shall be disbursed to Buyer at Closing; or (B) in lieu of restoration, prior to Closing, clear the site of debris and deposit all remaining insurance proceeds except Seller Loss of Rents Coverage in escrow with Escrow Agent and such funds, together with interest thereon, shall be disbursed to Buyer at Closing.  All unpaid claims and rights in connection with any such losses except Seller’s Loss of Rents Coverage shall be assigned to Buyer at Closing without in any manner affecting the Purchase Price.  In the event Buyer elects to proceed under clause (ii)(A) or (ii)(B) above, Seller shall either expend the deductible amount provided for in such insurance coverage in making such restoration or clearing the Property, as the case may be, or give Buyer a credit therefore against the Purchase Price.

14.Brokerage.  Buyer represents and warrants to Seller, and Seller represents and warrants to Buyer, that, except for RealPlex LLC, the broker representing Seller in this transaction (“Seller Broker”), neither has dealt with any broker, agent, finder or other intermediary in connection with the transactions contemplated pursuant to this Agreement.  Buyer agrees to indemnify, defend and hold Seller harmless from and against the claims of any and all brokers or intermediaries claiming a commission through Buyer in connection with the transactions contemplated pursuant to this Agreement, and Seller agrees to indemnify, defend and hold Buyer harmless from and against the claims of any and all brokers or intermediaries claiming a commission through Seller in connection with the transactions contemplated pursuant

16

to this Agreement, including Seller Broker.

15.Operation of the Property Prior to and After Closing.

(a)Prior to closing, Seller shall cause the Company to operate, manage and maintain the Property in a reasonable, professional and prudent manner, and keep the same in good condition at all times.  Without expense to Buyer, Seller shall cause the Company to make all repairs and replacements (structural and non-structural, ordinary and extraordinary) so that the Property is maintained in its present condition, reasonable wear and tear excepted.  From and after Closing,  Buyer shall continue in full force and effect all Contract Rights in accordance with their current terms as of the Effective Date, except that the Property Management Agreement with Hplex Solutions attached hereto as Exhibit J, shall be executed and delivered by Buyer and Hplex Solutions for a term of five (5) years..

(b)Prior to closing, upon reasonable notice to Seller and subject to the rights of tenants under Leases, Buyer, its accountants, architects, attorneys, engineers, contractors and other representatives shall be afforded access to:  (i)  the Property to inspect, measure, appraise, test and make surveys of the Property, including, but not limited to, all activities necessary to satisfy the contingencies set forth in this Section 15 and elsewhere in this Agreement; and (ii) all books, records and files relating to the Property.  Buyer shall have the right, at Buyer’s expense, to make copies of all such books and records, including, without limitation, all books and records relating to increases in real estate taxes, building and operations maintenance costs; provided, however, that Buyer shall return all copies of such books and records if Closing does not occur under this Agreement.  Buyer shall not interfere unreasonably with the operation of the Property and shall restore any area on the Property disturbed in the course of Buyer’s testing to the conditions existing prior to any tests conducted by Buyer.  Buyer agrees to indemnify and hold harmless Seller and its members, officers, agents, managers, employees, and tenants, (collectively, “Seller Parties”) from and against, and to reimburse Seller Parties with respect to any and all claims, demands, causes of action, losses, damages, liabilities, costs and expenses (including attorneys’ fees and court costs) asserted against or incurred by Seller Parties by reason of or arising out access to the Property by Buyer, its agents, representatives, contractors and subcontractors for the purpose of making such investigations, inspections, tests, assessments, surveys and the like in accordance with this Agreement. The indemnity contained in this Section 15(b) shall survive any termination of this Agreement, any statement contained herein that this Agreement is void and of no further force or effect, and the Closing. In furtherance of such indemnity, connection with any access to the Property by Buyer, its agents, representatives, contractors and subcontractors, Buyer certifies to Seller that it will maintain liability insurance coverage in an amount not less than $5,000,000.

(c)Seller shall cause the Company to comply with all of the obligations of landlord under the Leases and all other agreements and contractual arrangements affecting the Property by which the Company is bound.

(d)Seller shall promptly notify Buyer of Seller’s or the Company’s receipt of any notice from any party alleging that the Company is in default of its obligations under any of the Leases or any permit or agreement affecting the Property, or any portion or portions thereof.

(e)From and after the Effective Date, no contract for or on behalf of or

17

affecting the Property shall be negotiated or entered into which cannot be terminated by Seller or the Company prior to Closing without charge, cost, penalty or premium.

(f)Except with the prior written consent of Buyer, the Company shall not enter into any new leases for any portion of the Property.  Any new lease shall be on a form of lease supplied to Seller by Buyer.  In the event Buyer approves any new leases, Seller shall deliver to Buyer an Estoppel Certificate from the tenant(s) and guarantor(s) thereunder as required hereunder for the Leases and otherwise shall comply, as to such new leases and new guarantees, with the terms of this Agreement relating to the Leases and the Guarantees.  Further, except with the prior written consent of Buyer, the Company shall not amend, extend, terminate, accept surrender of, or permit any assignments or subleases of, any of the Leases nor accept any rental more than one (1) month in advance or accelerate the rent due to any tenant default under any of the Leases.

(g)From the Effective Date until Closing, Seller shall cause the Company to maintain the Contract Rights, Records and Plans, Warranties, and Licenses and Permits in full force and effect as applicable and shall not terminate, modify or waive any provision thereof. The Company shall not enter into any new contracts or agreements relating to the Property without Buyer’s prior written consent.

16.Notice.  All notices, requests and other communications under this Agreement shall be in writing and shall be delivered: (i) in person; or (ii) by registered or certified mail, return receipt requested; or (iii) by recognized overnight delivery service providing positive tracking of items (for example, Federal Express); or (iv) by electronic transmission (so long as one of methods (i), (ii) or (iii) are simultaneously utilized) addressed as follows or at such other address of which Seller or Buyer shall have given notice as herein provided:

If intended for Seller:

Cassady Gateway Partners, LLC

c/o Hplex Solutions

640A Enterprise Drive

Lewis Center, Ohio 43035

Attention: Denny Freudeman

Email: denny@hplex.com

with a copy to:

Kephart Fisher LLC

207 North Fourth Street

Columbus, Ohio 43215

Attention: David W. Fisher, Esq.

Email:  davidfisher@kephartfisher.com

If intended for Buyer:

DOC — 3100 Plaza Properties Boulevard MOB, LLC

c/o Physicians Realty L.P.

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735 North Water Street, Suite 1000

Milwaukee, WI  53202

Attention:  John W. Sweet, Chief Investment Officer

Email:  jws@docreit.com

with a copy to:

Davis & Kuelthau, s.c.

111 East Kilbourn Avenue, Suite 1400

Milwaukee, Wisconsin  53202

Attention:  Bradley D. Page, Esq.

Email:  bpage@dkattorneys.com

All such notices, requests and other communications shall be deemed to have been sufficiently given for all purposes hereof only upon receipt by the party to whom such notice is sent. Notices by the parties may be given on their behalf by their respective attorneys.

17.Indemnities.

(a)Seller agrees to indemnify and hold harmless Buyer and its officers, agents, employees, and tenants (“Buyer Parties”) from and against, and to reimburse Buyer Parties with respect to any and all claims, demands, causes of action, losses, damages, liabilities, costs and expenses (including attorneys’ fees and court costs) asserted against or incurred by Buyer Parties by reason of or arising out of the ownership, operation, management and use of the Property prior to Closing, including, without limitation, any payment or nonpayment on account of the operating expenses for the Property by the tenants under any leases.

(b)Buyer agrees to indemnify and hold harmless Seller Parties from and against, and to reimburse Seller Parties with respect to any and all claims, demands, causes of action, losses, damages, liabilities, costs and expenses (including attorneys’ fees and court costs) asserted against or incurred by Seller Parties by reason of or arising out the ownership, operation, management and use of the Property after Closing.

18.Further Assurances.  After Closing, at Buyer’s sole cost and expense, Seller shall execute, acknowledge and deliver, for no further consideration, all assignments, transfers, deeds and other documents as Buyer may reasonably request to vest in Buyer and perfect Buyer’s right, title and interest in and to the Purchased Assets.

19.Tax Treatment of Transaction.   Seller and the Company have timely filed all tax returns in accordance with applicable laws (taking into account any valid extensions of time for filing), and each such tax return is accurate and complete in all material respects.  Seller and the Company have timely paid all taxes due with respect to the taxable periods covered by such tax returns and all other taxes arising in connection with or relating to the Property (whether or not shown on any tax return).  Neither Seller nor the Company have requested any extension of time within which to file any tax return which has not since been filed.  Seller and the Company do not and will not have additional liability for taxes with respect to any tax return which was required by applicable laws to be filed on or before the Closing Date.   There are no liens on any of the assets of Seller or the Company that arose in connection with any failure or alleged failure (whether or not in writing) to pay any tax.  All taxes arising in connection with or relating to the

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Property that Seller or the Company is required by law to withhold or collect (including sales and use taxes and amounts required to be withheld or collected in connection with any amount paid or owing to any employee, independent contractor, creditor or other person) have been duly withheld or collected and, to the extent required by applicable law, have been paid over to the proper taxing authority.  No tax audits or other tax proceedings are pending or being conducted, nor has Seller or the Company received any notice from any governmental authority that any such audit or other tax proceeding is pending, threatened or contemplated.  There is no claim or assessment pending, or threatened against Seller or the Company for any alleged deficiency in taxes.  Neither Seller nor the Company  have any tax liabilities (whether due or to become due) with respect to the Purchased Assets or the Property, the operations of Seller or the Company, or the assets of Seller or the Company, that will be required under local laws or otherwise to be assumed by Buyer.  Neither Seller nor the Company has waived any statute of limitations with respect to taxes or agreed to an extension of time with respect to any tax assessment or deficiency.  Neither Seller nor the Company is a party to, or bound by, any tax allocation or sharing agreement, tax indemnity obligation or similar contract or practice.  Neither Seller nor the Company has made any election to be excluded from the provisions of subchapter K of the Code or to be taxable as a corporation.  Neither Seller nor the Company has entered into any “reportable transaction” arising in connection with or relating to the Purchased Assets or the Property within the meaning of Section 6011 of the Code.

20.As-Is Condition.   BUYER HEREBY EXPRESSLY ACKNOWLEDGES AND AGREES THAT BUYER WILL HAVE, AS OF CLOSING, THOROUGHLY INSPECTED AND EXAMINED THE STATUS OF TITLE TO THE PROPERTY AND THE PHYSICAL CONDITION OF THE PROPERTY TO THE EXTENT DEEMED NECESSARY BY BUYER IN ORDER TO ENABLE BUYER TO EVALUATE THE PURCHASE OF THE PROPERTY.  BUYER HEREBY FURTHER ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT, BUYER IS RELYING SOLELY UPON THE INSPECTION, EXAMINATION, AND EVALUATION OF THE PHYSICAL CONDITION OF THE PROPERTY BY BUYER AND HAS NOT RELIED UPON ANY WRITTEN OR ORAL REPRESENTATIONS, WARRANTIES OR STATEMENTS, WHETHER EXPRESS OR IMPLIED, MADE BY SELLER, OR ANY MEMBER OF SELLER, OR ANY AFFILIATE, AGENT, EMPLOYEE, OR OTHER REPRESENTATIVE OF ANY OF THE FOREGOING OR BY ANY BROKER OR ANY OTHER PERSON REPRESENTING OR PURPORTING TO REPRESENT SELLER WITH RESPECT TO THE PROPERTY, THE CONDITION OF THE PROPERTY OR ANY OTHER MATTER AFFECTING OR RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY.  BUYER IS PURCHASING, AND AT CLOSING WILL ACCEPT, THE PROPERTY ON AN “AS IS,” “WHERE IS” AND “WITH ALL FAULTS” BASIS, WITHOUT REPRESENTATIONS, WARRANTIES AND/OR COVENANTS, EXPRESS OR IMPLIED, OF ANY KIND OR NATURE; EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT.  BUYER ACKNOWLEDGES THAT SELLER HAS MADE NO AGREEMENT TO ALTER, REPAIR OR IMPROVE THE PROPERTY.

AS USED IN THE PRIOR PARAGRAPH, THE TERM “CONDITION OF THE PROPERTY” MEANS THE FOLLOWING MATTERS: (I) THE QUALITY, NATURE AND ADEQUACY OF THE PHYSICAL CONDITION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE QUALITY OF THE DESIGN, LABOR AND MATERIALS USED TO

20

CONSTRUCT THE IMPROVEMENTS INCLUDED IN THE PROPERTY; THE CONDITION OF STRUCTURAL ELEMENTS, FOUNDATIONS, ROOFS, GLASS, MECHANICAL, PLUMBING, ELECTRICAL, HVAC, SEWAGE, AND UTILITY COMPONENTS AND SYSTEMS; THE CAPACITY OR AVAILABILITY OF SEWER, WATER, OR OTHER UTILITIES; THE GEOLOGY, FLORA, FAUNA, SOILS, SUBSURFACE CONDITIONS, GROUNDWATER, LANDSCAPING, AND IRRIGATION OF OR WITH RESPECT TO THE PROPERTY, THE LOCATION OF THE PROPERTY IN OR NEAR ANY SPECIAL TAXING DISTRICT, FLOOD HAZARD ZONE, WETLANDS AREA, PROTECTED HABITAT, GEOLOGICAL FAULT OR SUBSIDENCE ZONE, HAZARDOUS WASTE DISPOSAL OR CLEAN-UP SITE, OR OTHER SPECIAL AREA, THE EXISTENCE, LOCATION, OR CONDITION OF INGRESS, EGRESS, ACCESS, AND PARKING; THE CONDITION OF THE PERSONAL PROPERTY AND ANY FIXTURES; AND THE PRESENCE OF ANY ASBESTOS OR OTHER HAZARDOUS MATERIALS, DANGEROUS, OR TOXIC SUBSTANCE, MATERIAL OR WASTE IN, ON, UNDER OR ABOUT THE PROPERTY AND THE IMPROVEMENTS LOCATED THEREON; AND (III) THE COMPLIANCE OR NON-COMPLIANCE OF THE SELLER OR THE OPERATION OF THE PROPERTY OR ANY PART THEREOF IN ACCORDANCE WITH, AND THE CONTENTS OF, (A) ALL CODES, LAWS, ORDINANCES, REGULATIONS, AGREEMENTS, LICENSES, PERMITS, APPROVALS AND APPLICATIONS OF OR WITH ANY GOVERNMENTAL AUTHORITIES ASSERTING JURISDICTION OVER THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THOSE RELATING TO ZONING, BUILDING, PUBLIC WORKS, PARKING, FIRE AND POLICE ACCESS, HANDICAP ACCESS, LIFE SAFETY, SUBDIVISION AND SUBDIVISION SALES, AND HAZARDOUS MATERIALS, DANGEROUS, AND TOXIC SUBSTANCES, MATERIALS, CONDITIONS OR WASTE, INCLUDING, WITHOUT LIMITATION, THE PRESENCE OF HAZARDOUS MATERIALS IN, ON, UNDER OR ABOUT THE PROPERTY THAT WOULD CAUSE STATE OR FEDERAL AGENCIES TO ORDER A CLEAN UP OF THE PROPERTY UNDER ANY APPLICABLE LEGAL REQUIREMENTS AND (B) ALL AGREEMENTS, COVENANTS, CONDITIONS, RESTRICTIONS (PUBLIC OR PRIVATE), CONDOMINIUM PLANS, DEVELOPMENT AGREEMENTS, SITE PLANS, BUILDING PERMITS, BUILDING RULES, AND OTHER INSTRUMENTS AND DOCUMENTS GOVERNING OR AFFECTING THE USE, MANAGEMENT, AND OPERATION OF THE PROPERTY.

Buyer’s Initials:                         

Except as specifically set forth in this Agreement, Buyer acknowledges and agrees that it has not (and shall not) rely upon any statement and/or information from whomsoever made or given (including, but not limited to, any broker, attorney, agent, employee or other person representing or purporting to represent Seller) directly or indirectly, verbally or in writing, and Seller is not and shall not be liable or bound by any such statement and/or information.

Except as specifically set forth in this Agreement, Seller specifically disclaims any representation, warranty or guaranty with respect to the Property, express or implied, including, but not limited to, any representation or warranty as to the Property’s condition, fitness for a particular purpose, quality, freedom from defects or contamination (whether or not detectable by inspection), compliance with zoning or other legal requirements or as to the availability or existence of any utility or other governmental or private services or as to the amount of taxes assessed to the Property.

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21.Miscellaneous.

(a)All of the representations and warranties contained in this Agreement, all covenants, agreements and indemnities made herein, and all obligations to be performed under the provisions of this Agreement shall survive Closing for a period of twelve (12) months.

(b)This Agreement shall be void and of no force or effect if not executed by Seller and delivered to Buyer or Buyer’s attorney within seven (7) business days after execution by Buyer and delivery to Seller.

(c)The “captions” or “headings” in this Agreement are inserted for convenience of reference only and in no way define, describe or limit the scope or intent of this Agreement or any of the provisions hereof.

(d)Buyer shall have the right to assign this Agreement, and upon notice from Buyer, Seller agrees to convey the Purchased Assets directly to Buyer’s assignee provided that Buyer and/or assignee have fulfilled Buyer’s obligations under this Agreement; provided that any such assignee shall be an affiliate of and controlled by Buyer and the named Buyer herein prior to any such assignment shall remain fully liable for all obligations of Buyer hereunder.  Seller shall not assign this Agreement without the prior written consent of Buyer.  Any assignment of this Agreement by Buyer not permitted hereunder, and any assignment of this Agreement by Seller without Buyer’s prior written consent shall in each case be be null and void, and of no force or effect.

(e)This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and permitted assigns.

(f)This Agreement, including the exhibits attached hereto, contains the entire agreement as to the Purchased Assets and the Property between Seller and Buyer, and there are no other terms, obligations, covenants, representations, statements or conditions, oral or otherwise, of any kind whatsoever concerning this sale and purchase.  This Agreement shall not be altered, amended, changed or modified except in writing executed by the parties hereto.

(g)This Agreement shall be construed in accordance with the internal laws of the State of Ohio, without giving effect to its conflicts of laws provisions.

(h)All parties to this Agreement having participated fully and equally in the negotiation and preparation hereof, this Agreement shall not be more strictly construed, or any ambiguities within this Agreement resolved, against either party hereto.  It is the intent of Buyer and Seller that this Agreement be binding on both parties and not illusory. Thus, wherever this Agreement grants Buyer or Seller discretion, which might otherwise make this Agreement illusory, the party exercising its discretion must act reasonably according to commercial standards.

(i)Subject to any tenants’ rights to the Property, Seller shall deliver occupancy of the Property to Buyer at Closing.

(j)Time is of the essence of this Agreement and Buyer and Seller hereby

22

agree that the times provided for in this Agreement are reasonable times for each party to complete its respective obligations. If any of the times provided for in this Agreement fall on a Saturday, Sunday or legal holiday, said times shall automatically extend to the next full business day.

(k)This Agreement may be executed or amended in counterparts, all of which taken together shall constitute one and the same instrument.

(l)If any of the terms or conditions contained herein shall be declared to be invalid or unenforceable by a court of competent jurisdiction, then the remaining provisions and conditions of this Agreement, or the application of such to persons or circumstances other than those to which it is declared invalid or unenforceable, shall not be affected thereby and shall remain in full force and effect and shall be valid and enforceable to the full extent permitted by law.

(m)After the Closing, at the request of Buyer and at Buyer’s expense, Seller shall make available to Buyer the historical financial information in Seller’s possession regarding the operation of the Property to the extent required by Buyer in order to prepare stand-alone audited financial statements for such operations in accordance with generally accepted accounting principles, and to cooperate (at Buyer’s expense) with Buyer and any auditor engaged by Buyer for such purpose.

22.Disclosure.  No party may make public disclosure with respect to this transaction before the Closing except:

(a)As may be required by law, including without limitation disclosure required under securities laws, or by the Securities and Exchange Commission, or by the rules of any stock exchange;

(b)To such title insurance companies, lenders, attorneys, accountants, partners, directors, officers, employees and representatives of any party or of such party’s advisors who need to know such information for the purpose of evaluating and consummating the transaction, including the financing of the transaction; and

(c)To present or prospective sources of financing.

