10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20541

FORM 10-K

ý     ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015

o     TRANSITION REPORT UNDER 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 or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
309 N. Water Street Suite 500 Milwaukee, Wisconsin	53202
(Address of Principal Executive Offices)	(Zip Code)

(414) 367-5600

(Registrant’s telephone number, including area code)

Securities registered under Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange On Which Registered
Common Shares, $0.01 par value	New York Stock Exchange

Securities registered under Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ý No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o No ý

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

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

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

The aggregate market value of common shares held by non-affiliates of the Registrant as of June 30, 2015 was approximately $1,081,225,866 based upon the closing price reported for such date on the New York Stock Exchange. For purposes of this disclosure, common shares held by executive officers and trustees of the Registrant on June 30, 2015 have been excluded because such persons may be deemed to be affiliates of the Registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of February 22, 2016, the number of the Registrant’s common shares outstanding was 108,596,965.

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III of this Annual Report on Form 10-K, to the extent not set forth in this Form 10-K, is incorporated herein by reference from Physicians Realty Trust’s definitive proxy statement relating to the annual meeting of shareholders to be held on May 5, 2016, to be filed with the Securities and Exchange Commission within 120 days after the end of the Registrant’s fiscal year ended December 31, 2015.

PHYSICIANS REALTY TRUST

Annual Report on Form 10-K for the Year Ended December 31, 2015

 Table of Contents

	Page
PART I	4
Item 1. Business	4
Item 1A. Risk Factors	11
Item 1B. Unresolved Staff Comments	32
Item 2. Properties	33
Item 3. Legal Proceedings	35
Item 4. Mine Safety Disclosures	35
PART II	36
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	36
Item 6. Selected Financial Data	38
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	60
Item 8. Financial Statements and Supplementary Data	62
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	100
Item 9A. Controls and Procedures	100
Item 9B. Other Information	100
PART III	101
Item 10. Directors, Executive Officers and Corporate Governance	101
Item 11. Executive Compensation	101
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	101
Item 13. Certain Relationships and Related Transactions, and Director Independence	101
Item 14. Principal Accountant Fees and Services	102
PART IV	103
Item 15. Exhibits and Financial Statement Schedules	103

Forward-Looking Statements

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains various forward-looking statements within the meaning of the federal securities laws. 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.

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 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 where 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 common shares;

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

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

• our geographic concentrations in Texas, Georgia, and Arizona cause us to be particularly exposed to downturns in these local economies 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 completing 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, any joint venture and development partners with whom we may make co-investments in the future;

• cybersecurity incidents could disrupt our business and result in the compromise of confidential information;

• our ability to operate as a public company;

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

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• lack of or insufficient amounts of insurance;

• other factors affecting the real estate industry generally;

• our failure to maintain our qualification as a 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

• factors that may materially adversely affect us, or the per share trading price of our common shares, including:

◦ 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 debt;

◦ failure of securities analysts to publish research or reports about us or our industry; and

◦ securities analysts’ downgrade of 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. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes after the date of this report, except as required by applicable law. You should not place undue reliance on any forward-looking statements that are based on information currently available to us or the third parties making the forward-looking statements. 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.”

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.”

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PART I

ITEM 1. BUSINESS

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 completed our initial public offering (“IPO”) in July 2013. Our common shares are listed on the NYSE and we are included in the MSCI US REIT Index.

We have grown our portfolio of gross real estate investments from approximately $124 million at the time of our IPO to approximately $1.7 billion as of December 31, 2015. As of December 31, 2015, our portfolio consisted of 151 properties located in 26 states with approximately 5,799,337 net leasable square feet, which were approximately 95.8% leased with a weighted average remaining lease term of approximately 9.0 years and approximately 74% of the net leasable square footage of our portfolio was either affiliated with a healthcare delivery system or located within approximately 1/4 mile of a hospital campus.

We receive a cash rental stream from healthcare providers under our leases. Approximately 85.5% of the annualized base rent payments from our properties as of December 31, 2015 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 relatively 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 2.0% to 3.0%. 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 December 31, 2015, leases representing a percentage of our portfolio on the basis of leasable square feet will expire as follows: 

Year (1)	Portfolio Lease Expirations
MTM	0.7%
2016	3.2%
2017	5.4%
2018	6.0%
2019	5.3%
2020	3.4%
2021	3.3%
2022	5.1%
2023	6.3%
2024	10.1%
Thereafter	46.2%
Total (2)	95.0%

(1) “MTM” means month-to-month.

(2) The difference between the 95.8% leased as of December 31, 2015 as noted above, compared to the 95.0% noted in this table is 0.8%, which is due to leases that expired on December 31, 2015. Of those, 0.6% rolled into new long-term leases and 0.2% are vacant as of January 1, 2016. Vacancy totaled 4.2%.

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 system. 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, and other real estate integral to health care providers. We seek to invest in stabilized medical facility assets with initial cash yields of 6% to 9%.

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We had no business operations prior to completion of the IPO and the related formation transactions on July 24, 2013. Our Predecessor, which is not a legal entity, is comprised of the four healthcare real estate funds managed by B.C. Ziegler & Company, which we refer to as the Ziegler Funds, that owned directly or indirectly interests in entities that owned our initial properties we acquired on July 24, 2013 in connection with completion of our IPO and related formation transactions.

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 umbrella partnership REIT 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 February 22, 2016, own approximately 96.7% of the partnership interests in our operating partnership (“OP Units”). 

Our Objectives and Growth Strategy

Our principal business objective is to provide attractive risk-adjusted returns to our shareholders through a combination of (i) sustainable and increasing rental revenue and cash flow that generate reliable, increasing dividends, and (ii) potential long-term appreciation in the value of our properties and common shares. Our primary strategies to achieve our business objective are to invest in, own and manage a diversified portfolio of high quality healthcare properties and pay careful attention to our tenants’ real estate strategies, which we believe will drive high retention, high occupancy and reliable, increasing rental revenue and cash flow.

We intend to grow our portfolio of high-quality healthcare properties leased to physicians, hospitals, healthcare delivery systems and other healthcare providers primarily through acquisitions of existing healthcare facilities that provide stable revenue growth and predictable long-term cash flows. We may also selectively finance the development of new healthcare facilities through joint venture or fee arrangements with premier healthcare real estate developers. Generally, we only expect to make investments in new development properties when approximately 70% or more of the development property has been pre-leased before construction commences. We seek to invest in properties where we can develop strategic alliances with financially sound healthcare providers and healthcare delivery systems that offer need-based healthcare services in sustainable healthcare markets. We focus our investment activity on the following types of healthcare properties:

• medical office buildings;

• outpatient treatment and diagnostic facilities;

• physician group practice clinics;

• ambulatory surgery centers; and

• specialty hospitals and treatment centers.

We may invest opportunistically in life science facilities, assisted living and independent senior living facilities and in the longer term, senior housing properties, including skilled nursing. Consistent with our intent to qualify as a REIT, we may also opportunistically invest in companies that provide healthcare services, and in joint venture entities with operating partners, structured to comply with the REIT Investment Diversification Act of 2007 (“RIDEA”).

In connection with our review and consideration of healthcare real estate investment opportunities, we generally take into account a variety of market considerations, including:

• whether the property is anchored by a financially-sound healthcare delivery system or whether tenants have strong affiliation to a healthcare delivery system;

• the performance of the local healthcare delivery system and its future prospects;

• property location, with a particular emphasis on proximity to healthcare delivery systems;

• demand for medical office buildings and healthcare related facilities, current and future supply of competing properties, and occupancy and rental rates in the market;

• population density and growth potential;

• ability to achieve economies of scale with our existing medical office buildings and healthcare related facilities or anticipated investment opportunities; and

• existing and potential competition from other healthcare real estate owners and operators.

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2015 Highlights and Other Recent Developments

• For the full year 2015, we completed acquisitions of 66 medical office facilities located in 22 states, containing an aggregate of 2,745,664 net leasable square feet, for an aggregate purchase price of approximately $818.6 million.

• In January 2015, we completed a follow-on public offering of 18,975,000 common shares of beneficial interest, including 2,475,000 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to us of approximately $297.3 million.

• In July 2015, we amended our existing credit facility, increasing the maximum principal amount available under our unsecured revolving credit facility from $400 million to $750 million. The credit facility includes a swingline loan commitment for up to 10% of the maximum principal amount and provides an accordion feature allowing us to increase borrowing capacity by up to an additional $350 million, subject to customary terms and conditions, resulting in a maximum borrowing capacity of $1.1 billion.

• Effective October 1, 2015, we appointed Deeni Taylor to the position of Executive Vice President – Investments. Additionally, effective February 2, 2015, we appointed Bradley D. Page to the position of Senior Vice President – General Counsel.

• In October 2015, we completed a follow-on public offering of 15,812,500 common shares of beneficial interest, including 2,062,500 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to us of approximately $226.8 million.

• On January 7, 2016, we issued and sold $150 million aggregate principal amount of senior notes. The proceeds of the notes were used to repay borrowings under our unsecured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

• In January 2016, we completed a follow-on public offering of 21,275,000 common shares of beneficial interest, including 2,775,000 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to us of approximately $320.9 million.

• From January 1, 2016 to February 22, 2016, we completed 8 acquisitions of 7 properties and 1 condominium unit located in 8 states, containing an aggregate of 326,326 net leasable square feet for an aggregate purchase price of approximately $105.1 million. We also issued 1 mezzanine loan for $0.5 million.

Employees

At December 31, 2015, we had 25 full-time employees, none of whom are subject to a collective bargaining agreement. We believe that relations with our employees are positive.

Portfolio Summary

Please see “Item 2. Properties” for a table that summarizes our portfolio as of December 31, 2015.

Geographic Concentration

For the year ended December 31, 2015, approximately 34.8% of our total annualized base rent was derived from properties located in Texas (15.7%), Georgia (9.8%), and Arizona (9.3%). The Texas properties are concentrated in El Paso and Dallas, the Georgia properties are concentrated in the metro Atlanta area, and the Arizona properties are concentrated in Phoenix and Scottsdale.

As a result of this geographic concentration, we are particularly exposed to downturns in these local economies or other changes in local real estate market conditions. Any material change in the current payment programs or regulatory, economic, environmental or competitive conditions in either of these areas could have a disproportionate effect on our overall business results. In the event of negative economic or other changes in either of these markets, our business, financial condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common shares may be adversely affected. See each of the discussion under Item 1A, “Risk Factors,” under the caption “Economic and other conditions that negatively affect geographic areas in which we conduct business, and in particular areas to which a greater percentage of our revenue is attributed could materially adversely affect our business, results of operations and financial condition.”

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Customer Concentration

We receive substantially all of our revenue as rent payments from tenants under leases of space in our healthcare properties, with our five largest tenants based upon rental revenue representing approximately $19.1 million, or 15.5%, of the annualized base rent from our properties as of December 31, 2015. No one tenant represents more than 3.9% of our total annualized base rent. We have no control over the success or failure of our tenants’ businesses and, at any time, any of our tenants may experience a downturn in its business that may weaken its financial condition.

Competition

We compete with many other entities engaged in real estate investment activities for acquisitions of healthcare properties, including national, regional and local operators, acquirers and developers of healthcare-related real estate properties and other investors such as private equity firms, some of whom may have greater financial resources and lower costs of capital than we do. The competition for healthcare-related real estate properties may significantly increase the price that we must pay for healthcare properties or other assets that we seek to acquire, and our competitors may succeed in acquiring those properties or assets themselves. In addition, our potential acquisition targets may find our competitors to be more attractive because they may have greater resources, may be willing to pay more for the properties or may have a more compatible operating philosophy. In particular, larger REITs that target healthcare properties may enjoy significant competitive advantages that result from, among other things, a lower cost of capital, enhanced operating efficiencies, more personnel and market penetration and familiarity with markets. In addition, the number of entities and the amount of funds competing for suitable investment properties may increase. Increased competition would result in increased demand for the same assets and therefore increase prices paid for them. Those higher prices for healthcare properties or other assets may adversely affect our returns from our investments.

Credit Facility

On July 22, 2015, the Operating Partnership, as borrower, and we and certain subsidiaries and other affiliates of our company, as guarantors, entered into an amendment to the existing 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 (as amended, the “Credit Agreement”) which increased the maximum principal amount available under an unsecured revolving credit facility from $400 million to $750 million. The Credit Agreement includes a swingline loan commitment for up to 10% of the maximum principal amount and provides an accordion feature allowing us to increase borrowing capacity by up to an additional $350 million, subject to customary terms and conditions, resulting in a maximum borrowing capacity of $1.1 billion.

The Credit Agreement has a maturity date of September 18, 2019 and includes a one year extension option. Borrowings under the Credit Agreement bear interest on the outstanding principal amount at an adjusted LIBOR rate, which is based on the Trust’s investment grade rating under the Credit Agreement. As of December 31, 2015, the Trust had an investment grade rating from Moody’s of Baa3 and as such, borrowings under the Credit Agreement accrued interest on the outstanding principal at a rate of LIBOR plus 1.20%. The Credit Agreement includes a facility fee equal to 0.25% per annum, which is also determined by the Trust’s investment grade rating.

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 December 31, 2015, 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.

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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 our investment grade rating as follows:

Investment Grade Rating	Adjusted LIBOR Rate Loans and Letter of Credit Fee	Base Rate Loans
At Least A- or A3	LIBOR + 0.85%	—	%
At Least BBB+ or BAA1	LIBOR + 0.90%	—	%
At Least BBB or BAA2	LIBOR + 1.00%	0.10	%
At Least BBB- or BAA3	LIBOR + 1.20%	0.20	%
Below BBB- or BAA3	LIBOR + 1.55%	0.60	%

As of December 31, 2015, there were $395 million of borrowings outstanding under our unsecured revolving credit facility and $198.7 million available for us to borrow without adding additional properties to the unencumbered borrowing base of assets, as defined by the Credit Agreement.

Additionally, on January 7, 2016, our Operating Partnership issued and sold $150 million aggregate principal amount of senior notes, comprised of (i) $15,000,000 aggregate principal amount of 4.03% Senior Notes, Series A, due January 7, 2023 (the “Series A Notes”), (ii) $45,000,000 aggregate principal amount of 4.43% Senior Notes, Series B, due January 7, 2026 (the “Series B Notes”), (iii) $45,000,000 aggregate principal amount of 4.57% Senior Notes, Series C, due January 7, 2028 (the “Series C Notes”) and (iv) $45,000,000 aggregate principal amount of 4.74% Senior Notes, Series D, due January 7, 2031 (the “Series D Notes,” and together with the Series A Notes, the Series B Notes and the Series C Notes, the “Notes”). The proceeds of the Notes were used to repay borrowings under our unsecured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

Seasonality

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

Environmental Matters

As an owner of real estate, we are subject to various federal, state and local environmental laws, regulations and ordinances and also could be liable to third parties as a result of environmental contamination or noncompliance at our properties even if we no longer own such properties. See the discussion under Item 1A, “Risk Factors,” under the caption “Environmental compliance costs and liabilities associated with owning, leasing, developing and operating our properties may affect our results of operations.”

Certain Government Regulations

Overview

Our tenants and operators are typically subject to extensive and complex federal, state and local healthcare laws and regulations relating to fraud and abuse practices, government reimbursement, licensure and certificate of need and similar laws governing the operation of healthcare facilities, and we expect that the healthcare industry, in general, will continue to face increased regulation and pressure in the areas of fraud, waste and abuse, cost control, healthcare management and provision of services, among others. These regulations are wide-ranging and can subject our tenants and operators to civil, criminal and administrative sanctions. Affected tenants and operators may find it increasingly difficult to comply with this complex and evolving regulatory environment because of a relative lack of guidance in many areas as certain of our healthcare properties are subject to oversight from several government agencies and the laws may vary from one jurisdiction to another. Changes in laws and regulations, reimbursement enforcement activity and regulatory non-compliance by our tenants and operators can all have a significant effect on their operations and financial condition, which in turn may adversely impact us, as detailed below and set forth under Item 1A, “Risk Factors,” under the caption “The healthcare industry is heavily regulated, and new laws or regulations, changes to existing laws or regulations, loss of licensure or failure to obtain licensure could adversely impact our company and result in the inability of our tenants to make rent payments to us.”

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Based on information primarily provided by our tenants and operators as of December 31, 2015 we estimate that approximately 44.0% of our hospital and long-term acute care hospital tenants’ and operators’ revenues were dependent on Medicare reimbursement.

The following is a discussion of certain laws and regulations generally applicable to our operators, and in certain cases, to us.

Fraud and Abuse Enforcement

There are various extremely complex federal and state laws and regulations governing healthcare providers’ relationships and arrangements and prohibiting fraudulent and abusive practices by such providers. These laws include (i) federal and state false claims acts, which, among other things, prohibit providers from filing false claims or making false statements to receive payment from Medicare, Medicaid or other federal or state healthcare programs, (ii) federal and state anti-kickback and fee-splitting statutes, including the Medicare and Medicaid anti-kickback statute, which prohibit the payment or receipt of remuneration to induce referrals or recommendations of healthcare items or services, (iii) federal and state physician self-referral laws (commonly referred to as the “Stark Law”), which generally prohibit referrals by physicians to entities with which the physician or an immediate family member has a financial relationship, (iv) the federal Civil Monetary Penalties Law, which prohibits, among other things, the knowing presentation of a false or fraudulent claim for certain healthcare services and (v) federal and state privacy laws, including the privacy and security rules contained in the Health Insurance Portability and Accountability Act of 1996, which provide for the privacy and security of personal health information. Violations of healthcare fraud and abuse laws carry civil, criminal and administrative sanctions, including punitive sanctions, monetary penalties, imprisonment, denial of Medicare and Medicaid reimbursement and potential exclusion from Medicare, Medicaid or other federal or state healthcare programs. These laws are enforced by a variety of federal, state and local agencies and can also be enforced by private litigants through, among other things, federal and state false claims acts, which allow private litigants to bring qui tam or “whistleblower” actions. Many of our operators and tenants are subject to these laws, and some of them may in the future become the subject of governmental enforcement actions if they fail to comply with applicable laws.

Reimbursement

Sources of revenue for many of our tenants and operators include, among other sources, governmental healthcare programs, such as the federal Medicare program and state Medicaid programs, and non-governmental payors, such as insurance carriers and HMOs. As federal and state governments focus on healthcare reform initiatives, and as the federal government and many states face significant budget deficits, efforts to reduce costs by these payors will likely continue, which may result in reduced or slower growth in reimbursement for certain services provided by some of our tenants and operators.

Healthcare Licensure and Certificate of Need

Certain healthcare facilities in our portfolio are subject to extensive federal, state and local licensure, certification and inspection laws and regulations. In addition, various licenses and permits are required to dispense narcotics, operate pharmacies, handle radioactive materials and operate equipment. Many states require certain healthcare providers to obtain a certificate of need, which requires prior approval for the construction, expansion and closure of certain healthcare facilities. The approval process related to state certificate of need laws may impact some of our tenants’ and operators’ abilities to expand or change their businesses.

Available Information

Our website address is www.docreit.com. We make available, free of charge through the Investor Relations portion of the website, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the “SEC” or the “Commission”). Reports of beneficial ownership filed pursuant to Section 16(a) of the Exchange Act are also available on our website. These reports and other information are also available, free of charge, at www.sec.gov. Alternatively, the public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.

In addition, our board of trustees has established a Code of Business Conduct and Ethics that applies to our officers, including our Chief Executive Officer and President and Chief Financial Officer, trustees and employees. The Code of Business Conduct and Ethics provides a statement of the Company’s policies and procedures for conducting business legally and

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ethically. A copy of the Code of Business Conduct and Ethics is available in the Investor Relations section of our website (www.docreit.com) under the tab “Governance Documents.” Any amendments to or waivers from the Code of Business Conduct and Ethics will be disclosed on our website. Information contained on our website is not part of this report.

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ITEM 1A. RISK FACTORS

The following summarizes the material risks of purchasing or owning our securities. Additional unknown risks may also impair our financial performance and business operations. Our business, financial condition and/or results of operation may be materially adversely affected by the nature and impact of these risks. 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. You should carefully consider the risks and uncertainties described below.

We have grouped these risk factors into the following general categories:

• Risks related to our business;

• Risks related to the healthcare industry; 

• Risks related to the real estate industry; 

• Risks related to financings;

• Risks related to our portfolio and structure; and 

• Risks related to our qualification and operation as a REIT.

Risks Related To Our Business

There is no assurance that we will be able to achieve our investment objectives.

We may not be able to achieve our investment objectives as described in this report and that the value of your investment could decline substantially. Our financial condition and results of operations depend on many factors, including the availability of investment opportunities, readily accessible short and long-term financing, conditions in the financial markets and economic conditions generally. There can be no assurance that we will be able to generate sufficient cash flow over time to pay our operating expenses and make distributions to shareholders.

Our real estate investments are concentrated in healthcare properties, making us more vulnerable economically than if our investments were diversified in other segments of the economy.

We acquire, own, manage, operate and selectively develop properties for lease primarily to physicians, hospitals and healthcare delivery systems. We are subject to risks inherent in concentrating investments in real estate, and the risks resulting from a lack of diversification become even greater as a result of our business strategy to concentrate our investments in the healthcare sector. Any adverse effects that result from these risks could be more pronounced than if we diversified our investments outside of healthcare properties. Given our concentration in this sector, our tenant base is especially concentrated and dependent upon the healthcare industry generally, and any industry downturn could adversely affect the ability of our tenants to make lease payments and our ability to maintain current rental and occupancy rates. Our tenant mix could become even more concentrated if a significant portion of our tenants practice in a particular medical field or are reliant upon a particular healthcare delivery system. Accordingly, a downturn in the healthcare industry generally, or in the healthcare related facility specifically, could adversely affect our business, financial condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common shares.

Economic and other conditions that negatively affect geographic areas in which we conduct business, and in particular areas to which a greater percentage of our revenue is attributed could materially adversely affect our business, results of operations and financial condition.

Our operating results depend upon our ability to maintain and increase occupancy levels and rental rates at our properties. Adverse economic or other conditions in the geographic markets in which we operate, including periods of economic slowdown or recession, industry slowdowns, periods of deflation, relocation of businesses, changing demographics, earthquakes and other natural disasters, fires, terrorist acts, civil disturbances or acts of war and other man-made disasters which may result in uninsured or underinsured losses, and changes in tax, real estate, zoning and other laws and regulations, may lower our occupancy levels and limit our ability to increase rents or require us to offer rental concessions.

Additionally, for the year ended December 31, 2015, approximately 34.8% of our total annualized base rent was derived from properties located in Texas (15.7%), Georgia (9.8%), and Arizona (9.3%). The Texas properties are concentrated in El Paso and Dallas, the Georgia properties are concentrated in the metro Atlanta area, and the Arizona properties are

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concentrated in Phoenix and Scottsdale. As a result of this geographic concentration, we are particularly exposed to downturns in these local economies or other changes in local real estate market conditions. Any material change in the current payment programs or regulatory, economic, environmental or competitive conditions in either of these areas could have a disproportionate effect on our overall business results. In the event of negative economic or other changes in any of the markets in which we conduct business, our business, financial condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common shares may be adversely affected.

Our healthcare properties and tenants face competition from nearby hospitals and other healthcare properties, and we may not realize the benefits that we anticipate from focusing on healthcare properties that are strategically aligned with a healthcare delivery system and from the relationships established through such strategic alignments.

As part of our business strategy, we focus on healthcare properties that are strategically aligned with a healthcare delivery system by (i) seeking to acquire, own, manage, and develop healthcare properties that are located on medical campuses where the underlying land is owned by a healthcare delivery system or by us, or (ii) seeking to acquire, own, manage, and develop healthcare properties located in close proximity to a healthcare delivery system or strategically aligned with a healthcare delivery system through leasing or other arrangements. We may not realize the benefits that we anticipate as a result of these strategic relationships. In particular, we may not obtain or realize increased rents, or reduced tenant turnover rates as compared to healthcare properties that are not strategically aligned. Moreover, building a portfolio of healthcare properties that are strategically aligned does not assure the success of any given property. The associated healthcare delivery system may not be successful and the strategic alignment that we seek for our healthcare properties could dissolve, and we may not succeed in replacing them. In addition, our healthcare properties, the associated healthcare delivery systems with which our healthcare properties are strategically aligned and our tenants may be unable to compete successfully with nearby hospitals, medical practices, other healthcare properties that provide comparable services, pharmacies and other retailers that may initiate or expand healthcare clinic operations and services to compete with our tenants. Any of our properties may be materially and adversely affected if the healthcare delivery system with which it is strategically aligned is unable to compete successfully. If we do not realize the benefits that we anticipate from our business strategy and our strategic alignments dissolve and we are not successful in replacing them, our reputation, business, financial results and prospects may be adversely affected.

We may have difficulty finding suitable replacement tenants in the event of a tenant default or non-renewal of our leases, especially for our properties located in smaller markets.