23.Cooperation with S-X 3-14 Audit.   Seller acknowledges that it is Buyer’s intention that the ultimate Buyer of the Purchased Assets will be affiliated with a publicly registered company (“Registered Company”).  Seller acknowledges that it has been advised that if such Buyer is affiliated with a Registered Company, such Registered Company may be required to make certain filings with the Securities and Exchange Commission (the “SEC Filings”) that may include financial statements for the most recent pre-acquisition fiscal year (the “Audited Year”) and the current fiscal year through the date of acquisition (the “Stub Period”) for the Property.  To assist Buyer and Registered Company in preparing the SEC Filings, Seller covenants and agrees no later than thirty (30) days after the Closing Date, Seller shall provide Buyer and the Registered Company with the following information pertaining to the Property (to the extent such items are not duplicative of items contained in the Disclosure Materials): (i) access to bank statements for the Audited Year and Stub Period; (ii) rent roll as of the end of the Audited Year and Stub Period; (iii) operating statements for the Audited Year and

23

Stub Period; (iv) access to the general ledger for the Audited Year and Stub Period; (v) cash receipts schedule for each month in the Audited Year and Stub Period; (vi) access to invoice for expenses and capital improvements in the Audited Year and Stub Period; (vii) accounts payable ledger and accrued expense reconciliations; (viii) check register for the 3-months following the Audited Year and Stub Period; (ix) all leases and 5-year lease schedules; (x) copies of all insurance documentation for the Audited Year and Stub Period; (xi) copies of accounts receivable aging as of the end of the Audited Year and Stub Period along with an explanation for all accounts over 30 days past due as of the end of the Audited Year and Stub Period; and (xii) any additional information required by the SEC Filings and requested by the Buyer.  In addition, no later than thirty (30) days after the Closing Date, Seller shall provide to Buyer: (1) signed representation letter in the form attached hereto as Exhibit G; (2) a signed audit request letter in the form attached hereto as Exhibit H; and (3) a signed audit response letter from Seller’s attorney in the form attached hereto as Exhibit I.

24.Execution.This Agreement may be executed and delivered electronically by facsimile or pdf attachment to an email with the same force and effect as if an original executed counterpart had been executed and delivered.

[Signatures located on following page.]

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IN WITNESS WHEREOF, intending to be legally bound, the parties have caused this Agreement of Sale and Purchase to be duly executed, under seal, as of the date first set forth above.

SELLER:
CASSADY GATEWAY PARTNERS, LLC
an Ohio limited liability company
By:	Hplex II LLC,
	an Ohio limited liability company and its Managing Member
	By:	/s/ Dennis J. Freudman
		Dennis J. Freudman,
		its Managing Member

BUYER:
DOC — 3100 PLAZA PROPERTIES BOULEVARD MOB, LLC
By:	Physicians Realty L.P., its Manager
	By:	Physicians Realty Trust, its General Partner
		By:	/s/ John W. Sweet
		Print Name:	John W. Sweet
		Its:	EVP & Chief Investment Officer

EX-10.5

Exhibit 10.5

CONTRIBUTION AGREEMENT

CURIE BUILDING, LLC (CONTRIBUTOR)

&

DOC-1755 CURIE DRIVE MOB, LLC (ACQUIRER)

PROPERTY:1720 MURCHISON, EL PASO, TX

EFFECTIVE DATE:SEPTEMBER 8, 2014

TABLE OF CONTENTS

CONTENTS		PAGE
1.	Contribution of Property	1
2.	Consideration; Deposit; Payment; Recourse Debt Allocation	2
3.	OPU Issuance; Closing Statement	3
4.	Title	4
5.	Closing	5
6.	Representations and Warranties	7
7.	Delivery of Disclosure Materials; Due Diligence Period	13
8.	Operations Prior to Closing; Conditions to Closing	16
9.	Prorations and Charges	18
10.	Condemnation; Rezoning; Historic Designation	19
11.	Default by Acquirer	20
12.	Default by Contributor	20
13.	Risk of Loss	20
14.	Brokerage	21
15.	Notice	21
16.	Indemnification	22
17.	Tax Treatment of Transaction	22
18.	Related Contribution Agreements; New EPOSG Leases; Right of First Refusal	23
19.	Cooperation with S-X 3-14 Audit	24
20.	Miscellaneous	25

EXHIBIT A	—	LEGAL DESCRIPTION
EXHIBIT B	—	ESCROW AGREEMENT
EXHIBIT B-1		FORM OF BOTTOM DOLLAR GUARANTY AGREEMENT
EXHIBIT C	—	LEASES, RENTS AND SECURITY DEPOSITS
EXHIBIT D	—	STATEMENT OF INCOME AND EXPENSES
EXHIBIT E	—	TENANT ESTOPPEL CERTIFICATE
EXHIBIT F	—	SNDA
EXHIBIT G	—	LIST OF ANCILLARY DOCUMENTS
EXHIBIT H	—	NON-FOREIGN PERSON CERTIFICATION
EXHIBIT I	—	REPRESENTATION LETTER
EXHIBIT J	—	AUDIT INQUIRY LETTER
EXHIBIT K	—	AUDIT RESPONSE LETTER FORM
Schedule 1.1(c)		—	Personal Property
Schedule 1.1(d)		—	Leases
Schedule 1.1(e)		—	List of Contract Rights
Schedule 1.1(f)		—	List of Records and Plans
Schedule 1.1(g)		—	List of Warranties
Schedule 1.1(h)		—	List of Licenses and Permits
Schedule 7.1	—	Disclosure Materials
Schedule 18.2	—	New EPOSG Leases

ii

CONTRIBUTION AGREEMENT

THIS CONTRIBUTION AGREEMENT (this “Agreement”) is made by and between CURIE BUILDING, LLC, a Texas limited liability company, as successor by conversion to Curie Building, Ltd., a Texas limited partnership (“Contributor”), and DOC-1755 CURIE DRIVE MOB, LLC, a Wisconsin limited liability company (“Acquirer”).  This Agreement is to be effective as of the Effective Date specified in Section 20.1 below.  Defined terms used in this Agreement shall have the meanings given in Section 20.14 hereof.

RECITALS:

A.Contributor is the owner of the Property (as hereinafter defined).

B.Contributor desires to contribute the Property to Acquirer, and Acquirer desires to acquire the Property from Contributor, on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the covenants and provisions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1.Contribution of Property.

1.1Description of Property.  For purposes of this Agreement, “Property” shall mean and include the following:

(a)That certain improved parcel of land legally described in Exhibit A hereto, together with all rights and appurtenances (the “Land”);

(b)The improvements on the Land, consisting of an approximately 86,971 square foot multi-tenant medical office and clinical/laboratory building, and all fixtures, including, without limitation, the sprinkling, plumbing, heating, cooling, ventilating, air conditioning, electrical, lighting and other systems (the “Improvements”), (the Land and Improvements are referred to collectively, as the “Real Property”);

(c)All of Contributor’s right, title and interest in and to all of the personal property attached to or located on or used in connection with the operation of the Real Property, including, without limitation, furniture, furnishings, fittings, appliances, machinery and equipment, building materials, operating inventories and supplies, all of which are listed on Schedule 1.1(c) hereto (collectively, the “Personal Property”);

(d)All of Contributor’s right, title and interest in and to all tenant leases in the Real Property, including leases executed after the date hereof in accordance with the terms of this Agreement (the “Leases”), all of which existing Leases are listed on Schedule 1.1(d) hereto;

(e)All of Contributor’s right, title and interest in and to all contracts and other agreements incident to the operation of the business conducted on the Real Property, including, without limitation, management contracts, on-site maintenance contracts, janitorial

1

contracts, and leasing commission agreements; all of which are listed on Schedule 1.1(e) hereto (collectively, the “Contract Rights”), except to the extent Acquirer elects to exclude any such item, pursuant to Section 7.2(b) of this Agreement;

(f)All of Contributor’s right, title and interest in and to all financial and other books and records maintained by Contributor in connection with the operation of the Real Property, all preliminary, final and proposed building plans and specifications in the possession of Contributor and relating to the Real Property, and all surveys, structural reviews, grading plans, topographical maps, architectural drawings and engineering, soils, seismic, geologic, environmental, and architectural reports, studies, certificates, and similar documents in the possession of Contributor and relating to the Real Property, all of which are listed on Schedule 1.1(f) hereto (collectively, the “Records and Plans”);

(g)All of Contributor’s right, title and interest in and to all guarantees and warranties relating to the Property and the fixtures and equipment located therein, all of which are listed on Schedule 1.1(g) hereto (collectively, the “Warranties”); and

(h)All of Contributor’s right, title and interest in and to all trade names, licenses, permits, certificates of occupancy, approvals, dedications, subdivision maps, and entitlements issued, approved or granted by governmental or quasi-governmental entities or otherwise relating to the Real Property, and any and all development rights and other intangible rights, titles, interests, privileges, and appurtenances owned by Contributor and in any way relating to or used in connection with the Real Property and/or the operation of the business conducted on the Real Property, all of which are listed on Schedule 1.1(h) hereto (collectively, the “Licenses and Permits”).

1.2Contribution and Acceptance.  Contributor agrees to contribute and transfer the Property to Acquirer, and Acquirer agrees to accept the Property from Contributor, pursuant to the terms and conditions set forth in this Agreement.

2.Consideration; Deposit; Payment; Recourse Debt Allocation.

2.1Aggregate Consideration.  The aggregate consideration (the “Consideration”) for which Contributor agrees to contribute the Property to Acquirer, and which Acquirer agrees to pay or deliver to Contributor, subject to the terms of this Agreement, is Thirty Million and 00/100 Dollars ($30,000,000.00).

2.2Earnest Money Deposit.  Acquirer shall pay One Hundred Thousand and 00/100 Dollars ($100,000.00) (the “Deposit”) by wire transfer payable to First American Title Insurance Company — Milwaukee Office, Attn: Tammy Mervin, 648 North Plankinton Avenue, Suite 140, Milwaukee, Wisconsin 53203(“Escrow Agent”), within three (3) business days following the Effective Date.  The Deposit shall be held in an interest bearing, federally insured account, by Escrow Agent in accordance with the Escrow Agreement attached hereto as Exhibit B (the “Escrow Agreement”) and this Agreement pending consummation of this transaction.  Any interest earned on the Deposit shall be paid to Acquirer unless Contributor shall be entitled to the Deposit pursuant to the terms of this Agreement or the Escrow Agreement, in which case such interest shall be paid to Contributor.  Upon expiration of the Due Diligence Period, if Acquirer has not terminated this Agreement as provided herein, the Deposit shall become

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nonrefundable except in the event of a Contributor default.  Acquirer’s Federal Tax I.D. Number is                               ; Contributor’s Federal Tax I.D. Number is 74-2936811.  At the Closing, the Deposit shall be paid to Contributor and credited to the cash portion of the Net Consideration due to Contributor pursuant to Section 2.3 below.

2.3Payment of Consideration.  At Closing Acquirer shall be entitled to credit the following against the Consideration due to Contributor;

(a)the Deposit, to the extent paid to Contributor by the Title Company;

(b)any amounts paid by Acquirer pursuant to Section 4.2 to remove any Mandatory Cure Items not removed by Contributor;

(c)all existing indebtedness that is secured by a mortgage on or other security interest in the Property which is assumed by Acquirer (“Existing Mortgage Debt”), but not including any accrued interest, unless actually assumed or paid by Acquirer, and not including any prepayment penalty associated with the pay-off of such Existing Mortgage Debt, it being understood and agreed that Acquirer shall be solely responsible for the repayment of principal (and accrued interest if assumed) of the Existing Mortgage Debt at Closing, and Contributor shall be solely responsible for any and all such prepayment penalties, which shall be paid by Contributor at or before Closing;

(d)prorations and adjustments due from Contributor pursuant to Section 9;

(e)to the extent unpaid as of the Closing, the brokerage fee to be paid by Contributor to Contributor’s Broker pursuant to Section 14 hereof.

The Consideration, as adjusted pursuant to Section 2.3(a)-(e) above, is referred to herein as the “Net Consideration”.  The Net Consideration shall be paid to Contributor at Closing in either cash or Aggregate OPU Value, as specified in Section 3 below.

2.4Bottom Dollar Guaranty by Contributor.  At the Closing, Acquirer will make a recourse allocation of a portion of Acquirer’s aggregate debt to the Contributor (the “Recourse Debt Allocation”) pursuant to a bottom dollar guaranty agreement in the form of Exhibit B-1 hereto.

3.OPU Issuance; Closing Statement.

3.1OPU Issuance.  Contributor shall have the option to elect to receive the Net Consideration in cash or in the form of Partnership Units designated as Common Units (“OPUs”) of Physicians Realty L.P., a Delaware limited partnership (the “Operating Partnership”), which is the operating partnership of Physicians Realty Trust, a Maryland real estate investment trust (“DOC”), or a combination thereof; provided, however, Contributor acknowledges and agrees that in order for the option to receive OPUs to be available to Contributor, Contributor must elect to receive at least One Million Dollars ($1,000,000) of the Net Consideration in OPUs.  If Contributor elects to receive all or a portion of the Net

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Consideration in the form of OPUs, then, prior to Closing, Contributor shall notify Acquirer in writing of such election and shall confirm for Acquirer that the foregoing requirement will be met.

3.2Closing Statement.  Prior to Closing, Contributor shall have delivered to Acquirer a Closing Statement calculated in accordance with Section 2.3 (the “Closing Statement”) in mutually agreed form accurately setting forth the financial terms of this transaction and a summary of the Consideration and Net Consideration, including the U.S. dollar denominated amount of Net Consideration that Contributor elects to receive in OPUs (such amount, the “Aggregate OPU Value”).

3.3Valuation of OPUs.  In accordance with the provisions of this Agreement, at the Closing, the Operating Partnership will issue to Contributor, a number of OPUs determined by dividing the Aggregate OPU Value on the Closing Statement by the DOC Trading Price (rounded to the nearest whole OPU). The “DOC Trading Price” means the average per share closing price, rounded to two decimal points, of DOC common stock on the New York Stock Exchange (as reported by the Wall Street Journal website, http://quotes.wsj.com/DOC/historical-prices, or its successor) for the period of three (3) consecutive trading days ending on the last full trading day prior to the Closing Date. The Closing Statement will be updated prior to the Closing in accordance with the requirements of this Section 3.3 to list the number of OPUs to be issued to Contributor at Closing. Such updated Closing Statement shall be the final and binding allocation of OPUs to Contributor.

4.Title.

4.1Title Commitment.  From and after the Effective Date, Acquirer shall have the right to order a title insurance commitment prepared in accordance with all of the terms and conditions of this Agreement (the “Title Commitment”).  The Title Commitment shall be issued by First American Title Insurance Company — Milwaukee Office (“Title Company”), and shall obligate the Title Company to issue at the Closing an Owner’s Policy of Title Insurance in the amount of the Consideration on the standard form (Form T-1) promulgated by the Texas Department of Insurance (the “Title Policy”).  Evidence of title shall be issued to Escrow Agent by Lone Star Title of El Paso, Inc., 601 North Mesa, Suite 100, El Paso, Texas 79901, Attn:  John Martin (Tel. #: (915) 545-2222). Acquirer may direct the Title Company at or prior to Closing to down date the Title Commitment to the date and time of the recording of the Deed and provide a “title mark-up” or “Pro-forma Policy” showing the final form of the Title Policy (including any endorsements required by Acquirer) to be issued, which mark-up or “Pro-forma” shall obligate the Title Company to issue the final title insurance policy in such form.  The title mark-up or Pro-Forma and final Title Policy shall be subject only to the “Permitted Exceptions” specified below. A written statement of the obligee of the amount of any lien or encumbrance to be discharged by Acquirer pursuant to Section 2.3(c) above shall be provided by Contributor before the expiration of the Due Diligence Period. The premium for the title policy and any fees for endorsements or other services provided by the Title Company (including the mortgagee policy, if any) shall be paid by Acquirer on or before Closing.

4.2Title Objections. Within ten (10) days of Acquirer’s receipt of the latter of the Title Commitment or the Survey (as defined in Section 7.2(e) below), Acquirer shall object

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in writing to any condition of title not satisfactory to Acquirer, in Acquirer’s sole discretion.  During the Due Diligence Period and following receipt of Acquirer’s objections to the Title Commitment and Survey, the parties will cooperate with one another in endeavoring to cure or secure title insurance over any objections Acquirer has made to the title to the Property as disclosed by the Title Commitment and Survey.  Contributor shall have no obligation to cure title objections, except that Contributor must remove (i) liens of an ascertainable amount other than Existing Mortgage Debt, (ii) any exceptions or encumbrances to title which are created by, through or under Contributor after the Effective Date and which are not consented to by Acquirer, and (iii) any mechanic’s and materialman’s liens filed against the Property during the pendency of this Agreement, unless the same arise by, through or under Acquirer, its employees, agents or contractors (“Mandatory Cure Items”).  The term “Permitted Exceptions” shall mean the specific exceptions to title contained in Schedule B of the Title Commitment as the same may be updated by Escrow Agent prior to Closing (other than Mandatory Cure Items, which Contributor must remove on or before Closing), that the Title Company has not agreed to insure over or remove from the Title Commitment during the Due Diligence Period, or thereafter, and any matters disclosed in the Survey

4.3UCC Search.  Contributor shall transfer to Acquirer all of the Personal Property free of all liens and encumbrances other than Existing Mortgage Debt.  Contributor shall, at Contributor’s sole cost and expense, prior to Closing, deliver to Acquirer documentation from Uniform Commercial Code (“U.C.C.”) searches confirming that there are no U.C.C. filings against Contributor which would be a lien on the Property, including the Personal Property, involved in this transaction other than Existing Mortgage Debt.

5.Closing.

5.1Time and Place.  The closing (“Closing”) of the transaction hereunder shall be held on the date that is fifteen (15) days after the expiration date of the Due Diligence Period (or on the next business day thereafter if such date is not a business day) (the “Closing Date”), or on such other date that the parties may mutually select, provided, however, in no event shall the Closing Date be later than September 30, 2014.  Closing shall be an escrow closing with the Title Company acting as the closing escrow agent. It is agreed that the time of Closing and the obligation of Contributor to deliver the Deed (as defined in Section 5.2(a) below) to Acquirer at Closing are of the essence of this Agreement.  Notwithstanding anything to the contrary contained herein, upon written notice to Contributor, Acquirer, in its sole discretion, shall have the right to extend the Closing Date for up to an additional thirty (30) days.

5.2Contributor’s Actions at Closing.  At Closing, Contributor shall deliver to Acquirer duly executed originals of the following:

(a)A general warranty deed to the Real Property conveying good and indefeasible fee simple title to the Real Property, subject only to the Permitted Exceptions, duly executed and acknowledged by Contributor and in proper form for recording (the “Deed”).

(b)A valid bill of sale for the Personal Property, if any.

(c)A valid assignment and assumption of Leases, in form mutually satisfactory to the parties (“Assignment and Assumption of Leases”), duly executed and

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acknowledged, assigning to Acquirer all of Contributor’s right, title and interest in and to the Leases, together with an original executed copy of the Leases and a letter addressed to the tenants informing tenants of the sale (the “Tenant Notice Letters”).  The Tenant Notice Letters shall be in form and substance satisfactory to, and approved in writing by, Acquirer.  The foregoing assignment shall include an indemnification from Contributor to Acquirer against liability for claims asserted against Acquirer under the Leases for events occurring prior to Closing, and an indemnification from Acquirer to Contributor against liability for claims asserted against Contributor for events occurring after Closing.

(d)A Non-foreign Person Certification in the form attached hereto as Exhibit H, as required under Section 1445 of the Internal Revenue Code of 1986, as amended (the “Code”).

(e)An assignment in form and substance mutually satisfactory to Contributor and Acquirer, duly executed by Contributor, assigning to Acquirer all of Contributor’s right, title and interest in and to the Contract Rights, Records and Plans, Warranties, Licenses and Permits (the “Assignment of Intangibles”).

(f)A certificate certifying that the representations and warranties of Contributor, as set forth in this Agreement, are true and correct in all respects as of the Closing.

(g)Originals of the following instruments, documents and other items (or copies if originals are unavailable):

(1)the Leases and the Guarantees;

(2)the Ancillary Documents executed by Contributor;

(3)all building records in Contributor’s possession or control with respect to the Property;

(4)each bill of current real estate taxes, sewer charges and assessments, water charges and other utilities, together with proof of payment thereof (to the extent same have been paid);

(5)the Warranties;

(6)all keys and combinations to locks at the Property, all plans, specifications, site plans, equipment manuals, technical data and other documentation relating to the building systems, equipment and any other personal property forming part of the Property or any portion thereof in the possession of Contributor or any property manager(s);

(7)a Seller’s affidavit, ALTA Statement or similar certification as may be required by the Title Company or Escrow Agent to issue the Title Policy;

(8)the Title Policy, insuring Acquirer’s fee simple title to the Real Property, subject only to the Permitted Exceptions and such other exceptions as may be approved by Acquirer;

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(9)the Closing Statement; and

(10)such other documents as may be reasonably required by Acquirer or the Escrow Agent to consummate this transaction in accordance with this Agreement.

(h)Prior to the Closing, Contributor shall have executed and delivered to Acquirer, the documents listed on Exhibit G hereto (the “Ancillary Documents”).

(i)Evidence of capacity and/or authority of Contributor to enter into and consummate the transaction contemplated under this Agreement, and the authority of the person executing documents on behalf of Contributor, in a form reasonably satisfactory to Acquirer and the Title Company.

(j)Any disclosures and reports required by applicable state law in connection with the transfer of the Property pursuant to this Agreement.

5.3Acquirer’s Actions at Closing.  At the Closing, Acquirer shall deliver the following to Contributor:

(a)the Net Consideration in cash and/or OPUs, as specified in Sections 2 and 3 hereof;

(b)the Assignment and Assumption of Leases, executed by Acquirer;

(c)the Assignment of Intangibles, executed by Acquirer;

(d)a certificate from Acquirer certifying that the representations and warranties of Acquirer, as set forth in this Agreement, are true and correct in all respects as of closing;

(e)the Ancillary Documents, executed by Acquirer;

(f)evidence of capacity and/or authority of Acquirer and the authority of the person executing documents on behalf of Acquirer reasonably satisfactory to Contributor and the Title Company;

(g)any disclosures and reports required by applicable state law in connection with the acceptance of the transfer of the Property; and

(h)any additional documents that Contributor or the Title Company may reasonably require for the proper consummation of the subject transaction.

5.4Possession.  Possession of the Property shall be given to Acquirer at Closing unoccupied and free of any encumbrances other than the Permitted Exceptions, and in the case of the Leases, subject only to any tenants’ rights under the Leases.

5.5Further Assurances.  In addition to the acts and deeds recited herein and contemplated to be performed, executed and/or delivered by the parties at the Closing, each of

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the parties agrees to perform, execute and/or deliver or cause to be performed, executed and/or delivered, but without any obligation to incur any additional liability or expense, on or after such Closing any and all further acts, deeds and assurances as may be reasonably necessary to consummate the transactions contemplated hereby and/or to further perfect and deliver to the other party the benefits conferred by this Agreement on such other party.

6.Representations and Warranties.

6.1Contributor’s Representations and Warranties.  Contributor makes the following representations and warranties and agrees that Acquirer’s obligations under this Agreement are conditioned upon the truth and accuracy of such representations and warranties, both as of the Effective Date and as of the Closing Date:

(a)Contributor has been duly formed and is validly existing as a Texas limited liability company in good standing in its state of organization, with the requisite power and authority to own, lease and operate its assets, conduct its business, and perform its obligations under this Agreement.  Contributor is duly qualified to transact business and is in good standing under the laws of the jurisdiction in which it owns or leases assets, or conducts any business, to the extent that such qualification is required under the laws of such jurisdiction.

(b)Contributor acknowledges that: (i) the Operating Partnership and Acquirer intend the offer and issuance of OPUs to be exempt from registration under the Securities Act, and applicable state securities laws by virtue of the status of Contributor being an “accredited investor” as that term is defined in Rule 501(a) of Regulation D, and that Contributor is acquiring the OPUs in a transaction exempt from registration pursuant to Rule 506 of Regulation D; and (ii) in issuing any OPUs pursuant to the terms of this Agreement, the Operating Partnership and Acquirer is relying on the representations made herein by Contributor.

(c)In electing to receive OPUs and engage in the transactions contemplated by this Agreement, Contributor will not rely upon any representations made to it by Acquirer, the Operating Partnership, or DOC, or any of their respective partners, members, officers, directors, employees, or agents as to tax matters or otherwise that are not contained herein.  Contributor has obtained from its own counsel advice regarding the transactions contemplated by this Agreement, including, without limitation, the tax consequences of: (i) the transfer of the Property to Acquirer and the receipt of OPUs as consideration therefor; and (ii) Contributor’s admission as a limited partner of the Operating Partnership.

(d)Contributor is aware of the risks involved in investing in the OPUs.  Contributor acknowledges that it has had an opportunity to ask questions of and to receive answers from Acquirer, the Operating Partnership, and DOC, or a person or persons authorized to act on their behalf, concerning the terms and conditions of the OPUs and the financial condition, affairs, and business of Acquirer, the Operating Partnership, and DOC.  Contributor confirms that Acquirer, the Operating Partnership, and/or DOC has provided copies of any documents, records, and information pertaining to the OPUs that Contributor deemed necessary to determine whether to enter into this Agreement and contribute the Property to Acquirer in exchange for the OPUs.

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(e)Contributor understands that the OPUs will not be registered under the Securities Act or any state securities laws and are instead being offered and sold in reliance on an exemption from such registration requirements.  Any OPUs issued to Contributor are being acquired solely for the Contributors’ own account, for investment, and are not being acquired with a view to, or for resale in connection with, any distribution, subdivision, or fractionalization thereof, in violation of such laws, and Contributor does not have any present intention to enter into any contract, undertaking, agreement, or arrangement with respect to any such resale.

(f)Contributor is an accredited investor, as that term is defined in Rule 501(a) of Regulation D.  Contributor covenants and agrees to provide to Acquirer prior to the Closing a completed and executed accredited investor questionnaire, with such accredited investor questionnaire confirming that Contributor is an accredited investor, as that term is defined in Rule 501(a) of Regulation D.

(g)Contributor holds fee simple title to the Real Property and marketable title to the Personal Property.

(h)The execution and delivery of this Agreement have been approved as required by law and Contributor’s constituent documents, and no further action is required on the part of Contributor to consummate the transaction contemplated hereby. The person executing this Agreement on behalf of Contributor has all requisite authority to execute this Agreement, and this Agreement, as executed, is valid, legal and binding upon Contributor.  No attachments, execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings are pending or threatened against Contributor, nor are any such proceedings contemplated by Contributor.

(i)There is no litigation or proceeding, either judicial or administrative, pending or threatened, affecting Contributor’s ability to consummate the transactions contemplated hereby.  There is no outstanding order, writ, injunction or decree of any court, government, governmental entity or authority or arbitration against or affecting Contributor or the Property.

(j)There are no management, employment, service, equipment, supply, maintenance, water, sewer or other utility or concession agreements or agreements with municipalities (including improvement or development escrows or bonds) with respect to or affecting the Property which will burden the Property or Acquirer after Closing in any manner whatsoever, except for (i) instruments of record and/or the Permitted Exceptions and (ii) Contract Rights that Acquirer has elected to assume.

(k)Contributor has no knowledge of, and has received no notice from, any governmental authority requiring any work, repairs, construction, alterations or installations on or in connection with the Property, or asserting any violation of any federal, state, county or municipal laws, ordinances, codes, orders, regulations or requirements affecting any portion of the Property, including, without limitation, the Americans with Disabilities Act and any applicable environmental laws or regulations. There is no action, suit or proceeding pending or, to the knowledge of Contributor, threatened against or affecting Contributor or the Property or any portion thereof or relating to or arising out of Contributor’s ownership of the Property, in

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any court or before or by any federal, state, county or municipal department, commission, board, bureau or agency or other governmental instrumentality.

(l)No special assessments or charges of any kind or nature (deferred or otherwise) for any public improvements have been made against the Property which remain unpaid, no improvements to the Property, or to Contributor’s knowledge, any roads or facilities abutting the Property have been made or ordered for which a lien, assessment or charge can be filed or made, and Contributor has no knowledge of any plans for improvements by any governmental or quasi-governmental authority which might result in a special assessment against the Property.  Contributor has incurred no obligations relating to the installation of or connection to any sanitary sewers or storm sewers which remain unpaid and shall be enforceable against the Property; and all public improvements ordered, advertised, commenced or completed prior to the Effective Date shall be paid for in full by Contributor prior to Closing.

(m)To Contributor’s knowledge, all certificates of occupancy and licenses necessary for operation of the Property, as presently conducted, have been issued by all authorities having jurisdiction thereof; and to Contributor’s knowledge, all such certificates of occupancy and licenses are in full force and effect. Contributor has not received any written notice of suspension or cancellation of any certificates of occupancy or licenses.  Contributor has no actual knowledge of any structural defect in the buildings or other improvements on the Real Property, or in the buildings’ roof, heating, ventilating, air conditioning, mechanical, plumbing, or electrical systems and equipment.

(n)Contributor warrants, represents and covenants that, to Contributor’s knowledge:  (i) there has been no disposal, burial or placement of Hazardous Substances (as defined below) on or about the Property in violation of applicable Environmental Laws; (ii) the Property and Contributor are not in violation of any applicable Environmental Laws (as defined below), and no other person or entity has used all or part of the Property or any lands contiguous to the Property in violation of any applicable Environmental Laws; (iii) there is no contamination, pollution or danger of pollution resulting from a condition on or under the Property, or on or under any lands in the vicinity of the Property; (iv) there are no storage tanks on or under the Property; (v) environmental conditions associated with the Property are in compliance with all applicable Environmental Laws; and (vi) Contributor has disclosed to Acquirer all environmental reports, correspondence from governmental entities, and similar written information in Contributor’s possession relating to the environmental condition of the Property..  Contributor has not received any information from neighboring property owners indicating they have any concerns about existing environmental conditions which could affect the Property or suggesting they might look to Contributor for contribution to clean up such condition.

In the event Acquirer shall discover such Hazardous Substances and/or violations of Environmental Laws, tanks, other “recognized environmental condition” (as that phrase is defined by the most recent American Society for Testing and Materials practice standards) or other unsatisfactory environmental conditions (in Acquirer’s sole discretion) on the Property at any time prior to Closing, Acquirer shall, as its sole remedy except as hereafter provided in this Section 6.1(n), have the right to terminate this Agreement upon written notice thereof to Contributor, whereupon Escrow Agent shall return the Deposit to Acquirer together

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with all interest thereon, and thereafter neither party shall have any further rights or obligations hereunder except for Surviving Obligations; provided, however, that, if Contributor had knowledge of such environmental condition and failed to disclose the same to Acquirer in breach of this Agreement, Contributor shall reimburse Acquirer upon demand for all Acquirer’s out of pocket costs and expenses incurred in connection with the transaction contemplated by this Agreement, not to exceed $100,000 (“Transaction Costs”).  Such reimbursement shall be made within thirty (30) days of demand by Acquirer, accompanied by a detailed summary and supporting documentation therefor establishing such out of pocket costs.  The foregoing reimbursement obligation of Contributor shall survive termination of this Agreement by Acquirer or Contributor.

(o)There are no existing leases, whether oral or written, agreements of sale, options, rights of first refusal, rights of first offer, tenancies, licenses or any other claims to possession or use affecting the Property, except for the Permitted Exceptions and/or as listed in Exhibit C hereto.  Exhibit C lists all:  (i) Leases and subleases for any portion of the Property and all assignments, amendments and any other writings related thereto in effect on the Effective Date; and (ii) guarantees with respect to the Leases in effect on the Effective Date (the “Guarantees”).  Each of the Leases and Guarantees is valid and subsisting and in full force and effect and has not been further amended, modified or supplemented; and the tenant thereunder is in actual possession in the normal course and the tenant is not in default thereunder.  No tenant has asserted any claim of which Contributor has notice which would in any way affect the collection of rent from such tenant, and no written notice of default or breach on the part of the landlord under any of the Leases has been received by Contributor or its agents from the tenant thereunder.  All painting, repairs, alterations and other work required to be performed under the Leases, have been or will, prior to Closing, be fully performed and paid for in full by Contributor.

(p)The rents set forth in Exhibit C or in the Leases are the actual rents, income and charges presently being collected by Contributor.  Except as set forth in Exhibit C or in the Leases, no tenant under any of the Leases is entitled to any concessions, allowances, rebates or refunds or has prepaid any rents or other charges for more than the current month.  None of the Leases and none of the rents or other amounts payable thereunder have been assigned, pledged or encumbered, except to the extent, if any, that Contributor has made collateral assignments of rents and leases to the holder of a mortgage on the Property.  No security deposits have been paid by any tenants which have not heretofore been returned, except as set forth in Exhibit C hereto or in the Leases, if any.

(q)No brokerage or leasing commissions or other compensation is or will be due or payable to any person, firm, corporation or other entity with respect to or on account of any of the Leases or any expansions or renewals thereof, except as set forth in Exhibit C.

(r)The statements of income and expenses identified in Exhibit D are true and correct, accurately reflecting the income and expenses for operating the Property for the periods therein specified.

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(s)There are no pending or, to Contributor’s knowledge, threatened condemnation or eminent domain proceedings affecting the Property or any portion thereof, and Contributor has no knowledge of any proposed actions by any governmental agencies or authorities which may create a lien upon the Property or any portion thereof.

(t)To Contributor’s knowledge, the Property is in material compliance with all applicable federal, state, county, municipal or other government standards, laws, ordinances, statutes, regulations and requirements. To Contributor’s knowledge, the Property is in material compliance with all applicable private restrictions, covenants, rules, standards and requirements. To Contributor’s knowledge, no approvals from, or filings or recordings with, any person or entity are required to create, subdivide or separate the Real Property from any other parcel of land in order to consummate the transfer of the Property hereunder to Acquirer.

(u)To Contributor’s knowledge, all licenses, permits, and other governmental approvals necessary for the operation of the Property and the business conducted thereon have been obtained and are currently in force.

(v)All work performed or materials furnished for the Property have been fully paid for.

(w)The Property constitutes substantially all of the trade or business assets of Contributor.

As used herein, the phrases: “to Contributor’s knowledge”, “Contributor has no knowledge”, and derivations thereof or phrases of similar import in a representation or warranty of Contributor mean the current actual knowledge of Mitchell G. McBeth, but does not include, constructive knowledge or inquiry knowledge.  Contributor hereby represents and warrants that Mr. McBeth is the person most knowledgeable regarding, and is primarily responsible for, the management, condition, and disposition of the Property.  Notwithstanding anything in this Agreement to the contrary, Acquirer specifically acknowledges and agrees that if the transaction contemplated in this Agreement is not consummated for any reason whatsoever, Contributor shall not be liable to Acquirer for any loss, damage or expense of any kind or character resulting or allegedly resulting from Contributor’s breach or alleged breach of any of the representations and warranties hereinabove set forth.  In the event that Acquirer discovers prior to Closing that any representations or warranties given by Contributor in this Agreement are false, Acquirer’s sole remedy shall be termination of this Agreement and refund of the Deposit then being held by the Escrow Agent, notwithstanding that the Due Diligence Period may have then expired, provided, however, that if such discovery is made after the expiration of the Due Diligence Period and Contributor intentionally misrepresented such matter, then Contributor shall be liable to Acquirer for Acquirer’s Transaction Costs.

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6.2Acquirer’s Representations and Warranties.

Acquirer makes the following representations and warranties and agrees that Contributor’s obligations under this Agreement are conditioned upon the truth and accuracy of such representations and warranties, both as of the Effective Date and as of the Closing Date:

(a)Acquirer has the full right and capacity to enter into this Agreement, consummate or cause to be consummated the sale and purchase, execute all other instruments contemplated herein, and make or cause to be made the transfers and assignments contemplated herein.  The person signing this Agreement on behalf of Acquirer is authorized to do so.

(b)There is no agreement to which Acquirer is a party or to Acquirer’s knowledge binding on Acquirer which is in conflict with this Agreement.

(c)Except as expressly provided in Section 6.1 above, in Contributor’s general warranty of title to be contained in the deed to Acquirer at Closing or as otherwise expressly provided in this Agreement (collectively the “Express Warranties”), Contributor hereby specifically disclaims any warranty, guaranty or representation, oral or written, express or implied, past, present or future, of, as to or concerning (i) the nature, quality, and condition of the Property, including, without limitation, the water, soil, and geology thereof, (ii) the suitability of the Property for any activities and uses which Acquirer may elect to conduct thereon, income to be derived therefrom or expenses to be incurred with respect thereto, or the habitability, merchantability or fitness thereof for a particular purpose; (iii) the manner of construction and condition and state of repair or lack of repair of any improvements thereon; (iv) the nature and extent of any easement, right-of-way, lease, possession, lien, encumbrance, license, reservation, or condition affecting the Property; (v) the compliance of the Property or the operation of the Property with any laws, rules, ordinances or regulations of any governmental body, and specifically, except for the Express Warranties, Contributor does not make any representations regarding hazardous waste, as defined by the laws of the State of Texas or the United States of America, and any regulations adopted pursuant thereto or the compliance of the Property with any such laws.  Except for the Express Warranties, Acquirer agrees to accept the Property at Closing in its present As Is, Where Is, With All Faults condition.

(d)ACQUIRER ACKNOWLEDGES AND AGREES THAT (i) ACQUIRER IS EXPERIENCED IN THE OWNERSHIP, DEVELOPMENT AND/OR OPERATION OF PROPERTIES SIMILAR TO THE PROPERTY, (ii) ACQUIRER IS REPRESENTED BY COUNSEL IN THIS TRANSACTION, (iii) PRIOR TO THE CLOSING ACQUIRER WILL HAVE INSPECTED THE PROPERTY TO ACQUIRER’S SATISFACTION, AND (iv) ACQUIRER AND/OR ITS CONSULTANTS ARE QUALIFIED TO MAKE SUCH INSPECTION.  EXCEPT FOR THE EXPRESS WARRANTIES, ACQUIRER: (1) ACKNOWLEDGES THAT IT IS FULLY RELYING ON ITS OWN INSPECTIONS OF THE PROPERTY AND NOT UPON ANY STATEMENT (ORAL OR WRITTEN) WHICH MAY HAVE BEEN MADE BY CONTRIBUTOR OR ANY OF CONTRIBUTOR’S REPRESENTATIVES; (2) ACKNOWLEDGES THAT IT HAS THOROUGHLY INSPECTED THE PROPERTY TO THE EXTENT DEEMED NECESSARY IN ORDER TO EVALUATE THE CONDITION THEREOF, AND IS RELYING SOLELY UPON SUCH INSPECTION; (3) EXPRESSLY ASSUMES ALL RISKS RESULTING OR ARISING FROM THE CONDITION OF THE PROPERTY; (4) EXPRESSLY WAIVES (TO

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THE EXTENT ALLOWED BY APPLICABLE LAW) ANY CLAIMS UNDER FEDERAL, STATE OR OTHER LAW THAT ACQUIRER MIGHT OTHERWISE HAVE AGAINST CONTRIBUTOR RELATING TO THE CONDITION OF THE PROPERTY; AND (5) ACKNOWLEDGES AND AGREES THAT THE DISCLAIMERS AND OTHER AGREEMENTS SET FORTH HEREIN ARE INTEGRAL PARTS OF THIS AGREEMENT, AND THAT CONTRIBUTOR WOULD NOT HAVE AGREED TO SELL THE PROPERTY TO ACQUIRER FOR THE PURCHASE PRICE WITHOUT THE DISCLAIMERS AND OTHER AGREEMENTS.

(e)Except for the Express Warranties, Acquirer is not relying on any representation or promise made by Contributor at any time and Acquirer hereby disclaims reliance on representations by Contributor or any one acting on behalf of Contributor and surrenders any right to sue based on any representations of the Contributor not contained in this Agreement.

6.3Survival of Representations, Warranties and Covenants.  The representations and warranties contained in Sections 6.1 and 6.2 and the provisions of this Agreement that contemplate performance after the Closing shall, to the extent not actually known by the warrantee to be inaccurate as of the Closing, survive the Closing for a period of one (1) year and shall not be deemed to be merged into or waived by the instruments of such Closing.

7.Delivery of Disclosure Materials; Due Diligence Period.

7.1Delivery of Disclosure Materials.  Within ten (10) business days of the Effective Date, Contributor shall deliver to Acquirer the items listed on Schedule 7.1 hereto and incorporated by reference herein that are in Contributor’s possession or control (the “Disclosure Materials”).

7.2Due Diligence Period.  For the purposes of this Agreement “Due Diligence Period” shall mean the thirty (30) day period from and after the Effective Date.  Contributor hereby grants to Acquirer, its employees, agents and contractors, access to the Property for the purpose of conducting surveys, architectural, engineering, geotechnical and environmental inspections and tests (including sampling and non-destructive invasive testing for the presence of hazardous materials, feasibility studies and any other non-destructive inspections, studies or tests reasonably required by Acquirer in connection with Acquirer’s due diligence).  During the pendency of this Agreement, Acquirer and its agents and contractors shall have a continuing right of access to the Property.  In the course of its investigation, Acquirer may make inquiries to third parties including, without limitation, lenders, contractors, property managers and municipal, local and other government officials and representatives, and Contributor consents to and agrees to reasonably cooperate with Acquirer in making such inquiries.  Without limitation on the foregoing, during the Due Diligence Period Acquirer must satisfy itself with respect to the following:

(a)Within the Due Diligence Period, Acquirer shall have reviewed and verified that the Leases are in every respect acceptable to Acquirer, including, without limitation, that the Leases (other than the lease with the State of Texas) are triple net leases and

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that the net income from the Property (following execution of the new EPOSG Leases as specified in Section 18.2) is at least Two Million Two Hundred Ninety-Eight Thousand Six Hundred Ten and 00/100 Dollars ($2,298,610.00).

(1)Contributor shall have delivered to Acquirer, within the Due Diligence Period, a duly executed original of a certificate from each tenant under the Leases in the form attached hereto as Exhibit E (“Estoppel Certificate”).