We cannot predict whether our tenants will renew or extend existing leases beyond their current terms. Nearly all of our properties are subject to leases which have multi-year terms. As of December 31, 2015, leases representing 3.2%, 5.4% and 6.0% of leasable square feet at our properties will expire in 2016, 2017 and 2018, respectively. If any of our leases are not renewed or extended, or if a tenant defaults under the terms of its lease or becomes insolvent, we would attempt to relet those spaces or properties to other tenants or new tenants. In case of non-renewal, we generally have advance notice before expiration of the lease term to arrange for reletting or repositioning of the spaces or the properties and our tenants are required to continue to perform all of their obligations (including the payment of all rental amounts) under the non-renewed leases until such expiration. However, following expiration of a lease term or if we exercise our right to replace a tenant in default, rental payments on the related properties could decline or cease altogether while we relet or reposition the spaces or the properties with suitable replacement tenants. We also might not be successful in identifying suitable replacement tenants or entering into leases with new tenants on a timely basis or on terms as favorable to us as our current leases, or at all, and we may be required to fund certain expenses and obligations (e.g., real estate taxes, debt costs and maintenance expenses) to preserve the value of, and avoid the imposition of liens on, our properties while they are being relet or repositioned. Our ability to relet or reposition our properties, or spaces within our properties, with suitable tenants could be significantly delayed or limited by state licensing, receivership, certificate of need or other laws, as well as by the Medicare and Medicaid change-of-ownership rules. We could also incur substantial additional expenses in connection with any licensing, receivership or change-of-ownership proceedings. In addition, our ability to locate suitable replacement tenants could be impaired by the specialized healthcare uses or contractual restrictions on use of the properties, and we may be required to spend substantial amounts to adapt the properties to other uses. Any such delays, limitations and expenses could adversely impact our ability to collect rent, obtain possession of leased properties or otherwise exercise remedies for tenant default and could have a material adverse effect on us or cause us to take an impairment charge on a property.

All of these risks may be greater in smaller markets, where there may be fewer potential replacement tenants, making it more difficult to replace tenants, especially for specialized spaces, like hospital or outpatient treatment facilities located in our properties, and could have a material adverse effect on us.

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We may fail to close any pending acquisitions, which could have a material adverse impact on our results of operations, earnings and cash flow.

From time to time, we enter into definitive agreements to acquire healthcare properties that are structured as bifurcated transactions (i.e., the closing of the transaction does not occur at the time of the signing of the definitive agreement). The acquisition of any such properties are subject to customary closing conditions, and there can be no assurance that those conditions will be satisfied or that the acquisitions will close on the terms that may be described or at all. Pending acquisitions, whether or not they close, require substantial time and attention from management. Furthermore, any such pending acquisitions require significant expense, including expenses for due diligence, legal and accounting fees and other costs. In the event we do not close any pending acquisitions, these expenses will not be offset by revenues from the investments and we may have issued a significant number of additional common shares without realizing a corresponding increase in earnings and cash flow from the investments. As a result, our failure to close pending acquisitions could have a material adverse impact on our financial condition, results of operations and the market price of our common shares.

We may be unable to successfully acquire or develop properties and expand our operations into new or existing markets.

We intend to explore acquisitions or developments of properties in new and existing geographic markets. These acquisitions and developments could divert management’s attention from our existing properties, and we may be unable to retain key employees or attract highly qualified new employees. In addition, we may not possess familiarity with the dynamics and prevailing conditions of any new geographic markets which could adversely affect our ability to successfully expand into or operate within those markets. For example, new markets may have different insurance practices, reimbursement rates and local real estate, zoning and development regulations than those with which we are familiar. We may find ourselves more dependent on third parties in new markets because our distance could hinder our ability to directly and efficiently manage and otherwise monitor new properties in new markets. Our expansion into new markets could result in unexpected costs or delays as well as lower occupancy rates and other adverse consequences. We may not be successful in identifying suitable properties or other assets which meet our acquisition or development criteria or in consummating acquisitions or developments on satisfactory terms or at all for a number of reasons, including, among other things, unsatisfactory results of our due diligence investigations, failure to obtain financing for the acquisition or development on favorable terms or at all, and our misjudgment of the value of the opportunities. We may also be unable to successfully integrate the operations of acquired properties, maintain consistent standards, controls, policies and procedures, or realize the anticipated benefits of the acquisitions within the anticipated timeframe or at all. If we are unsuccessful in expanding into new or our existing markets, it could adversely affect our business, financial condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common shares.

We may not be successful in identifying and completing off-market acquisitions and other suitable acquisitions or investment opportunities, which may impede our growth and adversely affect our business, financial condition and results of operations and our ability to make distributions to our shareholders.

An important component of our growth strategy is to acquire “off-market” properties before they are widely marketed by the owners. Facilities that are acquired off-market are typically more attractive to us as a purchaser because of the absence of a formal marketing process, which could lead to higher prices or other unattractive terms. If we cannot obtain off-market deal flow in the future, our ability to locate and acquire facilities at attractive prices could be adversely affected. We expect to compete with many other entities engaged in real estate investment activities for acquisitions of healthcare properties, including national, regional and local operators, acquirers and developers of healthcare-related real estate properties and other investors such as private equity firms, some of whom may have greater financial resources and lower costs of capital than we do. The competition for healthcare-related real estate properties may significantly increase the price that we must pay for healthcare properties or other assets that we seek to acquire, and our competitors may succeed in acquiring those properties or assets themselves. In addition, our potential acquisition targets may find our competitors to be more attractive because they may have greater resources, may be willing to pay more for the properties or may have a more compatible operating philosophy. In particular, larger REITs that target healthcare properties may enjoy significant competitive advantages that result from, among other things, a lower cost of capital, enhanced operating efficiencies, more personnel and market penetration and familiarity with markets. In addition, the number of entities and the amount of funds competing for suitable investment properties may increase. Increased competition would result in increased demand for these assets and therefore likely would increase prices paid for them. Those higher prices for healthcare properties or other assets may adversely affect our returns from our investments.

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Some of our existing properties and properties we acquire in the future are and may be subject to ground lease or other restrictions on the use of the space. If we are required to undertake significant capital expenditures to procure new tenants, then our business and results of operations may suffer.

Fourteen of our properties (Mid Coast Hospital MOB, Valley West Hospital MOB, Crescent City Surgical Centre, Orthopedic One - Columbus, Carmel Medical Pavilion, Berger Medical Center, Edina MOB, Healthpark Medical Center, Brookstone Physician Center MOB, Medical Specialists of Palm Beach MOB, Trios Health MOB, IMS - Paradise Valley MOB, IMS - North Mountain MOB, Great Falls Clinic MOB), representing approximately 16.8% of our total leasable square feet and 18.7% of our annualized revenue based on rental payments for the month ended December 31, 2015, are subject to ground leases that contain certain restrictions. These restrictions include limits on our ability to re-let our initial properties to tenants not affiliated with the healthcare delivery system that owns the underlying property, rights of purchase and rights of first offer and refusal with respect to sales of the property and limits on the types of medical procedures that may be performed. In addition, lower than expected rental rates upon re-letting could impede our growth. We may not be able to re-let space on terms that are favorable to us or at all. Further, we may be required to undertake significant capital expenditures to renovate or reconfigure space to attract new tenants. If we are unable to promptly re-let our initial properties, if the rates upon such re-letting are significantly lower than expected or if we are required to undertake significant capital expenditures in connection with re-letting, our business, financial condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common shares may be adversely affected.

We may invest in senior housing facilities that are subject to RIDEA, which may subject us to operational risks and increased costs.

We may invest in senior housing facilities or other properties, structured, where applicable, in compliance with RIDEA or other applicable REIT laws or regulations. If so, we will be exposed to various operational risks with respect to those operating properties that may increase our costs or adversely affect our ability to generate revenues. These risks include fluctuations in patient volume and occupancy, Medicare and Medicaid reimbursement, if applicable, and private pay rates, economic conditions, competition, federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards, the availability and increases in cost of general and professional liability insurance coverage, state regulation, the availability and increases in cost of labor (as a result of unionization or otherwise) and other risks applicable to operating businesses. Any one or a combination of these factors may adversely affect our revenue and operations.

We may not be able to control our operating costs or our expenses may remain constant or increase, even if our revenue does not increase, which could cause our results of operations to be adversely affected.

Factors that may adversely affect our ability to control operating costs include the need to pay for insurance and other operating costs, including real estate taxes, which could increase over time, the need periodically to repair, renovate and re-let space, the cost of compliance with governmental regulation, including zoning and tax laws, the potential for liability under applicable laws, interest rate levels and the availability of financing. Certain costs associated with real estate investments may not be reduced even if a healthcare related facility is not fully occupied or other circumstances cause our revenues to decrease. If our operating costs increase as a result of any of the foregoing factors, our results of operations may be adversely affected.

Uninsured losses or losses in excess of our insurance coverage could adversely affect our financial condition and our cash flows.

We maintain comprehensive liability, fire, flood, earthquake, wind (as deemed necessary or as required by our lenders), extended coverage and rental loss insurance with respect to our initial properties. Certain types of losses, however, may be either uninsurable or not economically insurable, such as losses due to earthquakes, riots, acts of war or terrorism. Should an uninsured loss occur, we could lose both our investment in and anticipated profits and cash flows from a healthcare related facility. If any such loss is insured, we may be required to pay a significant deductible on any claim for recovery of such a loss prior to our insurer being obligated to reimburse us for the loss, or the amount of the loss may exceed our coverage for the loss. In addition, future lenders may require such insurance, and our failure to obtain such insurance could constitute a default under loan agreements. We may determine not to insure some or all of our properties at levels considered customary in our industry and which would expose us to an increased risk of loss. As a result, our business, financial condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common shares may be adversely affected.

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Environmental compliance costs and liabilities associated with owning, leasing, developing and operating our properties may affect our results of operations.

Under various U.S. federal, state and local laws, ordinances and regulations, current and prior owners and tenants of real estate may be jointly and severally liable for the costs of investigating, remediating and monitoring certain hazardous substances or other regulated materials on or in such property. In addition to these costs, the past or present owner or tenant of a property from which a release emanates could be liable for any personal injury or property damage that results from such releases, including for the unauthorized release of asbestos-containing materials and other hazardous substances into the air, as well as any damages to natural resources or the environment that arise from such releases. These environmental laws often impose such liability without regard to whether the current or prior owner or tenant knew of, or was responsible for, the presence or release of such substances or materials. Moreover, the release of hazardous substances or materials, or the failure to properly remediate such substances or materials, may adversely affect the owner’s or tenant’s ability to lease, sell, develop or rent such property or to borrow by using such property as collateral. Persons who transport or arrange for the disposal or treatment of hazardous substances or other regulated materials may be liable for the costs of removal or remediation of such substances at a disposal or treatment facility, regardless of whether or not such facility is owned or operated by such person.

Certain environmental laws impose compliance obligations on owners and tenants of real property with respect to the management of hazardous substances and other regulated materials. For example, environmental laws govern the management and removal of asbestos-containing materials and lead-based paint. Failure to comply with these laws can result in penalties or other sanctions. If we incur substantial costs to comply with these environmental laws or we are held liable under these laws, our business, financial condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common shares may be adversely affected.

Acquiring outstanding mortgages or other debt secured by a healthcare related facility or land suitable for development as a healthcare related facility may expose us to risks of costs and delays in acquiring the underlying property.

We may decide to acquire outstanding mortgages or other debt secured by a healthcare related facility or land suitable for development as a healthcare related facility from lenders and investors if we believe we can ultimately foreclose or otherwise acquire ownership of the underlying property in the near-term through foreclosure, deed-in-lieu of foreclosure or other means. However, if we do acquire such debt, borrowers may seek to assert various defenses to our foreclosure or other actions and we may not be successful in acquiring the underlying property on a timely basis, or at all, in which event we could incur significant costs and experience significant delays in acquiring such properties, all of which could adversely affect our financial performance and reduce our expected returns from such investments. In addition, we may not earn a current return on such investments particularly if the mortgage or other debt that we acquire is in default.

We have now, and may have in the future, exposure to contingent rent escalators, which can hinder our growth and profitability.

We receive a significant portion of our revenues by leasing our assets under long-term triple-net leases in which the rental rate is generally fixed with annual escalations. Leases in the future may contain escalators contingent upon the achievement of specified revenue parameters or based on changes in the Consumer Price Index. If, as a result of weak economic conditions or other factors, the revenues generated by our properties do not meet the specified parameters or the Consumer Price Index does not increase, our growth and profitability will be hindered by these leases.

We may not be able to maintain or expand our relationships with our existing and future hospital and healthcare delivery system clients.

The success of our business depends, to a large extent, on our current and future relationships with hospital and healthcare delivery system clients. We invest a significant amount of time to develop, maintain and be responsive to these relationships, and our relationships have helped us to secure acquisition and development opportunities, as well as other advisory, property management and projects, with both new and existing clients. If our relationships with hospital or health system clients deteriorate, if a conflict of interest or non-compete arrangement prevents us from expanding these relationships, or if a hospital on or near whose campus one of our properties is located fails or becomes unable to meet its financial obligations, the business of our tenants could be adversely affected or our ability to secure new acquisition and development opportunities or other advisory, property management and hospital project management projects could be adversely impacted and our professional reputation within the industry could be damaged.

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We may be unable to make distributions which could result in a decrease in the market price of our common shares.

While we expect to make regular quarterly distributions to the holders of our common shares, if sufficient cash is not available for distribution from our operations, we may have to fund distributions from working capital, borrow to provide funds for such distributions, or reduce the amount of such distributions. To the extent we borrow to fund distributions, our future interest costs would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been. If cash available for distribution generated by our assets is less than expected, or if such cash available for distribution decreases in future periods from expected levels, our inability to make distributions could result in a decrease in the market price of our common shares.

All distributions will be made at the discretion of our board of trustees and will be based upon, among other factors, our historical and projected results of operations, financial condition, cash flows and liquidity, maintenance of our REIT qualification and other tax considerations, capital expenditure and other expense obligations, debt covenants, contractual prohibitions or other limitations and applicable law and such other matters as our board of trustees may deem relevant from time to time. We may not be able to make distributions in the future, and our inability to make distributions, or to make distributions at expected levels, could result in a decrease in the market price of our common shares.

Cybersecurity incidents could disrupt our business and result in the compromise of confidential information

Our business is at risk from and may be impacted by cybersecurity attacks, including attempts to gain unauthorized access to our confidential data, and other electronic security breaches. Such cyber attacks can range from individual attempts to gain unauthorized access to our information technology systems to more sophisticated security threats. While we employ a number of measures to prevent, detect and mitigate these threats, there is no guarantee such efforts will be successful in preventing a cyber attack. Cybersecurity incidents could disrupt our business and compromise confidential information of ours and third parties, including our tenants.

We may not be able to sustain our growth rate level.

Since our inception, we have achieved significant growth in our healthcare properties portfolio. This growth rate has contributed significantly to our growth in revenue. We may not be able to sustain this level of growth and over time we may experience a decline in our growth rate as a result of various factors, including changes in the economic and other conditions in geographic markets in which we conduct business, changes in the real estate market, changes in healthcare regulations, and the competitiveness of the real estate market. Additionally, our significant growth has resulted in increased levels of responsibility for our management, who may experience additional demands related to managing our current properties portfolio.

We have incurred operating losses in the past and we may not be able to maintain profitability.

Since our inception we have incurred operating losses and, as of December 31, 2015, we have an accumulated deficit of $109.0 million. Although our revenue has grown substantially and we achieved net profit in fiscal year 2015, our revenue growth rate may slow in the future and we cannot provide assurances that we will remain profitable in any quarterly or annual period in the future. Accordingly, you should not rely on the revenue growth or profitability of any prior quarterly or annual period as an indication of our future performance.

Our ability to issue equity to expand our business will depend, in part, upon the market price of our common shares, and our failure to meet market expectations with respect to our business could negatively affect the market price of our common shares and thereby limit our ability to raise capital.

The availability of equity capital to us will depend, in part, upon the market price of our common shares which, in turn, will depend upon various market conditions and other factors that may change from time to time. Our failure to meet the market’s expectation with regard to future earnings and cash distributions would likely adversely affect the market price of our common shares and, as a result, the cost and availability of equity capital to us.

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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 may cause dilution to our shareholders and could have an adverse effect on the per share trading price of our common shares and 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.

On August 4, 2014, we filed a shelf registration statement on Form S-3, 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 “Shelf Registration Statement”). The Commission declared the Shelf Registration Statement effective on August 19, 2014.

In addition, on June 17, 2015, we filed an automatic shelf registration statement on Form S-3 with the Commission covering an indeterminate amount of common shares, preferred shares, convertible shares, debt securities, convertible debt securities or other types of securities from time to time (the “Automatic Shelf Registration Statement”).

Any offering pursuant to the Shelf Registration Statement or the Automatic Shelf Registration Statement, whether a follow-on public offering, 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.

Risks Related to the Healthcare Industry

The healthcare industry is heavily regulated, and new laws or regulations, changes to existing laws or regulations, loss of licensure or failure to obtain licensure could adversely impact our company and result in the inability of our tenants to make rent payments to us.

The healthcare industry is heavily regulated by U.S. federal, state and local governmental authorities. Our tenants generally are subject to laws and regulations covering, among other things, licensure, certification for participation in government programs, billing for services, privacy and security of health information and relationships with physicians and other referral sources. In addition, new laws and regulations, changes in existing laws and regulations or changes in the interpretation of such laws or regulations could negatively affect our financial condition and the financial condition of our tenants. These changes, in some cases, could apply retroactively. The enactment, timing or effect of legislative or regulatory changes cannot be predicted.

The Affordable Care Act is changing how healthcare services are covered, delivered and reimbursed through expanded coverage of uninsured individuals and reduced Medicare program spending. In addition, the new law reforms certain aspects of health insurance, expands existing efforts to tie Medicare and Medicaid payments to performance and quality and contains provisions intended to strengthen fraud and abuse enforcement. The complexities and ramifications of the Affordable Care Act are significant and are being implemented in a phased approach which began in 2010. At this time, it is difficult to predict the full effects of the Affordable Care Act and its impact on our business, our revenues and financial condition and those of our tenants due to the law’s complexity, lack of implementing regulations or interpretive guidance, gradual implementation and possible amendment. Further, we are unable to foresee how individuals and businesses will respond to the choices afforded them by the Affordable Care Act. The Affordable Care Act could adversely affect the reimbursement rates received by our tenants, the financial success of our tenants and strategic partners and consequently us.

On June 28, 2012, the United States Supreme Court upheld the individual mandate of the Affordable Care Act but partially invalidated the expansion of Medicaid. The ruling on Medicaid expansion allow states not to participate in the expansion (and to forego funding for the Medicaid expansion) without losing their existing Medicaid funding. While the U.S. federal government will pay for approximately 100% of those additional costs from 2014 to 2016, states will be expected to pay a small percentage of those additional costs beginning in 2017. Because the U.S. federal government substantially funds the Medicaid expansion, it is unclear how many states ultimately will elect this option. The participation by states in the Medicaid expansion could have the effect of increasing some of our tenants’ revenues but also could be a strain on U.S. federal government and state budgets.

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Recent changes to healthcare laws and regulations, including to government reimbursement programs such as Medicare and reimbursement rates applicable to our current and future tenants, could have a material adverse effect on the financial condition of our tenants and, consequently, their ability to meet obligations to us.

Statutory and regulatory policy changes and decisions may impact one or more specific unique providers that lease space in any of our facilities. In particular, the following recent changes to healthcare laws and regulations may apply to our tenants:

• Recent amendments to an existing statutory moratorium on the establishment of new long-term care hospitals (“LTCH”), the establishment of new LTCH satellite facilities, and bed increases within such existing facilities, which is in effect through September 30, 2017, could impact the Medicare participation of facilities that are not already participating in the Medicare program as LTCHs, including at least one of our existing tenants. The Centers for Medicare and Medicaid Services (“CMS”) has issued a proposed rule addressing the moratorium and exceptions thereto but to date no final rule has been implemented.

• The Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”) reforms Medicare payment policy for services paid under the Medicare physician fee schedule and adopts a series of policy changes affecting a wide range of providers and suppliers. MACRA repeals the sustainable growth rate (the “SGR”) formula effective January 1, 2015, and establishes a new payment framework which may impact payment rates for our tenants, including LTCHs.

• The Bipartisan Budget Act of 2013 (the “BBA”) establishes new payment limits for Medicare patients discharged from a LTCH who do not meet specified criteria. For any Medicare patient who does not meet the new criteria, the LTCH will be paid a lower “site-neutral” payment rate (subject to a transition period through September 30, 2017), which may impact the financial condition of tenants affected by the lower payment rate. Additionally, new rules may cause all discharges from LTCHs to be paid at the site-neutral rate if the number of discharges for which payment is made under the site-neutral payment rate is greater than 50% of the total number of discharges from the LTCH.

• The Affordable Care Act instituted a market basket payment adjustment to LTCHs. In fiscal years 2017 through 2019, the market basket update will be reduced by 0.75%. The Affordable Care Act specifically allows these market basket reductions to result in a less than 0% payment update and payment rates that are less than the prior year. MACRA sets the annual update for fiscal year 2018 at 1% after taking into account the market basket payment reduction of 0.75% mandated by the Affordable Care Act.

These regulatory changes may have an adverse financial impact on the net operating revenues and profitability of many LTCHs for cost reporting periods beginning on or after July 1, 2016, which could have an impact on their ability to pay rent due to us.

Many states also regulate the establishment and construction of healthcare facilities and services, and the expansion of existing healthcare facilities and services through certificate of need, or CON, laws, which may include regulation of certain types of beds, medical equipment and capital expenditures. Under such laws, the applicable state regulatory body must determine a need exists for a project before the project can be undertaken. If any of our tenants seeks to undertake a CON-regulated project, but are not authorized by the applicable regulatory body to proceed with the project, these tenants could be prevented from operating in their intended manner and could be materially adversely affected.

The application of lower reimbursement rates to our tenants or failure to qualify for existing rates under certain exceptions, the failure to comply with these laws and regulations, or the failure to secure CON approval to undertake a desired project could adversely affect our tenants’ ability to make rent payments to us which may have an adverse effect on our business, financial condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common shares.

Adverse trends in healthcare provider operations may negatively affect our lease revenues and our ability to make distributions to our shareholders.

The healthcare industry is currently experiencing, among other things:

• changes in the demand for and methods of delivering healthcare services; 

• changes in third party reimbursement methods and policies;

• consolidation and pressure to integrate within the healthcare industry through acquisitions and joint ventures; and

• increased scrutiny of billing, referral and other practices by U.S. federal and state authorities.

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These factors may adversely affect the economic performance of some or all of our tenants and, in turn, our lease revenues, which may have a material adverse effect on our business, financial condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common shares.

Reductions in reimbursement from third party payors, including Medicare and Medicaid, could adversely affect the profitability of our tenants and hinder their ability to make rent payments to us or renew their lease.

Sources of revenue for our tenants typically include the U.S. federal Medicare program, state Medicaid programs, private insurance payors and health maintenance organizations. Healthcare providers continue to face increased government and private payor pressure to control or reduce healthcare costs and significant reductions in healthcare reimbursement, including reduced reimbursements and changes to payment methodologies under the Affordable Care Act. In some cases, private insurers rely upon all or portions of the Medicare payment systems to determine payment rates which may result in decreased reimbursement from private insurers.

The slowdown in the United States economy has negatively affected state budgets, thereby putting pressure on states to decrease spending on state programs including Medicaid. The need to control Medicaid expenditures may be exacerbated by the potential for increased enrollment in state Medicaid programs due to unemployment and declines in family incomes. Historically, states have often attempted to reduce Medicaid spending by limiting benefits and tightening Medicaid eligibility requirements. Many states have adopted, or are considering the adoption of, legislation designed to enroll Medicaid recipients in managed care programs and/or impose additional taxes on hospitals to help finance or expand the states’ Medicaid systems. Potential reductions to Medicaid program spending in response to state budgetary pressures could negatively impact the ability of our tenants to successfully operate their businesses.

Efforts by payors to reduce healthcare costs will likely continue which may result in reductions or slower growth in reimbursement for certain services provided by some of our tenants. A reduction in reimbursements to our tenants from third party payors for any reason could adversely affect our tenants’ ability to make rent payments to us which may have a material adverse effect on our businesses, financial condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common shares.

The Bipartisan Budget Act of 2015 (H.R. 1314) (the “2015 Budget Act”) provides changes to the requirements for providers who seek “hospital outpatient department” (“HOPD”) reimbursement under Medicare.

Section 603 of the 2015 Budget Act generally requires providers who seek to qualify for HOPD to be located on the campus of the hospital that seeks such HOPD, which generally is higher than reimbursement for providers that do not qualify as HOPD providers. The 2015 Budget Act specifically grandfathers HOPD providers in existence as of November 2, 2015 and does not change such HOPD providers' eligibility for HOPD reimbursement.

We have a number of existing tenants that may be reimbursed as HOPD providers and but for the grandfathering protection of the 2015 Budget Act, may not be eligible for HOPD reimbursement in the future. Any provider who establishes a new HOPD location after November 2, 2015 will be subject to the 2015 Budget Act requirements and if any such provider does not satisfy the new requirements, then such provider will be reimbursed for claims billed on or after January 1, 2017 at generally lower reimbursement levels.

Failure to comply with the 2015 Budget Act requirements could adversely affect the ability of certain of our tenants to make rent payments to us, which may have an adverse effect on our business, financial condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common shares.

Our tenants and our company are subject to fraud and abuse laws, the violation of which by a tenant may jeopardize the tenant’s ability to make rent payments to us.

There are various federal and state laws prohibiting fraudulent and abusive business practices by healthcare providers who participate in, receive payments from or are in a position to make referrals in connection with government-sponsored healthcare programs, including the Medicare and Medicaid programs. Our lease arrangements with certain tenants may also be subject to these fraud and abuse laws.

Violations of these laws may result in criminal and/or civil penalties that range from punitive sanctions, damage assessments, penalties, imprisonment, denial of Medicare and Medicaid payments and/or exclusion from the Medicare and Medicaid programs. In addition, the Affordable Care Act clarifies that the submission of claims for items or services generated in violation of the Anti-Kickback Statute constitutes a false or fraudulent claim under the False Claims Act. The federal

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government has taken the position, and some courts have held, that violations of other laws, such as the Stark Law, can also be a violation of the False Claims Act. Additionally, certain laws, such as the False Claims Act, allow for individuals to bring whistleblower actions on behalf of the government for violations thereof. Imposition of any of these penalties upon one of our tenants or strategic partners could jeopardize that tenant’s ability to operate or to make rent payments or affect the level of occupancy in our healthcare properties, which may have a material adverse effect on our business, financial condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common shares. Further, we enter into leases and other financial relationships with healthcare delivery systems that are subject to or impacted by these laws. We also have other investors who are healthcare providers in certain of our subsidiaries that own our healthcare properties. If any of our relationships, including those related to the other investors in our subsidiaries, are found not to comply with these laws, we and our physician investors may be subject to civil and/or criminal penalties.

Our healthcare-related tenants may be subject to significant legal actions that could subject them to increased operating costs and substantial uninsured liabilities, which may affect their ability to pay their rent payments to us, and we could be subject to healthcare industry violations.

As is typical in the healthcare industry, our tenants may often become subject to claims that their services have resulted in patient injury or other adverse effects. Many of these tenants may have experienced an increasing trend in the frequency and severity of professional liability and general liability insurance claims and litigation asserted against them. The insurance coverage maintained by these tenants may not cover all claims made against them nor continue to be available at a reasonable cost, if at all. In some states, insurance coverage for the risk of punitive damages arising from professional liability and general liability claims and/or litigation may not, in certain cases, be available to these tenants due to state law prohibitions or limitations of availability. As a result, these types of tenants of our healthcare properties and healthcare-related facilities operating in these states may be liable for punitive damage awards that are either not covered or are in excess of their insurance policy limits.

We also believe that there has been, and will continue to be, an increase in governmental investigations of certain healthcare providers, particularly in the area of Medicare/Medicaid false claims, as well as an increase in enforcement actions resulting from these investigations. Insurance is not available to cover such losses. Any adverse determination in a legal proceeding or governmental investigation, any settlements of such proceedings or investigations in excess of insurance coverage, whether currently asserted or arising in the future, could have a material adverse effect on a tenant’s financial condition. If a tenant is unable to obtain or maintain insurance coverage, if judgments are obtained or settlements reached in excess of the insurance coverage, if a tenant is required to pay uninsured punitive damages, or if a tenant is subject to an uninsurable government enforcement action or investigation, the tenant could be exposed to substantial additional liabilities, which may affect the tenant’s ability to pay rent, which in turn could have a material adverse effect on our business, financial condition and results of operations, our ability to pay distributions to our shareholders and the trading price of our common shares. We could also be subject to costly government investigations or other enforcement actions which could have a material adverse effect on our business, financial condition and results of operations, our ability to pay distributions to our shareholders and the trading price of our common shares.

Risks Related to the Real Estate Industry

Our operating performance is subject to risks associated with the real estate industry.

Real estate investments are subject to various risks and fluctuations and cycles in value and demand, many of which are beyond our control. Certain events may decrease cash available for distributions as well as the value of our initial properties. These events include, but are not limited to:

• vacancies or our inability to rent space on favorable terms, including possible market pressures to offer tenants rent abatements, tenant improvements, early termination rights or tenant-favorable renewal options;

• inability to collect rent from tenants;

• competition from other real estate investors with significant capital, including other real estate operating companies, REITs and institutional private equity or other investment funds;

• reductions in the level of demand for healthcare properties and changes in the demand for certain healthcare-related properties;

• increases in the supply of medical office space;

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• increases in expenses associated with our real estate operations, including, but not limited to, insurance costs, third party management fees, energy prices, real estate assessments and other taxes and costs of compliance with laws, regulations and governmental policies, and restrictions on our ability to pass such expenses on to our tenants; and

• changes in, and changes in enforcement of, laws, regulations and governmental policies associated with real estate, including, without limitation, health, safety, environmental, zoning and tax laws, governmental fiscal policies and the ADA. 

In addition, periods of economic slowdown or recession, such as the recent U.S. economic downturn, rising interest rates or declining demand for real estate, or the public perception that any of these events may occur, could result in a general decline in rents or an increased incidence of defaults under existing leases. If we cannot operate our properties to meet our financial expectations, our business, financial condition, results of operations, cash flow, per share trading price of our common shares and ability to satisfy our debt service obligations and to make distributions to our shareholders could be adversely affected.

Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of any of our properties.

Because real estate investments are relatively illiquid, our ability to promptly sell one or more of our properties in response to changing economic, financial and investment conditions is limited. The real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand, that are beyond our control. We cannot predict whether we will be able to sell any of our properties for the price or on the terms set by us or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of any of our properties. We may be required to expend funds to correct defects or to make improvements before a property can be sold. We cannot assure you that we will have funds available to correct those defects or to make those improvements.

In acquiring a property, we may agree to transfer restrictions that materially restrict us from selling that property for a period of time or impose other restrictions, such as a limitation on the amount of debt that can be placed on that property. These transfer restrictions would impede our ability to sell a property even if we deem it necessary or appropriate. These facts and any others that would impede our ability to respond to adverse changes in the performance of our properties may have an adverse effect on our business, financial condition, results of operations, or ability to make distributions to our shareholders and the trading price of our common shares.

Uncertain market conditions could cause us to sell our healthcare properties at a loss in the future.

We intend to hold our various real estate investments until such time as we determine that a sale or other disposition appears to be advantageous to achieve our investment objectives. Our senior management team and our board of trustees may exercise their discretion as to whether and when to sell a healthcare related facility, and we will have no obligation to sell our buildings at any particular time. We generally intend to hold our healthcare properties for an extended period of time, and we cannot predict with any certainty the various market conditions affecting real estate investments that will exist at any particular time in the future. Because of the uncertainty of market conditions that may affect the future disposition of our healthcare properties, we may not be able to sell our properties at a profit in the future or at all. In addition, if we are unable to access the capital markets for financing in the future, we may need to sell some of our properties to raise capital. We may incur prepayment penalties in the event that we sell a property subject to a mortgage earlier than we otherwise had planned. Additionally, we could be forced to sell healthcare properties at inopportune times which could result in us selling the affected property at a substantial loss. Accordingly, the extent to which you will receive cash distributions and realize potential appreciation on our real estate investments will, among other things, be dependent upon fluctuating market conditions. Any inability to sell a healthcare property could adversely impact our ability to make debt payments and distributions to our shareholders.

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Our assets may be subject to impairment charges.

We will periodically evaluate our real estate investments and other assets for impairment indicators. The judgment regarding the existence of impairment indicators is based upon factors such as market conditions, tenant performance and legal structure. For example, the termination of a lease by a major tenant may lead to an impairment charge. If we determine that an impairment has occurred, we would be required to make an adjustment to the net carrying value of the asset which could have an adverse effect on our results of operations in the period in which the impairment charge is recorded. In 2014, we recognized a $0.3 million impairment loss on a medical office building in Pickerington, Ohio, and a $1.5 million impairment loss on a medical office building in Lansing, Michigan. Both properties were vacant and were sold during 2015. For both properties, the impairment was assessed because the property’s carrying amount exceeded its estimated fair value. We have determined that none of our properties are impaired as of December 31, 2015.

Our investments in, or originations of, mezzanine loans will be subject to specific risks relating to the particular company, and our mezzanine loan assets will involve greater risks of loss than senior loans secured by income-producing properties.

We have originated seven mezzanine loans and in the future, we may originate further mezzanine loans. These investments involve special risks relating to the particular borrower, including its financial condition, liquidity, results of operations, business and prospects. We may also originate other real estate-related investments which take the form of subordinated loans secured by second mortgages on the underlying property or loans secured by a pledge of the ownership interests of either the entity owning the property or a pledge of the ownership interests of the entity that owns the interest in the entity owning the property or other properties. These types of assets involve a higher degree of risk than long-term senior mortgage lending secured by income producing real property, because the loan may become unsecured as a result of foreclosure by the senior lender and because it is in second position and there may not be adequate equity in the property. In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security, we may not have full recourse to the assets of such entity, or the assets of the entity may not be sufficient to satisfy such mezzanine loan. If a borrower defaults on a mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, such mezzanine loan will be satisfied only after the senior debt. We may be unable to enforce guaranties of payment and/or performance given as security for some mezzanine loans. As a result, we may not recover some or all of our initial expenditure. Mezzanine loans may partially finance the construction of real estate projects and so involve additional risks inherent in the construction process, such as adherence to budgets and construction schedules. In addition, mezzanine loans may have higher loan-to-value ratios than conventional mortgage loans, resulting in less equity in the property and increasing the risk of loss of principal. Significant losses related to our mezzanine loans would result in operating losses for us and may limit our ability to make distributions to our shareholders.

Risks Related to Financings

Required payments of principal and interest on borrowings may leave us with insufficient cash to operate our properties or to pay the distributions currently contemplated or necessary to qualify as a REIT and may expose us to the risk of default under our debt obligations.

We historically borrow on our unsecured revolving credit facility to acquire properties. Then, as market conditions dictate, we have issued equity or long-term fixed rate debt to repay borrowings under our unsecured revolving credit facility. We are subject to risks associated with debt financing, including the risk that existing indebtedness may not be refinanced or that the terms of refinancing may not be as favorable as the terms of current indebtedness. The majority of our borrowings were completed under indentures or contractual agreements that limit the amount of indebtedness we may incur. Accordingly, in the event that we are unable to raise additional equity or borrow money because of these limitations, our ability to acquire additional properties may be limited. 

As of December 31, 2015, we had approximately $95 million of mortgage debt on individual properties and approximately $395.0 million of borrowings outstanding under our unsecured revolving credit facility. In addition, in January 2016, we issued and sold $150 million aggregate principal amount of senior notes. We expect to incur additional debt in the future. We do not anticipate that our internally generated cash flow will be adequate to repay our existing indebtedness upon maturity, and, therefore, we expect to repay our indebtedness through refinancings and future offerings of equity and debt securities, either of which we may be unable to secure on favorable terms or at all. Our level of debt and the limitations imposed upon us by our debt agreements could have adverse consequences, including the following:

• our cash flow may be insufficient to meet our required principal and interest payments;

• we may be unable to borrow additional funds as needed or on favorable terms, including to make acquisitions;

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• we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness;

• because a portion of our debt bears, or is expected to bear, interest at variable rates, an increase in interest rates could materially increase our interest expense;

• we may fail to effectively hedge against interest rate volatility;

• we may be forced to dispose of one or more of our properties, possibly on disadvantageous terms if we are able to do so at all;

• after debt service, the amount available for distributions to our shareholders is reduced;

• our leverage could place us at a competitive disadvantage compared to our competitors who have less debt;

• we may experience increased vulnerability to economic and industry downturns, reducing our ability to respond to changing business and economic conditions;

• we may default on our obligations and the lenders or mortgagees may foreclose on our properties that secure their loans and receive an assignment of rents and leases;

• we may violate financial covenants contained in our various loan documents which would cause a default on our obligations, giving lenders various remedies, including increased interest rates, foreclosure and liability for additional expenses;

• we may inadvertently violate non-financial restrictive covenants in our loan documents, such as covenants that require us to maintain the existence of entities, maintain insurance policies and provide financial statements, which would entitle the lenders to accelerate our debt obligations; and

• our default under any of our mortgage loans with cross-default or cross-collateralization provisions could result in default on other indebtedness and result in the foreclosures of other properties.

The realization of any or all of these risks may have an adverse effect on our business, financial condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common shares.

As of December 31, 2015, we had approximately $395.0 million of borrowings outstanding under our unsecured revolving credit facility and in January 2016 we issued $150 million of debt, all of which is senior to our common shares upon liquidation, and we may in the future make offerings of debt or preferred equity securities which may be senior to our common shares for purposes of dividend distributions or upon liquidation, any of which may materially adversely affect the per share trading price of our common shares.

As of December 31, 2015, there were approximately $395.0 million of borrowings outstanding under our unsecured revolving credit facility, and on January 7, 2016 we issued and sold $150 million aggregate principal amount of senior notes. 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 would 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.

We 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.

In order to qualify as a REIT under the Code, we are required, among other things, to distribute each year to our shareholders at least 90% of our taxable income, without regard to the deduction for dividends paid and excluding net capital gain. Because of this distribution requirement, 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

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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. Our access to capital will depend upon a number of factors over which we have little or no control, including general stock and bond market conditions and investor interest, the market’s perception of our current and potential future earnings, analyst reports about us and the REIT industry, cash distributions and the market price of our common shares, and other factors such as governmental regulatory action and changes in REIT tax laws. We may not be in a position to take advantage of attractive investment opportunities for growth if we are unable to access the capital markets on a timely basis on favorable terms.

We could become highly leveraged in the future because our organizational documents contain no limitations on the amount of debt that we may incur.

As of December 31, 2015, our indebtedness represented approximately 29.8% of our total assets. However, our organizational documents contain no limitations on the amount of indebtedness that we or our Operating Partnership may incur. We could alter the balance between our total outstanding indebtedness and the value of our properties at any time. If we become more highly leveraged, the resulting increase in outstanding debt could adversely affect our ability to make debt service payments, to pay our anticipated distributions and to make the distributions required to qualify as a REIT. The occurrence of any of the foregoing risks could adversely affect our business, financial condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common shares.

We are subject to covenants in our debt agreements that may restrict or limit our operations and acquisitions and our failure to comply with the covenants in our debt agreements could have a material adverse impact on our business, results of operations and financial condition.

The terms of the instruments governing our existing indebtedness require us to comply with a number of customary financial and other covenants, such as maintaining certain leverage and coverage ratios and minimum tangible net worth requirements. Our continued ability to incur additional debt and to conduct business in general is subject to our compliance with these covenants, which limit our operational flexibility. Breaches of these covenants could result in defaults under the instruments governing the applicable indebtedness, in addition to any other indebtedness cross-defaulted against such instruments. Any such default could have a material adverse impact on our business, results of operations and financial condition or our ability to make distributions to our shareholders.

Increases in interest rates may increase our interest expense and adversely affect our cash flows, our ability to service our indebtedness and our ability to make distributions to our shareholders, and could cause our stock price to decline.

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. Since the most recent recession, the U.S. Federal Reserve has taken actions which have resulted in low interest rates prevailing in the marketplace for a historically long period of time. In December 2015, the U.S. Federal Reserve raised its benchmark interest rate by a quarter of a percentage point. Further increases 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.

Additionally, as of December 31, 2015, we had approximately $399.3 million of variable-rate indebtedness outstanding that has not been swapped for a fixed interest rate and we expect that more of our indebtedness in the future, including borrowings under our unsecured revolving credit facility since December 31, 2015 and thereafter, will be subject to variable interest rates. Increases in interest rates on any variable rate indebtedness will increase our interest expense, which could adversely affect our cash flow and our ability to pay distributions to our shareholders.

Failure to hedge effectively against interest rate changes may adversely affect our results of operations.

In certain cases, we may seek to manage our exposure to interest rate volatility by using interest rate hedging arrangements. Hedging involves risks, such as the risk that the counterparty may fail to honor its obligations under an arrangement, that the arrangements may not be effective in reducing our exposure to interest rate changes and that a court could rule that such an agreement is not legally enforceable. In addition, we may be limited in the type and amount of hedging transactions that we may use in the future by our need to satisfy the REIT income tests under the Code. Failure to hedge effectively against interest rate changes may have an adverse effect on our business, financial condition, results of operations, our ability to make distributions to our shareholders and the trading price of our common shares.

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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 and 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.

Risks Related to Our Portfolio and Structure

We have no direct operations and rely upon funds received from our Operating Partnership to meet our obligations.

We conduct substantially all of our operations through our Operating Partnership. As of February 22, 2016, we owned approximately 96.7% of the OP Units and apart from this ownership interest, we will not have any independent operations. As a result, we rely upon distributions from our Operating Partnership to pay any distributions that we might declare on our common shares. We also rely upon distributions from our Operating Partnership to meet our obligations, including tax liability on taxable income allocated to us from our Operating Partnership (which might make distributions to us not equal to the tax on such allocated taxable income). Shareholders’ claims will consequently be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of our Operating Partnership and its subsidiaries. Therefore, in the event of our bankruptcy, liquidation or reorganization, claims of our shareholders will be satisfied only after all of our and our Operating Partnership’s and its subsidiaries’ liabilities and obligations have been paid in full.

We incur substantial costs as a result of being a public company.

As a public company, we incur significant legal, accounting, insurance and other expenses, including costs associated with public company reporting requirements. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect compliance with these public reporting requirements and associated rules and regulations to increase expenses, although we are currently unable to estimate theses costs with any degree of certainty.

Failure to maintain effective internal control over financial reporting could harm our business, results of operations and financial condition.

Pursuant to the Sarbanes-Oxley Act of 2002, we are required to provide a report by management on internal control over financial reporting, including management’s assessment of the effectiveness of such control. Because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud, effective internal controls over financial reporting may not prevent or detect misstatement and can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. If we fail to maintain the adequacy of our internal controls, including any failure to implement required new or improved controls as a result of changes to our business or otherwise, or if we experience difficulties in their implementation, our business, results of operations and financial condition could be materially adversely impacted and we could fail to meet our reporting obligations.

Our business could be harmed if key personnel terminate their employment with us or if we are unsuccessful in integrating new personnel into our operations.

Our success depends, to a significant extent, on the continued services of Mr. Thomas, our President and Chief Executive Officer, Mr. Theiler, our Executive Vice President and Chief Financial Officer, Mr. Sweet, our Executive Vice President and Chief Investment Officer, Mr. Taylor, our Executive Vice President – Investments, Mr. Lucey, our Senior Vice President – Principal Accounting and Reporting Officer, Mr. Theine, our Senior Vice President of Asset and Investment Management and Mr. Page, our Senior Vice President and General Counsel. We do not maintain key person life insurance on any of our officers. Our ability to continue to acquire and develop healthcare properties depends upon the significant relationships that our senior management team has developed over many years.

Although we have entered into employment agreements with Messrs. Thomas, Theiler, Sweet, Taylor, Lucey, Theine and Page, we cannot provide any assurance that any of them will remain employed by us. Our ability to retain our senior management team, or to attract suitable replacements should any member of the senior management team leave, is dependent on the competitive nature of the employment market. The loss of services of, or the failure to successfully integrate one or more new members of, our senior management team could adversely affect our business and our prospects.

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Our use of OP Units as currency to acquire properties could result in shareholder dilution, could limit our ability to sell such properties, or could affect the amount of distributions we can make to our shareholders, any of which could have a material adverse effect on us.

We may continue to acquire some properties or portfolios of properties through tax deferred contribution transactions in exchange for OP Units, which are convertible into common shares and, upon conversion, may result in shareholder dilution. Such issuances of OP Units would also reduce our ownership percentage in our Operating Partnership and could affect the amount of distributions made to us by our Operating Partnership and, therefore, the amount of distributions we can make to our shareholders. Our shareholders do not directly own OP Units, and thus, do not have any voting rights with respect to any such issuances. The issuance of OP Units may also have the effect of, among other things, reducing the amount of tax depreciation we could deduct over the tax life of the acquired properties, and may require that we agree to protect the contributors’ ability to defer recognition of taxable gain through restrictions on our ability to dispose of the acquired properties or the allocation of partnership debt to the contributors to maintain their tax bases. These restrictions could limit our ability to sell properties at a time, or on terms, that would be favorable absent such restrictions.

Conflicts of interest could arise as a result of our UPREIT structure.

Conflicts of interest could arise in the future as a result of the relationships between us and our affiliates, on the one hand, and our Operating Partnership or any partner thereof, on the other. Our trustees and officers have duties to us under applicable Maryland law in connection with their management of our company. At the same time, we, as general partner, have fiduciary duties to our Operating Partnership and to the limited partners under Delaware law in connection with the management of our Operating Partnership. Our duties, as general partner, to our Operating Partnership and its limited partners may come into conflict with the duties of our trustees and officers.

Unless otherwise provided for in the relevant partnership agreement, Delaware law generally requires a general partner of a Delaware limited partnership to adhere to fiduciary duty standards under which it owes its limited partners the highest duties of good faith, fairness and loyalty and which generally prohibits such general partner from taking any action or engaging in any transaction as to which it has a conflict of interest.

Additionally, the partnership agreement expressly limits our liability by providing that we, as the general partner of the Operating Partnership, and our trustees and officers are not be liable or accountable in damages to our Operating Partnership, the limited partners or assignees for errors in judgment, mistakes of fact or law or for any act or omission if we or our trustees of officers acted in good faith. In addition, our Operating Partnership is required to indemnify us, our affiliates and each of our respective officers and trustees, to the fullest extent permitted by applicable law against any and all losses, claims, damages, liabilities (whether joint or several), expenses (including, without limitation, attorneys’ fees and other legal fees and expenses), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the Operating Partnership, provided that our Operating Partnership will not indemnify any such person for (1) acts or omissions committed in bad faith or that were the result of active and deliberate dishonesty, (2) any transaction for which such person received an improper personal benefit in money, property or services, or (3) in the case of a criminal proceeding, the person had reasonable cause to believe the act or omission was unlawful.

The provisions of Delaware law that allow the common law fiduciary duties of a general partner to be modified by a partnership agreement have not been resolved in a court of law, and we have not obtained an opinion of counsel covering the provisions set forth in the partnership agreement that purport to waive or restrict our fiduciary duties that would be in effect under common law were it not for the partnership agreement.

Our declaration of trust restricts the ownership and transfer of our outstanding shares of beneficial interest which may have the effect of delaying, deferring or preventing a transaction or change of control of our company.

In order for us to qualify as a REIT, no more than 50% of the value of our outstanding shares of beneficial interest may be owned, beneficially or constructively, by five or fewer individuals at any time during the last half of each taxable year other than our initial REIT taxable year. Subject to certain exceptions, our declaration of trust prohibits any shareholder from owning beneficially or constructively more than 9.8% in value or number of shares, whichever is more restrictive, of the outstanding shares of any class or series of our shares of beneficial interest, although we have granted, and may in the future grant, a waiver from the ownership limitations. The constructive ownership rules under the Code are complex and may cause the outstanding shares owned by a group of related individuals or entities to be deemed to be constructively owned by one individual or entity. As a result, the acquisition of less than 9.8% of our outstanding shares of any class or series by an individual or entity could cause that individual or entity to own constructively in excess of 9.8% of the outstanding shares of

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any class or series of our shares of beneficial interest and to be subject to our declaration of trust’s ownership limit. Our declaration of trust also prohibits, among other prohibitions, any person from owning our shares of beneficial interest that would result in our being “closely held” under Section 856(h) of the Code or otherwise cause us to fail to qualify as a REIT. Any attempt to own or transfer shares of our beneficial interest in violation of these restrictions may result in the shares being automatically transferred to a charitable trust or may be void.

Certain provisions of Maryland law could inhibit changes of control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our common shares or that our shareholders otherwise believe to be in their best interests.

Certain provisions of the Maryland General Corporation Law, or MGCL, applicable to Maryland real estate investment trusts may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide our common shareholders with the opportunity to realize a premium over the then-prevailing market price of such shares, including:

• “business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested shareholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our shares at any time within the two-year period immediately prior to the date in question) or an affiliate thereof for five years after the most recent date on which the shareholder becomes an interested shareholder, and thereafter imposes certain minimum price and/or supermajority shareholder voting requirements on these combinations; and

• “control share” provisions that provide that holders of “control shares” of our company (defined as shares that, when aggregated with all other shares controlled by the shareholder, entitle the shareholder to exercise one of three increasing ranges of voting power in electing trustees) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares,” subject to certain exceptions) have no voting rights with respect to their control shares, except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.

Pursuant to the statute, our board of trustees has by resolution exempted any business combination between us and any other person from the business combination provisions of the MGCL, provided that the business combination is first approved by our board of trustees (including a majority of trustees who are not affiliates or associates of such person). In addition, our bylaws contain a provision exempting any and all acquisitions of our shares from the control share provisions of the MGCL. However, our board of trustees may at any time alter or repeal the resolution exempting certain businesses from the business combination provisions of the MGCL and we may at any time amend or eliminate the provision of our bylaws exempting acquisitions of our shares from the control share provisions of the MGCL.

Certain provisions of the MGCL permit our board of trustees, without shareholder approval and regardless of what is currently provided in our declaration of trust or bylaws, to implement certain corporate governance provisions, some of which (for example, a classified board) are not currently applicable to us. If implemented, these provisions may have the effect of limiting or precluding a third party from making an unsolicited acquisition proposal for us or of delaying, deferring or preventing a change in control of us under circumstances that otherwise could provide our common shareholders with the opportunity to realize a premium over the then current market price. Pursuant to our declaration of trust, we have elected to be subject to the provisions of Title 3, Subtitle 8 of the MGCL relating to the filling of vacancies on our board of trustees.

We could increase the number of authorized shares, classify and reclassify unissued shares and issue shares without shareholder approval.

Our board of trustees, without shareholder approval, has the power under our declaration of trust to amend our declaration of trust to increase or decrease the aggregate number of shares or the number of shares of any class or series that we are authorized to issue, and to authorize us to issue authorized but unissued common shares or preferred shares. In addition, under our declaration of trust, our board of trustees has the power to classify or reclassify any unissued common or preferred shares into one or more classes or series of shares and set or change the preference, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications or terms or conditions of redemption for such newly classified or reclassified shares. As a result, we may issue series or classes of common shares or preferred shares with preferences, dividends, powers and rights, voting or otherwise, that are senior to, or otherwise conflict with, the rights of holders of our common shares. Although our board of trustees has no such intention at the present time, it could establish a class or series of preferred shares that could, depending on the terms of such class or series, delay, defer or prevent a transaction

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or a change of control that might involve a premium price for our common shares or that our shareholders otherwise believe to be in their best interests.