(2)If required by Acquirer, Contributor shall have delivered to Acquirer, within the Due Diligence Period, duly executed originals from each tenant under the Leases a subordination non-disturbance and attornment agreement (“SNDA”) in the form attached hereto as Exhibit F.

(b)Within the Due Diligence Period, Acquirer verifying that the Property (including the Contract Rights, Records and Plans, Warranties and Licenses and Permits) is in every respect acceptable to Acquirer based on an investigation and review by Acquirer, its agents and contractors of the Property, all information that is required to be provided to Acquirer by Contributor pursuant to this Agreement and all information that is available to Acquirer relating to the Property and the transactions contemplated herein, including, but not limited to, the Disclosure Materials (as defined below).  If any Contract Rights are unacceptable to Acquirer, Acquirer may elect to exclude any such items from the Property to be transferred hereunder by delivering written notice thereof to Contributor no later than the five (5) business days after the expiration of the Due Diligence Period, in which event Contributor shall terminate any such items, as applicable, with respect to the Property as of the Closing.  This contingency shall also include, without limitation, Acquirer obtaining, at Acquirer’s expense, a physical inspection of the Property, which is acceptable to Acquirer.

(c)Within the Due Diligence Period, Acquirer shall have obtained, at Acquirer’s expense, written environmental assessments and/or evaluations of the Property (including “Phase I” assessments and, if Acquirer deems necessary and with the prior consent of Contributor, “Phase II” assessments, including laboratory testing of soil, water and other substances) from qualified environmental consultants of Acquirer’s choice, confirming an environmental condition acceptable to Acquirer.

(d)Within the Due Diligence Period, Acquirer shall have verified to Acquirer’s satisfaction that all applicable public and private laws, rules, standards, covenants and requirements, including, without limitation, all zoning, subdivision, building and use restrictions and all easements and matters of record, allow the conveyance of the Property from Contributor to Acquirer, and are consistent with Acquirer’s Intended Use, and Acquirer shall have obtained or verified to Acquirer’s satisfaction that Acquirer will be able to obtain, all public and private permits, certificates and other approvals, consents and all variances, exemptions, waivers, zoning changes and land divisions required for the conveyance of the Property from Contributor to Acquirer, and Acquirer’s Intended Use. The term “Acquirer’s Intended Use” shall mean and include, without limitation, medical and other healthcare related uses.

(e)Within the Due Diligence Period, Acquirer shall have obtained a current ALTA survey of the Property (the “Survey”) at Acquirer’s expense, that: (i) is

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satisfactory to Acquirer in all respects (in Acquirer’s sole discretion); (ii) is prepared by a licensed, insured and qualified surveyor selected by Acquirer; (iii) is certified to Acquirer, Acquirer’s lender(s) (if any) and the applicable title company; (iv) includes all Table A requirements, except Item 5 of Table A; (v) shows and discloses no encroachments onto the Property or over the boundaries of the Property, and no easements or other matters that would affect Acquirer’s Intended Use of the Property; and (vi) is sufficient to remove the standard title exceptions relating to surveys without adding any new exceptions.  In addition, the Survey shall locate all public utilities, water courses, drains, sewers and roads (including vacated streets and alleys) crossing or adjacent to the Property, and contain an acceptable certification by the surveyor.

7.3Termination Right.  Notwithstanding anything to the contrary set forth herein, if any of the matters specified in Sections 7.2(a)-(e) above are not satisfactory to Acquirer, or Acquirer determines, in its sole judgment and discretion, that the Property is otherwise not acceptable, Acquirer may terminate this Agreement by giving, or causing its counsel to give, written notice of termination on or before the end of the Due Diligence Period.  Except as otherwise provided herein to the contrary, if any such termination notice is not timely given, Acquirer’s right to terminate this Agreement pursuant to this Section 7.3 shall irrevocably lapse.

7.4Return of Deposit.  If Acquirer timely notifies Contributor and the Escrow Agent of its decision to terminate this Agreement pursuant to the terms hereof, the Deposit together with all interest thereon shall be refunded to Acquirer promptly following such notification, and all further rights and obligations of the parties under this Agreement shall terminate except for the obligations of Acquirer in Sections 7.5 and 7.6 hereof, and any other obligations hereunder which by the express terms of this Agreement survive termination (“Surviving Obligations”).

7.5Indemnity.  If any inspection or test conducted by or for Acquirer disturbs the Property, Acquirer will restore the Property to substantially the same condition as existed prior to any such inspection or test.  Acquirer shall keep the Property free and clear of any liens and will indemnify, defend, and hold Contributor harmless from all losses, costs and damages including reasonable attorneys’ fees resulting from inspections and/or activities on the Property of Acquirer and its employees, agents, contractors and representatives.  This indemnity obligation of Acquirer shall survive the termination of this Agreement for any reason.

7.6Return of Disclosure Materials, etc.  If this Agreement is terminated for any reason, Acquirer shall promptly (and in any event within ten (10) days thereafter) deliver to Contributor, at no cost and expense to Acquirer, all Disclosure Materials and other documents delivered to Acquirer (its agents, representatives or designees) by Contributor or Contributor’s agents, representatives or employees pursuant to this Agreement, together with originals of all engineering reports, environmental studies, sales reports, appraisals and other studies and reports obtained by Acquirer with respect to the Property.  Notwithstanding anything to the contrary in this Agreement, Acquirer may retain one (1) copy of all disclosure materials, reports and studies to comply with laws, rules, regulations, or orders applicable to Acquirer, the Operating Partnership, or DOC, provided, however, that Acquirer shall keep such retained information confidential, and shall use the same only for the purpose of such compliance.  Acquirer shall

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confirm in writing that it has returned all documents as required herein.  Acquirer shall not be liable to Contributor for the accuracy or inaccuracy of any such studies or reports obtained by Acquirer or for any effect that any information contained in such studies or reports has or could have on the value of the Property.  The obligations of Acquirer under this Section 7.6 shall survive the termination of this Agreement for any reason.

8.Operations Prior to Closing; Conditions to Closing.

8.1Operations Prior to Closing.  Prior to Closing:

(a)Contributor shall operate, manage and maintain the Property in the ordinary course of business and in accordance with its past practice, subject to this Agreement.  Without expense to Acquirer, Contributor shall make all repairs and replacements (structural and non-structural, ordinary and extraordinary) so that the Property is maintained in its present condition, reasonable wear and tear excepted.

(b)Upon reasonable notice, Acquirer, its accountants, architects, attorneys, engineers, contractors and other representatives shall be afforded access to:  (i) the Property to inspect, measure, appraise, test and make surveys of the Property, including, but not limited to, all activities necessary to satisfy the contingencies set forth in this Section 8 and elsewhere in this Agreement; and (ii) all books, records and files relating to the Property.  Acquirer shall have the right, at Acquirer’s expense, to make copies of all such books and records, including, without limitation, all books and records relating to increases in real estate taxes, building and operations maintenance costs; provided, however, that Acquirer shall return all copies of such books and records if Closing does not occur under this Agreement as specified in Section 7.6 hereof.  Acquirer shall not interfere unreasonably with the operation of the Property and shall restore any area on the Property disturbed in the course of Acquirer’s testing to the conditions existing prior to any tests conducted by Acquirer.

(c)Contributor shall comply with all of the obligations of landlord under the Leases and all other agreements and contractual arrangements affecting the Property by which Contributor is bound.

(d)Contributor shall promptly notify Acquirer of Contributor’s receipt of any notice from any person alleging that Contributor is in default of its obligations under any of the Leases or any permit or agreement affecting the Property, or any portion or portions thereof.

(e)No contract for or on behalf of or affecting the Property shall be negotiated or entered into by Contributor which cannot be terminated by Contributor prior to Closing without charge, cost, penalty or premium.

(f)Except with the prior written consent of Acquirer, and as specified in Section 18.2 below, Contributor shall not enter into any new leases for any portion of the Property.  Any new lease shall be on a form of lease supplied to Contributor by Acquirer.  In the event Acquirer approves any new leases, Contributor shall deliver to Acquirer an Estoppel Certificate from the tenant(s) and guarantor(s) thereunder as required hereunder for the Leases and otherwise shall comply, as to such new leases and new guarantees, with the terms of this

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Agreement relating to the Leases and the Guarantees.  Further, except with the prior written consent of Acquirer, and as specified in Section 18.2 below, Contributor shall not amend, extend, terminate, accept surrender of, or permit any assignments or subleases of, any of the Leases nor accept any rental more than one (1) month in advance or accelerate the rent due to any tenant default under any of the Leases.

(g)From the Effective Date until Closing, Contributor shall take all action on its part to maintain the Contract Rights, Records and Plans, Warranties, and Licenses and Permits in full force and effect as applicable and shall not terminate, modify or waive any provision thereof. Contributor shall not enter into any new contracts or agreements relating to the Property without Acquirer’s prior written consent.

(h)Any material defect in the structural condition or building systems of which Contributor gains knowledge after the Effective Date shall be disclosed to Acquirer promptly.

8.2Conditions to the Parties’ Obligations to Close.  The obligation of Contributor, on the one hand, and Acquirer, on the other hand, to consummate the transactions contemplated hereunder shall be contingent upon the following:

(a)The other party’s representations and warranties contained herein shall be true and correct in all material respects as of the Effective Date and the Closing Date.

(b)The other party shall have delivered, or caused to be delivered, and shall have performed, each of the items and obligations required to be delivered or performed by it hereunder.

(c)The parties shall have amended the Leases and/or executed new leases, in each case in form mutually acceptable to Contributor and Acquirer, to effect the terms specified in Sections 7.2(a) and 18.2 hereof.

8.3Conditions to Contributor’s Obligations.  The obligation of Contributor hereunder to consummate the transactions contemplated hereunder shall also be contingent upon Acquirer simultaneously closing the acquisitions of the Lee Trevino Property and the Kenworthy Property under the Related Contribution Agreements.

8.4Failure of Condition.  So long as a party is not in default hereunder, if any condition to such party’s obligation to proceed with the Closing hereunder has not been satisfied as of the Closing Date, such party may, in its sole discretion, terminate this Agreement by delivering written notice to the other party.  Upon such termination, the Deposit shall be promptly refunded to Acquirer together with all accrued interest, and thereafter neither party shall have any further rights or obligations hereunder except for the Surviving Obligations.

9.Prorations and Charges.

9.1Taxes.  All general real estate and personal property taxes shall be prorated through the day before the Closing based on the taxes for the year of Closing, if known,

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otherwise on the prior year’s taxes.  Contributor shall be responsible for all real estate taxes through the day prior to the Closing.  In the event taxes are prorated on the prior year’s taxes, the parties agree to reprorate taxes when the taxes for the current year are known, and the parties agree to make such payment between themselves to effectuate such reproration.  Assessments of any kind (general, special or otherwise) levied or to be levied, if any, for work on site actually commenced or announced (by either a private individual or entity or a governmental entity) prior to Closing shall be paid by Contributor at or prior to Closing.  All other assessments shall be paid by Acquirer if this transaction is consummated.

9.2Utilities.  The following items shall be prorated through the day before Closing: all collected rents and other payments under the Leases; all utility charges (as applicable), including, but not limited to, sewer, water, electricity, gas, telephone and other private and municipal charges (collectively “Utility Charges”).  Any rent and or other payments under the Leases delinquent as of Closing shall not be prorated.  If Acquirer collects delinquencies after Closing pertaining to Contributor’s period of ownership, Acquirer shall remit such amounts to Contributor.  Contributor shall be responsible for obtaining all necessary billing information for the Utility Charges in order to accurately reflect the same on the Closing Statement.  Income derived from the Property that is earned as of the day of Closing shall accrue to the benefit of Acquirer.

9.3Taxes, Insurance, CAM Charges and Security Deposits Collected from Tenants.  At Closing, Contributor shall pay to Acquirer any and all funds paid to Contributor by tenants in the Property on account of security deposits and additional rent items not yet due and payable by Contributor, such as tax, insurance and CAM charge escrows.  Contributor shall make such payment in the form of a credit against the Consideration in favor of Acquirer.  The parties agree to enter into a reconciliation agreement at Closing obligating the parties to reconcile the taxes, insurance, and CAM charges collected from Tenants as additional rent pursuant to Section 9.6, below.

9.4Closing Costs.  Contributor shall pay all transfer taxes associated with the conveyance of the Property and all recording fees customarily paid sellers in the locality where the Property is located.  Acquirer shall be responsible for the payment of all title fees and premiums associated with the Title Policy (including the mortgagee policy, if any).  All other closing expenses shall be allocated between the parties in the customary manner for sales of real property in the locality where the Real Property is located. Each party is responsible for paying its own respective attorneys’ fees incurred in negotiating, preparing and closing the transaction contemplated by this Agreement.

9.5Other Operating Costs.  Any and all other normal, on-going operating expenses attributable to the Property, except to the extent any of the same relate to the Contract Rights excluded from the Property pursuant to Section 7.2(b) of this Agreement, shall be prorated between the parties through the day before Closing.

9.6Reconciliation.  Within ninety (90) days after the Closing, or as soon thereafter as practicable, Acquirer and Contributor shall reconcile all of the foregoing payments and prorations based on actual bills or invoices received after the Closing, but only if the prorations or payments were based on an estimate and not actual current bills or invoices.  In the

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event that any item of income, charge, or expense cannot be reconciled accurately within such 90-day period, the Acquirer and Contributor hereby agree to delay such reconciliation until a date when it can be accurately completed.  Any party owing to the other party any amount ascertained by the required reconciliations shall promptly, but in no event later than fifteen (15) business days after the date of the applicable reconciliation, pay the other party such amount.  The obligations set forth in this Section 9.6 shall survive Closing.

9.7Time of Proration.  As applicable, all of the foregoing items set forth in this Section 9, unless otherwise expressly stated, shall be prorated between the parties as of midnight of the day before Closing.

10.Condemnation; Rezoning, Historic Designation.

10.1Condemnation.  Contributor represents and warrants that Contributor has not heretofore received any notice of any eminent domain or condemnation proceeding in connection with the Property.  If prior to Closing any such eminent domain or condemnation proceeding is commenced or any change is made, or proposed to be made to: (i) any portion or all of the Property; (ii) the current means of ingress and egress to the Property; or (iii) to the roads or driveways adjoining the Property, Contributor agrees immediately to notify Acquirer in writing thereof.  Acquirer then shall have the right, at Acquirer’s option, to terminate this Agreement by giving written notice to Contributor prior to Closing.  If Acquirer elects to terminate this Agreement pursuant to the terms set forth in this Section 10, the Deposit shall be promptly returned to Acquirer together with all accrued interest, and thereafter neither party shall have any further rights or obligations hereunder, except for the Surviving Obligations.  If Acquirer does not so terminate this Agreement, Acquirer shall proceed to Closing hereunder as if no such proceeding had commenced and will pay Contributor the full Consideration in accordance with this Agreement, and Contributor shall assign to Acquirer all of its right, title and interest in and to any compensation for such condemnation.  Contributor shall not negotiate or settle any claims for compensation prior to Closing, and Acquirer shall have the sole right (in the name of Acquirer or Contributor or both) to negotiate for, to agree to, and to contest all offers and awards.

10.2Historic Designation/Rezoning.  If, prior to closing, there is a designation of the Real Property (and/or any improvement located thereon) or any portion thereof as a historic structure or other historic designation, or any such historic designation is threatened, commenced or finalized, or there is a threatened, commenced or finalized rezoning of the Real Property, Contributor shall promptly notify Acquirer, and Acquirer may elect to terminate this Agreement prior to Closing, in which event the Deposit and all accrued interest thereon shall be returned forthwith to Acquirer, Acquirer and Contributor shall be released from any further liability hereunder and this Agreement shall terminate, except for the Surviving Obligations. If Acquirer does not elect to terminate this Agreement, this Agreement shall remain in full force and effect and at Closing Contributor shall assign to Acquirer all Contributor’s right, title and interest in and to any dollars paid by the governmental authority (if any) in connection with the rezoning of the Real Property or historic designation.

11.Default by Acquirer.  If Acquirer, without the right to do so and in default of its obligations hereunder, fails to complete Closing as to the Property, the Deposit and all accrued

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interest shall be paid to Contributor.  Such payment of the Deposit and all accrued interest to Contributor shall be deemed to be liquidated damages for Acquirer’s default and the receipt of same shall be Contributor’s exclusive and sole remedy; and Contributor hereby waives any right to recover the balance of the Consideration, or any part thereof, and the right to pursue any other remedy permitted at law or in equity against Acquirer.  The parties agree that it would be impracticable and extremely difficult to ascertain the actual damages suffered by Contributor as a result of Acquirer’s failure to complete the acquisition of the Property pursuant to this Agreement, and that under the circumstances existing as of the Effective Date, the liquidated damages provided for in this Section represent a reasonable estimate of the damages which Contributor will incur as a result of such failure.  The parties acknowledge that the payment of such liquidated damages is not intended as a forfeiture or penalty under any legal or equitable theory, but is intended to constitute liquidated damages to Contributor.

12.Default by Contributor.  If Contributor, defaults in the performance of any obligation contained in this Agreement or, without the right to do so and in default of its obligations hereunder, fails to complete Closing, the Deposit and all accrued interest shall be returned to Acquirer and Contributor shall reimburse Acquirer for all of Acquirer’s Transaction Costs.  In addition, Acquirer may pursue an action for specific performance and/or damages; provided, however, that in any suit for damages Acquirer’s damages shall be capped at $100,000, which amount the parties agree shall constitute liquidated damages and the maximum recoverable amount in the case of a suit for damages.  The parties agree that it would be impracticable and extremely difficult to ascertain the actual damages suffered by Acquirer as a result of Contributor’s failure to complete the contribution of the Property pursuant to this Agreement, and that under the circumstances existing as of the Effective Date, the liquidated damages provided for in this Section represent a reasonable estimate of the damages which Acquirer will incur as a result of such failure.  Acquirer waives any right to sue for damages.  Contributor waives the right to assert the defense of lack of mutuality in any action for specific performance instituted by Acquirer.  Contributor shall have no right to cure any default.

13.Risk of Loss.  Contributor shall bear the risk of all loss or damage to the Property from all causes until Closing.  Contributor represents that it has, and will maintain pending Closing, a policy of fire and extended coverage insurance in at least the full amount of the replacement cost of all buildings and improvements located on the Property.  If at any time prior to Closing any portion of the Property is destroyed or damaged as a result of fire or any other casualty whatsoever, Contributor shall promptly give written notice thereof to Acquirer and Acquirer shall have the right:  (i) to terminate this Agreement by written notice to Contributor, whereupon Escrow Agent shall return the Deposit together with all accrued interest to Acquirer, and thereafter neither party shall have any further rights or obligations hereunder except for the Surviving Obligations; or (ii) to proceed with this Agreement and to notify Contributor that, at Acquirer’s sole option, Contributor either shall:  (A) use any available insurance proceeds to restore the Property prior to Closing to its condition as of the Effective Date, and if there are any excess insurance proceeds after completion of such restoration, Contributor shall promptly deposit same in escrow with Escrow Agent and such funds, together with any interest thereon, shall be disbursed to Acquirer at Closing; or (B) in lieu of restoration, prior to Closing, clear the site of debris and deposit all remaining insurance proceeds in escrow with Escrow Agent and such funds, together with interest thereon, shall be disbursed to Acquirer at Closing.  All unpaid claims and rights in connection with any such losses shall be assigned to Acquirer at Closing

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without in any manner affecting the Consideration.  In the event Acquirer elects to proceed under clause (ii)(A) or (ii)(B) above, Contributor shall either expend the deductible amount provided for in such insurance coverage in making such restoration or clearing the Property, as the case may be, or give Acquirer a credit therefore against the Consideration.

14.Brokerage.  Acquirer represents to Contributor that Acquirer has engaged the brokerage services of Newmark Grubb Knight Frank (“Acquirer’s Broker”) and that Acquirer shall be solely responsible for all fees, costs, commissions and any and all other amounts due and payable to Acquirer’s Broker, which shall be paid to Acquirer’s Broker on or before Closing.  Contributor represents to Acquirer that Contributor has engaged the brokerage services of Martin Morgades of RBG Realty (“Contributor’s Broker”) and that Contributor shall be solely responsible for all fees, costs, commissions and any and all other amounts due and payable to Contributor’s Broker, which shall be paid to Contributor’s Broker on or before Closing.  Each party represents and warrants to the other that, except for their respective Brokers as specified above, neither has dealt with any broker, agent, finder or other intermediary in connection with this transaction. Acquirer agrees to indemnify, defend and hold Contributor harmless from and against the claims of any and all brokers, including the Acquirer’s Broker, or intermediaries claiming a commission through Acquirer in connection with this sale.  Contributor agrees to indemnify, defend and hold Acquirer harmless from and against the claims of any and all brokers, including the Contributor’s Broker, or intermediaries claiming a commission through Contributor in connection with this sale.