Our rights and the rights of our shareholders to take action against our trustees and officers are limited, which could limit your recourse in the event that we take certain actions which are not in your best interests.

Our declaration of trust eliminates the liability of our trustees and officers to us and our shareholders for money damages, except for liability resulting from:

• actual receipt of an improper benefit or profit in money, property or services; or

• active and deliberate dishonesty by the trustee or officer that was established by a final judgment and is material to the cause of action adjudicated.

Our declaration of trust authorizes us to indemnify our present and former trustees and officers for actions taken by them in those and other capacities to the maximum extent permitted by Maryland law. Our bylaws obligate us to indemnify each present and former trustee or officer, to the maximum extent permitted by Maryland law, in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service to us. In addition, we may be obligated to advance the defense costs incurred by our trustee and officers. We have also entered into indemnification agreements with our officers and trustees granting them express indemnification rights. As a result, we and our shareholders may have more limited rights against our trustees and officers than might otherwise exist absent the current provisions in our declaration of trust, bylaws and indemnification agreements or that might exist with other companies.

Our declaration of trust contains provisions that make removal of our trustees difficult, which could make it difficult for our shareholders to effect changes to our management and may prevent a change in control of our company that is in the best interests of our shareholders. Our declaration of trust provides that a trustee may only be removed for cause upon the affirmative vote of holders of two-thirds of all the votes entitled to be cast generally in the election of trustees. Vacancies may be filled only by a majority of the remaining trustees in office, even if less than a quorum. These requirements make it more difficult to change our management by removing and replacing trustees and may prevent a change in control of our company that is in the best interests of our shareholders.

Certain provisions in the partnership agreement of our Operating Partnership may delay or prevent unsolicited acquisitions of us.

Provisions in the partnership agreement of our Operating Partnership may delay, or make more difficult, unsolicited acquisitions of us or changes of our control. These provisions could discourage third parties from making proposals involving an unsolicited acquisition of us or change of our control, although some shareholders might consider such proposals, if made, desirable. These provisions include, among others:

• redemption rights;

• a requirement that we may not be removed as the general partner of our Operating Partnership without our consent;

• transfer restrictions on OP Units;

• our ability, as general partner, in some cases, to amend the partnership agreement and to cause the Operating Partnership to issue units with terms that could delay, defer or prevent a merger or other change of control of us or our Operating Partnership without the consent of the limited partners; and

• the right of the limited partners to consent to direct or indirect transfers of the general partnership interest, including as a result of a merger or a sale of all or substantially all of our assets, in the event that such transfer requires approval by our common shareholders.

Our declaration of trust and bylaws, Maryland law and the partnership agreement of our Operating Partnership also contain other provisions that may delay, defer or prevent a transaction or a change of control that might involve a premium price for our common shares or that our shareholders otherwise believe to be in their best interest.

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Risks Related to Our Qualification and Operation as a REIT

If we fail to qualify as a REIT in any taxable year, we will face serious tax consequences that would substantially reduce funds available for distributions to our shareholders.

We were organized on April 9, 2013 as a Maryland real estate investment trust. We elected to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ending December 31, 2013. Commencing with such taxable year, we were organized and operated in such a manner as to qualify for taxation as a REIT under the U.S. federal income tax laws, and we intend to continue to operate in such a manner, but no assurances can be given that we will operate in a manner so as to qualify or remain qualified as a REIT.

Failure to qualify as a REIT, or failure to remain qualified as a REIT, would cause us to be taxed as a regular corporation, which would substantially reduce funds available for distributions to our shareholders. If we fail to qualify as a REIT in any taxable year, we would face serious tax consequences that will substantially reduce the funds available for distributions to our shareholders because:

• we would not be allowed a deduction for dividends paid to shareholders in computing our taxable income and would be subject to U.S. federal income tax at regular corporate rates;

• we could be subject to the federal alternative minimum tax and possibly increased state and local taxes; and

• unless we are entitled to relief under certain U.S. federal income tax laws, we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT.

In addition, if we fail to qualify as a REIT, we will no longer be required to make distributions. As a result of all these factors, our failure to qualify as a REIT could impair our ability to expand our business and raise capital, and it would adversely affect the value of our shares of beneficial interest.

Even if we qualify as a REIT, we may face other tax liabilities that reduce our cash flows.

Even if we qualify for taxation as a REIT, we may be subject to certain federal, state and local taxes on our income and assets, including taxes on any undistributed income, tax on income from some activities conducted as a result of a foreclosure, and state or local income, property and transfer taxes. In addition, any taxable REIT subsidiary, or “TRS,” that we may form would be subject to regular corporate federal, state and local taxes. Any of these taxes would decrease cash available for distributions to shareholders.

Failure to make required distributions would subject us to U.S. federal corporate income tax.

We intend to operate in a manner so as to qualify as a REIT for U.S. federal income tax purposes. In order to qualify as a REIT, we generally are required to distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, each year to our shareholders. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal corporate income tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our shareholders in a calendar year is less than a minimum amount specified under the Internal Revenue Code of 1986, as amended (the “Code”).

Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.

To qualify as a REIT for federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our shareholders and the ownership of our shares of beneficial interest. In order to meet these tests, we may be required to forego investments we might otherwise make. Thus, compliance with the REIT requirements may hinder our performance.

In particular, we must ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified real estate assets. The remainder of our investment in securities (other than government securities, securities of TRSs and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets (other than government securities, securities of TRSs and qualified real estate assets) can consist of the securities of any one issuer, and no more than 25% (reduced under the PATH

29

Act to 20% for taxable years beginning after December 31, 2017) of the value of our total assets can be represented by the securities of one or more TRSs. Further, for taxable years beginning after December 31, 2015, debt instruments that do not otherwise qualify as real estate assets issued to us by publicly offered REITs will be treated as qualified real estate assets for purposes of the asset test, but no more than 25% of the value of our total assets may be represented by such debt instruments. If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our shareholders.

The prohibited transactions tax may limit our ability to dispose of our properties.

A REIT’s net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property other than Foreclosure Property, held primarily for sale to customers in the ordinary course of business. We may be subject to the prohibited transaction tax equal to 100% of net gain upon a disposition of real property. Although a safe harbor to the characterization of the sale of real property by a REIT as a prohibited transaction is available, we cannot assure you that we can comply with the safe harbor or that we will avoid owning property that may be characterized as held primarily for sale to customers in the ordinary course of business. Consequently, we may choose not to engage in certain sales of our properties or may conduct such sales through any TRS that we may form, which would be subject to federal and state income taxation.

We may pay taxable dividends in our common shares and cash, in which case shareholders may sell our common shares to pay tax on such dividends, placing downward pressure on the market price of our common shares.

We may distribute taxable dividends that are payable in cash and common shares at the election of each shareholder. The IRS has issued private letter rulings to other REITs treating certain distributions that are paid partly in cash and partly in shares as taxable dividends that would satisfy the REIT annual distribution requirement and qualify for the dividends paid deduction for U.S. federal income tax purposes. Those rulings may be relied upon only by taxpayers to whom they were issued, but we could request a similar ruling from the IRS. In addition, the IRS issued a revenue procedure creating a temporary safe harbor that authorized publicly traded REITs to make elective cash/share dividends, but that temporary safe harbor has expired. Accordingly, it is unclear whether and to what extent we will be able to make taxable dividends payable in cash and common shares.

If we made a taxable dividend payable in cash and common shares, taxable shareholders receiving such dividends will be required to include the full amount of the dividend as ordinary income to the extent of our current and accumulated earnings and profits, as determined for U.S. federal income tax purposes. As a result, shareholders may be required to pay income tax with respect to such dividends in excess of the cash dividends received. If a U.S. shareholder sells the common shares that it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our common shares at the time of the sale. Furthermore, with respect to certain non-U.S. shareholders, we may be required to withhold U.S. federal income tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in common shares. If we made a taxable dividend payable in cash and our common shares and a significant number of our shareholders determine to sell our common shares in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our common shares. We do not currently intend to pay taxable dividends using both our common shares and cash, although we may choose to do so in the future.

Any ownership of a TRS we may form in the future will be subject to limitations and our transactions with a TRS will cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm’s-length terms.

Overall, no more than 25% of the value of a REIT’s assets may consist of stock or securities of one or more TRSs. The permitted percentage is reduced to 20% for taxable years beginning after December 31, 2017. In addition, the Code limits the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation. The Code also imposes a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis, including “redetermined TRS service income” relating to gross income of a TRS attributable to services provided to, or on behalf of, the REIT (less the deductions properly allocable thereto) to the extent the amount of such income (less such deductions) would be increased on distribution, apportionment or allocation under Code Section 482. Furthermore, we will monitor the value of our respective investments in any TRS that we may form for the purpose of ensuring compliance with TRS ownership limitations and will structure our transactions with any TRS on terms that we believe are arm’s-length to avoid incurring a 100% excise tax from the transactions discussed above. There can be no

30

assurance, however, that we will be able to comply with the 25% (or 20%, as applicable) REIT subsidiaries limitation or to avoid application of the 100% excise tax.

If leases of our properties are not respected as true leases for federal income tax purposes, we would fail to qualify as a REIT and would be subject to higher taxes and have less cash available for distribution to our shareholders.

To qualify as a REIT, we must satisfy two gross income tests, under which specified percentages of our gross income must be derived from certain sources, such as “rents from real property.” Rents paid to our Operating Partnership by third party lessees and any TRS lessee that we may form in the future pursuant to the leases of our properties will constitute substantially all of our gross income. In order for such rent to qualify as “rents from real property” for purposes of the gross income tests, the leases must be respected as true leases for federal income tax purposes and not be treated as service contracts, joint ventures or some other type of arrangement. If our leases are not respected as true leases for federal income tax purposes, we would fail to qualify as a REIT.

You may be restricted from acquiring or transferring certain amounts of our common shares.

The share ownership restrictions of the Code for REITs and the 9.8% share ownership limit and other restrictions on ownership and transfer of our shares contained in our declaration of trust may inhibit market activity in our shares of beneficial interest and restrict our business combination opportunities.

In order to qualify as a REIT for each taxable year after 2013, five or fewer individuals, as defined in the Code, may not own, beneficially or constructively, more than 50% in value of our issued and outstanding shares of beneficial interest at any time during the last half of a taxable year. Attribution rules in the Code determine if any individual or entity beneficially or constructively owns our shares of beneficial interest under this requirement. Additionally, at least 100 persons must beneficially own our shares of beneficial interest during at least 335 days of a taxable year for each taxable year after 2013. To help insure that we meet these tests, our declaration of trust restricts the acquisition and ownership of shares of our beneficial interest.

Our declaration of trust, with certain exceptions, authorizes our trustees to take such actions as are necessary and desirable to preserve our qualification as a REIT. Unless exempted by our board of trustees, our declaration of trust prohibits any person from beneficially or constructively owning more than 9.8% in value or number of shares, whichever is more restrictive, of the outstanding shares of any class or series of our shares of beneficial interest. Our Board of Trustees has granted, and may in the future grant, an exemption to the 9.8% share ownership limitation. However, our board of trustees may not grant an exemption from this restriction to any proposed transferee whose ownership in excess of 9.8% of the number or value of our outstanding shares would result in our failing to qualify as a REIT. This as well as other restrictions on transferability and ownership will not apply, however, if our board of trustees determines that it is no longer in our best interests to continue to qualify as a REIT.

Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.

The maximum tax rate applicable to “qualified dividend income” payable to U.S. shareholders that are taxed at individual rates is 23.8%. Dividends payable by REITs, however, generally are not eligible for the reduced rates on qualified dividend income. The more favorable rates applicable to regular corporate qualified dividends could cause investors who are taxed at individual rates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common shares. Additionally, the PATH Act limits the aggregate amount of dividends that we designate for a taxable year to the amount of dividends paid with respect to the taxable year.

We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our common shares.

At any time, the U.S. federal income tax laws governing REITs or the administrative interpretations of those laws may be amended. We cannot predict when or if any new U.S. federal income tax law, regulation or administrative interpretation, or any amendment to any existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective and any such law, regulation, or interpretation may take effect retroactively. We and our shareholders could be adversely affected by any such change in the U.S. federal income tax laws, regulations or administrative interpretations.

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On December 18, 2015, President Obama signed into law the Protecting Americans from Tax Hikes Act of 2015 (the “PATH Act”). The PATH Act includes several provisions relating to REITs, including a provision restricting certain tax-free spinoffs involving REITs. A significant feature of the PATH Act is that it dismisses the application of the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”) altogether for a “qualified foreign pension fund,” or any entity all of the interests of which are held by a qualified foreign pension fund, that holds U.S. real property interests directly (or indirectly through one or more partnerships), such that a qualified foreign pension fund and any entity wholly-owned by a qualified foreign pension fund will no longer be subject to U.S. income tax and withholding tax under FIRPTA. The PATH Act also raised the FIRPTA withholding tax rate from 10% to 15%. The PATH Act further increases from 5% to 10% the maximum stock ownership a shareholder may hold in a publicly-traded REIT to be exempt from FIRPTA on dispositions of stock in such REIT or distributions from such REIT.

The failure of a mezzanine loan to qualify as a real estate asset could adversely affect our ability to maintain our qualification as a REIT.

In general, in order for a loan to be treated as a qualifying real estate asset producing qualifying income for purposes of the federal income tax asset and income tests applicable to REITs, the loan must be secured by real property. We may originate (in connection with a forward purchase or option to purchase contract) or acquire mezzanine loans that are not directly secured by real property but instead secured by equity interests in a partnership or limited liability company that directly or indirectly owns real property. In Revenue Procedure 2003-65, the IRS provided a safe harbor pursuant to which a mezzanine loan that is not secured by real estate would, if it meets each of the requirements contained in the Revenue Procedure, be treated by the IRS as a qualifying real estate asset. Although the Revenue Procedure provides a safe harbor on which taxpayers may rely, it does not prescribe rules of substantive tax law and in many cases it may not be possible for us to meet all the requirements of the safe harbor. We cannot provide assurance that any mezzanine loan in which we invest, including our seven outstanding mezzanine loans, would be treated as a qualifying asset producing qualifying income for REIT qualification purposes. If any such loan fails either the REIT income or asset tests, we may be disqualified as a REIT.

Furthermore, if we participate in any appreciation in value of real property securing a mortgage loan and the IRS characterizes such “shared appreciation mortgage” as equity rather than debt, for example, because of a large interest in cash flow of the borrower, we may be required to recognize income, gains, and other items with respect to the real property for U.S. federal income tax purposes. This could affect our ability to qualify as a REIT. 

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

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ITEM 2. PROPERTIES

Geographic Diversification/Concentration

The following table lists the states in which our properties are located and provides certain information regarding our portfolio’s geographic diversification/concentration as of December 31, 2015:

State	Number of Properties	GLA (1) (square feet)	Percent of GLA		Annualized Base Rent (2) (thousands)		Percent of Annualized Base Rent
Alabama	5	96,470	1.7	%	$	1,293	1.1	%
Arizona	7	496,535	8.6	%	11,428		9.3	%
Colorado	1	15,000	0.3	%	600		0.5	%
Florida	19	283,679	4.9	%	8,270		6.7	%
Georgia	22	631,402	10.9	%	12,079		9.8	%
Illinois	4	181,891	3.1	%	3,404		2.8	%
Indiana	13	407,746	7.0	%	8,263		6.7	%
Kentucky	1	18,887	0.3	%	499		0.4	%
Louisiana	3	151,044	2.6	%	5,186		4.2	%
Maryland	1	41,493	0.7	%	810		0.7	%
Maine	1	44,677	0.8	%	1,235		1.0	%
Michigan	6	371,541	6.4	%	7,068		5.7	%
Minnesota	8	348,750	6.0	%	7,002		5.7	%
Missouri	1	30,000	0.5	%	634		0.5	%
Mississippi	2	97,294	1.7	%	2,494		2.0	%
Montana	2	120,636	2.1	%	2,582		2.1	%
North Carolina	1	29,422	0.5	%	628		0.5	%
North Dakota	1	45,222	0.8	%	839		0.7	%
New York	7	185,365	3.2	%	3,840		3.1	%
Ohio	9	444,630	7.7	%	8,632		7.0	%
Oklahoma	1	52,000	0.9	%	1,298		1.1	%
Pennsylvania	10	386,924	6.7	%	5,051		4.1	%
Tennessee	5	228,479	3.9	%	2,746		2.2	%
Texas	15	737,449	12.7	%	19,248		15.7	%
Washington	2	192,959	3.3	%	5,228		4.3	%
Wisconsin	4	159,842	2.7	%	2,576		2.1	%
Total	151	5,799,337	100	%	$	122,933	100	%

(1) “GLA” means gross leasable area.

(2) Calculated for each tenant as the monthly contracted base rent per the terms of such tenant’s lease, as of December 31, 2015, multiplied by 12.

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Scheduled Lease Expirations

The following table provides a summary of lease expirations for our properties owned as of December 31, 2015 for the periods indicated.

Expiration	Number of Leases Expiring	GLA	Percent of GLA		Annualized Base Rent (1) (thousands)		Percent of Annualized Base Rent		Annualized Base Rent Leased per Square Foot (2)
2015 (3)	7	47,375	0.8	%	1,136		0.9	%	$	23.98
2016	44	186,504	3.2	%	3,889		3.3	%	20.85
2017	79	315,342	5.4	%	7,291		5.9	%	23.12
2018	68	345,789	6.0	%	6,600		5.4	%	19.09
2019	46	307,057	5.3	%	6,977		5.7	%	22.72
2020	51	197,014	3.4	%	3,746		3.0	%	19.01
2021	31	190,700	3.3	%	3,857		3.1	%	20.23
2022	28	294,163	5.1	%	6,163		5.0	%	20.95
2023	39	365,650	6.3	%	7,406		6.0	%	20.25
2024	55	583,469	10.1	%	11,360		9.2	%	19.47
Thereafter	168	2,686,306	46.2	%	64,244		52.3	%	23.92
Month to month	15	38,867	0.7	%	264		0.2	%	6.79
Vacant	—	241,101	4.2	%	—		—		—
Total / Weighted average	631	5,799,337	100	%	$	122,933	100	%	$	22.36

(1) Annualized base rent is calculated by multiplying (a) base rental payments for the month ended December 31, 2015, by (b) 12.

(2) Annualized base rent per leased square foot is calculated by dividing (a) annualized base rent as of December 31, 2015, by (b) square footage under commenced leases as of December 31, 2015.

(3) Of the 0.8% of leases that expired on December 31, 2015, 0.6% rolled into new long-term leases. The remaining 0.2% are vacant as of January 1, 2016.

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Tenants

As of December 31, 2015, our properties were 95.8% leased. No single tenant accounted for more than 3.9% of our total annualized base rent as of December 31, 2015.

The following table sets forth certain information about the 10 largest tenants in our portfolio based on total annualized base rent as of December 31, 2015.

Tenant	# of Properties	Property Location	Leased SF	% Leased GLA		Annualized Base Rent (1) (thousands)		% of Portfolio Annualized Rent (2)
LifeCare	3	TX, PA	310,352	5.4	%	$	4,803	3.9	%
Trios Health	1	WA	161,885	2.8	%	4,250		3.5	%
East El Paso Physicians Medical Center	1	TX	77,000	1.3	%	3,585		2.9	%
Wayne State University Physician Group	1	MI	176,000	3.0	%	3,247		2.6	%
Crescent City Surgical Centre	1	LA	60,000	1.0	%	3,183		2.6	%
FSH Hospital of San Antonio	2	TX	68,786	1.2	%	2,988		2.4	%
Mid-Ohio Oncology/Hematology	1	OH	98,325	1.7	%	2,322		1.9	%
Northside Hospital	3	GA	88,003	1.5	%	2,291		1.9	%
Great Falls Clinic	1	MT	108,000	1.9	%	2,235		1.8	%
Columbus Regional Healthcare System	9	GA	125,189	2.2	%	1,956		1.6	%
Total	23		1,273,540	22.0	%	$	30,860	25.1	%

(1) Calculated for each tenant as the monthly contracted base rent per the terms of such tenant’s lease, as of December 31, 2015, multiplied by 12.

(2) Calculated as annualized base rent for such tenant as of December 31, 2015 divided by annualized base rent for the total portfolio as of December 31, 2015.

Before entering into a lease and during the lease term, we seek to manage our exposure to significant tenant credit issues. In most instances, we seek to obtain tenant financial information, including credit reports, financial statements and tax returns. Where appropriate, we seek to obtain financial commitments in the form of letters of credit and security deposits from tenants. On an ongoing basis, we monitor accounts receivable and payment history for both tenants and properties and seek to identify any credit concerns as quickly as possible. In addition, we keep in close contact with our tenants in an effort to identify and address negative changes to their businesses prior to such adverse changes affecting their ability to pay rent to us.

Ground Leases

We lease the land upon which fourteen of our properties (Mid Coast Hospital MOB, Valley West Hospital MOB, Crescent City Surgical Centre, Orthopedic One - Columbus, Carmel Medical Pavilion, Berger Medical Center, Edina MOB, Healthpark Medical Center, Brookstone Physician Center MOB, Medical Specialists of Palm Beach MOB, Trios Health MOB, IMS - Paradise Valley MOB, IMS - North Mountain MOB, Great Falls Clinic MOB), representing approximately 16.8% of our total leasable square feet and 18.7% of our annualized revenue for the year ended December 31, 2015, are subject to ground leases that contain certain restrictions. These restrictions include limits on our ability to re-let such facilities to tenants not affiliated with the healthcare delivery system that owns the underlying land, and rights of first offer and refusal with respect to sales of the property, and limits on the types of medical procedures that may be performed.

ITEM 3. LEGAL PROCEEDINGS

From time to time, we are 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 4.MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common shares are traded on the NYSE under the symbol “DOC.” As of February 22, 2016, we had 117 registered shareholders of record for our common shares.

The following table sets forth, for the periods indicated, the high and low sale prices of our common shares for the fiscal years ended December 31, 2014 and 2015, respectively, as reported on the NYSE, and the dividends paid by us with respect to those periods.

2014	High		Low		Dividends (1)
First quarter	$	14.00	$	11.99	$	0.225	(2)
Second quarter	$	14.63	$	12.39	$	0.225	(3)
Third quarter	$	15.00	$	13.51	$	0.225	(4)
Fourth quarter	$	16.97	$	13.56	$	0.225	(5)

2015	High		Low		Dividends (1)
First quarter	$	18.12	$	15.67	$	0.225	(6)
Second quarter	$	17.99	$	14.89	$	0.225	(7)
Third quarter	$	16.29	$	13.86	$	0.225	(8)
Fourth quarter	$	17.05	$	14.68	$	0.225	(9)

(1) Dividend information is for dividends declared with respect to that quarter.

(2) On March 27, 2014, we declared a cash dividend of $0.225 per share for the quarterly period ended March 31, 2014. The dividend was paid on April 25, 2014 to common shareholders and common OP Unit holders of record on April 11, 2014.

(3) On June 26, 2014, we declared a cash dividend of $0.225 per share for the quarterly period ended June 30, 2014. The dividend was paid on August 1, 2014 to common shareholders and common OP Unit holders of record on July 18, 2014.

(4) On September 26, 2014, we 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 17, 2014.

(5) On December 30, 2014, we declared a cash dividend of $0.225 per share for the quarter ending December 31, 2014. The dividend was paid on February 6, 2015 to common shareholders and common OP Unit holders of record on January 23, 2015.

(6) On April 6, 2015, we declared a cash dividend of $0.225 per share for the quarterly period ended March 31, 2015. The dividend was paid on May 1, 2015 to common shareholders and common OP Unit holders of record on April 17, 2015.

(7) On July 1, 2015, we declared a cash dividend of $0.225 per share for the quarterly period ended June 30, 2015. The dividend was paid on July 31, 2015 to common shareholders and common OP Unit holders of record on July 17, 2015.

(8) On September 28, 2015, we declared a cash dividend of $0.225 per common share for the quarterly period ended September 30, 2015. The dividend was paid on October 30, 2015 to common shareholders and common OP Unit holders of record on October 16, 2015.

(9) On January 4, 2016, we declared a cash dividend of $0.225 per share for the quarter ending December 31, 2015. The dividend was paid on January 29, 2016 to common shareholders and common OP Unit holders of record on January 15, 2016.

It has been our policy to declare quarterly dividends to the shareholders so as to comply with applicable provisions of the Code governing REITs. The declaration and payment of quarterly dividends remains subject to the review and approval of the Board of Trustees.

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Stock Performance Graph

This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of Physicians Realty Trust under the Securities Act or the Exchange Act.

The graph below compares the cumulative total return of our common shares, the S&P 500 and the MSCI US REIT Index (RMS), from July 19, 2013 (the date of our IPO) through December 31, 2015. The comparison assumes $100 was invested on July 19, 2013 in our common shares and in each of the foregoing indexes and assumes reinvestment of dividends, as applicable. The MSCI US REIT Index consists of equity REITs that are included in the MSCI US Investable Market 2500 Index, except for specialty equity REITS that do not generate a majority of their revenue and income from real estate rental and leasing operations. We have included the MSCI US REIT Index because we joined the MSCI US REIT Index in November 2014 and therefore, we believe that it is representative of the industry in which we compete and is relevant to an assessment of our performance.

	Period Ending
Index	7/19/2013		12/31/2013		12/31/2014		12/31/2015
Physicians Realty Trust	$	100.00	$	112.34	$	156.36	$	167.80
S&P 500	$	100.00	$	110.29	$	125.39	$	127.13
MSCI US REIT (RMS)	$	100.00	$	91.70	$	119.56	$	122.57

Recent Sales of Unregistered Securities

On December 17, 2015, the Company, through a subsidiary of the Operating Partnership, entered into and closed a contribution agreement (the “Contribution Agreement”) with Nashbridge MOB, Inc. and Camlotte, LLC to acquire a medical office building in Nashville, Tennessee (the “Nashville MOB”) in exchange for approximately $27.4 million in cash (and payment of third party indebtedness) and approximately $19.7 million payable in Series A Participating Redeemable Preferred Units of the Operating Partnership (the “Series A Preferred Units”). Holders of the Series A Preferred Units issued in connection with the acquisition of the Nashville MOB are entitled to a 5% cumulative return and upon redemption, the receipt of one common share and $200. The holders of the Series A Preferred Units have agreed not to cause the Operating Partnership to redeem their Series A Preferred Units prior to one year from the issuance date. In addition, Series A Preferred Units are redeemable at the option of the holders which redemption obligation may be satisfied, at the Trust’s option, in cash or registered common shares. Our Operating Partnership issued 91,236 Series A Preferred Units in the transaction to acquire the Nashville MOB. The investors in the Series A Preferred Units have agreed not to cause the Operating Partnership to redeem their Series A Preferred Units prior to December 17, 2016.

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The Series A Preferred Units issued in connection with the property acquisition described above were issued (a) in private placements in reliance on Section 4(2) of the Securities Act of 1933, as amended (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.

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data should be read together with the discussion under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the consolidated and combined financial statements and related notes thereto included elsewhere in this report.

We had no business operations prior to completion of the IPO and the formation transactions on July 24, 2013. The balance sheet data as of December 31, 2013, 2014 and 2015 reflects our financial condition. References in the notes to the consolidated and combined financial statements refer to Physicians Realty Trust for the period July 24, 2013, the date of completion of the IPO and the related formation transactions through December 31, 2013, and to the Predecessor for all prior periods.

Our 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 properties, we acquired on July 24, 2013 in connection with completion of our IPO and related formation transactions.

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Physicians Realty Trust and Predecessor

(in thousands, except share and per share data)

	Year Ended December 31,
	2015			2014			2013 (1)
Statement of Operations Data:
Revenues:
Rental revenues	$	103,974		$	46,397		$	13,565
Expense recoveries	21,587			5,871			3,234
Interest income on real estate loans and other	3,880			1,066			246
Total revenues	129,441			53,334			17,045
Expenses:
Interest expense	10,636			6,907			4,295
General and administrative	14,908			11,440			3,214
Operating expenses	31,026			10,154			4,650
Depreciation and amortization	45,471			16,731			5,107
Impairment losses	—			1,750			—
Acquisition expenses	14,893			10,897			1,938
Management fees	—			—			475
Total expenses	116,934			57,879			19,679
Income (loss) before equity in income of unconsolidated entity, gain (loss) on sale of investment properties, and noncontrolling interests:	12,507			(4,545		)	(2,634		)
Equity in income of unconsolidated entity	104			95			—
Gain (loss) on sale of investment properties	130			32			(2		)
Net income (loss)	12,741			(4,418		)	(2,636		)
Less: net loss attributable to Predecessor	—			—			576
Less: net (income) loss attributable to noncontrolling interest – Operating Partnership	(576		)	695			470
Less: net income attributable to noncontrolling interest – partially owned properties	(377		)	(314		)	(71		)
Net income (loss) attributable to controlling interest	11,788			(4,037		)	(1,661		)
Preferred distributions	(1,189		)	—			—
Net income (loss) attributable to common shareholders	$	10,599		$	(4,037	)	$	(1,661	)
Balance Sheet Data (as of end of period):
Assets:
Net real estate investments	$	1,579,483		$	773,650		$	227,539
Cash and cash equivalents	3,143			15,923			56,478
Tenant receivables, net	2,977			1,324			837
Deferred costs, net	7,037			4,870			2,105
Other assets	52,231			15,806			5,901
Total assets	$	1,644,871		$	811,573		$	292,860
Liabilities and Equity
Credit Facility	$	395,000		$	138,000		$	—
Mortgage debt	94,600			78,105			42,821
Accounts payable	644			700			836
Dividends payable	20,783			16,548			5,681
Accrued expenses and other liabilities	24,473			6,140			2,685
Acquired lease intangible, net	5,950			2,871			—
Total liabilities	541,450			242,364			52,023
Redeemable noncontrolling interest – Operating Partnership and partially owned properties	26,960			—			—
Total shareholders’ equity	1,021,132			534,730			204,904
Noncontrolling interest	55,329			34,479			35,933
Total liabilities and equity	$	1,644,871		$	811,573		$	292,860

(1) Because our IPO and the formation transactions were completed on July 24, 2013 and we had no operations prior to completion of our IPO, the results of operations, for the year ended December 31, 2013 reflect the results of operations of the Predecessor Ziegler Funds from January 1, 2013 through July 23, 2013 and of the Trust from July 24, 2013 through December 31, 2013.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our financial statements, including the notes to those statements, included elsewhere in 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”and elsewhere in 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, acute and post-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 6% to 9%. 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 have entered into an unsecured credit facility in the maximum principal amount of $750 million and intend to use borrowings under the facility to finance future acquisitions and developments, fund tenant improvements, leasing commissions to third parties, capital expenditures, provide for working capital and for other general corporate purposes. The unsecured credit facility includes a swingline loan commitment for up to 10% of the maximum principal amount and provides an accordion feature allowing us to increase borrowing capacity by up to an additional $350 million, subject to customary terms and conditions, resulting in a maximum borrowing capacity of $1.1 billion. As of December 31, 2015, we had approximately $95 million of mortgage indebtedness outstanding secured by first mortgages on certain of our properties and $395 million of outstanding borrowings under our unsecured credit facility.

As of December 31, 2015, our portfolio consisted of 151 properties located in 26 states with approximately 5,799,337 net leasable square feet, which were approximately 95.8% leased with a weighted average remaining lease term of approximately 9.0 years and approximately 74% of the net leasable square footage of our portfolio was affiliated with a healthcare delivery system or located within approximately 1/4 mile of a hospital campus. We expect to acquire between $750 million and $1 billion of real estate during 2016, including the 2016 acquisitions described in this report.

We receive a cash rental stream from these healthcare providers under our leases. Approximately 85.5% of the annualized base rent payments from our properties as of December 31, 2015 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. Approximately 5.9% of the annualized base rent payments from our properties as of December 31, 2015 are from modified gross base stop leases which allow us to pass through certain increases in future operating expenses (e.g., property tax and insurance), to tenants for reimbursement, thus protecting us from increases in such operating expenses. 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 2.0% to 3.0%. 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 December 31, 2015, leases representing a percentage of our portfolio on the basis of leasable square feet will expire as follows:

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Year (1)	Portfolio Lease Expirations
MTM	0.7%
2016	3.2%
2017	5.4%
2018	6.0%
2019	5.3%
2020	3.4%
2021	3.3%
2022	5.1%
2023	6.3%
2024	10.1%
Thereafter:	46.2%
Total (2)	95.0%

(1) “MTM” means month-to-month.

(2) The difference between the 95.8% leased as of December 31, 2015 as noted above, compared to the 95.0% noted in this table is 0.8%, which is due to leases that expired on December 31, 2015. Of those 0.6% rolled into new long-term leases and 0.2% are vacant as of January 1, 2016. Vacancy totaled 4.2%.

During 2015, we completed acquisitions of 66 medical office facilities located in 22 states for an aggregate purchase price of approximately $818.6 million. Acquisitions are detailed in Note 3 to our consolidated and combined financial statements included in Item 8 to this report.

In 2015, we funded 5 mezzanine loan investments totaling approximately $21.4 million. Additionally, we provided 3 advances on 1 construction loan totaling approximately $1.0 million.

We have grown our portfolio of gross real estate investments from approximately $124 million at the time of our IPO in July 2013 to approximately $1.7 billion as of December 31, 2015. As of February 22, 2016, we have 108,596,965 common shares outstanding.

On January 21, 2015, we completed a follow-on public offering of 18,975,000 common shares of beneficial interest, including 2,475,000 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to us of approximately $297.3 million. We contributed the net proceeds of this offering to our Operating Partnership in exchange for 18,975,000 OP Units, and our Operating Partnership used the net proceeds of the public offering to repay borrowings under our unsecured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

On July 22, 2015, the Operating Partnership, as borrower, and we and certain subsidiaries and other affiliates of our company, as guarantors, entered into an amendment to the existing 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 (as amended, the “Credit Agreement”) which increased the maximum principal amount available under an unsecured revolving credit facility from $400 million to $750 million. The Credit Agreement includes a swingline loan commitment for up to 10% of the maximum principal amount and provides an accordion feature allowing us to increase borrowing capacity by up to an additional $350 million, subject to customary terms and conditions, resulting in a maximum borrowing capacity of $1.1 billion.

The Credit Agreement has a maturity date of September 18, 2019 and includes a one year extension option. Borrowings under the Credit Agreement bear interest on the outstanding principal amount at an adjusted LIBOR rate, which is based on the Trust’s investment grade rating under the Credit Agreement. As of December 31, 2015, the Trust had an investment grade rating from Moody’s of Baa3 and as such, borrowings under the Credit Agreement accrued interest on the outstanding principal at a rate of LIBOR plus 1.20%. The Credit Agreement includes a facility fee equal to 0.25% per annum, which is also determined by the Trust’s investment grade rating.

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 December 31, 2015, we were in compliance with all financial covenants.

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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.

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 our investment grade rating as follows:

Investment Grade Rating	Adjusted LIBOR Rate Loans and Letter of Credit Fee	Base Rate Loans
At Least A- or A3	LIBOR + 0.85%	—	%
At Least BBB+ or BAA1	LIBOR + 0.90%	—	%
At Least BBB or BAA2	LIBOR + 1.00%	0.10	%
At Least BBB- or BAA3	LIBOR + 1.20%	0.20	%
Below BBB- or BAA3	LIBOR + 1.55%	0.60	%

On October 19, 2015, we completed a follow-on public offering of 15,812,500 common shares of beneficial interest, including 2,062,500 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to us of approximately $226.8 million. We contributed the net proceeds of this offering to our Operating Partnership in exchange for 15,812,500 OP Units, and our Operating Partnership used the net proceeds of the public offering to repay borrowings under our unsecured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

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.

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 February 22, 2016, own approximately 96.7% of the OP Units.

Recent Developments

On January 4, 2016, our Board of Trustees authorized and we declared a cash distribution of $0.225 per common share and common OP Unit for the quarterly period ended December 31, 2015. The distribution was paid on January 29, 2016 to common shareholders and OP Unit holders of record as of the close of business on January 15, 2016.

January 2016 Notes Offering

On January 7, 2016, our Operating Partnership issued and sold $150 million aggregate principal amount of senior notes, comprised of (i) $15,000,000 aggregate principal amount of 4.03% Senior Notes, Series A, due January 7, 2023 (the “Series A Notes”), (ii) $45,000,000 aggregate principal amount of 4.43% Senior Notes, Series B, due January 7, 2026 (the “Series B Notes”), (iii) $45,000,000 aggregate principal amount of 4.57% Senior Notes, Series C, due January 7, 2028 (the “Series C Notes”) and (iv) $45,000,000 aggregate principal amount of 4.74% Senior Notes, Series D, due January 7, 2031 (the “Series D Notes,” and together with the Series A Notes, the Series B Notes and the Series C Notes, the “Notes”). The proceeds of the Notes were used to repay borrowings under our unsecured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

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January 2016 Follow-on Equity Offering

On January 25, 2016, we completed a follow-on public offering of 21,275,000 common shares of beneficial interest, including 2,775,000 common shares issued upon exercise of the underwriters' overallotment option, resulting in net proceeds to us of approximately $320.9 million. We contributed the net proceeds of this offering to our Operating Partnership in exchange for 21,275,000 OP Units, and our Operating Partnership used the net proceeds of the public offering to repay borrowings under our secured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

2016 Property Acquisitions

Since January 1, 2016, we have completed 8 acquisitions of 7 healthcare properties and 1 condominium for an aggregate purchase price of $105.1 million containing an aggregate of 326,326 net leasable square feet. Additionally, we issued 1 mezzanine loan for $0.5 million. Acquisitions subsequent to January 1, 2016 are summarized below.

Property(1)	Location	Acquisition Date	Investment (in thousands)
Randall Road MOB - Suite 380	Elgin, IL	January 14, 2016	$	704
Great Falls Hospital	Great Falls, MT	January 25, 2016	29,043
Monterey Medical Center ASC	Stuart, FL	February 1, 2016	6,900
Physicians Medical Plaza MOB	Indianapolis, IN	February 1, 2016	8,500
Mezzanine Loan - Davis	Minneapolis, MN	February 4, 2016	500
Park Nicollet Clinic	Chanhassen, MN	February 8, 2016	18,600
HEB Cancer Center	Bedford, TX	February 12, 2016	14,000
Riverview Medical Center	Lancaster, OH	February 26, 2016	12,800
St. Luke's Cornwall MOB	Cornwall, NY	February 26, 2016	14,550
			$	105,597

We expect to acquire between $750 million and $1 billion of real estate during 2016, including the approximately $106 million of acquisitions described above. 

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. 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.

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, straight-lining of contractual rents and below-market lease amortization reduced by lease inducements and above-market lease amortization.

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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 mezzanine loans, term loans, change in fair value of derivative liabilities, and third party property management income. Interest income on the loans are recognized as earned based on the terms of the loans subject to evaluation of collectability risks.

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. 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. On July 31, 2014, we entered into the First Amendment to Shared Services Agreement 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 us 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, which could be paid in cash or in unrestricted common shares, as determined by us in our sole discretion. On August 19, 2014, we made the amendment payment by issuing 124,913 common shares to Ziegler. The fees paid under the Shared Services Agreement are included in general and administrative expenses. We elected to terminate the Agreement effective July 23, 2015 in conjunction with our completed renovations of the Renaissance Office Building.

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

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.

Impairment loss. We review long-lived assets every quarter for impairment indicators or whenever events or changes in circumstances indicate that the recorded amount of an asset may not be fully recoverable. An impairment loss is recognized if the carrying amount of its assets is not recoverable and exceeds its fair value. If such criteria are present, an impairment loss is recognized based on the excess of the carrying amount of the asset over its fair value. 

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 in connection with the acquisition of our initial properties upon completion of our IPO and the formation transactions.

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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.

Gain or loss on sale of investment properties. Upon the sale of investment properties, gains or losses are recognized based upon the difference between the disposal sale price and the net book value of the asset.

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.

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Results of Operations

Overview

As described above, following the completion of the IPO and the formation transactions in July 2013, 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 combined operating results for the Predecessor and the Trust presented for fiscal year 2013 are indicative of our future operating results.

Year Ended December 31, 2015 compared to the Year Ended December 31, 2014.

The following table summarizes our results of operations for the years ended December 31, 2015 and 2014 (in thousands):

	2015		2014			Change			%
Revenues:
Rental revenues	$	103,974	$	46,397		$	57,577		124.1
Expense recoveries	21,587		5,871			15,716			267.7
Interest income on real estate loans and other	3,880		1,066			2,814			264.0
Total revenues	129,441		53,334			76,107			142.7
Expenses:
Interest expense	10,636		6,907			3,729			54.0
General and administrative	14,908		11,440			3,468			30.3
Operating expenses	31,026		10,154			20,872			205.6
Depreciation and amortization	45,471		16,731			28,740			171.8
Acquisition expenses	14,893		10,897			3,996			36.7
Impairment loss	—		1,750			(1,750		)	(100.0	)
Total expenses	116,934		57,879			59,055			102.0
Income (loss) before equity in income of unconsolidated entity and gain on sale of investment properties:	12,507		(4,545		)	17,052			(375.2	)
Equity in income of unconsolidated entity	104		95			9			9.5
Gain on sale of investment properties	130		32			98			306.3
Net income (loss)	$	12,741	$	(4,418	)	$	17,159		(388.4	)

Revenues

Total revenues increased $76.1 million, or 142.7%, for the year ended December 31, 2015 as compared to the year ended December 31, 2014. An analysis of selected revenues follows.

Rental revenues. Rental revenues increased $57.6 million, or 124.1%, from $46.4 million for the year ended December 31, 2014 to $104.0 million for the year ended December 31, 2015. The increase in rental revenues primarily resulted from our 2015 and 2014 acquisitions which resulted in additional rental revenue of $31.0 million and $26.5 million, respectively.

Expense recoveries. Expense recoveries increased $15.7 million, or 267.7%, for the year ended December 31, 2015 as compared to the year ended December 31, 2014. The increase in expense recoveries are the result of our 2015 and 2014 acquisitions which resulted in additional expense recoveries of $9.8 million and $5.9 million, respectively.

Interest income on real estate loans and other. Interest income on real estate loans and other increased $2.8 million, or 264.0%, for the year ended December 31, 2015 as compared to the year ended December 31, 2014. The increase primarily resulted from $1.5 million of additional interest earned on the Company’s loan investments and $0.8 million of amortized tenant improvement income during the year ended December 31, 2015.

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Expenses

Total expenses increased by $59.1 million, or 102.0%, for the year ended December 31, 2015 as compared to the year ended December 31, 2014. An analysis of selected expenses follows.

Interest expense. Interest expense for the year ended December 31, 2015 was $10.6 million compared to $6.9 million for the year ended December 31, 2014, representing an increase of $3.7 million, or 54.0%. The $3.7 millionincrease was the result of a $0.9 million increase in interest on new mortgage debt and $3.0 million increase resulting from outstanding balances, non-use fees and amortization of deferred financing costs on our revolving line of credit, partially offset by a $0.2 million decrease in interest on mortgage debt due to pay-downs of existing debt.

General and administrative. General and administrative expenses increased $3.5 million or 30.3%, from $11.4 million during the year ended December 31, 2014 to $14.9 million during the year ended December 31, 2015. The increase was primarily the result of additional salaries and benefits expenses totaling $3.5 million (including non-cash share compensation of $1.1 million). Other increases in administrative costs were offset by the absence of a one-time charge related to the $1.8 million shared services amendment which occurred during 2014.

Operating expenses. Operating expenses increased $20.9 million or 205.6%, from $10.2 million during the year ended December 31, 2014 to $31.0 million during the year ended December 31, 2015. The increase in operating expenses primarily resulted from our 2015 and 2014 acquisitions which resulted in additional operating expenses of $12.7 million and $9.0 million, respectively.

Depreciation and amortization. Depreciation and amortization increased $28.7 million, or 171.8%, from $16.7 million during the year ended December 31, 2014 to $45.5 million during the year ended December 31, 2015. The increase in depreciation and amortization primarily resulted from our 2015 and 2014 acquisitions which resulted in additional depreciation and amortization of $17.3 million and $11.5 million, respectively.

Acquisition expenses. Acquisition expenses increased $4.0 million or 36.7%, from $10.9 million during the year ended December 31, 2014 to $14.9 million for the year ended December 31, 2015. During the year ended December 31, 2015 and 2014, we acquired $779.2 million and $322.8 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 $1.8 million impairment loss on two medical office buildings purchased by the Predecessor for the year ended December 31, 2014. No such impairment loss was recorded for the year ended December 31, 2015.

Equity in income of unconsolidated entity. The change in equity income from unconsolidated entity for the year ended December 31, 2015 compared to the year ended December 31, 2014 is not significant.

Gain on sale of investment properties. On March 26, 2015, the Trust sold a 20,329 square foot medical office building located in Ohio for approximately $1.6 million, resulting in an insignificant loss. On July 31, 2015, the Trust sold a 26,783 square foot medical office building located in Michigan for approximately $1.5 million, realizing a gain of $0.1 million. 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, resulting in an insignificant gain.

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Year Ended December 31, 2014 compared to the Year Ended December 31, 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 December 31, 2013, combined with the results of the Predecessor from January 1, 2013 through July 23, 2013.

The following table summarizes our results of operations for the years ended December 31, 2014 and 2013 (in thousands):

	2014			2013			Change			%
Revenues:
Rental revenues	$	46,397		$	13,565		$	32,832		242.0
Expense recoveries	5,871			3,234			2,637			81.5
Interest income on real estate loans and other	1,066			246			820			333.3
Total revenues	53,334			17,045			36,289			212.9
Expenses:
Interest expense	6,907			4,295			2,612			60.8
General and administrative	11,440			3,214			8,226			255.9
Operating expenses	10,154			4,650			5,504			118.4
Depreciation and amortization	16,731			5,107			11,624			227.6
Acquisition expenses	10,897			1,938			8,959			462.3
Management fee	—			475			(475		)	(100.0	)
Impairment loss	1,750			—			1,750			NM
Total expenses	57,879			19,679			38,200			194.1
Loss before equity in income of unconsolidated entity and gain (loss) on sale of investment properties:	(4,545		)	(2,634		)	(1,911		)	72.6
Equity in income of unconsolidated entity	95			—			95			NM
Gain (loss) on sale of investment properties	32			(2		)	34			NM
Net loss	$	(4,418	)	$	(2,636	)	$	(1,782	)	67.6

NM = Not Meaningful

Revenues

Total revenues increased $36.3 million, or 212.9%, for the year ended December 31, 2014 as compared to the year ended December 31, 2013. An analysis of selected revenues follows.

Rental revenues. Rental revenues increased $32.8 million, or 242.0%, from $13.6 million for the year ended December 31, 2013 to $46.4 million for the year ended December 31, 2014. The increase in rental revenues primarily resulted from our 2014 and 2013 acquisitions which resulted in additional rental revenue of $23.4 million and $9.8 million, respectively.

Expense recoveries. Expense recoveries increased $2.6 million, or 81.5%, for the year ended December 31, 2014 as compared to the year ended December 31, 2013. The increase in expense recoveries primarily resulted from our 2014 and 2013 acquisitions which resulted in additional expense recoveries of $2.5 million and $0.2 million, respectively.

Interest income on real estate loans and other. Interest income on real estate loans and other increased $0.8 million for the year ended December 31, 2014 as compared to the year ended December 31, 2013. The increase was the result of a $0.7 million increase due to the mezzanine loan transaction completed on January 2, 2014 and an increase of $0.2 million of other income, which was partially offset by a $0.1 million decrease in the gain from the change in fair value of a derivative liability.

Expenses

Total expenses increased by $38.2 million, or 194.1%, for the year ended December 31, 2014 as compared to the year ended December 31, 2013. An analysis of selected expenses follows.

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Interest expense. Interest expense for the year ended December 31, 2014 was $6.9 million compared to $4.3 million for the year ended December 31, 2013, representing an increase of $2.6 million, or 60.8%. The $2.6 million increase was the result of a $1.9 million increase in interest on new mortgage debt and $2.3 million resulting from outstanding balances, non-use fees and amortization of deferred financing costs on our revolving line of credit, partially offset by a $1.5 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 $0.1 million decrease relating to a mortgage re-finance and debt pay-downs.

General and administrative. General and administrative expenses increased $8.2 million or 255.9%, from $3.2 million during the year ended December 31, 2013 to $11.4 million during the year ended December 31, 2014. The increase included salaries and benefits of $3.8 million (including non-cash share compensation of $1.5 million), professional fees of $1.3 million and other administrative costs of $3.1 million (including one-time Amendment Payment of $1.8 million to Ziegler).

Operating expenses. Operating expenses increased $5.5 million or 118.4%, from $4.7 million during the year ended December 31, 2013 to $10.2 million during the year ended December 31, 2014. The increase in operating expense primarily resulted from our 2014 and 2013 acquisitions which resulted in additional operating expense of $5.2 million and $0.3 million, respectively.

Depreciation and amortization. Depreciation and amortization increased $11.6 million, or 227.6%, from $5.1 million during the year ended December 31, 2013 to $16.7 million during the year ended December 31, 2014. The increase in depreciation and amortization primarily resulted from our 2014 and 2013 acquisitions which resulted in additional depreciation and amortization of $8.0 million and $3.1 million, respectively.

Acquisition expenses. Acquisition expenses increased $9.0 million or 462.3%, from $1.9 million during the year ended December 31, 2013 to $10.9 million for the year ended December 31, 2014. During the year ended December 31, 2014 and 2013, we acquired $322.8 million and $132.4 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 $1.8 million impairment loss on two medical office buildings purchased by the Predecessor for the year ended December 31, 2014. No such impairment loss was recorded for the year ended December 31, 2013.

Management fees. The Predecessor incurred $0.5 million of management fees in the year ended December 31, 2013. We do not incur these management fees. No management fees were incurred by the Trust in the year ended December 31, 2014.

Equity in income of unconsolidated entity. The change in equity in income from unconsolidated entity for the year ended December 31, 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 investment properties. 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. During 2013, the Trust sold a 4,000 square foot medical office building condominium unit located in Florida for approximately $0.5 million.

Cash Flows

Twelve Months Ended December 31, 2015 compared to the twelve months ended December 31, 2014 (in thousands).

	2015			2014
Cash provided by operating activities	$	61,352		$	13,295
Cash used in investing activities	(801,716		)	(518,810		)
Cash provided by financing activities	727,584			464,960
Decrease in cash and cash equivalents	$	(12,780	)	$	(40,555	)

Cash flows from operating activities. Cash flows provided by operating activities was $61.4 million during the twelve months ended December 31, 2015 compared to $13.3 million during the twelve months ended December 31, 2014, representing an increase of $48.1 million. This change is attributable to the increased operating cash flows resulting from our 2015 and 2014 acquisitions.

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Cash flows from investing activities. Cash flows used in investing activities was $800.7 million during the twelve months ended December 31, 2015 compared to cash flows used in investing activities of $518.8 million during the twelve months ended December 31, 2014, representing a change of $282.9 million. The increase in cash flows used in investing activities was primarily attributable to our $251.7 millionincrease in acquisition activity over the prior year.