15.Notice.  All notices, requests and other communications under this Agreement shall be in writing and shall be delivered: (i) in person; or (ii) by registered or certified mail, return receipt requested; or (iii) by recognized overnight delivery service providing positive tracking of items (for example, Federal Express); or (iv) by electronic transmission (so long as one of methods (i), (ii) or (iii) are simultaneously utilized) addressed as follows or at such other address of which Contributor or Acquirer shall have given notice as herein provided:

If intended for Contributor:

Curie Building, LLC

1700 Murchison St., Suite C

El Paso, Texas 79902

Attn:  Mitch McBeth

Email:  mmcbeth@eposg.com

with a copy to:

ScottHulse PC

1100 Chase Tower

201 E. Main Drive

El Paso, Texas 79901

Attn:  W. David Bernard

Email:  dber@scotthulse.com

If intended for Acquirer:

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DOC-1755 Curie Drive MOB, LLC

c/o Physicians Realty L.P.

735 North Water Street, Suite 1000

Milwaukee, WI  53202

Attention:  John W. Sweet, Chief Investment Officer

Email:  jws@docreit.com

with a copy to:

Davis & Kuelthau, s.c.

111 East Kilbourn Avenue, Suite 1400

Milwaukee, Wisconsin  53202

Attention:  Bradley D. Page, Esq.

Email:  bpage@dkattorneys.com

All such notices, requests and other communications shall be deemed to have been sufficiently given for all purposes hereof only upon receipt by the party to whom such notice is sent. Notices by the parties may be given on their behalf by their respective attorneys.

16.Indemnification.

16.1By Contributor.  Contributor agrees to indemnify and hold harmless Acquirer and its officers, agents, employees, and tenants from and against, and to reimburse Acquirer with respect to any and all claims, demands, causes of action, losses, damages, liabilities, costs and expenses (including attorneys’ fees and court costs) asserted against or incurred by Acquirer by reason of or arising out of: (a) if the transaction  hereunder closes, a breach of any representation or warranty of Contributor set forth in this Agreement; (b) the failure of Contributor to perform any obligation required by this Agreement to be performed by it; and (c) the ownership, maintenance, operation, management and use of the Property prior to Closing.

16.2By Acquirer.  Acquirer agrees to indemnify and hold harmless Contributor and its officers, agents, employees, and tenants from and against, and to reimburse Contributor with respect to any and all claims, demands, causes of action, losses, damages, liabilities, costs and expenses (including attorneys’ fees and court costs) asserted against or incurred by Contributor by reason of or arising out of: (a) if the transaction hereunder closes, a breach of any representation or warranty of Acquirer set forth in this Agreement; (b) the failure of Acquirer to perform any obligation required by this Agreement to be performed by it; (c) the ownership, maintenance, operation, management and use of the Property after Closing; and (d) as specified in Section 7.5 hereof.

17.Tax Treatment of Transaction.

17.1Agreed Tax Treatment.  Contributor and Acquirer hereby acknowledge and agree that the transaction will, for United States federal income tax purposes, be treated as (i) a “disguised sale” of an undivided portion of the Property by Contributor to Acquirer pursuant to Section 707(a)(2)(B) of the Code to the extent of the cash consideration received by Contributor and the portion of the liabilities assumed by Acquirer that is treated as a transfer of consideration

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under the rules of Section 1.707-5 of the United States federal income tax regulations and (ii) a non-taxable contribution of the remaining undivided portion of the Property to Acquirer in exchange for OPUs pursuant to Section 721 of the Code.  Contributor and Acquirer hereby agree to file their respective tax returns in a manner consistent with the provisions of this Section 17.1.

17.2Contributor’s Tax Status.  Contributor has timely filed all tax returns in accordance with applicable laws (taking into account any valid extensions of time for filing), and each such tax return is accurate and complete in all material respects.  Contributor has timely paid all taxes due with respect to the taxable periods covered by such tax returns and all other taxes arising in connection with or relating to the Property (whether or not shown on any tax return).  Contributor has not requested any extension of time within which to file any tax return which has not since been filed.  Contributor does not and will not have additional liability for taxes with respect to any tax return which was required by applicable laws to be filed on or before the Closing Date.   There are no liens on any of the assets of Contributor that arose in connection with any failure or alleged failure (whether or not in writing) to pay any tax.  All taxes arising in connection with or relating to the Property that Contributor is required by law to withhold or collect (including sales and use taxes and amounts required to be withheld or collected in connection with any amount paid or owing to any employee, independent contractor, creditor or other person) have been duly withheld or collected and, to the extent required by applicable law, have been paid over to the proper taxing authority.  No tax audits or other tax proceedings are pending or being conducted, nor has Contributor received any notice from any governmental authority that any such audit or other tax proceeding is pending, threatened or contemplated.  There is no claim or assessment pending, or threatened against Contributor for any alleged deficiency in taxes.  Contributor does not have any tax liabilities (whether due or to become due) with respect to the Property, the operations of Contributor, or the assets of Contributor, that will be required under local laws or otherwise to be assumed by Acquirer.  Contributor has not waived any statute of limitations with respect to taxes or agreed to an extension of time with respect to any tax assessment or deficiency.  Contributor is not a party to, or bound by, any tax allocation or sharing agreement, tax indemnity obligation or similar contract or practice.  Contributor has not made any election to be excluded from the provisions of subchapter K of the Code or to be taxable as a corporation.  Contributor has not entered into any “reportable transaction” arising in connection with or relating to the Property within the meaning of Section 6011 of the Code.

18.Related Contribution Agreements; New EPOSG Leases; Right of First Refusal.

18.1Related Contribution Agreements.  Acquirer and Contributor acknowledge that Acquirer and certain Affiliates of Contributor have entered into Contribution Agreements of even date herewith (“Related Contribution Agreements”) for the contribution of certain assets of EPOSG-East Building, LLC and Kenworthy Building LLC (each a “Related Contributor” and collectively the “Related Contributors”), for the contribution by the Related Contributors of certain properties located at 3100 Lee Trevino, El Paso, Texas (“Lee Trevino Property”) and 9999 Kenworthy, El Paso, Texas (“Kenworthy Property”).  Notwithstanding anything in this Agreement to the contrary, in the event of a termination of this Agreement for any reason, either Acquirer or Contributor, in their absolute and sole discretion, may terminate the Related Contribution Agreements by serving written notice of termination upon the other within ten (10) days of the termination of this Agreement.  Upon such termination, the Deposit shall be promptly

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returned to Acquirer together with all accrued interest, and thereafter neither party shall have any further rights or obligations hereunder except for the Surviving Obligations.

18.2New EPOSG Leases.  As a condition to Closing hereunder, Contributor and El Paso Orthopaedic Surgery Group, P.A. (“EPOSG”) shall have terminated any existing Lease with EPOSG reflected on Schedule 1.1(d) and executed new leases with respect to the Property as set forth in Schedule 18.2 hereto, which leases shall be assigned to Acquirer at Closing.

18.3Right of First Refusal.  In the event that this transaction closes, Contributor will cause its Affiliate, EPOSG to grant to Acquirer a right of first refusal to purchase or fund the development and ownership of any outpatient or medical office facility that EPOSG currently owns or seeks to develop in the future in the El Paso, Texas market, subject to terms and conditions mutually acceptable to the parties.

19.Cooperation with S-X 3-14 Audit.  Contributor acknowledges that Acquirer and any assignee of this Agreement pursuant to Section 20.3 below will be affiliated with DOC, a publicly registered company (“Registered Company”).  Contributor acknowledges that it has been advised that such Registered Company (and such acquirer) are required to make certain filings with the Securities and Exchange Commission (the “SEC Filings”) that relate to the most recent pre-acquisition fiscal year (the “Audited Year”) and the current fiscal year through the date of acquisition (the “Stub Period”) for the Property.  To assist Acquirer and Registered Company in preparing the SEC Filings, Contributor covenants and agrees no later than thirty (30) days after the Closing Date, Contributor shall provide Acquirer and the Registered Company with the following information (to the extent such items are not duplicative of items contained in the Disclosure Materials): (i) access to bank statements for the Audited Year and Stub Period; (ii) rent roll as of the end of the Audited Year and Stub Period; (iii) operating statements for the Audited Year and Stub Period; (iv) access to the general ledger for the Audited Year and Stub Period; (v) cash receipts schedule for each month in the Audited Year and Stub Period; (vi) access to invoices for expenses and capital improvements in the Audited Year and Stub Period; (vii) accounts payable ledger and accrued expense reconciliations; (viii) check register for the 3-months following the Audited Year and Stub Period; (ix) all leases and 5-year lease schedules; (x) copies of all insurance documentation for the Audited Year and Stub Period and (xi) copies of accounts receivable aging as of the end of the Audited Year and Stub Period along with an explanation for all accounts over 30 days past due as of the end of the Audited Year and Stub Period.  In addition, no later than thirty (30) days after the Closing Date, Contributor shall provide to Acquirer: (1) signed representation letter substantially in the form attached hereto as Exhibit I; (2) a signed audit request letter substantially in the form attached hereto as Exhibit J; and (3) a signed audit response letter from Contributor’s attorney substantially in the form attached hereto as Exhibit K.

20.Miscellaneous.

20.1Execution of Agreement; Effective Date.  This Agreement shall be void and of no force or effect if not executed by Contributor and delivered to Acquirer or Acquirer’s attorney within seven (7) business days after execution by Acquirer and delivery to Contributor.

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The “Effective Date” of this Agreement shall be the date that it is last executed by both Acquirer and Contributor.

20.2Captions.  The “captions” or “headings” in this Agreement are inserted for convenience of reference only and in no way define, describe or limit the scope or intent of this Agreement or any of the provisions hereof.

20.3Assignment.  Acquirer shall have the right to assign this Agreement, and upon notice from Acquirer, Contributor agrees to convey the Property directly to Acquirer’s assignee provided that Acquirer and/or assignee have fulfilled Acquirer’s obligations under this Agreement.  Contributor shall not assign this Agreement without the prior written consent of Acquirer.  Any assignment of this Agreement by Contributor without Acquirer’s prior written consent shall be null and void, and of no force or effect.

20.4Binding Effect.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and permitted assigns.

20.5Entire Agreement.  This Agreement, including the exhibits attached hereto, contains the entire agreement as to the Property between Contributor and Acquirer; and there are no other terms, obligations, covenants, representations, statements or conditions, oral or otherwise, of any kind whatsoever concerning this sale and purchase.  This Agreement shall not be altered, amended, changed or modified except in writing executed by the parties hereto.

20.6Choice of Law.  This Agreement shall be construed in accordance with the internal laws of the State of Texas, without giving effect to its conflicts of laws provisions.

20.7Construction.  All parties to this Agreement having participated fully and equally in the negotiation and preparation hereof, this Agreement shall not be more strictly construed, or any ambiguities within this Agreement resolved, against either party hereto.  It is the intent of Acquirer and Contributor that this Agreement be binding on both parties and not illusory. Thus, wherever this Agreement grants Acquirer or Contributor discretion, which might otherwise make this Agreement illusory, the party exercising its discretion must act reasonably according to commercial standards.

20.8Time of the Essence.  Time is of the essence of this Agreement and Acquirer and Contributor hereby agree that the times provided for in this contract are reasonable times for each party to complete its respective obligations. If any of the times provided for in this Agreement fall on a Saturday, Sunday or legal holiday, said times shall automatically extend to the next full business day.

20.9Counterparts.  This Agreement may be executed or amended in counterparts, all of which taken together shall constitute one and the same instrument.

20.10Invalidity.  If any of the terms or conditions contained herein shall be declared to be invalid or unenforceable by a court of competent jurisdiction, then the remaining provisions and conditions of this Agreement, or the application of such to persons or circumstances other than those to which it is declared invalid or unenforceable, shall not be

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affected thereby and shall remain in full force and effect and shall be valid and enforceable to the full extent permitted by law.

20.11Post-Closing Matters.  After the Closing, at the request of Acquirer and at Acquirer’s expense, Contributor shall make available to Acquirer the historical financial information in Contributor’s possession regarding the operation of the Property to the extent required by Acquirer in order to prepare stand-alone audited financial statements for such operations in accordance with generally accepted accounting principles, and to cooperate (at Acquirer’s expense) with Acquirer and any auditor engaged by Acquirer for such purpose.

20.12Public Announcements.  No party may make public disclosure with respect to this transaction before the Closing except:

(a)As may be required by law, including without limitation disclosure required under securities laws, or by the Securities and Exchange Commission, or by the rules of any stock exchange;

(b)To such title insurance companies, lenders, attorneys, accountants, partners, directors, officers, employees and representatives of any party or of such party’s advisors who need to know such information for the purpose of evaluating and consummating the transaction, including the financing of the transaction; and

(c)To present or prospective sources of financing.

20.13Form of Exhibits and Closing Documents.  In the event that any of the exhibits referenced in this Agreement are not attached as of the Effective Date, then the parties agree to negotiate in good faith during the Due Diligence Period to finalize such exhibits in form and substance mutually satisfactory to the parties.  Furthermore, during the Due Diligence Period the parties will negotiate in good faith to reach agreement on the final form of all documents to be executed at the Closing, including, without limitation, the Ancillary Documents (collectively the “Closing Documents”).  If the final form of the exhibits and Closing Documents have not been agreed upon and finalized by the parties on or before the expiration of the Due Diligence Period, then either Contributor or Acquirer may terminate this Agreement upon written notice to the other given within ten (10) days of the expiration of the Due Diligence Period, in which event the Deposit shall be promptly returned to Acquirer together with all accrued interest, and thereafter, neither party shall have any further rights or obligations hereunder except for the Surviving Obligations.

20.14Definitions and Index of Capitalized Terms.  Defined terms used in this Agreement and not otherwise defined shall have the meanings specified or referenced below.

“Acquirer” shall have the meaning set forth in the first paragraph herein.

“Acquirer’s Broker” shall have the meaning set forth in Section 14 herein.

“Acquirer’s Intended Use” shall have the meaning set forth in Section 7.2(d) herein.

“Affiliates” means, when used with reference to a specified person, (i) any person that

27

directly or indirectly controls or is controlled by or is under common control with the specified person, or (ii) any person that is an employee of, an officer of, a general partner in or a trustee of, or serves in a similar capacity with respect to, the specified person or any person described in clause (i).  In the case of a person who is an individual, Affiliate shall include (x) any member of the immediate family of such person, including the spouse, siblings and lineal descendants and their spouses, of such immediate family member, (y) any trust whose principal beneficiary is such person or one or more members of such immediate family, and (z) any person or entity controlled by such individual’s immediate family or any such trust.  For purposes of this definition, “control” when used with respect to any specified person or entity means the power to direct the management and policies of such person or entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.

“Aggregate OPU Value” shall have the meaning set forth in Section 3.2 herein.

“Agreement” shall have the meaning set forth in the first paragraph herein.

“Ancillary Documents” shall have the meaning set forth in Section 5.2(h) herein.

“Assignment and Assumption of Leases” shall have the meaning set forth in Section 5.2(c) herein.

“Assignment of Intangibles” shall have the meaning set forth in Section 5.2(e) herein.

“Audited Year” shall have the meaning set forth in Section 19 herein.

“Closing” shall have the meaning set forth in Section 5.1 herein.

“Closing Date” shall have the meaning set forth in Section 5.1 herein.

“Closing Documents” shall have the meaning set forth in Section 20.13 herein.

“Closing Statement” shall have the meaning set forth in Section 3.2 herein.

“Code” shall have the meaning set forth in Section 5.2(d) herein.

“Consideration” shall have the meaning set forth in Section 2.1 herein.

“Contract Rights” shall have the meaning set forth in Section 1.1(e) herein.

“Contributor” shall have the meaning set forth in the first paragraph herein.

“Contributor’s Broker” shall have the meaning set forth in Section 14 herein.

“Deed” shall have the meaning set forth in Section 5.2(a) herein.

“Deposit” shall have the meaning set forth in Section 2.2 herein.

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“Disclosure Materials” shall have the meaning set forth in Section 7.1 herein.

“DOC” shall have the meaning set forth in Section 3.1 herein.

“DOC Trading Price” shall have the meaning set forth in Section 3.3 herein.

“Due Diligence Period” shall have the meaning set forth in Section 7.2 herein.

“Effective Date” shall have the meaning set forth in Section 20.1 herein.

“Environmental Law(s)” shall mean all federal, state and local laws including statutes, regulations, codes and other governmental standards, restrictions, rulings, judgments, orders and requirements in effect relating to the use, storage, disposal, release, emission, dispersal, spilling, leaking, burial, migration, seepage, movement, discharge, management, investigation, remediation, monitoring, regulation relating to air pollutants, water pollutants, process wastewater, solid or hazardous waste, chemicals, gases, vapors, water pollutants, groundwater, effluents, stormwater runoff, surface water runoff, the environment, Hazardous Substances or employee health and safety, including, but not limited to, the Federal Solid Waste Disposal Act, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976, the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Federal Hazardous Materials Transportation Act, the Toxic Substance Control Act, the Occupational Safety and Health Act of 1970 (all as the same may have been amended), regulations of the Environmental Protection Agency, regulations of the Nuclear Regulatory Agency, and regulations of any state department of natural resources or state environmental protection agency.

“EPOSG” shall have the meaning set forth in Section 18.2 herein.

“Escrow Agent” shall have the meaning set forth in Section 2.2 herein.

“Escrow Agreement” shall have the meaning set forth in Section 2.2 herein.

“Estoppel Certificate” shall have the meaning set forth in Section 7.2(a)(1) herein.

“Existing Mortgage Debt” shall have the meaning set forth in Section 2.3(c) herein.

“Express Warranties” shall have the meaning set forth in Section 6.2(c) herein.

“Guarantees” shall have the meaning set forth in Section 6.1(o) herein.

“Hazardous Substance(s)” shall mean all hazardous, toxic, flammable, explosive or radioactive substances, wastes and materials; any pollutants or contaminants (including, but not limited to, petroleum products, asbestos, raw materials and natural substances that include hazardous constituents); and any other similar substances or materials that are regulated under Environmental Laws.

“Improvements” shall have the meaning set forth in Section 1.1(b) herein.

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“Kenworthy Property” shall have the meaning set forth in Section 18.1 herein.

“Land” shall have the meaning set forth in Section 1.1(a) herein.

“Leases” shall have the meaning set forth in Section 1.1(d) herein.

“Lee Trevino Property” shall have the meaning set forth in Section 18.1 herein.

“Licenses and Permits” shall have the meaning set forth in Section 1.1(h) herein.

“Mandatory Cure Items” shall have the meaning set forth in Section 4.2 herein.

“Net Consideration” shall have the meaning set forth in Section 2.3 herein.

“OPUs” shall have the meaning set forth in Section 3.1 herein.

“Permitted Exceptions” shall have the meaning set forth in Section 4.2 herein.

“Person”, whether or not capitalized, means any individual, partnership, limited liability company, corporation, association, business trust, government or political subdivision thereof, governmental agency or other entity.

“Personal Property” shall have the meaning set forth in Section 1.1(c) herein.

“Property” shall have the meaning set forth in Section 1.1 herein.

“Real Property” shall have the meaning set forth in Section 1.1(b) herein.

“Records and Plans” shall have the meaning set forth in Section 1.1(f) herein.

“Recourse Debt Allocation” shall have the meaning set forth in Section 2.4 herein.

“Registered Company” shall have the meaning set forth in Section 19 herein.

“Related Contribution Agreements” shall have the meaning set forth in Section 18.1 herein.

“Related Contributor” and “Related Contributors” shall have the meaning set forth in Section 18.1 herein.

“SEC Filings” shall have the meaning set forth in Section 19 herein.

“SNDA” shall have the meaning set forth in Section 7.2(a)(2) herein.

“Stub Period” shall have the meaning set forth in Section 19 herein.

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“Survey” shall have the meaning set forth in Section 7.2(e) herein.

“Surviving Obligations” shall have the meaning set forth in Section 7.4 herein.

“Tenant Notice Letters” shall have the meaning set forth in Section 5.2(c) herein.

“Title Commitment” shall have the meaning set forth in Section 4.1 herein.

“Title Company” shall have the meaning set forth in Section 4.1 herein.

“Title Policy” shall have the meaning set forth in Section 4.1 herein.

“Transaction Costs” shall have the meaning set forth in Section 6.1(n) herein.

“U.C.C.” shall have the meaning set forth in Section 4.3 herein.

“Utility Charges” shall have the meaning set forth in Section 9.2 herein.

“Warranties” shall have the meaning set forth in Section 1.1(g) herein.

(The Remainder of this Page is Intentionally Left Blank

Signatures shall Commence on the Following Page)

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IN WITNESS WHEREOF, intending to be legally bound, the parties have caused this Contribution Agreement to be duly executed, under seal, as of the date first set forth above.