Cash flows from financing activities. Cash flows provided by financing activities was $727.6 million during the twelve months ended December 31, 2015 compared to cash flows provided by financing activities of $465.0 million during the twelve months ended December 31, 2014, representing an increase of $262.6 million. The 2015 activity was primarily attributable to our follow-on public offerings and the at-the-market offering, resulting in net proceeds of $545.1 million, and $620.0 million of proceeds from borrowings on our revolving credit facility. These were partially offset by the $363.0 million paydown of our revolving credit facility and $63.7 million of dividends paid. 

Year Ended December 31, 2014 compared to Year Ended December 31, 2013 (in thousands).

	2014			2013
Net cash provided by operating activities	$	13,295		$	1,168
Net cash used in investing activities	(518,810		)	(126,443		)
Net cash provided by financing activities	464,960			179,139
(Decrease) increase in cash and cash equivalents	$	(40,555	)	$	53,864

Cash flows from operating activities. Cash flows provided by operating activities was $13.3 million during the year ended December 31, 2014 compared to cash flow provided by operating activities of $1.2 million during the year ended December 31, 2013, representing an increase of $12.1 million. This change is attributable to the increased operating cash flows resulting from the acquisition of 61 healthcare properties in 2014.

Cash flows from investing activities. Cash flows used in investing activities was $518.8 million during the year ended December 31, 2014 compared to cash flows used in investing activities of $126.4 million during the year ended December 31, 2013, representing a change of $392.4 million. The increase in cash flows used in investing activities was primarily attributable to a $375.4 million increase in 2014 acquisitions compared to 2013, funding of two loans for $15.4 million, and $0.9 million increase in capital expenditures on investment properties.

Cash flows from financing activities. Cash flows provided by financing activities was $465.0 million during the year ended December 31, 2014 compared to cash flows provided by financing activities of $179.1 million during the year ended December 31, 2013, representing an increase of $285.5 million. The increase was primarily attributable to an increase of $124.5 million in net proceeds from follow-on public offerings, net increase of proceeds and payments on credit facility borrowings of $138.0 million, increase of $26.4 million in proceeds from issuance of mortgage debt and a decrease of $35.3 million of payments on mortgage debt, partially offset by an increase of $28.8 million of dividends and distributions paid, a $7.6 million increase in purchase of OP Units, and an increase of $2.5 million of debt issuance costs on our credit facility.

Non-GAAP Financial Measures

Funds From Operations (FFO) and Normalized FFO

We believe that information regarding FFO is helpful to shareholders and potential investors because it facilitates an understanding of the operating performance of our properties without giving effect to real estate depreciation and amortization, which assumes that the value of real estate assets diminishes ratably over time. Because real estate values have historically increased or decreased with market conditions, we believe that FFO provides a more meaningful and accurate indication of our performance. We calculate FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as net income (computed in accordance with GAAP) before noncontrolling interests of holders of OP units, excluding gains (or losses) on sales of depreciable operating property, impairment write-downs on depreciable assets and extraordinary items (computed in accordance with GAAP), plus real estate related depreciation and amortization (excluding amortization of deferred financing costs). Our FFO computation may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with NAREIT definition or that interpret the NAREIT definition differently than we do. The GAAP measure that we believe to be most directly comparable to FFO, net income (loss), includes depreciation and amortization expenses, gains or losses on property sales, impairments and noncontrolling interests. In computing FFO, we eliminate these items because, in our view, they are not indicative of the results from the operations of our properties. To facilitate a clear understanding of our historical operating results, FFO should be examined in

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conjunction with net income (determined in accordance with GAAP) as presented in our financial statements. FFO does not represent cash generated from operating activities in accordance with GAAP, should not be considered to be an alternative to net income (loss) (determined in accordance with GAAP) as a measure of our liquidity and is not indicative of funds available for our cash needs, including our ability to make cash distributions to shareholders.

We use Normalized FFO, which excludes from FFO net change in fair value of derivative financial instruments, acquisition-related expenses, acceleration of deferred financing costs, and other normalizing items. However, our use of the term Normalized FFO may not be comparable to that of other real estate companies as they may have different methodologies for computing this amount. Normalized FFO should not be considered as an alternative to net income or loss attributable to controlling interest (computed in accordance with GAAP) as an indicator of our financial performance or to cash flow operating activities (computed in accordance with GAAP) as an indicator of our liquidity, nor its indicative of funds available to fund our cash needs, including its ability to make distributions. Normalized FFO should be reviewed in connection with other GAAP measurements.

The following is a reconciliation from net income, the most direct financial measure calculated and presented in accordance with GAAP, to FFO and Normalized FFO (in thousands, except share and per share data):

	Year Ended December 31,
	2015			2014
Net income (loss)	$	12,741		$	(4,418	)
Net (income) attributable to NCI - partially owned properties	(377		)	(314		)
Preferred distributions	(1,189		)	—
Depreciation and amortization expense	45,445			16,731
Depreciation and amortization expense - partially owned properties	(484		)	(265		)
Gain on the sale of investment properties	(130		)	(32		)
Impairment loss	—			1,750
FFO applicable to common shares and OP Units	$	56,006		$	13,452
FFO per common share and OP Unit	$	0.73		$	0.36
Net change in fair value of derivative	(166		)	(161		)
Acquisition related expenses	14,893			10,897
Acceleration of deferred financing costs	—			178
Other normalizing items	—			1,800
Normalized FFO applicable to common shares and OP Units	$	70,733		$	26,166
Normalized FFO per common share and OP Unit	$	0.92		$	0.70
Weighted average number of common shares and OP Units outstanding	76,792,073			37,196,043

Net Operating Income (NOI) and Cash NOI

NOI is a non-GAAP financial measure that is defined as net income or loss, computed in accordance with GAAP, generated from our total portfolio of properties before general and administrative expenses, acquisition-related expenses, depreciation and amortization expense, interest expense, net change in the fair value of derivative financial instruments, gain or loss on the sale of investment properties, and impairment losses. We believe that NOI provides an accurate measure of operating performance of our operating assets because NOI excludes certain items that are not associated with management of the properties. Additionally, our use of the term NOI may not be comparable to that of other real estate companies as they may have different methodologies for computing this amount.

Cash NOI is a non-GAAP financial measure which excludes from NOI straight-line rent adjustments, amortization of acquired above and below market leases and other non-cash and normalizing items. Other non-cash and normalizing items include items such as the amortization of lease inducements. We believe that Cash NOI provides an accurate measure of the operating performance of our operating assets because it excludes certain items that are not associated with management of the properties. Additionally, we believe that Cash NOI is a widely accepted measure of comparative operating performance in the real estate community. However, our use of the term Cash NOI may not be comparable to that of other real estate companies as such other companies may have different methodologies for computing this amount.

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The following is a reconciliation from net income, the most direct financial measure calculated and presented in accordance with GAAP, to NOI and Cash NOI (in thousands):

	Year Ended December 31,
	2015			2014
Net income (loss)	$	12,741		$	(4,418	)
General and administrative	14,908			11,440
Acquisition-related expenses	14,893			10,897
Depreciation and amortization	45,471			16,731
Interest expense	10,636			6,907
Net change in the fair value of derivative	(166		)	(161		)
Gain on the sale of investment properties	(130		)	(32		)
Impairment loss	—			1,750
NOI	$	98,353		$	43,114
NOI	$	98,353		$	43,114
Straight-line rent adjustments	(9,000		)	(4,259		)
Amortization of acquired above/below market leases	1,832			378
Amortization of lease inducements	572			191
Seller master lease and rent abatement payments	1,321			—
Cash NOI	$	93,078		$	39,424

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA

We define EBITDA as net income computed in accordance with GAAP plus depreciation and amortization, interest expense and net change in the fair value of derivative financial instruments. We define Adjusted EBITDA as net income computed in accordance with GAAP plus depreciation and amortization, interest expense and net change in the fair value of derivative financial instruments, acquisition-related expenses, non-cash share compensation, and other non-recurring items, such as impairment loss and shared service amendment payment. We consider EBITDA and Adjusted EBITDA important measures because they provide additional information to allow management, investors, and our current and potential creditors to evaluate and compare our core operating results and our ability to service debt.

The following is a reconciliation from net income, the most direct financial measure calculated and presented in accordance with GAAP, to EBITDA and Adjusted EBITDA (in thousands):

	Year Ended December 31,
	2015			2014
Net income (loss)	$	12,741		$	(4,418	)
Depreciation and amortization	45,471			16,731
Interest expense	10,636			6,907
Net change in fair value of derivatives	(166		)	(161		)
EBITDA	$	68,682		$	19,059
Acquisition-related expenses	14,893			10,897
Non-cash share compensation	3,084			1,977
Impairment loss	—			1,750
Shared service amendment payment	—			1,800
Adjusted EBITDA	$	86,659		$	35,483

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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 December 31, 2015, we had a total of $3.1 million of cash and cash equivalents and $198.7 million of near-term availability on our unsecured revolving credit facility. Also, we had an additional $156.3 million of availability under our unsecured revolving credit facility as of December 31, 2015 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 unsecured revolving credit facility will be adequate to fund any 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 and debt 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.

In addition, on June 17, 2015, we filed an automatic shelf registration statement on Form S-3 with the Commission covering an indeterminate amount of common shares, preferred shares, convertible shares, debt securities, convertible debt securities or other types of securities from time to time (the “Automatic Shelf Registration Statement”).

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 our Shelf Registration Statement declared effective on August 19, 2014 (the “ATM Program”). 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. During 2015, we sold 1,255,092 common shares pursuant to the ATM Program, at a weighted average price of $16.63 per share resulting in total proceeds of approximately $20.9 million, before $0.3 million in

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commissions. As of February 22, 2016 we had no 2016 activity under the ATM Program. As of February 22, 2016, we have $73.5 million remaining available under the ATM Program.

On December 2, 2014, we adopted a Dividend Reinvestment and Share Purchase Plan (the “DRIP”). Under the DRIP:

• Existing shareholders may purchase additional common shares by reinvesting all or a portion of the dividends paid on their common shares and by making optional cash payments of not less than $50 and up to a maximum of $10,000 per month;

• New investors may join the DRIP by making an initial investment of not less than $1,000 and up to a maximum of $10,000; and

• Once enrolled in the DRIP, participants may authorize electronic deductions from their bank account for optional cash payments to purchase additional shares.

The DRIP is administered by our transfer agent, Computershare Trust Company, N.A. Our common shares sold under the DRIP will be newly issued or purchased in the open market, as further described in the DRIP. As of February 22, 2016, we have issued 16,589 common shares under our DRIP since its inception.

On January 21, 2015, we completed a follow-on public offering of 18,975,000 common shares of beneficial interest, including 2,475,000 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to us of approximately $297.3 million. We contributed the net proceeds of this offering to our Operating Partnership in exchange for 18,975,000 OP Units, and our Operating Partnership used the net proceeds of the public offering to repay borrowings under our unsecured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

On October 19, 2015, we completed a follow-on public offering of 15,812,500 common shares of beneficial interest, including 2,062,500 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to us of approximately $226.8 million. We contributed the net proceeds of this offering to our Operating Partnership in exchange for 15,812,500 OP Units, and our Operating Partnership used the net proceeds of the public offering to repay borrowings under our unsecured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

On January 7, 2016, our Operating Partnership issued and sold $150 million aggregate principal amount of senior notes, comprised of (i) $15,000,000 aggregate principal amount of 4.03% Senior Notes, Series A, due January 7, 2023 (the “Series A Notes”), (ii) $45,000,000 aggregate principal amount of 4.43% Senior Notes, Series B, due January 7, 2026 (the “Series B Notes”), (iii) $45,000,000 aggregate principal amount of 4.57% Senior Notes, Series C, due January 7, 2028 (the “Series C Notes”) and (iv) $45,000,000 aggregate principal amount of 4.74% Senior Notes, Series D, due January 7, 2031 (the “Series D Notes,” and together with the Series A Notes, the Series B Notes and the Series C Notes, the “Notes”). The proceeds of the Notes were used to repay borrowings under our unsecured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

The note agreement covering the Notes contains covenants that are substantially similar to those contained in the Credit Agreement, including financial covenants that require compliance with leverage and coverage ratios and maintenance of minimum tangible net worth, as well as other affirmative and negative covenants that may limit, among other things, our ability to incur additional debt, make distributions or investments, incur liens and sell, transfer or dispose of assets. The note agreement also includes customary representations and warranties and customary events of default substantially similar to those contained in the Credit Agreement.

On January 25, 2016, we completed a follow-on public offering of 21,275,000 common shares of beneficial interest, including 2,775,000 common shares issued upon exercise of the underwriters' overallotment option, resulting in net proceeds to us of approximately $320.9 million. We contributed the net proceeds of this offering to our Operating Partnership in exchange for 21,275,000 OP Units, and our Operating Partnership used the net proceeds of the public offering to repay borrowings under our secured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

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.

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Critical Accounting Policies

Our consolidated and combined financial statements are prepared in conformity with GAAP, which require us to make estimates and assumptions 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. Set forth below is a summary of our accounting policies that we believe are critical to the preparation of our consolidated and combined financial statements.

Principles of Consolidation and Combination

We did not conduct business operations prior to completion of the IPO on July 24, 2013, so the financial information herein for periods prior to July 24, 2013 reflects the operations of the Ziegler Funds, from whom we acquired the equity interests in the 19 properties that constituted our initial portfolio upon completion of the IPO and formation transactions. We determined the Ziegler Funds to be our accounting Predecessor, which is not a legal entity. The financial information herein since July 24, 2013 reflects the operations of Physicians Realty Trust since completion of the IPO and formation transactions. The combined historical data for our Predecessor is not indicative of our financial position or results of operations.

The accompanying consolidated and combined financial statements include the accounts of all controlled subsidiaries and joint ventures. The portion of the net income or loss attributed to third parties is reported as net income allocable to noncontrolling interests on the consolidated and combined statements of operations, and such parties’ portion of the net equity in such subsidiaries is reported on the consolidated balance sheets as noncontrolling interests. All significant intercompany balances and transactions have been eliminated in consolidation and combination.

We consider ourselves to control an entity under ASC Topic 810 Consolidation (“ASC 810”), if we are the majority owner of and have voting control over such entity. We also assess control through means other than voting rights (“variable interest entities” or “VIEs”) and determine which business entity is the primary beneficiary of the VIE. A VIE is broadly defined as an entity where either the equity investors as a group, if any, do not have a controlling financial interest or the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. We consolidate VIEs when it is determined that we are the primary beneficiary of the VIE at either the date we became involved with the variable interest entity or upon the occurrence of a reconsideration event.

Real Estate Investment Properties and Identified Intangible Assets

We are required to make subjective assessments of the useful lives of our properties for purposes of determining the amount of depreciation to record on an annual basis with respect to our investments in real estate. These assessments have a direct impact on our net income because if we were to shorten the expected useful lives of our investments in real estate we would depreciate such investments over fewer years, resulting in more depreciation expense and lower net income on an annual basis. Real estate investment properties and identified intangible assets are carried at cost, net of accumulated depreciation and amortization. Medical office buildings are depreciated over their estimated useful lives ranging up to 50 years using the straight-line method. Tenant improvements and in-place leases are amortized over the lease life of the in-place leases or the tenant’s respective lease term. Cost of maintenance and repairs are charged to expense when incurred.

We periodically assess the carrying value of real estate investments and related intangible assets in accordance with ASC Topic 360, Property, Plant & Equipment (“ASC 360”), to determine if facts and circumstances exist that would suggest that the recorded amount of an asset might be impaired or that the estimated useful live should be modified. In the event impairment in value occurs and a portion of the carrying amount of the real estate investment will not be recovered in part or in whole, a provision will be recorded to reduce the carrying basis of the real estate investment and related intangibles to their estimated fair value. The estimated fair value of our real estate investments is determined by use of a number of customary industry standard methods that include discounted cash flow modeling using appropriate discount and capitalization rates and/or estimated cash proceeds received upon the anticipated disposition of the asset from market comparables. Estimates of future cash flows is based on a number of factors including the historical operating results, leases in place, known trends, and other market or economic factors affecting the real estate investment. The evaluation of anticipated cash flows is subjective and is based on assumptions regarding future occupancy, lease rates and capital requirements that could differ materially from actual results. If our anticipated holding periods change or estimated cash flows decline based on market conditions or other unforeseen factors, impairment may be recognized. Long-lived assets to be disposed of are recorded at the lower of carrying value or fair value less costs to sell.

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Revenue

We recognize rental revenues in accordance with ASC 840, Leases (“ASC 840”). ASC 840 requires that rental revenue and adjustments relating to lease inducements and above and below market leases, be recognized on a straight-line basis over the term of the lease 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 are included in other assets on the consolidated balance sheets. If we determine the collectability of straight-line rents is not reasonable assured, we limit future recognition to amounts contractually owed and, where appropriate, establish an allowance for estimated losses.

Expense recoveries related to tenant reimbursement for real estate taxes, insurance, and other operating expenses are recognized as expense recoveries revenue in the period the applicable expenses are incurred. The reimbursements are recognized at gross, as we are generally the primary obligor with respect to real estate taxes and purchasing goods and services from third party suppliers, and have discretion in selecting the supplier, and bear the credit risk.

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 expense recoveries.

Lease Accounting

We, as lessor, make a determination with respect to each of our leases whether they should be accounted for as operating leases or direct financing leases. The classification criteria is based on estimates regarding the fair value of the leased facilities, minimum lease payments, effective cost of funds, the economic life of the facilities, the existence of a bargain purchase option, and certain other terms in the lease agreements. We believe all of our leases should be accounted for as operating leases. Payments received under operating leases are accounted for in the consolidated and combined statements of operations as rental revenue for actual rent collected plus or minus a straight-line adjustment for estimated minimum lease escalators, adjustments relating to amortization of lease inducements, above and below market leases. Assets subject to operating leases are reported as real estate investments in the consolidated balance sheets.

Substantially all of our leases contain fixed or formula-based rent escalators. To the extent that the escalator increases are tied to a fixed index or rate, lease payments are accounted for on a straight-line basis over the life of the lease.

Purchase of 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 the acquired tangible assets and assumed liabilities 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 (“ASC 805”), and assets acquired and liabilities assumed, including identified intangible assets and liabilities, are recorded at fair value.

The determination of fair value involves the use of significant judgment and estimation. The Trust makes estimates of the fair value of the tangible and intangible acquired assets and assumed liabilities using information obtained from multiple sources as a result of pre-acquisition due diligence and may include the assistance of a third party appraiser. We estimate the fair value of buildings acquired on an as-if-vacant basis and depreciate the building value over its estimated remaining life. We determine the allocated value of other fixed assets, such as site improvements, based upon the replacement cost and depreciate such value over the assets’ estimated remaining useful lives as determined at the applicable acquisition date. The fair value of land is determined either by considering the sales prices of similar properties in recent transactions or based on internal analyses of recently acquired and existing comparable properties within our portfolio.

In recognizing identified intangible assets and liabilities in connection with a business combination, the value of above-or-below market leases is estimated based on the present value (using an interest rate which reflected the risks associated with the leases acquired) of the difference between contractual amounts to be received pursuant to the leases and management’s estimate of market lease rates measured over a period equal to the estimated remaining term of the lease. The capitalized above-market or below-market lease intangibles are amortized as a reduction or addition to rental income over the estimated remaining term of the respective leases.

In determining the value of in-place leases and tenant relationships, management considers current market conditions and costs to execute similar leases in arriving at an estimate of the carrying costs during the expected lease-up period from vacant to existing occupancy. In estimating carrying costs, management includes real estate taxes, insurance, other operating

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expenses, estimates of lost rental revenue during the expected lease-up periods, and costs to execute similar leases, including leasing commissions, tenant improvements, legal, and other related costs based on current market demand. The values assigned to in-place leases and tenant relationships are amortized over the estimated remaining term of the lease. If a lease terminates prior to its scheduled expiration, all unamortized costs related to that lease are written off.

The values assigned to all lease intangible assets and liabilities are amortized over the estimated remaining term of the lease. If a lease terminates prior to its scheduled expiration, all unamortized costs related to that lease are written off.

We calculate the fair value of any long-term debt assumed by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings, which we approximate based on the rate at which it would expect to incur a replacement instrument on the date of acquisition, and recognize any fair value adjustments related to long-term debt as effective yield adjustments over the remaining term of the instrument.

Based on these estimates, we recognize the acquired assets and assumed liabilities at their estimated fair values, which generally are determined using Level 3 inputs, such as market rental rates, capitalization rates, discount rates, or other available market data. Initial valuations are subject to change until the information is finalized, no later than 12 months from the acquisition date. We expense transaction costs associated with acquisitions accounted for as business combinations in the period incurred.

Use of Estimates

The preparation of the consolidated and combined financial statements in conformity with GAAP requires management to make estimates and assumptions 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 period. Significant estimates are made for the valuation of real estate and related intangibles, valuation of financial instruments, impairment assessments and fair value assessments with respect to purchase price allocations. Actual results could differ from those estimates.

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.

Real Estate Taxes

As owner of our properties, we are ultimately liable for the real estate taxes on our properties. Pursuant to our triple-net lease agreements, tenants generally are responsible, directly or indirectly, for the payment of all real estate taxes assessed on our properties, which are subject to triple-net leases.

Credit Facility

On July 22, 2015, the Operating Partnership, as borrower, and we and certain subsidiaries and other affiliates of our company, as guarantors, entered into an amendment to the existing 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 (as amended, the “Credit Agreement”) which increased the maximum principal amount available under an unsecured revolving credit facility from $400 million to $750 million. The Credit Agreement includes a swingline loan commitment for up to 10% of the maximum principal amount and provides an accordion feature allowing us to increase borrowing capacity by up to an additional $350 million, subject to customary terms and conditions, resulting in a maximum borrowing capacity of $1.1 billion.

The Credit Agreement has a maturity date of September 18, 2019 and includes a one year extension option. Borrowings under the Credit Agreement bear interest on the outstanding principal amount at an adjusted LIBOR rate, which is based on the Trust’s investment grade rating under the Credit Agreement. As of December 31, 2015, the Trust had an investment grade rating from Moody’s of Baa3 and as such, borrowings under the Credit Agreement accrued interest on the

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outstanding principal at a rate of LIBOR plus 1.20%. The Credit Agreement includes a facility fee equal to 0.25% per annum, which is also determined by the Trust’s investment grade rating.

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 December 31, 2015, 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.

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 our investment grade rating as follows:

Investment Grade Rating	Adjusted LIBOR Rate Loans and Letter of Credit Fee	Base Rate Loans
At Least A- or A3	LIBOR + 0.85%	—	%
At Least BBB+ or BAA1	LIBOR + 0.90%	—	%
At Least BBB or BAA2	LIBOR + 1.00%	0.10	%
At Least BBB- or BAA3	LIBOR + 1.20%	0.20	%
Below BBB- or BAA3	LIBOR + 1.55%	0.60	%

Off-Balance Sheet Arrangements

As of December 31, 2015, we had no off-balance sheet debt.

Contractual Obligations

The following table summarizes our material contractual payment obligations and commitments as of December 31, 2015:

			Payments by Period (in thousands)
	Total		Less than 1 Year		2016 - 2017		2018 - 2019		2020 and Thereafter
Principal payments(1)	$	488,926	$	9,748	$	41,924	$	420,602	$	16,652
Interest payments – fixed rate debt(1)	12,590		4,290		5,388		2,290		622
Interest payments – variable rate debt(1)	22,782		6,285		12,394		4,103		—
Ground lease payments	34,756		1,576		3,268		3,439		26,473
Total	$	559,054	$	21,899	$	62,974	$	430,434	$	43,747

(1) Payments shown represent 100% of debt service and do not reflect joint venture interests.

Inflation

Historically, inflation has not had a significant impact on the operating performance of our properties. Many of our lease agreements contain provisions designed to mitigate the adverse impact of inflation. These provisions include clauses that enable us to receive payment of increased rent pursuant to escalation clauses which generally increase rental rates during the terms of the leases. These escalation clauses often provide for fixed rent increases or indexed escalations (based upon changes in the consumer price index or other measures). However, some of these contractual rent increases may be less than the actual rate of inflation. Most of our lease agreements require the tenant to pay an allocable share of operating expenses, including common area maintenance costs, real estate taxes and insurance. This requirement reduces our exposure to increases in these costs and operating expenses resulting from inflation.

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Seasonality

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

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ITEM 7A. 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 instruments consist of two embedded derivatives and an interest rate swap and are recognized as liabilities on the consolidated balance sheets in accrued expenses and other liabilities and are measured at fair value. See Note 2 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 December 31, 2015 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 December 31, 2015 would increase by approximately $4.0 million annually, and if LIBOR were to decrease by 100 basis points, interest expense on our variable rate debt at December 31, 2015, would decrease by approximately $4.0 million annually.

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 December 31, 2015, we had total consolidated indebtedness of approximately $489.6 million. The weighted average interest rate on our consolidated indebtedness was 2.28% (based on the 30-day LIBOR rate as of December 31, 2015, of 0.358%). As of December 31, 2015, we had approximately $399.3 million, or approximately 81.7%, of our outstanding long-term debt exposed to fluctuations in short-term interest rates.

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The following table sets forth certain information with respect to our consolidated indebtedness outstanding as of December 31, 2015 (in thousands).

	Principal		Fixed/Floating Rate	Rate			Maturity
Senior Secured Revolving Credit Facility	$	395,000	Floating	LIBOR + 1.2%			9/18/2019
Canton Medical Office Building(1)	6,099		Fixed	5.94	%		6/6/2017
Firehouse Square	2,699		Fixed	6.58	%		9/6/2017
Hackley Medical Center	5,283		Fixed	5.93	%		1/6/2017
MeadowView Professional Center	10,225		Fixed	5.81	%		6/6/2017
Mid Coast Hospital Medical Office Building(2)	7,656		Fixed	4.90	%	(3)	5/16/2016
Remington Medical Commons	4,262		Floating	LIBOR + 2.75%			9/28/2017
Valley West Hospital Medical Office Building	4,768		Fixed	4.83	%		12/1/2020
Oklahoma City, OK Medical Office Building	7,473		Fixed	4.71	%		1/10/2021
Crescent City Surgical Center	18,750		Fixed	5.00	%		1/23/2019
San Antonio, TX Hospital	9,120		Fixed	5.00	%		6/26/2022
Savage Medical Office Building	5,753		Fixed	5.50	%		2/1/2022
Plaza HCA MOB	11,838		Fixed	6.13	%		8/1/2017
Total	$	488,926

(1) We own a 51.0% interest in the joint venture that owns this property. Debt shown in this table 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 table is the full amount of the mortgage indebtedness on this property.

(3) This loan bears interest at a rate of LIBOR + 2.75%. We have entered into an interest rate swap to effectively fix the rate on this loan at 4.90% through the date of maturity.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements

Physicians Realty Trust	Page
Report of Independent Registered Public Accounting Firm	63
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting	64
Consolidated Balance Sheets at December 31, 2015 and 2014	66
Consolidated and Combined Statements of Operations for the Years Ended December 31, 2015, 2014, and 2013	67
Consolidated and Combined Statements of Equity for the Years Ended December 31, 2015, 2014, and 2013	68
Consolidated and Combined Statements of Cash Flows for the Years Ended December 31, 2015, 2014, and 2013	69
Notes to Consolidated and Combined Financial Statements	70

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Report of Independent Registered Public Accounting Firm

The Board of Trustees of Physicians Realty Trust

We have audited the accompanying consolidated balance sheets of Physicians Realty Trust (the “Company”) as of December 31, 2015 and December 31, 2014, and the related consolidated statements of operations, equity and cash flows for the years then ended. Our audit also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audit.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Physicians Realty Trust at December 31, 2015 and 2014, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Physicians Realty Trust’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 29, 2016 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Chicago, Illinois

February 29, 2016

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Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting

Shareholders and Board of Trustees

Physicians Realty Trust:

We have audited Physician Realty Trust’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Physician Realty Trust’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Physicians Realty Trust maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the 2015 consolidated financial statements of Physicians Realty Trust and our report dated February 29, 2016 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Chicago, Illinois

February 29, 2016

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Report of Independent Registered Public Accounting Firm

To The Board of Trustees and Shareholders of

Physicians Realty Trust

Milwaukee, Wisconsin

We have audited the accompanying consolidated and combined statements of operations, shareholders’ equity and cash flows of Physicians Realty Trust (the “Company”) for the year ended December 31, 2013. These consolidated and combined financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated and combined financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated and combined financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated and combined financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated and combined financial statements referred to above present fairly, in all material respects, the results of the operations and cash flows of Physicians Realty Trust for year ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.

/s/ Plante & Moran, PLLC

Chicago, Illinois

March 21, 2014

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Physicians Realty Trust

Consolidated Balance Sheets

(in thousands, except share and per share data)

	December 31, 2015			December 31, 2014
ASSETS
Investment properties:
Land and improvements	$	130,788		$	79,334
Building and improvements	1,284,863			644,086
Tenant improvements	9,243			5,614
Acquired lease intangibles	205,168			72,985
	1,630,062			802,019
Accumulated depreciation	(91,250		)	(45,569		)
Net real estate property	1,538,812			756,450
Real estate loans receivable	39,349			15,876
Investment in unconsolidated entity	1,322			1,324
Net real estate investments	1,579,483			773,650
Cash and cash equivalents	3,143			15,923
Tenant receivables, net	2,977			1,324
Deferred costs, net	7,037			4,870
Other assets	52,231			15,806
Total assets	$	1,644,871		$	811,573
LIABILITIES AND EQUITY
Liabilities:
Credit facility	$	395,000		$	138,000
Mortgage debt	94,600			78,105
Accounts payable	644			700
Dividends payable	20,783			16,548
Accrued expenses and other liabilities	24,473			6,140
Acquired lease intangibles, net	5,950			2,871
Total liabilities	541,450			242,364
Redeemable noncontrolling interest – Operating Partnership and partially owned properties	26,960			—
Equity:
Common shares, $0.01 par value, 500,000,000 common shares authorized, 86,864,063 and 50,640,863 common shares issued and outstanding as of December 31, 2015 and December 31, 2014, respectively.	872			510
Additional paid-in capital	1,129,284			586,017
Accumulated deficit	(109,024		)	(51,797		)
Total shareholders’ equity	1,021,132			534,730
Noncontrolling interests:
Operating Partnership	45,451			33,727
Partially owned properties	9,878			752
Total noncontrolling interests	55,329			34,479
Total equity	1,076,461			569,209
Total liabilities and equity	$	1,644,871		$	811,573

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

(in thousands, except share and per share data)

	December 31,
	2015			2014			2013
Revenues:
Rental revenues	$	103,974		$	46,397		$	13,565
Expense recoveries	21,587			5,871			3,234
Interest income on real estate loans and other	3,880			1,066			246
Total revenues	129,441			53,334			17,045
Expenses:
Interest expense	10,636			6,907			4,295
General and administrative	14,908			11,440			3,214
Operating expenses	31,026			10,154			4,650
Depreciation and amortization	45,471			16,731			5,107
Acquisition expenses	14,893			10,897			1,938
Management fees	—			—			475
Impairment loss	—			1,750			—
Total expenses	116,934			57,879			19,679
Income (loss) before equity in income of unconsolidated entity, gain (loss) on sale of investment properties and noncontrolling interests:	12,507			(4,545		)	(2,634		)
Equity in income of unconsolidated entity	104			95			—
Gain (loss) on sale of investment properties	130			32			(2		)
Net income (loss)	12,741			(4,418		)	(2,636		)
Net (income) loss attributable to noncontrolling interests:
Predecessor	—			—			576
Operating Partnership	(576		)	695			470
Partially owned properties	(377		)	(314		)	(71		)
Net income (loss) attributable to controlling interest	11,788			(4,037		)	(1,661		)
Preferred distributions	(1,189		)	—			—
Net income (loss) attributable to common shareholders	$	10,599		$	(4,037	)	$	(1,661	)
Net income (loss) per share:
Basic	$	0.15		$	(0.12	)	$	(0.13	)
Diluted	$	0.15		$	(0.12	)	$	(0.13	)
Weighted average common shares:
Basic	72,750,724			33,063,093			12,883,917
Diluted	76,792,073			33,063,093			12,883,917
Dividends and distributions declared per common share and unit	$	0.90		$	0.90		$	0.41

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

67

Physicians Realty Trust and Predecessor

Consolidated and Combined Statements of Equity

(in thousands, except 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
Balance at 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 at July 24, 2013	—		—			—			18,181			18,181			—			(80		)	(80		)	18,101
Physicians Realty Trust
Net proceeds from sale of common shares	213		225,707			—			—			225,920			—			—			—			225,920
Formation transactions	—		35			—			(18,181		)	(18,146		)	18,181			(389		)	17,792			(354		)
Restricted share award grants	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 at December 31, 2013	215		213,359			(8,670		)	—			204,904			35,310			623			35,933			240,837
Net proceeds from sale of common shares	272		350,113			—			—			350,385			—			—			—			350,385
Restricted share award grants	2		2,100			(42		)	—			2,060			—			—			—			2,060
Issuance of common shares in connection with the Ziegler shared service amendment payment	1		1,799			—			—			1,800			—			—			—			1,800
Purchase of OP Units	—		—			—			—			—			(7,546		)	—			(7,546		)	(7,546		)
Conversion of OP Units	20		13,266			—			—			13,286			(13,286		)	—			(13,286		)	—
Dividends/distributions declared	—		—			(39,048		)	—			(39,048		)	(3,265		)	—			(3,265		)	(42,313		)
Adjustment for Noncontrolling Interests ownership in Operating Partnership	—		5,380			—			—			5,380			(5,380		)	—			(5,380		)	—
Issuance of OP Units in connection with acquisition	—		—			—			—			—			28,589			—			28,589			28,589
Distributions	—		—			—			—			—			—			(185		)	(185		)	(185		)
Net (loss) income	—		—			(4,037		)	—			(4,037		)	(695		)	314			(381		)	(4,418		)
Balance at December 31, 2014	510		586,017			(51,797		)	—			534,730			33,727			752			34,479			569,209
Net proceeds from sale of common shares	361		544,756			—			—			545,117			—			—			—			545,117
Restricted share award grants, net	1		3,191			(284		)	—			2,908			—			—			—			2,908
Purchase of OP Units	—		—			—			—			—			(1,088		)	—			(1,088		)	(1,088		)
Conversion of OP Units	—		171			—			—			171			(171		)	—			(171		)	—
Dividends/distributions declared	—		—			(67,542		)	—			(67,542		)	(3,344		)	—			(3,344		)	(70,886		)
Preferred distributions	—		—			(1,189		)				(1,189		)	—			—			—			(1,189		)
Issuance of OP Units in connection with acquisitions	—		—			—			—			—			10,973			—			10,973			10,973
Contributions	—		—			—						—			—			8,962			8,962			8,962
Distributions	—		—			—			—			—			—			(213		)	(213		)	(213		)
Change in market value of Redeemable Noncontrolling Interest in Operating Partnership	—		(73		)	—			—			(73		)	—			—			—			(73		)
Net income	—		—			11,788			—			11,788			576			377			953			12,741
Adjustment for Noncontrolling Interests ownership in Operating Partnership	—		(4,778		)	—			—			(4,778		)	4,778			—			4,778			—
Balance at December 31, 2015	$	872	$	1,129,284		$	(109,024	)	$	—		$	1,021,132		$	45,451		$	9,878		$	55,329		$	1,076,461

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

68

Physicians Realty Trust and Predecessor

Consolidated and Combined Statements of Cash Flows

(in thousands)

	Year Ended December 31,
	2015			2014			2013
Cash Flows from Operating Activities:
Net income (loss)	$	12,741		$	(4,418	)	$	(2,636	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	45,471			16,731			5,107
Amortization of deferred financing costs	1,373			1,097			510
Amortization of lease inducements and above/below market lease intangibles	2,577			571			141
Straight-line rental revenue/expense	(9,000		)	(4,366		)	(675		)
Amortization of above market assumed debt	(173		)	—			—
(Gain) loss on sale of investment properties	(130		)	(32		)	2
Equity in income of unconsolidated entity	(104		)	(95		)	—
Distribution from unconsolidated entity	106			71			—
Change in fair value of derivatives	(166		)	(161		)	(246		)
Provision for bad debts	69			9			30
Non-cash share compensation	3,798			2,422			433
Ziegler shared service amendment payment	—			1,800			—
Impairment on investment properties	—			1,750			—
Change in operating assets and liabilities:
Tenant receivables	(2,836		)	(986		)	(184		)
Other assets	(630		)	(3,518		)	(1,074		)
Accounts payable to related parties	—			—			(1,530		)
Accounts payable	(56		)	(136		)	34
Accrued expenses and other liabilities	8,312			2,556			1,256
Net cash provided by operating activities	61,352			13,295			1,168
Cash Flows from Investing Activities:
Proceeds on sales of investment properties	3,039			235			448
Acquisition of investment properties, net	(752,807		)	(501,127		)	(125,728		)
Capital expenditures on existing investment properties	(4,988		)	(900		)	—
Pay down of contingent consideration	(999		)	—			—
Real estate loans receivable	(22,359		)	(15,386		)	—
Note receivable	(20,545		)	—			—
Leasing commissions	(579		)	(100		)	(163		)
Lease inducements	(2,478		)	(1,532		)	(1,000		)
Net cash used in investing activities	(801,716		)	(518,810		)	(126,443		)
Cash Flows from Financing Activities:
Net proceeds from sale of common shares	545,117			350,384			225,920
Formation transactions	—			—			(354		)
Proceeds from credit facility borrowings	620,000			395,200			52,350
Payment on credit facility borrowings	(363,000		)	(257,200		)	(52,350		)
Proceeds from issuance of mortgage debt	—			26,550			162
Principal payments on mortgage debt	(2,022		)	(6,549		)	(41,832		)
Debt issuance costs	(3,105		)	(3,887		)	(1,428		)
Dividends paid – shareholders	(63,720		)	(28,104		)	(2,161		)
Distributions to noncontrolling interest – Operating Partnership	(3,216		)	(3,382		)	(493		)
Distributions to members and partners	(563		)	—			(211		)
Distributions to noncontrolling interest – partially owned properties	(213		)	(185		)	(464		)
Purchase of OP Units	(1,088		)	(7,546		)	—
Common shares repurchased and retired	(606		)	(321		)	—
Net cash provided by financing activities	727,584			464,960			179,139
Net (decrease) increase in cash and cash equivalents	(12,780		)	(40,555		)	53,864
Cash and cash equivalents, beginning of year	15,923			56,478			2,614
Cash and cash equivalents, end of year	$	3,143		$	15,923		$	56,478
Supplemental disclosure of cash flow information – interest paid during the year	$	9,550		$	5,606		$	3,942
Supplemental disclosure of noncash activity – assumed debt	$	18,690		$	15,283		$	—
Supplemental disclosure of noncash activity – issuance of OP Units and Series A Preferred Units in connection with acquisitions	$	40,376		$	28,589		$	11,535
Supplemental disclosure of noncash activity – contingent consideration	$	2,718		$	840		$	—

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

69

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 December 31, 2015, 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

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 (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 common units of partnership interest (“OP Units”) on July 24, 2013. 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 provided office space, IT support, accounting support and other services to the Trust in exchange for an annual fee. The Trust elected to terminate the shared services agreement effective July 23, 2015 in conjunction with completed renovations of the Renaissance Office Building.

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 per share to the public in the IPO. These formation transactions were effected concurrently with the completion of the IPO.

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 former senior secured revolving credit facility. The balance of the net proceeds was subsequently invested in healthcare properties.

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.

70

Equity Offerings

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 former 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 former senior secured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

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 former senior secured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

On January 21, 2015, the Trust completed a follow-on public offering of 18,975,000 common shares at $16.40 per share, including 2,475,000 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to the Trust of approximately $297.3 million. The Trust contributed the net proceeds of this offering to the Operating Partnership in exchange for 18,975,000 partnership interests in the Operating Partnership (“OP Units”), and the Operating Partnership used the net proceeds of the public offering to repay borrowings under the unsecured revolving credit facility and for general corporate purposes, including working capital and investment in real estate.

On June 17, 2015, the Trust filed an automatic shelf registration statement on Form S-3 with the Commission covering an indeterminate amount of common shares, preferred shares, convertible shares, debt securities, convertible debt securities or other types of securities from time to time.

On October 19, 2015, the Trust completed a follow-on public offering of 15,812,500common shares at $15.00 per share, including2,062,500common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to the Trust of approximately$226.8 million. The Trust contributed the net proceeds of this offering to the Operating Partnership in exchange for15,812,500 OP Units, and the Operating Partnership used the net proceeds of the public offering to repay a portion of the outstanding indebtedness under the unsecured revolving credit facility and for general corporate purposes, including working capital and investment in real estate.

On August 19, 2014, the Trust 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 the Trust 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 a shelf registration statement on Form S-3 (the “ATM Program”). During 2015 and 2014, the Trust’s issuance and sale of common shares pursuant to the ATM Program is as follows (in thousands, except common shares and price): 

	2015					2014
	Common shares sold	Weighted average price		Net proceeds		Common shares sold	Weighted average price		Net proceeds
Quarterly period ended March 31	247,397	$	16.96	$	4,139	—	$	—	$	—
Quarterly period ended June 30	1,007,695	16.56		16,439		—	—		—
Quarterly period ended September 30	—	—		—		—	—		—
Quarterly period ended December 31	—	—		—		3,576,010	15.54		54,789
Year ended December 31	1,255,092	$	16.63	$	20,578	3,576,010	$	15.54	$	54,789

71

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation

GAAP requires the Trust to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The Trust consolidates its investment in a VIE when it determines that it is its primary beneficiary. The Trust may change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary.

The Trust identifies the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. The Trust performs this analysis on an ongoing basis.

For property holding entities not determined to be VIEs, the Trust consolidates such entities in which the Trust or the Operating Partnership owns 100% of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest. All intercompany balances and transactions are eliminated in consolidation. For entities in which the 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 noncontrolling interest representing equity held by noncontrolling interests.

Noncontrolling Interests

The Trust presents the portion of any equity it does not own in entities that it controls (and thus consolidates) as noncontrolling interests and classifies such interests as a component of consolidated equity, separate from the Trust’s total shareholders’ equity, on the consolidated balance sheets.

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 and the payment of approximately $36.9 million of debt related to such properties.

During the year ended December 31, 2013, the Operating Partnership partially funded one property acquisition by issuing 954,877 OP Units valued at approximately $11.5 million on the date of issuance. The acquisition had a total purchase price of approximately $37.5 million.

During the year ended December 31, 2014, the Operating Partnership partially funded five property acquisitions by issuing an aggregate of 2,042,313 OP Units valued at approximately $28.6 million on the date of issuance. The five acquisitions had a total purchase price of approximately $103.6 million.

During the year ended December 31, 2015, the Operating Partnership partially funded three property acquisitions by issuing an aggregate of 648,649 OP Units valued at approximately $11.0 million on the date of issuance. The three acquisitions had a total purchase price of approximately $32.5 million.

72

Noncontrolling interests in the Trust represent OP Units held by the Predecessor’s prior investors and other investors. As of December 31, 2015, the Trust held a 95.7% 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 unregistered common shares on a one-for-one basis. Such selection to pay cash or issue common 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 sheet.

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 statement of operations.

Redeemable Noncontrolling Interests - Operating Partnership and Partially Owned Properties 

On February 5, 2015, the Trust entered into a Second Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”) which provides for the designation and issuance of the newly designated Series A Participating Redeemable Preferred Units of the Operating Partnership (“Series A Preferred Units”). Series A Preferred Units have priority over all other partnership interests of the Operating Partnership with respect to distributions and liquidation. Holders of Series A Preferred Units are entitled to a 5% cumulative return and upon redemption, the receipt of one common share and $200. The holders of the Series A Preferred Units have agreed not to cause the Operating Partnership to redeem their Series A Preferred Units prior to one year from the issuance date. In addition, Series A Preferred Units are redeemable at the option of the holders which redemption obligation may be satisfied, at the Trust’s option, in cash or registered common shares. Instruments that require settlement in registered common shares may not be classified in permanent equity as it is not always completely within an issuer’s control to deliver registered common shares. Due to the redemption rights associated with the Series A Preferred Units, the Trust classifies the Series A Preferred Units in the mezzanine section of its consolidated balance sheet. 

On February 5, 2015, the acquisition of the Minnetonka MOB was partially funded with the issuance of 44,685 Series A Preferred Units which are valued at $9.7 million. On December 17, 2015, the acquisition of the Nashville MOB was partially funded with the issuance of 91,236 Series A Preferred Units which are valued at $19.7 million. The Series A Preferred Units were evaluated for embedded features that should be bifurcated and separately accounted for as a freestanding derivative. The Trust determined that the Series A Preferred Units contained features that require bifurcation. The fair value of the embedded derivative is $8.1 million and is included on the Trust’s consolidated balance sheets in accrued expenses and other liabilities.

In connection with the acquisition of the Minnetonka MOB, the Trust received a $5 million equity investment from a third party, effective March 1, 2015. This investment earns a 15% cumulative preferred return. At any point subsequent to the third anniversary of the investment, the holder can require the Trust to redeem the instrument at a price for which the investor will realize a 15% internal rate of return. Due to the redemption provision, which is outside of the control of the Trust, the Trust classifies the investment in the mezzanine section of its consolidated balance sheet. The Trust records the carrying amount of the redeemable noncontrolling interests at the greater of the carrying value or redemption value.

73

Dividends and Distributions

Declaration Date	Record Date	Payment Date	Cash Dividend per Share/Unit
December 31, 2015	January 15, 2016	January 29, 2016	$	0.225
September 28, 2015	October 16, 2015	October 30, 2015	$	0.225
July 1, 2015	July 17, 2015	July 31, 2015	$	0.225
April 6, 2015	April 17, 2015	May 1, 2015	$	0.225
December 30, 2014	January 23, 2015	February 6, 2015	$	0.225
September 26, 2014	October 17, 2014	October 30, 2014	$	0.225
June 26, 2014	July 18, 2014	August 1, 2014	$	0.225
March 27, 2014	April 11, 2014	April 25, 2014	$	0.225
December 30, 2013	January 24, 2014	February 7, 2014	$	0.225
September 30, 2013	October 18, 2013	November 1, 2013	$	0.180	(1)

(1) Prorated cash dividend of $0.18 per share for the quarterly period from July 19, 2013 (the date of the IPO) through September 30, 2013, which was equivalent to a full quarterly dividend of $0.225 per share. The dividend was paid on November 1, 2013 to common shareholders and common OP Unit holders of record on October 18, 2013, with the exception of the OP Units issued in the acquisition of Crescent City Surgical Centre.

Purchase of 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 the acquired tangible assets and assumed liabilities 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 (“ASC 805”), and assets acquired and liabilities assumed, including identified intangible assets and liabilities, are recorded at fair value.

The determination of fair value involves the use of significant judgment and estimation. The Trust makes estimates of the fair value of the tangible and intangible acquired assets and assumed liabilities using information obtained from multiple sources as a result of pre-acquisition due diligence and may include the assistance of a third party appraiser. The Trust estimates the fair value of buildings acquired on an as-if-vacant basis and depreciates the building value over the estimated remaining life of the building. The Trust determines the allocated value of other fixed assets, such as site improvements, based upon the replacement cost and depreciates such value over the assets’ estimated remaining useful lives as determined at the applicable acquisition date. The fair value of land is determined either by considering the sales prices of similar properties in recent transactions or based on internal analyses of recently acquired and existing comparable properties within the Trust’s portfolio.

In recognizing identified intangible assets and liabilities in connection with a business combination, the value of above-or-below market leases is estimated based on the present value (using an interest rate which reflected the risks associated with the leases acquired) of the difference between contractual amounts to be received pursuant to the leases and management’s estimate of market lease rates measured over a period equal to the estimated remaining term of the lease. The capitalized above-market or below-market lease intangibles are amortized as a reduction or addition to rental income over the estimated remaining term of the respective leases.

In determining the value of in-place leases, management considers current market conditions and costs to execute similar leases in arriving at an estimate of the carrying costs during the expected lease-up period from vacant to existing occupancy. In estimating carrying costs, management includes real estate taxes, insurance, other operating expenses, estimates of lost rental revenue during the expected lease-up periods, and costs to execute similar leases, including leasing commissions, tenant improvements, legal, and other related costs based on current market demand. The values assigned to in-place leases are amortized over the estimated remaining term of the lease.

The values assigned to all lease intangible assets and liabilities are amortized over the estimated remaining term of the lease. If a lease terminates prior to its scheduled expiration, all unamortized costs related to that lease are written off.

The Trust calculates the fair value of any long-term debt assumed by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings, which the Trust approximates based on the rate at which it

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would expect to incur on a replacement instrument on the date of acquisition, and recognize any fair value adjustments related to long-term debt as effective yield adjustments over the remaining term of the instrument.

Based on these estimates, the Trust recognizes the acquired assets and assumed liabilities at their estimated fair values, which are generally determined using Level 3 inputs, such as market rental rates, capitalization rates, discount rates, or other available market data. Initial valuations are subject to change until the information is finalized, no later than 12 months from the acquisition date. The Trust expenses transaction costs associated with acquisitions accounted for as business combinations in the period incurred.

Impairment of Intangible and Long-Lived Assets

The Trust periodically evaluates its long-lived assets, primarily consisting of investments in real estate, for impairment indicators or whenever events or changes in circumstances indicate that the recorded amount of an asset may not be fully recoverable. If indicators of impairment are present, the Trust evaluates the carrying value of the related real estate properties in relation to the undiscounted expected future cash flows of the underlying operations. In performing this evaluation, management considers market conditions and current intentions with respect to holding or disposing of the real estate property. The Trust adjusts the net book value of real estate properties to fair value if the sum of the expected future undiscounted cash flows, including sales proceeds, is less than book value. The Trust recognizes an impairment loss at the time it makes any such determination. 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. Fair value is typically determined using a discounted future cash flow analysis or other acceptable valuation techniques, which are based, in turn, upon Level 3 inputs, such as revenue and expense growth rates, capitalization rates, discount rates or other available market data.

The Trust recorded real estate impairment charges of $1.8 million year ended December 31, 2014.

Assets Held for Sale and Discontinued Operations

The Trust may sell properties from time to time for various reasons, including favorable market conditions. The Trust classifies certain long-lived assets as held for sale once the criteria, as defined by GAAP, has been met. Long-lived assets to be disposed of are reported at the lower of their carrying amount or fair value minus cost to sell and are no longer depreciated.

In 2014, the FASB issued Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), which raises the threshold for disposals to qualify as discontinued operations. A discontinued operation is defined as: (1) a component of an entity or group of components that has been disposed of or classified as held for sale and represents a strategic shift that has or will have a major effect on an entity’s operations and financial results; or (2) an acquired business that is classified as held for sale on the acquisition date. ASU 2014-08 also requires additional disclosures regarding discontinued operations, as well as material disposals that do not meet the definition of discontinued operations. The application of this guidance is prospective from the date of adoption and applies only to disposals (or new classifications to held for sale) that have not been reported as discontinued operations in the Trust’s previously issued financial statements. The Trust early adopted ASU 2014-08 for the quarter ended March 31, 2014. Such adoption has had no impact on the Trust’s financial statements as no dispositions that qualify as discontinued operations occurred during the year ended December 31, 2015 and 2014.