CONTRIBUTOR:
CURIE BUILDING, LLC,
a Texas limited liability company, as successor by conversion to Curie Building, Ltd., a Texas limited partnership
By:	/s/ Michael Fallon
Print Name:	Michael Fallon
Title:	Vice President
Date:	September 8, 2014

[Signature Page for Contribution Agreement - 1720 Murchison]

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ACQUIRER:
DOC-1755 CURIE DRIVE MOB, LLC,
a Wisconsin limited liability company
By:	Physicians Realty L.P., its Manager
	By:	Physicians Realty Trust,
		its General Partner
	By:	/s/ John T. Thomas
		John T. Thomas, President & CEO
Date:	September 8, 2014

[Signature Page for Contribution Agreement - 1720 Murchison]

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EX-10.6

Exhibit 10.6

AGREEMENT OF SALE AND PURCHASE

UNIVERSITY PHYSICIAN GROUP

D/B/A WAYNE STATE UNIVERSITY  PHYSICIAN GROUP (SELLER)

&

DOC-WSUPG TROY MOB, LLC (BUYER)

PROPERTY:1420 STEPHENSON HIGHWAY TROY, MICHIGAN

EFFECTIVE DATE:SEPTEMBER 8, 2014

TABLE OF CONTENTS

CONTENTS		PAGE
1.	Agreement to Sell and Purchase	1
2.	Purchase Price	2
3.	Closing	2
4.	Title	3
5.	Representations and Warranties	4
6.	Conditions of Buyer’s Obligations	8
7.	Possession	12
8.	Prorations and Charges	12
9.	Condemnation; Rezoning, Historic Designation	14
10.	Default by Buyer	14
11.	Default by Seller	15
12.	Risk of Loss	15
13.	Brokerage	15
14.	Operation of the Property Prior to Closing	16
15.	Notice	17
16.	Indemnity by Seller	18
17.	Further Assurances	18
18.	Like Kind Exchanges	18
19.	Miscellaneous	19
20.	Disclosure	20
21.	Cooperation with S-X 3-14 Audit	20

EXHIBIT “A”	-	LEGAL DESCRIPTION
EXHIBIT “B”	-	ESCROW AGREEMENT
EXHIBIT “C”	-	SNDA
EXHIBIT “D”	-	TENANT ESTOPPEL CERTIFICATE
EXHIBIT “E”	-	NON-FOREIGN PERSON CERTIFICATION
EXHIBIT “F”	-	REPRESENTATION LETTER
EXHIBIT “G”	-	AUDIT INQUIRY LETTER
EXHIBIT “H”	-	AUDIT LETTER RESPONSE
Schedule 1(b)		List of Personal Property
Schedule 1(c)		List of Contract Rights
Schedule 1(d)		List of Records and Plans
Schedule 1(e)		List of Guarantees and Warranties

ii

Schedule 1(f)	List of Licenses and Permits
Schedule 6(h)	Disclosure Materials

iii

AGREEMENT OF SALE AND PURCHASE

THIS AGREEMENT OF SALE AND PURCHASE (this “Agreement”) is made by and between UNIVERSITY PHYSICIAN GROUP, D/B/A WAYNE STATE UNIVERSITY PHYSICIAN GROUP, a Michigan nonprofit corporation (“Seller”), and DOC-WSUPG TROY MOB, LLC, a Wisconsin limited liability company or its assignee or nominee (“Buyer”).  This Agreement is to be effective as of the date on which Buyer receives this Agreement and the Escrow Agreement (as defined below) executed by Seller and Buyer (the “Effective Date”).  Buyer shall provide Seller with written notice of the Effective Date of this Agreement.

In consideration of the covenants and provisions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1.Agreement to Sell and Purchase.  Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller the Property, subject to the terms and conditions of this Agreement.  For the purposes of this Agreement, the term “Property” shall mean and include the following:

(a)All of that certain real property legally described in the attached Exhibit “A”, including, without limitation, the land, buildings, improvements, fixtures (including, without limitation, the sprinkling, plumbing, heating, cooling, ventilating, air conditioning, electrical, lighting and other systems), easements and all other right, title and interest appurtenant and otherwise relating thereto (collectively, the “Real Property”).

(b)All of Seller’s right, title and interest in and to all of the personal property attached to or located on or directly used in connection with the operation of the Real Property, including, without limitation, furniture, furnishings, fittings, appliances, machinery and equipment, building materials, operating inventories and supplies; all of which are listed on attached Schedule 1(b), but excluding all personal property used in the administration and delivery of any medical and health services within the Real Property (collectively, the “Personal Property”).

(c)All of Seller’s right, title and interest in and to all leases, contracts and other agreements incident to the operation and management of the Real Property, including, without limitation, management contracts, on-site maintenance contracts, janitorial contracts, and leasing commission agreements; all of which are listed on attached Schedule 1(c) (collectively, the “Contract Rights”), except to the extent Buyer elects to exclude any such item, pursuant to Section 6(d) of this Agreement.

(d)All of Seller’s right, title and interest in and to all financial and other books and records maintained in connection with the operation of the Real Property; all preliminary, final and proposed building plans and specifications relating to the Real Property; and all surveys, structural reviews, grading plans, topographical maps, architectural drawings and engineering, soils, seismic, geologic, environmental, and architectural reports, studies,

1

certificates, and similar documents relating to the Real Property; all of which are listed on the attached Schedule 1(d) (collectively, the “Records and Plans”).

(e)All of Seller’s right, title and interest in and to all guarantees and warranties relating to the Property and the fixtures and equipment located therein; all of which are listed on the attached Schedule 1(e) (collectively, the “Warranties”).

(f)All of Seller’s right, title and interest in and to all trade names, licenses, permits, certificates of occupancy, approvals, dedications, subdivision maps, and entitlements issued, approved or granted by governmental or quasi-governmental entities or otherwise directly relating to the Property; and any and all appurtenances owned by Seller and in any way relating to or used in connection with the Property; all of which are listed on the attached Schedule 1(f) (collectively, the “Licenses and Permits”).

2.Purchase Price.  The purchase price for the Property is Forty-Six Million Five Hundred Thousand and 00/100 Dollars ($46,500,000.00) (the “Purchase Price”), payable by Buyer as follows:

(a)Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) (the “Deposit”) by wire transfer payable to First American Title Insurance Company (“Escrow Agent”), which sum shall be delivered to Escrow Agent within three (3) business days following the Effective Date.  The Deposit shall be held in an interest bearing, federally insured account, by Escrow Agent in accordance with the Escrow Agreement attached hereto as Exhibit “B” (the “Escrow Agreement”) and this Agreement pending consummation of this transaction. Any interest earned on the Deposit shall be paid to Buyer unless Seller shall be entitled to the Deposit by reason of a default by Buyer, in which case such interest shall be paid to Seller.  Upon expiration of the Due Diligence Period, if Buyer has not terminated this Agreement as provided herein, the Deposit shall become nonrefundable except in the event of a Seller default.  Buyer’s Federal Tax I.D. Number is 80-0941870; Seller’s Federal Tax I.D. Number is 38-3474766.

(b)The balance of the Purchase Price (the Purchase Price minus the Deposit), subject to adjustments pursuant to this Agreement, including, but not limited to, those adjustments set forth in Section 8 of this Agreement, shall be paid to Seller at Closing (as defined below) in cash by wire transfer of immediately available federal funds, or by certified check via the Title Company (as defined below)).

(c)The parties acknowledge and agree that the Purchase Price may exceed the current fair market value (and true cash value) of the physical real estate comprising the Real Property.  The Purchase Price specifically reflects the financial impact to Buyer of the income from the Master Lease referenced in Section 6(b).

3.Closing.  Closing shall be held on the date that is fifteen (15) days after the later of:  (i) expiration date of the Due Diligence Period (as defined below), or (ii) the date upon which title to the Property is acceptable or deemed acceptable to Buyer pursuant to Section 5 below (or on the next business day thereafter if such date is not a business day) (the “Closing Date”), or on such earlier date as Buyer shall designate by at least five (5) days advance written

2

notice to Seller.  Closing shall be an escrow closing with the Title Company (as defined below) acting as the closing escrow agent (“Closing”). It is agreed that the time of Closing and the obligation of Seller to deliver the Deed (as defined in Section 6(i) below) to Buyer at Closing are of the essence of this Agreement.

4.Title.  From and after the Effective Date, Buyer shall have the right to order a title insurance commitment prepared in accordance with all of the terms and conditions of this Agreement (the “Title Commitment”).

(a)The Title Commitment shall be prepared in accordance with the current ALTA Form, issued by First American Title Insurance Company — Milwaukee Office acceptable to Buyer (the “Title Company”), agreeing to issue, upon recording of the general warranty deed described in this Agreement, an ALTA owner’s title insurance policy to Buyer and an ALTA Lender’s title insurance policy issued to Buyer’s lender(s), if applicable, in the amount of the Purchase Price insuring title to the Real Property to be in the condition called for by this Agreement and containing a “fifty-year chain-of-title search,” a zoning endorsement on ALTA Form 3.1 (with parking), a survey endorsement insuring that the survey accurately depicts the Real Property (including boundaries, improvements, easements and encroachments), a contiguity endorsement, an access endorsement, an endorsement for “gap coverage,” a location endorsement and an owner’s comprehensive endorsement, a utility facilities endorsement, and a tax parcel endorsement; each if applicable.  Seller shall cause the Title Company at or prior to Closing to down date the Title Commitment to the date and time of the recording of the Deed and provide a “title mark-up” showing the final form of the title insurance policy (including the above referenced endorsements) to be issued, which mark-up shall obligate the Title Company to issue the final title insurance policy in such form.  The title mark-up and final title insurance policy shall be free from the standard requirements and exceptions and shall be subject only to liens, encumbrances or exceptions specifically approved by Buyer (the “Permitted Exceptions”). A written statement of the obligee of the amount of any lien or encumbrance to be discharged by Seller shall be provided by Seller within ten (10) days after the title evidence is furnished to Buyer. The premium for the title policy and any fees for endorsements or other services provided by the Title Company (other than the mortgagee policy, if any) shall be paid by Buyer on or before Closing.

(b)Title Defects. Within ten (10) days after  Buyer’s receipt of the latter of the Title Commitment or the Survey (as defined in Section 6(g) below), Buyer shall object in writing to any condition of title not satisfactory to Buyer, in Buyer’s sole discretion (hereinafter referred to as a “Title Defect”). If any objection is made, Seller shall have until prior to Closing in which to exercise its best efforts to correct such Title Defect.  Seller’s best efforts requirement in this Section shall, without limitation, obligate Seller to cure any and all Title Defects of an ascertainable monetary value.  If the Title Defect cannot be corrected prior to Closing despite Seller’s best efforts, or as otherwise extended by agreement of Buyer and Seller, Buyer may, at its option, (a) declare this Agreement null and void and as a result Seller shall return the Deposit together with all accrued interest forthwith to Buyer or (b) elect to accept such title as Seller is able to convey and proceed to Closing.  If Buyer fails to notify Seller that Buyer is terminating

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this Agreement pursuant to this Section within ten (10) business days after  the expiration of the 10-day period, Buyer shall be deemed to have selected option (b) in the previous sentence.

(c)Seller shall transfer to Buyer all of the Personal Property free of all liens and encumbrances.  Seller shall, at Seller’s sole cost and expense, at least three (3) days prior to Closing, deliver to Buyer documentation from Uniform Commercial Code (“U.C.C.”) searches confirming that there are no U.C.C. filings against Seller which would be a lien on the Property, including the Personal Property, involved in this transaction. The searches must be dated or updated within fifteen (15) days prior to Closing.

5.Representations and Warranties.  Seller represents and warrants that all of Seller’s representations and warranties relating to this Agreement are true, correct and complete as of the Effective Date of this Agreement and shall be deemed reaffirmed as true, correct and complete as of Closing. Seller acknowledges that the representations and warranties made in this Agreement by Seller are a material inducement to Buyer’s entering into this Agreement and purchasing the Property and that Buyer is entitled to rely upon these representations and warranties despite any and all investigation undertaken by Buyer. All of Seller’s representations and warranties relating to this Agreement shall survive for 18 months after the Closing of the transactions contemplated herein. Seller hereby indemnifies Buyer for any loss or damage, including, without limitation thereto, reasonable attorney’s fees and court costs occurring as a result of the breach of any representation, warranty or covenant of Seller herein. In addition to any other representations and warranties set forth in this Agreement, Seller hereby further represents, warrants and covenants to Buyer as follows:

(a)OHS/UPG Ventures, a Michigan nonprofit corporation (“OHS/UPG), an affiliate of Seller, holds fee simple title to the Real Property and Seller has good title to the Personal Property.  Seller is a validly organized and duly existing nonprofit corporation organized under the laws of the State of Michigan and has the power and authority to enter into this Agreement and to consummate the transactions herein contemplated.  Immediately prior to the Closing, as defined above, Seller will acquire fee simple title to the Real Property and good title to the Personal Property, pursuant to the closing on a Real Estate Purchase and Sale Agreement executed by OHS/UPG and Seller.  Notwithstanding Seller’s immediate purchase and subsequent sale of the Real Property, the representations and warranties set forth in this Section 5 made by Seller shall have the same force and effect as if made by OHS/UPG to Buyer directly.

(b)Neither the execution and delivery of this Agreement, nor compliance with the terms and conditions of this Agreement by Seller, nor the consummation of the sale and conveyance of the Property to Buyer, constitutes or will constitute a violation or breach of the Bylaws of Seller, as the same may have been amended from time to time, or of any agreement or other instrument to which Seller is a party, to which it is subject or by which it is bound.

(c)The execution and delivery of this Agreement have been approved by the members of the Board of Trustees of Seller and no further action is required on the part of Seller to consummate the transaction contemplated hereby. The person executing this Agreement on behalf of Seller shall have all requisite authority to execute this Agreement, and this Agreement,

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as executed, is valid, legal and binding upon Seller. There are no proceedings pending or, to Seller’s knowledge, threatened by or against Seller in bankruptcy, insolvency or reorganization in any state or federal court.

(d)There are no management, employment, service, equipment, supply, maintenance, water, sewer or other utility or concession agreements or agreements with municipalities (including improvement or development escrows or bonds) with respect to or affecting the Property which will burden the Property or Buyer after Closing in any manner whatsoever, except for instruments of record and other documents disclosed by Seller to Buyer in writing.

(e)Seller has no knowledge of, and has received no notice from, any governmental authority requiring any work, repairs, construction, alterations or installations on or in connection with the Property, or asserting any violation of any federal, state, county or municipal laws, ordinances, codes, orders, regulations or requirements affecting any portion of the Property, including, without limitation, the Americans with Disabilities Act and any applicable environmental laws or regulations. There is no action, suit or proceeding pending or, to the knowledge of Seller, threatened against or affecting Seller or the Property or any portion thereof or relating to or arising out of the ownership of the Property, in any court or before or by any federal, state, county or municipal department, commission, board, bureau or agency or other governmental instrumentality.

(f)No assessments or charges of any kind or nature (deferred or otherwise) for any public improvements have been made against the Property which remain unpaid, no improvements to the Property or any roads or facilities abutting the Property have been made or ordered for which a lien, assessment or charge can be filed or made, and Seller has no knowledge of any plans for improvements by any governmental or quasi-governmental authority which might result in a special assessment against the Property; except for Seller’s pending initiative to change the address and frontage of the Property to Maple Rd. from Stephenson Hwy, which shall remain a Seller responsibility pursuant to the Master Lease (as defined in Section 6(b) below).  Seller has incurred no obligations relating to the installation of or connection to any sanitary sewers or storm sewers which shall be enforceable against the Property; and all public improvements ordered, advertised, commenced or completed prior to the date of this Agreement shall be paid for in full by Seller prior to Closing.

(g)All certificates of occupancy and licenses necessary for operation of the Property, as presently conducted, have been issued by all authorities having jurisdiction thereof; and all such certificates of occupancy and licenses are in full force and effect. Seller has not received any written notice of suspension or cancellation of any certificates of occupancy or licenses.  To Seller’s knowledge, there is no defective condition, structural or otherwise, in the buildings or other improvements on the Real Property, or in the buildings’ roof, heating, ventilating, air conditioning, mechanical, plumbing, electrical systems and equipment, and other building systems and equipment are in good condition and working order and adequate in quantity and quality for the comfortable and normal operation of the Property.  Any defective condition of which Seller gains knowledge after the Effective Date shall be disclosed to Buyer

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promptly and shall be subject to Seller’s obligation to make repairs as specifically set forth in this Agreement.

(h)Seller warrants, represents and covenants that, to Seller’s knowledge:  (i) there has been no disposal, burial or placement of Hazardous Substances (as defined below) on or about the Property; (ii) the Property and Seller are not in violation of any Environmental Laws (as defined below); and no other person or entity has used all or part of the Property or any lands contiguous to the Property in violation of any Environmental Laws; (iii) there is no contamination, pollution or danger of pollution resulting from a condition on or under the Property, or on or under any lands in the vicinity of the Property; (iv) there are no storage tanks on or under the Property; (v) environmental conditions associated with the Property are in compliance with all Environmental Laws; and (vi) Seller has disclosed to Buyer all information in Seller’s possession relating to the environmental condition of the Property.  Seller has not received any information from neighboring property owners indicating they have any concerns about existing environmental conditions which could affect the Property or suggesting they might look to Seller for contribution to clean up such condition.

In the event Buyer shall discover such Hazardous Substances and/or violations of Environmental Laws, tanks, other “recognized environmental condition” (as that phrase is defined by the most recent American Society for Testing and Materials practice standards) or other unsatisfactory environmental conditions (in Buyer’s sole discretion) on the Property at any time prior to Closing, in addition to its other rights and remedies at law or equity or under this Agreement, Buyer shall have the right to terminate this Agreement upon written notice thereof to Seller, whereupon Escrow Agent shall return the Deposit to Buyer together with all interest thereon; and thereafter this Agreement shall be deemed void and neither party shall have any further rights or obligations hereunder; provided, however, that, if Seller had knowledge of such environmental condition and failed to disclose the same to Buyer in breach of this Agreement, Seller shall immediately reimburse Buyer for all Buyer’s costs and expenses incurred in connection with the transaction contemplated by this Agreement.  The foregoing reimbursement obligation of Seller shall survive on termination of this Agreement by Buyer or Seller.  Notwithstanding anything to the contrary herein, the effect of the representations and warranties made in this Subsection shall not be diminished or deemed to be waived by any inspections, tests or investigations made by Buyer or its agents.

For purposes of this Agreement, the term “Environmental Law(s)” shall mean all federal, state and local laws including statutes, regulations, codes and other governmental standards, restrictions, rulings, judgments, orders and requirements in effect now or at any time in the future or past relating to the use, storage, disposal, release, emission, dispersal, spilling, leaking, burial, migration, seepage, movement, discharge, management, investigation, remediation, monitoring, regulation relating to air pollutants, water pollutants, process wastewater, solid or hazardous waste, chemicals, gases, vapors, water pollutants, groundwater, effluents, stormwater runoff, surface water runoff, the environment, Hazardous Substances or employee health and safety, including, but not limited to, the Federal Solid Waste Disposal Act, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976, the Federal Comprehensive Environmental Response, Compensation and

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Liability Act of 1980, the Federal Hazardous Materials Transportation Act, the Toxic Substance Control Act, the Occupational Safety and Health Act of 1970 (all as the same may have been amended), regulations of the Environmental Protection Agency, regulations of the Nuclear Regulatory Agency, and regulations of any state department of natural resources or state environmental protection agency.

For purposes of this Agreement, the term “Hazardous Substance(s)” shall mean all hazardous, toxic, flammable, explosive or radioactive substances, wastes and materials; any pollutants or contaminants (including, but not limited to, petroleum products, asbestos, raw materials and natural substances that include hazardous constituents); and any other similar substances or materials that are regulated under Environmental Laws.

(i)At Closing, there shall be no leases, whether oral or written, agreements of sale, options, rights of first refusal, rights of first offer, tenancies, licenses or any other claims to possession or use affecting the Property, except for the Master Lease (as defined in Section 6(b) below).  Buyer and Seller acknowledge and agree that there is a surgery center lease currently encumbering the Property (the “Surgery Center Lease”) and that, at Closing, Seller shall cause the Surgery Center Lease to be assigned to the Master Tenant (as defined in Section 6(b) below) and the Surgery Center Lease shall be treated as a sublease of the Master Lease.  Seller, as Master Tenant, agrees that, in addition to its obligations under the Master Lease, it shall perform all of the obligations of the landlord under the Surgery Center Lease and shall enforce all of the obligations of the tenant under the Surgery Center Lease.

(j)No brokerage or leasing commissions or other compensation is or will be due or payable to any person, firm, corporation or other entity with respect to or on account of the Master Lease or any expansions or renewals thereof.

(k)There are no pending or to Seller’s knowledge, threatened condemnation or eminent domain proceedings affecting the Property or any portion thereof, and there are no proposed actions by any governmental agencies or authorities which have or may create a lien upon the Property or any portion thereof.

(l)To Seller’s knowledge, the Property is in full compliance with all federal, state, county, municipal or other government standards, laws, ordinances, statutes, regulations and requirements. The Property is in full compliance with all applicable private restrictions, covenants, rules, standards and requirements, except where any noncompliance would have no material adverse effect on the Seller’s ownership and operation of the Property. No approvals from, or filings or recordings with, any person or entity are required to create, subdivide or separate the Real Property from any other parcel of land.

(m)All licenses, permits, and other governmental approvals necessary for the operation of the Property and the business conducted thereon have been obtained, are currently in force, and will be maintained in full force and effect by Seller until Closing.

(n)All work performed or materials furnished for Property have been fully paid for, Seller shall deliver an affidavit to that effect to the Title Company at Closing and Seller

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shall provide Buyer with appropriate, full and complete lien waivers from any and all contractors, sub-contractors, laborers or materialmen furnishing labor or material for the improvement of the Real Property during the six months (or other applicable period for the filing of liens) preceding the date of Closing.

For purposes of this Agreement, “Seller’s knowledge” means the actual knowledge of Seller’s Facilities Manager, Kevin Tuchowski.  Seller hereby represents and warrants that Mr. Tuchowski is the person most knowledgeable regarding, and is primarily responsible for, the management, condition, and disposition of the Property.

6.Conditions of Buyer’s Obligations.  For the purposes of this Agreement “Due Diligence Period” shall mean the thirty (30) day period from and after the Effective Date.  The obligation of Buyer under this Agreement to purchase the Property from Seller is contingent on the satisfaction of the following conditions within each condition’s respective time-period (any one of which may be waived in whole or in part by Buyer within each condition’s time period):

(a)At Closing, all of the representations and warranties by Seller set forth in this Agreement shall be true and correct in all respects as though such representations and warranties were made at and as of Closing, and Seller shall have performed, observed and complied with all covenants, agreements and conditions required by this Agreement.

(b)Within the Due Diligence Period, Seller (as “Master Tenant”) will agree upon an absolute net master lease for the Property (the “Master Lease”), pursuant to which the Master Tenant shall be responsible for all of the obligations and costs incurred for the Property (excluding Buyer’s debt service obligations, if any), including, without limitation, all property management fees, operating costs, property and general liability insurance, real estate taxes and assessments, and maintenance, repairs and replacements of all buildings (including roof, walls, structure, foundation and systems), parking facilities and other improvements situated on and constituting part of the Property and otherwise on terms and conditions acceptable to Buyer (as “Master Landlord”).  Buyer and Seller acknowledge that, at Closing, Seller shall assign the Surgery Center Lease to Master Tenant and that the Surgery Center Lease shall be treated as a sublease of the Master Lease.  Master Tenant, in addition to its obligations under the Master Lease, shall perform all of the obligations of the landlord under the Surgery Center Lease and shall enforce all of the obligations of the tenant under the Surgery Center Lease.  The term of the Master Lease shall be fifteen (15) years, plus one or more extensions as agreed to by the parties.  Base rent for the first year of the term shall be Three Million One Hundred Sixty-Eight Thousand One Hundred Eighty-One and 00/100 Dollars ($3,168,181.00), payable in equal monthly installments of 1/12 of such amount.  On the first anniversary of the lease commencement date and on each anniversary thereafter for the remainder of the term, annual base rent shall increase by two and one-half percent (2.5%) per year. Seller shall cause Master Tenant to execute and deliver the Master Lease on the Closing Date.  Seller shall also cause Master Tenant to execute and deliver to Buyer, on or before the Closing Date, a duly executed original of (i) a Subordination Non-Disturbance and Attornment Agreement (the “SNDA”) in the form attached hereto as Exhibit “C”, and (ii) an estoppel certificate in the form attached hereto as Exhibit “D” (the “Estoppel Certificate”).

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(c)Reserved.

(d)Within the Due Diligence Period, Buyer verifying that the Property (including the Contract Rights, Records and Plans, Warranties and Licenses and Permits) is in every respect acceptable to Buyer based on an investigation and review by Buyer, its agents and contractors of the Property, all information that is required to be provided to Buyer by Seller pursuant to this Agreement and all information that is available to Buyer relating to the Property and the transactions contemplated herein, including, but not limited to, the Disclosure Materials (as defined below).  If any Contract Rights are unacceptable to Buyer, Buyer may elect to exclude any such items from the Property to be transferred hereunder by delivering written notice thereof to Seller no later than the five (5) business days after the expiration of the Due Diligence Period, and Seller shall terminate any such items, as applicable, with respect to the Property as of the Closing.  This contingency shall also include, without limitation, Buyer obtaining, at Buyer’s expense, a physical inspection of the Property, which discloses no “Defects,” as that term is defined herein. For purposes of this Agreement, a “Defect” is defined as a condition or conditions, or evidence of a condition or conditions, that has the potential to: (i) impair the health or safety of occupants of the Property; (ii) result in the violation of any applicable public or private law, standard or covenant; or (iii) cost, in the aggregate, an amount in excess of $5,000 to repair, correct, or remediate.

(e)Within the Due Diligence Period, Buyer obtaining, at Buyer’s expense, written environmental assessments and/or evaluations of the Property (including “Phase I” assessments and, if Buyer deems necessary, “Phase II” assessments, including laboratory testing of soil, water and other substances) from qualified environmental consultants of Buyer’s choice, confirming that: (i) the Property complies with all Environmental Laws; (ii) there are no liabilities (potential, contingent or otherwise) affecting the Property arising under any Environmental Laws; (iii) there are no underground or aboveground storage tanks, associated pipes or equipment located on or at the Real Property; (iv) there are no Hazardous Substances on, under, at, in or migrating to or from the Real Property; (v) no portion of the Real Property has been designated as wetland, shoreland, floodplain or conservancy land; (vi) no portion of the Real Property has been filled; and (viii) the Property is not affected in any manner or degree by a “recognized environmental condition” (as that phrase is defined by the most recent American Society for Testing and Materials practice standards).

(f)Within the Due Diligence Period, Buyer verifying to Buyer’s satisfaction that all applicable public and private laws, rules, standards, covenants and requirements, including, without limitation, all zoning, subdivision, building and use restrictions and all easements and matters of record, allow the conveyance of the Property from Seller to Buyer, and are consistent with Buyer’s Intended Use; Buyer obtaining, or Buyer verifying to Buyer’s satisfaction that Buyer will be able to obtain, all public and private permits, certificates and other approvals, consents and all variances, exemptions, waivers, zoning changes and land divisions required for the conveyance of the Property from Seller to Buyer, and Buyer’s Intended Use. The term “Buyer’s Intended Use” shall mean and include, without limitation, medical and other healthcare related uses.

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(g)Within the Due Diligence Period, Buyer obtaining a current  ALTA survey of the Property (the “Survey”) at Buyer’s expense, that: (aa) is satisfactory to Buyer in all respects (in Buyer’s sole discretion); (bb) is prepared by a licensed, insured and qualified surveyor selected by Buyer; (cc) is certified to Buyer, Buyer’s lender(s) (if any) and the applicable title company; (dd) includes all Table A requirements, except Item 5 of Table A; (ee) shows and discloses no encroachments onto the Property or over the boundaries of the Property, and no easements or other matters that would affect Buyer’s intended use of the Property; and (ff) is sufficient to remove the standard title exceptions relating to surveys without adding any new exceptions.  In addition, the Survey shall locate all public utilities, water courses, drains, sewers and roads (including vacated streets and alleys) crossing or adjacent to the Property, and contain an acceptable certification by the surveyor.  Notwithstanding anything to the contrary in this Agreement, if Buyer, through no fault of its own, is unable to obtain the Survey in the form required by this Agreement within the Due Diligence Period, then it shall have a reasonable time thereafter to obtain such Survey.

(h)Within five (5) business days after the Effective Date, Seller shall deliver to Buyer the items listed on Schedule 6(h) attached hereto and incorporated by reference herein that are in Seller’s possession or control (the “Disclosure Materials”).

(i)At Closing, Seller shall deliver to Buyer duly executed originals of the following:

(i)A general warranty deed to the Real Property, expressly warranting that the Real Property is good, indefeasible, in fee simple, subject only to the Permitted Exceptions, duly executed and acknowledged by Seller and in proper form for recording, (the “Deed”).

(ii)A valid bill of sale for the Personal Property, if any.

(iii)A Non-foreign Person Certification in the form attached hereto as Exhibit “E”, as required under Section 1445 of the Internal Revenue Code.

(iv)An assignment in form and substance mutually satisfactory to Seller and Buyer, duly executed by Seller, assigning to Buyer all of Seller’s right, title and interest in and to the Contract Rights, Licenses and Permits, Records and Plans, Warranties and any other permits, licenses, plans, authorizations and approvals relating to ownership, operation or occupancy of the Property.

(v)A certificate certifying that the representations and warranties of Seller, as set forth in this Agreement, are true and correct in all material respects as of the Closing and shall survive Closing for a period of eighteen (18) months.

(vi)Notwithstanding anything to the contrary in this Agreement, Seller shall provide Buyer original and complete waivers of any and all existing rights of first refusal, rights of first offer, options to purchase, or any other similar rights (including, but not limited to,

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any and all consents), executed by the necessary parties, so that Seller is able to freely transfer the Property to Buyer unencumbered by such rights.

(vii)Originals of the following instruments, documents and other items (or copies if originals are unavailable), all certified (as applicable) by Seller as true and complete to the best knowledge of Seller:

(A)All certificates of occupancy (and any required governmental approvals in connection with the transfer of the Property), licenses, plans, permits, authorizations and approvals required by law and issued by all governmental authorities having jurisdiction over the Property;

(B)the Master Lease;

(C)the Estoppel Certificate and the SNDA;

(D)all building records in Seller’s possession or control with respect to the Property;

(E)each bill of current real estate taxes, sewer charges and assessments, water charges and other utilities, together with proof of payment thereof (to the extent same have been paid);

(F)the Warranties;

(G)all keys and combinations to locks at the Property, all plans, specifications, site plans, equipment manuals, technical data and other documentation relating to the building systems, equipment and any other personal property forming part of the Property or any portion thereof in the possession of Seller or any property manager(s);

(H)an affidavit of title in favor of Buyer and Buyer’s title insurer, together with such other affidavits as are required by Buyer’s title insurer, in the forms used by such title insurance company;

(I)an owner’s policy of title insurance using the most current ALTA Policy Form or a binding, unconditioned “mark-up” of the Title Commitment, each or either showing title to the Property to be in the condition required by Section 4 hereof;

(J)a Closing Statement accurately setting forth the financial terms of this transaction and a summary of the Purchase Price (the “Closing Statement”); and

(K)such other documents as may be reasonably required to consummate this transaction in accordance with this Agreement.

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Unless all of the foregoing conditions contained in this Section 7 are satisfied and completed within each condition’s applicable time period, or if no time period is specified, prior to or at Closing, Buyer, at its election (in its sole discretion), may, either:  (i) extend the date for Closing until such conditions are satisfied; or (ii) terminate this Agreement and have the Deposit refunded together with accrued interest (provided, however, that termination and refund of the Deposit shall not be Buyer’s exclusive remedy); or (iii) waive in writing the satisfaction of any such condition or conditions, in which event this Agreement shall be read as if such condition or conditions no longer existed.

Notwithstanding anything to the contrary contained in this Agreement, Buyer shall have the right to terminate this Agreement for any reason or no reason whatsoever, in Buyer’s sole and absolute discretion, upon written notice to Seller on or before the expiration of the Due Diligence Period, and thereupon this Agreement shall terminate, the Deposit together with accrued interest shall be refunded to Buyer and neither party shall have any further rights or obligations hereunder, except as expressly provided herein.

7.Possession.  Possession of the Property shall be given to Buyer at Closing unoccupied and free of any leases except the Master Lease and the Surgery Center Lease as a permitted sublease to the Master Lease.  Prior to Closing hereunder, Seller shall clean the Property of trash, debris, equipment, vehicles, toxic materials, and signs (except to the extent such signs are specifically permitted in the Master Lease or consented to in writing by Buyer), whether on the surface or buried below.

8.Prorations and Charges.

(a)The Master Tenant, pursuant to the Master Lease, is required to pay all general real estate and personal property taxes for the Property for the year in which the Closing occurs, and, accordingly, such general real estate and personal property taxes shall not be prorated at Closing.  In the event Master Tenant is not required to pay any portion or all of the real estate or personal property taxes pursuant to the Master Lease, then such real estate or personal property taxes not paid by Master Tenant shall be prorated through the day before the Closing based on the taxes for the year that the Closing is in, if known, otherwise on the prior year’s taxes.  Seller shall then be responsible for all real estate taxes through the day prior to the Closing.  In the event taxes are prorated on the prior year’s taxes, the parties agree to reprorate taxes when the taxes for the current year are known, and the parties agree to make such payment between themselves to effectuate such reproration.  All assessments of any kind (general, special or otherwise) levied or to be levied, if any, for work on site actually commenced or announced (by either a private individual or entity or a governmental entity) prior to Closing shall be paid by Master Tenant, if required pursuant to the Master Lease, or by Seller at or prior to Closing.  All other assessments shall be paid by Buyer if this transaction is consummated.  Buyer will reasonably cooperate with and assist Seller in administering any post-closing real property tax appeals relating to the Real Property during the Term of the Master Lease.

(b)In addition, the following items shall be paid by Master Tenant, pursuant to the Master Lease, whether incurred before or after Closing, and such items shall not be

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prorated at Closing: all utility charges (as applicable), including, but not limited to, sewer, water, electricity, gas, telephone and other private and municipal charges (collectively “Utility Charges”).  Income derived from the Property that is earned as of the day of Closing shall accrue to the benefit of Buyer.  In the event Master Tenant is not required to pay any portion or all of the Utility Charges pursuant to the Master Lease, then each of the Utility Charges not paid by Master Tenant shall be prorated through the day before Closing and shown as a credit to Buyer on the Closing Statement, as applicable.  Seller shall be responsible for obtaining all necessary billing information for each of the Utility Charges not paid by Master Tenant in order to accurately reflect the same on the Closing Statement.

(c)At Closing, Seller shall pay to Buyer any and all funds paid to Seller by tenants in the Property on account of additional rent items not yet due and payable by Seller, such as tax and insurance escrows.  Seller shall make such payment in the form of a credit against the Purchase Price in favor of Buyer.

(d)Seller shall pay all transfer taxes associated with the conveyance of the Property and all recording fees customarily paid by Sellers in the locality where the Property is located.  Buyer shall be responsible for the payment of title fees and premiums associated with the Title Policy (and mortgagee policy, if any).  All other closing expenses shall be allocated between the parties in the customary manner for sales of real property in the locality where the Property is located. Each party is responsible for paying its own respective attorneys’ fees incurred in negotiating, preparing and closing the transaction contemplated by this Agreement.

(e)All rights, privileges, income, rents, liabilities, obligations, expenses and costs relating to the assignment and transfer of the Contract Rights, Records and Plans, Warranties and Licenses and Permits shall be paid by Seller at Closing.

(f)Any and all other normal, on-going operating expenses attributable to the Property, whether incurred before or after Closing, except to the extent any of the same relate to the Contract Rights excluded from the Property pursuant to Section 6(d) of this Agreement, shall be paid by Master Tenant, pursuant to the Master Lease.  In the event Master Tenant is not required to pay such on-going operating expenses pursuant to the Master Lease, then such normal on-going operating expenses attributable to the Property, except to the extent any of the same relate to the Contract Rights excluded from the Property pursuant to Section 6(d) of this Agreement, shall be prorated between the parties through the day before Closing.

(g)To the extent any of the foregoing payments and prorations are not required to be paid by Master Tenant pursuant to the Master Lease, then within ninety (90) days after the Closing, Buyer and Seller shall reconcile such payments and prorations based on actual bills or invoices received after the Closing, but only if the prorations or payments were based on an estimate and not actual current bills or invoices.  In the event that any item of income, charge, or expense cannot be reconciled accurately within such 90-day period, the Buyer and Seller hereby agree to delay such reconciliation until a date when it can be accurately completed.  Any party owing to the other party any amount ascertained by the required reconciliations shall promptly, but in no event later than fifteen (15) business days after the date of the applicable

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reconciliation, pay the other party  such amount.  The obligations set forth in this Section 8(g) shall survive Closing.

As applicable, all of the foregoing items set forth in this Section 8, unless otherwise expressly stated, shall be prorated between the parties as of midnight of the day before Closing.

9.Condemnation; Rezoning, Historic Designation.  Seller represents and warrants that Seller has not heretofore received any notice of any eminent domain or condemnation proceeding in connection with the Property.  If prior to Closing any such eminent domain or condemnation proceeding is commenced or any change is made, or proposed to be made to: (i) any portion or all of the Property; (ii) the current means of ingress and egress to the Property; or (iii) to the roads or driveways adjoining the Property, Seller agrees immediately to notify Buyer in writing thereof.  Buyer then shall have the right, at Buyer’s option, to terminate this Agreement by giving written notice to Seller prior to Closing.  If Buyer elects to terminate this Agreement pursuant to the terms set forth in this Section 9, then the Deposit shall be immediately returned to Buyer together with all accrued interest, Buyer and Seller shall be released from any further liability hereunder and this Agreement shall be null and void.  If Buyer does not so terminate this Agreement, Buyer shall proceed to Closing hereunder as if no such proceeding had commenced and will pay Seller the full Purchase Price in accordance with this Agreement, and Seller shall assign to Buyer all of its right, title and interest in and to any compensation for such condemnation.  Seller shall not negotiate or settle any claims for compensation prior to Closing, and Buyer shall have the sole right (in the name of Buyer or Seller or both) to negotiate for, to agree to, and to contest all offers and awards.

If, prior to closing, there is a designation of the Real Property (and/or any improvement located thereon) or any portion thereof as a historic structure or other historic designation, or is threatened, commenced or finalized, or there is a threatened, commenced or finalized rezoning of the Real Property, Seller shall promptly notify Buyer, and Buyer may elect to terminate this Agreement prior to Closing, in which event the Deposit and all accrued interest thereon shall be returned forthwith to Buyer, Buyer and Seller shall be released from any further liability hereunder and this Agreement shall be null and void. If Buyer does not elect to terminate this Agreement, this Agreement shall remain in full force and effect and at Closing Seller shall assign to Buyer all Seller’s right, title and interest in and to any dollars paid by the governmental authority (if any) in connection with the rezoning of the Real Property or historic designation.

10.Default by Buyer.  If Buyer, without the right to do so and in default of its obligations hereunder, fails to complete Closing as to the Property, the Deposit and all accrued interest shall be paid to Seller.  Such payment of the Deposit and all accrued interest to Seller shall be deemed to be liquidated damages for Buyer’s default and the receipt of same shall be Seller’s exclusive and sole remedy; and Seller hereby waives any right to recover the balance of the Purchase Price, or any part thereof, and the right to pursue any other remedy permitted at law or in equity against Buyer.  The parties agree that it would be impracticable and extremely difficult to ascertain the actual damages suffered by Seller as a result of Buyer’s failure to complete the purchase of the Property pursuant to this Agreement, and that under the circumstances existing as of the date of this Agreement, the liquidated damages provided for in

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this Section represent a reasonable estimate of the damages which Seller will incur as a result of such failure.  The parties acknowledge that the payment of such liquidated damages is not intended as a forfeiture or penalty under any legal or equitable theory, but is intended to constitute liquidated damages to Seller.

11.Default by Seller.  If Seller a) defaults in the performance of any obligation contained in this Agreement, and fails to cure such default within ten (10) days after receiving written notice of such default from Buyer; or b) without the right to do so and in default of its obligations hereunder, fails to complete Closing, the Deposit and all accrued interest shall be returned to Buyer, and Seller shall reimburse Buyer for all of Buyer’s reasonable out-of-pocket costs incurred in connection with the transaction contemplated by this Agreement, not to exceed $50,000.  Alternatively, Buyer may exercise any remedies available to it at law or in equity, including, but not limited to, specific performance.  Seller waives the right to assert the defense of lack of mutuality in any action for specific performance instituted by Buyer.

12.Risk of Loss.  Seller shall bear the risk of all loss or damage to the Property from all causes until Closing.  Seller represents that it has, and will maintain pending Closing, a policy of fire and extended coverage insurance in at least the full amount of the replacement cost of all buildings and improvements located on the Property.  Seller will cause the insurer to add Buyer’s name to the policy as an additional insured, as its interest may appear.  Seller will deliver to Buyer within five (5) days after the Effective Date a certificate issued by such insurer evidencing that such policy is in effect, that it will not be canceled without at least thirty (30) days prior notice to Buyer and that Buyer has been named as an additional named insured thereunder.  If at any time prior to Closing any portion of the Property is destroyed or damaged as a result of fire or any other casualty whatsoever, Seller shall promptly give written notice thereof to Buyer and Buyer shall have the right:  (i) to terminate this Agreement by written notice to Seller, whereupon Escrow Agent shall return the Deposit (with any accrued interest) to Buyer, and thereafter this Agreement shall be void and neither party shall have any further rights or obligations hereunder; or (ii) to proceed with this Agreement and to notify Seller that, at Buyer’s sole option, Seller either shall:  (A) use any available insurance proceeds to restore the Property prior to Closing to its condition as of the Effective Date, and if there are any excess insurance proceeds after completion of such restoration, Seller shall promptly deposit same in escrow with Escrow Agent and such funds, together with any interest thereon, shall be disbursed to Buyer at Closing; or (B) in lieu of restoration, prior to Closing, clear the site of debris and deposit all remaining insurance proceeds in escrow with Escrow Agent and such funds, together with interest thereon, shall be disbursed to Buyer at Closing.  All unpaid claims and rights in connection with any such losses shall be assigned to Buyer at Closing without in any manner affecting the Purchase Price.  In the event Buyer elects to proceed under clause (ii)(A) or (ii)(B) above, Seller shall either expend the deductible amount provided for in such insurance coverage in making such restoration or clearing the Property, as the case may be, or give Buyer a credit therefore against the Purchase Price.

13.Brokerage.  Seller represents to Buyer that Seller has engaged the brokerage services of Newmark Grubb Knight Frank (“Broker”) and that Seller shall be solely responsible for all fees, costs, commissions and any and all other amounts due and payable to Broker, which

15

shall be paid to Broker on or before Closing.  Buyer represents and warrants to Seller and Seller represents and warrants to Buyer that, except for Broker, neither has dealt with any broker, agent, finder or other intermediary in connection with this sale and purchase. Seller agrees to indemnify, defend and hold Buyer harmless from and against the claims of any and all brokers, including the Broker, or intermediaries claiming a commission in connection with this sale.  Buyer agrees to indemnify, defend and hold Seller harmless from and against any broker’s claim arising from any breach by Buyer of Buyer’s representation and warranty in this Section 13.

14.Operation of the Property Prior to Closing.  Prior to Closing:

(a)Seller shall operate, manage and maintain the Property in a reasonable, professional and prudent manner, and keep the same in good condition at all times.  Without expense to Buyer, Seller shall make all repairs and replacements (structural and non-structural, ordinary and extraordinary) so that the Property is maintained in its present condition, reasonable wear and tear excepted.

(b)Upon reasonable prior notice, Buyer, its accountants, architects, attorneys, engineers, contractors and other representatives shall be afforded access to:  (i)  the Property to inspect, measure, appraise, test and make surveys of the Property, including, but not limited to, all activities necessary to satisfy the contingencies set forth in this Section 14 and elsewhere in this Agreement; and (ii) all books, records and files relating to the Property (but not the medical and health care operations within the Property).  Buyer shall have the right, at Buyer’s expense, to make copies of all such books and records directly relating to the Property, including, without limitation, all books and records relating to increases in real estate taxes, building and operations maintenance costs; provided, however, that Buyer shall return all copies of such books and records if Closing does not occur under this Agreement.  Buyer shall not interfere unreasonably with the operation of the Property and shall restore any area on the Property disturbed in the course of Buyer’s testing to the conditions existing prior to any tests conducted by Buyer.

(c)Seller shall comply with all of the obligations of landlord under the leases and all other agreements and contractual arrangements affecting the Property by which Seller is bound.

(d)Seller shall promptly notify Buyer of Seller’s receipt of any notice from any party alleging that Seller is in default of its obligations under any of the leases or any permit or agreement affecting the Property, or any portion or portions thereof.

(e)After the Effective date and through the Closing, no contract for or on behalf of or affecting the Property shall be negotiated or entered into which cannot be terminated by Seller prior to Closing without charge, cost, penalty or premium.

(f)Seller shall not enter into any new leases or subleases for any portion of the Property without Buyer’s prior written consent, not to be unreasonably withheld.

(g)From the Effective Date until Closing, Seller shall maintain the Contract Rights, Records and Plans, Warranties, and Licenses and Permits in full force and effect as

16

applicable and shall not terminate, modify or waive any provision thereof. Seller shall not enter into any new contracts or agreements relating to the Property without Buyer’s prior written consent.

15.Notice.  All notices, requests and other communications under this Agreement shall be in writing and shall be delivered: (i) in person; or (ii) by registered or certified mail, return receipt requested; or (iii) by recognized overnight delivery service providing positive tracking of items (for example, Federal Express); or (iv) by electronic transmission (so long as one of methods (i), (ii) or (iii) are simultaneously utilized) addressed as follows or at such other address of which Seller or Buyer shall have given notice as herein provided:

If intended for Seller:

University Physician Group

d/b/a Wayne State University Physician Group

1241 Scott Hall,

540 E. Canfield

Detroit, MI 48201

Attention: Robert A. Frank, M.D.

Email: rfrank@upgdocs.org

with a copy to:

Hall, Render, Killian, Heath & Lyman, PLLC

201 W. Big Beaver Rd., Suite 1200

Troy, MI 48084

Attention:  Mark R. Adams, Esq.

Email: madams@hallrender.com

If intended for Buyer:

DOC-WSUPG Troy MOB, LLC

735 North Water Street, Suite 1000

Milwaukee, WI  53202

Attention:  John W. Sweet, Chief Investment Officer

Email:  jws@docreit.com

with a copy to:

Davis & Kuelthau, s.c.

111 East Kilbourn Avenue, Suite 1400

Milwaukee, Wisconsin  53202

Attention:  Bradley D. Page, Esq.

Email:  bpage@dkattorneys.com

17

All such notices, requests and other communications shall be deemed to have been sufficiently given for all purposes hereof only upon receipt by the party to whom such notice is sent. Notices by the parties may be given on their behalf by their respective attorneys.

16.Indemnity by Seller.(a)

(a)Seller agrees to indemnify and hold harmless Buyer and its officers, agents, employees, and tenants from and against, and to reimburse Buyer with respect to any and all claims, demands, causes of action, losses, damages, liabilities, costs and expenses (including attorneys’ fees and court costs) asserted against or incurred by Buyer by reason of or arising out of: (a) a breach of any representation or warranty of Seller set forth in this Agreement; (b) the failure of Seller to perform any obligation required by this Agreement to be performed by it; and (c) the ownership, maintenance, operation, management and use of the Property prior to Closing, including without limitation any payment or nonpayment on account of the operating expenses for the Property by the tenants under any leases.

(b)Buyer agrees to indemnify and hold harmless Seller and its officers, agents, employees, and tenants from and against, and to reimburse Seller with respect to any and all claims, demands, causes of action, losses, damages, liabilities, costs and expenses (including attorneys’ fees and court costs) asserted against or incurred by Seller by reason of or arising out of: (a) a breach of any representation or warranty of Buyer set forth in this Agreement; (b) the failure of Buyer to perform any obligation required by this Agreement to be performed by it; (c) the ownership, maintenance, operation, management and use of the Property after Closing; and (d) Buyer’s access to the Property for the purpose of making such investigations, inspections, tests, assessments, surveys and the like in accordance with Section 6 of this Agreement.

17.Further Assurances.  After Closing, at Buyer’s sole cost and expense, Seller shall execute, acknowledge and deliver, for no further consideration, all assignments, transfers, deeds and other documents as Buyer may reasonably request to vest in Buyer and perfect Buyer’s right, title and interest in and to the Property.

18.Like Kind Exchanges.  Buyer or Seller may elect to exchange the Property for other real estate of a like kind in accordance with Section 1031 of the Internal Revenue Code of 1986 as amended (the “Code”).  To the extent possible, the provisions of this Section shall be interpreted consistently with this intent.  To exercise any rights under this Section, the party electing to exchange the Property shall provide the other with a written statement stating its intent to enter into an exchange at least five days prior to Closing.  Either party’s election to exchange, rather than sell or buy, the Property for other real estate of a like kind shall be at no cost or liability to the other.

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19.Miscellaneous.

(a)All of the representations and warranties contained in this Agreement, all covenants, agreements and indemnities made herein, and all obligations to be performed under the provisions of this Agreement shall survive Closing.

(b)This Agreement shall be void and of no force or effect if not executed by Seller and delivered to Buyer or Buyer’s attorney within seven (7) business days after execution by Buyer and delivery to Seller.

(c)The “captions” or “headings” in this Agreement are inserted for convenience of reference only and in no way define, describe or limit the scope or intent of this Agreement or any of the provisions hereof.

(d)Buyer shall have the right to assign this Agreement, and upon notice from Buyer, Seller agrees to convey the Property directly to Buyer’s assignee provided that Buyer and/or assignee have fulfilled all Buyer’s obligations under this Agreement.  Seller shall not assign this Agreement without the prior written consent of Buyer.  Any assignment of this Agreement by Seller without Buyer’s prior written consent shall be null and void, and of no force or effect.

(e)This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and permitted assigns.

(f)This Agreement, including the exhibits attached hereto, contains the entire agreement as to the Property between Seller and Buyer; and there are no other terms, obligations, covenants, representations, statements or conditions, oral or otherwise, of any kind whatsoever concerning this sale and purchase.  This Agreement shall not be altered, amended, changed or modified except in writing executed by the parties hereto.

(g)This Agreement shall be construed in accordance with the internal laws of the State of Michigan, without giving effect to its conflicts of laws provisions.

(h)All parties to this Agreement having participated fully and equally in the negotiation and preparation hereof, this Agreement shall not be more strictly construed, or any ambiguities within this Agreement resolved, against either party hereto.  It is the intent of Buyer and Seller that this Agreement be binding on both parties and not illusory. Thus, wherever this Agreement grants Buyer or Seller discretion, which might otherwise make this Agreement illusory, the party exercising its discretion must act reasonably according to commercial standards.

(i)Subject to any tenants’ rights to the Property, including under the Master Lease and the Surgery Center Lease, Seller shall deliver possession of the Property to Buyer at Closing.

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(j)Time is of the essence of this Agreement and Buyer and Seller hereby agree that the times provided for in this contract are reasonable times for each party to complete its respective obligations. If any of the times provided for in this Agreement fall on a Saturday, Sunday or legal holiday, said times shall automatically extend to the next full business day.

(k)This Agreement may be executed or amended in counterparts, all of which taken together shall constitute one and the same instrument.  The parties may exchange executed counterparts via electronic transmission, including e-mail.

(l)If any of the terms or conditions contained herein shall be declared to be invalid or unenforceable by a court of competent jurisdiction, then the remaining provisions and conditions of this Agreement, or the application of such to persons or circumstances other than those to which it is declared invalid or unenforceable, shall not be affected thereby and shall remain in full force and effect and shall be valid and enforceable to the full extent permitted by law.

(m)After the Closing, at the request of Buyer and at Buyer’s expense, Seller shall make available to Buyer the historical financial information in Seller’s possession regarding the operation of the Property to the extent required by Buyer in order to prepare stand-alone audited financial statements for such operations in accordance with generally accepted accounting principles, as of the end of fiscal year 2013, and any required subsequent date or period, and to cooperate (at Buyer’s expense) with Buyer and any auditor engaged by Buyer for such purpose.

20.Disclosure.  No party may make public disclosure with respect to this transaction before the Closing except:

(a)as may be required by law, including without limitation disclosure required under securities laws, or by the Securities and Exchange Commission, or by the rules of any stock exchange;

(b)to such title insurance companies, lenders, attorneys, accountants, partners, directors, officers, employees and representatives of any party or of such party’s advisors who need to know such information for the purpose of evaluating and consummating the transaction, including the financing of the transaction; and

(c)to present or prospective sources of financing.

21.Cooperation with S-X 3-14 Audit.  The Seller acknowledges that it is Buyer’s intention that the ultimate acquirer of the Property will be affiliated with a publicly registered company (“Registered Company”).  The Seller acknowledges that it has been advised that if such acquirer is affiliated with a Registered Company, such Registered Company (and such acquirer) are required to make certain filings with the Securities and Exchange Commission (the “SEC Filings”) that relate to the most recent pre-acquisition fiscal year (the “Audited Year”) and the current fiscal year through the date of acquisition (the “Stub Period”) for the Property.  To assist Buyer and Registered Company in preparing the SEC Filings, the Seller covenants and

20

agrees no later than thirty (30) days after the Closing Date, Seller shall provide Buyer and the Registered Company with the following information (to the extent such items are required for the SEC Filings and are not duplicative of items contained in the Disclosure Materials): (i) access to bank statements for the Audited Year and Stub Period; (ii) rent roll as of the end of the Audited Year and Stub Period; (iii) operating statements for the Audited Year and Stub Period; (iv) access to the general ledger for the Audited Year and Stub Period; (v) cash receipts schedule for each month in the Audited Year and Stub Period; (vi) access to invoice for expenses and capital improvements in the Audited Year and Stub Period; (vii) accounts payable ledger and accrued expense reconciliations; (viii) check register for the 3-months following the Audited Year and Stub Period; (ix) all leases and 5-year lease schedules; (x) copies of all insurance documentation for the Audited Year and Stub Period and (xi) copies of accounts receivable aging as of the end of the Audited Year and Stub Period along with an explanation for all accounts over 30 days past due as of the end of the Audited Year and Stub Period.  In addition, no later than thirty (30) days after the Closing Date, Seller shall provide to Buyer: (1) signed representation letter in substantially the form attached hereto as Exhibit “F”; (2) a signed audit request letter in substantially the form attached hereto as Exhibit “G”; and (3) a signed audit response letter from Seller’s attorney in substantially the form attached hereto as Exhibit “H”.  Notwithstanding the foregoing provisions, Seller will not make any information disclosures to Buyer that would be in violation of HIPAA or other laws relating to privacy and confidentiality of health care information.

(Signatures contained on following pages)

21

IN WITNESS WHEREOF, intending to be legally bound, the parties have caused this Agreement to be duly executed, under seal.

SELLER:			BUYER:
UNIVERSITY PHYSICIAN GROUP, D/B/A			DOC-WSUPG TROY MOB, LLC
WAYNE STATE UNIVERSITY PHYSICIAN GROUP
			By:	Physicians Realty L.P., its Manager
				By:	Physicians Realty Trust, its General Partner
By:	/s/ Kenneth P. Lee	9-8-14
		Date
Name:	Kenneth P. Lee			By:	/s/ John T. Thomas	9-8-14
	(Print)					Date
Title:	Executive Director			Name:	John T. Thomas
	(Print)				(Print)
				Title:	President & CEO
					(Print)

22

EX-31.1

Exhibit 31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John T. Thomas, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Physicians Realty Trust for the fiscal quarter ended September 30, 2014;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [language omitted pursuant to Exchange Act Rules 13a-14(a) and 15d-15(a)] for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.[Language omitted pursuant to Exchange Act Rules 13a-14(a) and 15d-15(a)];

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November 13, 2014	/s/ John T. Thomas
	John T. Thomas
	Chief Executive Officer and President (Principal Executive Officer)

EX-31.2

Exhibit 31.2.

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jeffrey Theiler, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Physicians Realty Trust for the fiscal quarter ended September 30, 2014;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [language omitted pursuant to Exchange Act Rules 13a-14(a) and 15d-15(a)] for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.[Language omitted pursuant to Exchange Act Rules 13a-14(a) and 15d-15(a)];

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November 13, 2014	/s/ Jeffrey Theiler
	Jeffrey Theiler
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, John T. Thomas, the Chief Executive Officer and President of Physicians Realty Trust (the “Trust”), pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certifies in his capacity as an officer of the Trust that, to the best of his knowledge:

1.the Quarterly Report on Form 10-Q of the Trust for the fiscal quarter ended September 30, 2014, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust.

Date:   November 13, 2014	/s/ John T. Thomas
	John T. Thomas
	Chief Executive Officer and President (Principal Executive Officer)

This certification is not deemed to be “filed” for purposes of section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section. This certification is not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or Securities Exchange Act of 1934, except to the extent that the Trust specifically incorporates it by reference.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, Jeffrey Theiler, the Executive Vice President and Chief Financial Officer of Physicians Realty Trust (the “Trust”), pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certifies in his capacity as an officer of the Trust that, to the best of his knowledge:

1.the Quarterly Report on Form 10-Q of the Trust for the fiscal quarter ended September 30, 2014, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust.

Date:   November 13, 2014	/s/ Jeffrey Theiler
	Jeffrey Theiler
	Executive Vice President and Chief Financial Officer (Principal Financial Officer)

This certification is not deemed to be “filed” for purposes of section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section. This certification is not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or Securities Exchange Act of 1934, except to the extent that the Trust specifically incorporates it by reference.

XML

Debt (Details 2) (USD $) In Millions, unless otherwise specified	0 Months Ended														0 Months Ended							0 Months Ended
	Sep. 18, 2014 Operating Partnership Base Rate Loans Consolidated Leverage Ratio, 35%	Sep. 18, 2014 Operating Partnership Base Rate Loans Consolidated Leverage Ratio, >35% and 45%	Sep. 18, 2014 Operating Partnership Base Rate Loans Consolidated Leverage Ratio, >45% and 45%	Sep. 18, 2014 Operating Partnership Base Rate Loans Consolidated Leverage Ratio, >45% and 50%	Sep. 18, 2014 Operating Partnership Base Rate Loans Consolidated Leverage Ratio, >50% and 55%	Sep. 18, 2014 Operating Partnership Base Rate Loans Consolidated Leverage Ratio, >55%	Sep. 18, 2014 Operating Partnership LIBOR Adjusted LIBOR Rate Loans and Letter of Credit Consolidated Leverage Ratio, 35%	Sep. 18, 2014 Operating Partnership LIBOR Adjusted LIBOR Rate Loans and Letter of Credit Consolidated Leverage Ratio, >35% and 45%	Sep. 18, 2014 Operating Partnership LIBOR Adjusted LIBOR Rate Loans and Letter of Credit Consolidated Leverage Ratio, >45% and 45%	Sep. 18, 2014 Operating Partnership LIBOR Adjusted LIBOR Rate Loans and Letter of Credit Consolidated Leverage Ratio, >45% and 50%	Sep. 18, 2014 Operating Partnership LIBOR Adjusted LIBOR Rate Loans and Letter of Credit Consolidated Leverage Ratio, >50% and 55%	Sep. 18, 2014 Operating Partnership LIBOR Adjusted LIBOR Rate Loans and Letter of Credit Consolidated Leverage Ratio, >55%	Sep. 18, 2014 Prior Credit Agreement Operating Partnership	Sep. 30, 2014 Credit Agreement	Sep. 18, 2014 Credit Agreement Operating Partnership	Sep. 18, 2014 Credit Agreement Operating Partnership LIBOR	Sep. 18, 2014 Credit Agreement Operating Partnership Minimum	Sep. 18, 2014 Credit Agreement Operating Partnership Minimum LIBOR	Sep. 18, 2014 Credit Agreement Operating Partnership Maximum	Sep. 18, 2014 Credit Agreement Operating Partnership Maximum LIBOR	Sep. 18, 2014 Credit Agreement Operating Partnership Swingline loan	Sep. 18, 2014 Credit Agreement Operating Partnership Accordion feature Maximum
Debt
Maximum borrowing capacity													$ 200	$ 400	$ 400				$ 750
Maximum borrowing capacity as a percentage of maximum principal amount																					10.00%
Increase in maximum borrowing capacity																						$ 350
Term of extension option															1 year
Unused fee (as a percent)																	0.15%		0.25%
Consolidated leverage ratio, minimum (as a percent)		35.00%	45.00%	45.00%	50.00%	55.00%		35.00%	45.00%	45.00%	50.00%	55.00%
Consolidated leverage ratio, maximum (as a percent)	35.00%	45.00%	45.00%	50.00%	55.00%		35.00%	45.00%	45.00%	50.00%	55.00%
Variable rate basis							LIBOR	LIBOR	LIBOR	LIBOR	LIBOR	LIBOR				LIBOR
Margin (as a percent)	0.50%	0.65%	0.75%	0.85%	1.00%	1.20%	1.50%	1.65%	1.75%	1.85%	2.00%	2.20%						1.50%		2.20%

XML

Earnings Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		5 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Sep. 30, 2014	Sep. 30, 2013
Numerator for earnings per share - basic and diluted:
Net loss	$ (2,251)	$ (1,416)	$ (2,060)	$ (6,409)	$ (1,998)
Less: Net (income) loss attributable to Predecessor		(6)			576
Less: Net loss (income) attributable to noncontrolling interests -operating partnership	233	(61)		887	(61)
Less: Net (income) loss attributable to noncontrolling interests - partially owned properties	(76)	323		(226)	323
Net loss attributable to common shareholders	$ (2,094)	$ (1,160)		$ (5,748)	$ (1,160)
Denominator for earnings per share - basic and diluted shares:	36,313,644	11,486,011		27,980,408	11,486,011
Basic and diluted earnings per share (in dollar per share)	$ (0.06)	$ (0.10)		$ (0.21)	$ (0.10)
Number of potentially dilutive shares	202,446			202,446