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 equity interest.

During 2014, the Trust completed the acquisition of a 40% limited liability company membership interest in Jeff-Orleans Medical Development Real Estate, L.L.C., the entity that owns and leases to the Trust the land on which the Crescent City Surgical Centre is situated, for $1.3 million.

Real Estate Loans Receivable

Real estate loans receivable consists of seven mezzanine loans and a term loan. Each mezzanine loan is collateralized by an ownership interest in the respective borrower, while the term loan is secured by an equity interest in one medical office

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building development. Interest income on the loans are recognized as earned based on the terms of the loans subject to evaluation of collectability risks and are included in the Trust’s consolidated statement of operations.

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and short-term investments with maturities of three months or less from the date of purchase.

The Trust is subject to concentrations of credit risk as a result of its temporary cash investments. The Trust places its temporary cash investments with high credit quality financial institutions in order to mitigate that risk.

Escrow reserves

The Trust is required to maintain various escrow reserves on certain notes payable to cover future property taxes and insurance and tenant improvements costs as defined in each loan agreement. The total reserves as of December 31, 2015 and 2014 are $4.8 million and $1.9 million, respectively, which are included in other assets in the consolidated balance sheets.

Deferred costs

Deferred costs consist primarily of fees paid to obtain financing and costs associated with the origination of long-term leases on real estate properties. After the purchase of a property, lease commissions incurred to extend in-place leases or generate new lease are added to deferred lease costs. Deferred lease costs are amortized on a straight-line basis over the terms of their respective agreements. The Trust amortizes deferred financing costs as a component of interest expense over the terms of the related borrowings using a method that approximates a level yield.

Derivatives

Derivatives consist of two embedded derivatives and an interest rate swap and are recognized as liabilities on the consolidated balance sheets in accrued expenses and other liabilities and are measured at fair value. For the interest rate swap any change in the fair value is recognized immediately in earnings unless the derivative qualified as a hedge and for the embedded derivatives any change in fair value is recognized in Redeemable noncontrolling interest – Operating Partnership and partially owned properties. No derivatives have been designated as hedges.

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 measured and reported in the consolidated balance sheets at fair value. The Trust has elected not to apply hedge accounting to its derivative financial instruments and as such, any changes in the fair values of its derivatives are recognized immediately in earnings. 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. 

Tenant receivables, net

Tenant accounts receivable are stated net of the applicable allowance. Rental payments under these contracts are primarily due monthly. The Trust assesses the collectability of tenant receivables, including straight-line rent receivables, and defers recognition of revenue if collectability is not reasonably assured. The Trust bases its assessment of the collectability of rent receivables on several factors, including, among other things, payment history, the financial strength of the tenant and current economic conditions. If management’s evaluation of these factors indicates it is probable that the Trust will be unable to recover the full value of the receivable, the Trust provides a reserve against the portion of the receivable that it estimates may not be recovered. At December 31, 2015 and 2014, the allowance for doubtful accounts was $0.1 million.

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 approximately $15.6 million and $6.4 million as of December 31, 2015 and 2014, 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

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revenue is adjusted by amortization of lease inducements and above or below market rents on certain leases. Lease inducements and above or below market rents 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, 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 expense recoveries.

Income Taxes

The Trust elected to be taxed as a REIT for federal tax purposes commencing with the filing of its tax return for the short taxable year ending December 31, 2013. The Trust had no taxable income prior to electing REIT status. To qualify as a REIT, the Trust must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income to its shareholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Trust generally will not be subject to federal income tax to the extent it distributes qualifying dividends to its shareholders. If the Trust fails to qualify as a REIT in any taxable year, it will be subject to federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants the Trust relief under certain statutory provisions. Such an event could materially adversely affect the Trust’s net income and net cash available for distribution to shareholders. However, the Trust intends to continue to operate in such a manner as to continue qualifying for treatment as a REIT. Even if the Trust continues to qualify for taxation as a REIT, the Trust may be subject to state and local taxes on its income and property and federal income and excise taxes on its undistributed income.

Management Estimates

The preparation of consolidated and combined financial statements in conformity with GAAP 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 fair value assessments with respect to purchase price allocations, impairment assessments, and the valuation of financial instruments. Actual results could differ from these estimates.

Contingent Liability

The Trust records 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.

Reclassifications

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

Segment Reporting

Under the provision of Codification Topic 280, Segment Reporting, the Company has determined that it has one reportable segment with activities related to leasing and managing healthcare properties.

New Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-9, 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

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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, 2017 and allows for either full retrospective or modified retrospective adoption. Early adoption of this standard is permitted for reporting periods beginning after December 15, 2016. While the Trust is currently evaluating the impact the adoption of Topic 606 will have on its consolidated financial statements, we do not expect its adoption to have a significant impact on our consolidated financial statements, as a substantial portion of our revenue consists of rental income from leasing arrangements, which are specifically excluded from ASU 2014-09.

In February 2015, the FASB issued ASU 2015-2, Amendments to the Consolidation Analysis. This update is intended to improve targeted areas of consolidation guidance by simplifying the consolidation evaluation process and by placing more emphasis on risk of loss when determining a controlling financial interest. The provisions of this ASU are effective for interim and annual periods beginning after December 15, 2015. The Company will adopt ASU 2015-2 on January 1, 2016, and it is not expected to have a material impact on the Company’s consolidated financial statements and disclosures.

In April 2015, the FASB issued ASU 2015-3, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. ASU 2015-3 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. ASU 2015-3 is effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The Company will adopt ASU 2015-3 on January 1, 2016, and it is not expected to have a material impact on the Company’s consolidated financial statements and disclosures.

In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. The update requires that acquiring entities in a business combination recognize adjustments to provisional amounts identified in the reporting period in which the adjustment amounts are determined, including the cumulative effect of the change in provisional amount, as if the accounting had been completed at the acquisition date. Adjustments related to previous reporting periods must be disclosed by income statement line item, either on the face of the income statement or in the notes, in the period for which the adjustment was identified. ASU 2015-16 is effective for annual reporting periods beginning after December 15, 2015. The Company will adopt ASU 2015-16 on January 1, 2016, and it is not expected to have a material impact on the Company’s consolidated financial statements and disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases. The update amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. ASU 2016-02 will be effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted. We are currently evaluating the impact of adopting the new leases standard on our consolidated financial statements.

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Note 3. Acquisitions and Dispositions

During 2015, the Trust completed acquisitions of 66 properties located in 22 states for an aggregate purchase price of approximately $818.6 million. In addition, the Trust completed loan investments totaling $22.4 million. Acquisition activity for the year ending December 31, 2015 is summarized below:

Property (1)		Location	Acquisition Date	Purchase Price (in thousands)
Minnesota Portfolio	(2)
Edina MOB	(5)	Edina MN	January 22, 2015	$	14,190
Crystal MOB	(5)	Crystal, MN	January 22, 2015	14,782
Savage MOB	(5)	Savage, MN	January 22, 2015	12,800
Dell Road MOB	(5)	Chanhassen, MN	January 22, 2015	6,410
Vadnais Heights MOB	(5)	Vadnais Heights, MN	January 29, 2015	18,422
Minnetonka MOB	(3) (5)	Minnetonka, MN	February 5, 2015	26,000
Jamestown MOB	(5)	Jamestown, ND	February 5, 2015	12,819
Minnesota Eye MOB	(5)	Minnetonka, MN	February 17, 2015	10,882
Columbus MOB	(5)	Columbus, GA	January 23, 2015	6,540
Methodist Sports MOB	(4) (6)	Greenwood, IN	January 28, 2015	10,000
Indianapolis South (4 MOBs)	(5)	Greenwood, IN	February 13, 2015	17,183
Baylor Cancer Center	(5)	Dallas, TX	February 27, 2015	8,200
Bridgeport Medical Center	(5)	Lakewood, WA	February 27, 2015	13,750
Renaissance Office Building	(5)	Milwaukee, WI	March 27, 2015	6,500
University of Rochester Strong Memorial Portfolio (5 MOBs)	(5)	Rochester, NY	March 31, 2015	41,000
Avalon Park Florida Hospital MOB	(5)	Avalon Park, FL	March 31, 2015	14,600
Premier Surgery Center of Louisville	(5)	Louisville, KY	April 10, 2015	8,000
Baton Rouge MOB	(5)	Baton Rouge, LA	April 15, 2015	10,486
Healthpark Medical Center	(5)	Grand Blanc, MI	April 30, 2015	18,913
Plaza HCA MOB	(5)	Jacksonville, FL	April 30, 2015	19,000
Northern Ohio Medical Center	(4)	Sheffield, OH	May 28, 2015	11,236
University of Michigan - Northville MOB	(5)	Livonia, MI	May 29, 2015	14,750
Coon Rapids Medical Center MOB	(5)	Coon Rapids, MN	June 1, 2015	7,298
Mezzanine Loan - UF Health MOB	(7)	Jacksonville, FL	June 1, 2015	9,000
Premier Landmark MOB	(4) (8)	Bloomington, IN	June 5, 2015	11,308
Palm Beach ASC	(5)	Palm Beach, FL	June 26, 2015	14,070
Brookstone Physician Center MOB	(5)	Jacksonville, AL	June 30, 2015	2,800
Jackson Woman's Clinic MOB	(5)	Jackson, TN	June 30, 2015	5,672
Hillside Medical Center MOB	(5)	Hanover, PA	June 30, 2015	11,400
Randall Road MOB	(5)	Elgin, IL	June 30, 2015	13,045
Randall Road MOB - Unit 140	(4)	Elgin, IL	July 17, 2015	1,750
Medical Specialists of Palm Beach MOB	(5)	Atlantis, FL	July 24, 2015	11,051
OhioHealth - SW Health Center MOB	(5)	Grove City, OH	July 31, 2015	11,460
Trios Health MOB	(5)	Kennewick, WA	July 31, 2015	64,000
Integrated Medical Services (IMS) Portfolio
IMS - Paradise Valley MOB	(5)	Phoenix, AZ	August 14, 2015	31,814
IMS - Avondale MOB	(5)	Avondale, AZ	August 19, 2015	22,144
IMS - Palm Valley MOB	(5)	Goodyear, AZ	August 19, 2015	35,184
IMS - North Mountain MOB	(5)	Phoenix, AZ	August 31, 2015	51,740

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Property (1)		Location	Acquisition Date	Purchase Price (in thousands)
Mezzanine Loan - Warm Springs Rehab Hospital	(9)	Kyle, TX	August 21, 2015	3,138
Memorial Hermann Medical Complex (2 MOBs)	(5)	Katy, TX	September 1, 2015	40,400
Construction Loan - Tinseltown	(10)	Jacksonville, FL	September 4, 2015	1,005
New Albany Medical Center MOB	(5) (11)	New Albany, OH	September 9, 2015	11,200
Fountain Hills Medical Campus MOB	(5)	Fountain Hills, AZ	September 30, 2015	13,250
Catalyst Portfolio (12 MOBs)	(5)	AL & FL	October 13, 2015	23,805
Mezzanine Loan - Truman Medical Center	(12)	Kansas City, MO	October 16, 2015	4,500
Arete Surgical Center	(5)	Johnstown, CO	October 19, 2015	9,100
Cambridge Professional Center MOB	(5)	Waldorf, MD	October 30, 2015	11,550
Mezzanine Loan - Great Falls Replacement Surgical Hospital	(13)	Great Falls, MT	November 2, 2015	4,500
HonorHealth 44th Street MOB	(5)	Phoenix, AZ	November 13, 2015	7,163
Mercy Medical Center MOB	(5)	Fenton, MO	December 1, 2015	9,850
Nashville MOB	(5) (14)	Nashville, TN	December 17, 2015	45,440
Mezzanine Loan - Wilson Surgery Center	(15)	Wilson, NC	December 17, 2015	216
Hillside Medical Center - Suite 100	(4)	Hanover, PA	December 18, 2015	4,240
Randall Road MOB - Suite 170	(4)	Elgin, IL	December 21, 2015	408
KSF Orthopaedic MOB	(5)	Houston, TX	December 22, 2015	6,250
Great Falls Clinic MOB	(5) (16)	Great Falls, MT	December 29, 2015	24,244
Randall Road MOB - Suite 320	(4)	Elgin, IL	December 30, 2015	500
Total				$	840,958

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

(2) Through subsidiaries of the Operating Partnership, the Trust acquired seven medical office facilities located in the Minneapolis-St. Paul Metropolitan area and one additional medical office facility located in Jamestown, North Dakota from affiliates of The Davis Group and investors associated with The Davis Group. The Davis Group retained a less than 1% minority interest in the property holding entities.

(3) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 44,685 Series A Preferred Units valued at approximately $9.7 million in the aggregate on the date of issuance.

(4) The Trust accounted for these acquisitions as asset acquisitions and capitalized $0.4 million of total acquisition costs to the basis of the properties.

(5) The Trust accounted for these acquisitions as business combinations pursuant to the acquisition method and expensed total acquisition costs of $14.9 million.

(6) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 420,963 OP Units valued at approximately $7.3 million in the aggregate on the date of issuance.

(7) The Trust made a $9.0 million mezzanine term loan to fund the development of a MOB in Jacksonville, Florida. The loan is collateralized by an equity interest in the medical building development and accrues interest at a rate of 8.4% per year.

(8) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 210,820 OP Units valued at approximately $3.4 million in the aggregate on the date of issuance.

(9) The Trust made a $3.1 million mezzanine term loan to partially fund the borrower’s acquisition of the 54,500 square foot Warm Springs Rehabilitation Hospital in Kyle, Texas. The mezzanine loan is collateralized by an equity interest in the property and accrues interest at a rate of 8.5% per year. The Trust has an option to purchase the property.

(10) The Trust made additional advances on a construction loan to Tinseltown Partners, LLC to fund the renovations and additions of two re-purposed buildings in Jacksonville, Florida. The additional advances total $1.0 million and accrue at an interest rate of 9.0% per year.

(11) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 16,866 OP Units valued at approximately $0.2 million in the aggregate on the date of issuance.

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(12) The Trust made a $4.5 million mezzanine term loan to partially fund the owner’s permanent financing of the 87,500 square foot Truman Medical Center in Kansas City, Missouri. The loan accrues interest at the rate of 8.02% per year. The Trust has rights of first offer and first refusal to purchase the property.

(13) The Trust made a $4.5 million mezzanine term loan to partially fund the construction of the 63,250 square foot Great Falls Hospital in Great Falls, Montana. The loan accrues interest at the rate of 9.0% per year. The Trust has a contract to purchase the property upon completion of construction.

(14) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 91,236 Series A Preferred Units valued at approximately $19.7 million in the aggregate on the date of issuance. Holders of the Series A Preferred Units issued in connection with the acquisition of the Nashville MOB are entitled to certain redemption rights under the partnership agreement of the Operating Partnership which allow them to cause the Operating Partnership to redeem the Series A Preferred Units in exchange for cash, or at the Trust’s option, for common shares, pursuant to a formula provided in the partnership agreement. The investors in the Series A Preferred Units have agreed not cause the Operating Partnership to redeem their Series A Preferred Units prior to December 17, 2016.

(15) The Trust made a $0.2 million short term mezzanine loan to partially fund the owner’s acquisition of a 9,890 square foot ambulatory surgery center in Wilson, North Carolina. The loan accrues interest at the rate of 8.8% per year.

(16) The Trust’s $24.2 million investment represents the acquisition of an approximate 75% membership interest in the entity which owns the Great Falls Clinic.

For 2015, the Trust recorded revenues and net income of $41.4 million and $10.6 million, respectively, from its 2015 acquisitions.

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During 2014, the Trust completed acquisitions of 61 properties located in 15 states for an aggregate purchase price of approximately $543.4 million. Acquisition activity for the year ending December 31, 2014 is 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 Orthopaedic 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) (5)	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) (6)	Bloomington, IN	July 1, 2014	23,837
Carlisle II MOB	(3)	Carlisle, PA	July 25, 2014	4,500
Surgical Institute of Monroe ASC		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) (7)	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) (8)	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 Westerville, OH	September 30, 2014	24,500
Pinnacle Health Portfolio 5 MOBs	(3)	Harrisburg, PA	October 29, 2014	23,100
Columbus Regional Health Portfolio 12 MOBs Columbus Regional Health Portfolio 1 MOB	(3)	Columbus, GA Phenix City, AL	November 20, 2014	27,997
Middletown Medical 2 MOBs	(2)	Middletown, NY	November 26, 2014	14,399
Carle Danville Clinic MOB	(3)	Danville, IL	November 26, 2014	10,300
Napoleon Medical Building MOB	(3)	New Orleans, LA	December 18, 2014	10,500
West Tennessee Bone & Joint 1 MOB 1 ASC	(2)	Jackson, TN	December 30, 2014	9,936
Total				$	543,436

(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 $1.7 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 $10.9 million.

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(4) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 147,659 OP Units valued at approximately $1.9 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 96,099 OP Units valued at approximately $1.2 million in the aggregate on the date of issuance.

(6) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 576,040 OP Units valued at approximately $8.3 million in the aggregate on the date of issuance.

(7) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 272,191 OP Units valued at approximately $4.0 million in the aggregate on the date of issuance.

(8) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 950,324 OP Units valued at approximately $13.2 million in the aggregate on the date of issuance.

The following table summarizes the preliminary purchase price allocations of the assets acquired and the liabilities assumed, which the Trust determined using Level 2 and Level 3 inputs (in thousands):

	December 31, 2015			December 31, 2014
Land	$	52,224		$	53,687
Building and improvements	643,470			451,691
In-place lease intangibles	99,763			35,720
Above market lease intangibles	19,337			5,270
Below market lease intangibles	(3,738		)	(2,330		)
Below market ground lease	13,941			—
Above market ground lease	—			(701		)
Investment in unconsolidated entity	—			1,300
Lease inducement	2,478			1,532
Leasehold interest	—			759
Derivative liability assumed	—			(197		)
Contingent consideration	(2,718		)	(840		)
Receivable	3,564			640
Debt assumed	(18,690		)	(15,283		)
Issuance of OP Units	(10,973		)	(28,589		)
Issuance of Series A Preferred Units	(29,403		)	—
Noncontrolling interest	(13,970		)	—
Net assets acquired	$	755,285		$	502,659

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 consolidated revenue, net income, and earnings per share as if the Trust had acquired the 2015 acquisitions detailed above as of January 1, 2014 (in thousands, except share and per share amounts):

	Year Ended December 31,
	2015		2014
Revenue	$	168,154	$	133,411
Net income	38,959		17,512
Net income available to common shareholders	36,938		16,599
Earnings per share	$	0.42	$	0.19
Common shares outstanding	87,175,904		87,175,904

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Note 4. Intangibles

The following is a summary of the carrying amount of intangible assets and liabilities as of December 31, 2015 and 2014 (in thousands):

	December 31, 2015							December 31, 2014
	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
Assets
In-place leases	$	163,728	$	(26,702	)	$	137,026	$	64,777	$	(12,213	)	$	52,564
Above market leases	26,787		(3,174		)	23,613		7,449		(578		)	6,871
Leasehold interest	712		(64		)	648		759		(5		)	754
Below market ground lease	13,941		(68		)	13,873		—		—			—
Total	$	205,168	$	(30,008	)	$	175,160	$	72,985	$	(12,796	)	$	60,189
Liability
Below market lease	$	6,068	$	(799	)	$	5,269	$	2,330	$	(156	)	$	2,174
Above market ground lease	701		(20		)	681		701		(4		)	697
Total	$	6,769	$	(819	)	$	5,950	$	3,031	$	(160	)	$	2,871

The following is a summary of the acquired lease intangible amortization for the years ended December 31, 2015, 2014 and 2013 (in thousands):

	December 31,
	2015		2014		2013
Amortization expense related to in-place leases	$	15,300	$	4,133	$	1,252
Decrease of rental income related to above-market leases	2,596		530		48
Decrease of rental income related to leasehold interests	59		5		—
Increase of rental income related to below-market leases	643		156		—
Decrease of operating expense related to above market ground leases	16		4		—
Increase in operating expense related to below market ground leases	68		—		—

Future aggregate net amortization of the acquired lease intangibles as of December 31, 2015, is as follows (in thousands):

	Net Decrease in Revenue			Net Increase in Expenses
2016	$	(3,016	)	$	20,760
2017	(2,447		)	18,743
2018	(2,162		)	17,283
2019	(1,982		)	14,161
2020	(1,886		)	12,427
Thereafter	(7,499		)	66,844
Total	$	(18,992	)	$	150,218

For the year ended December 31, 2015, the weighted average amortization period for asset lease intangibles and liability lease intangibles are 15 years and 12 years, respectively.

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Note 5. Other Assets

Other assets consisted of the following as of December 31, 2015 and 2014 (in thousands):

	December 31,
	2015		2014
Straight line rent receivable	$	15,584	$	6,431
Lease inducements, net	4,970		2,845
Escrows	4,788		1,906
Earnest deposits	343		2,343
Notes receivable	20,620		—
Prepaid expenses and other	5,926		2,281
Total	$	52,231	$	15,806

Note 6. Debt

The following is a summary of debt as of December 31, 2015 and 2014 (in thousands):

	December 31,
	2015			2014
Fixed interest mortgage notes	$	89,664	(1)	$	73,706	(2)
Variable interest mortgage note	4,262		(3)	4,399		(4)
Total mortgage debt	93,926			78,105
$750 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.20%, due September 2019.	395,000			138,000
Total principal	488,926			216,105
Unamortized fair value adjustment	674			—
Total debt	$	489,600		$	216,105

(1) Fixed interest mortgage notes, bearing interest from 4.71% to 6.58%, with a weighted average interest rate of 5.40%, and due in 2016, 2017, 2019, 2020, 2021 and 2022 collateralized by 11 properties with a net book value of $145,038.

(2) Fixed interest mortgage notes, bearing interest from 4.71% to 6.58%, with a weighted average interest rate of 5.26%, and due in 2016, 2017, 2018, 2019, 2021 and 2022 collateralized by nine properties with a net book value of $118,247.

(3) Variable interest mortgage note bearing variable interest of LIBOR plus 2.75% and due in 2017, collateralized by one property with a net book value of $5,994.

(4) Variable interest mortgage note bearing variable interest of LIBOR plus 2.75% and due in 2017, collateralized by one property with a net book value of $6,249.

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.

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 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 (“Credit Agreement”). 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

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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.

On July 22, 2015, the Operating Partnership, as borrower, and the Trust and certain subsidiaries and other affiliates of the Operating Partnership, as guarantors, entered into an amendment to the existing 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 (as amended, the “Credit Agreement”) which increased the maximum principal amount available under the unsecured revolving credit facility from $400 million to $750 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 $1.1 billion.

The Credit Agreement has a maturity date of September 18, 2019 and includes a one year extension option. Borrowings under the Credit Agreement bear interest on the outstanding principal amount at an adjusted LIBOR rate, which is based on the Trust’s investment grade rating under the Credit Agreement. As of December 31, 2015, the Trust had an investment grade rating from Moody’s of Baa3 and as such, borrowings under the Credit Agreement accrued interest on the outstanding principal at a rate of LIBOR plus 1.20%. The Credit Agreement includes a facility fee equal to 0.25% per annum, which is also determined by the Trust’s investment grade rating.

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 December 31, 2015, 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 Trust’s investment grade rating as follows:

Investment Grade Rating	Adjusted LIBOR Rate Loans and Letter of Credit Fee	Base Rate Loans
At Least A- or A3	LIBOR + 0.85%	—	%
At Least BBB+ or BAA1	LIBOR + 0.90%	—	%
At Least BBB or BAA2	LIBOR + 1.00%	0.10	%
At Least BBB- or BAA3	LIBOR + 1.20%	0.20	%
Below BBB- or BAA3	LIBOR + 1.55%	0.60	%

As of December 31, 2015, there were $395.0 million of borrowings outstanding under our unsecured revolving credit facility and $198.7 million available for us to borrow without adding additional properties to the unencumbered borrowing base of assets, as defined by the Credit Agreement.

Certain properties have mortgage debt that contains financial covenants. As of December 31, 2015, the Trust was in compliance with all mortgage debt financial covenants.

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Scheduled principal payments due on debt as of December 31, 2015, are as follows (in thousands):

2016	$	9,748
2017	40,658
2018	1,265
2019	415,081
2020	5,521
Thereafter	16,653
Total Payments	$	488,926

For the years ended December 31, 2015 and 2014, the Trust incurred interest expense on its debt of $9.3 million and $5.8 million, respectively.

Note 7. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following as of December 31, 2015 and 2014 (in thousands):

	December 31,
	2015		2014
Embedded derivatives	$	8,149	$	—
Security deposits	4,038		1,191
Prepaid rent	2,778		839
Contingent consideration	2,559		840
Accrued expenses and other	6,949		3,270
Total	$	24,473	$	6,140

Note 8. Stock-based Compensation

The Trust follows ASC 718, Compensation – Stock Compensation (“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 (“2013 Plan”), which made available 600,000 common 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 Plan to increase the number of common shares authorized for issuance under the 2013 Plan by 1,850,000 common shares, for a total of 2,450,000 common shares authorized for issuance.

The committee has broad discretion in administering the terms of the 2013 Plan. Restricted shares granted under the 2013 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 Plan at a value per share of $11.50 and total value of $2.9 million with a vesting period of three years. During 2014, a total of 152,987 restricted common shares with a total value of $2.1 million were granted to Trust employees and the Board of Trustees with vesting periods ranging from one to

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three years. During 2015, a total of 162,522 restricted common shares with a value of $2.6 million were granted to Trust employees with vesting periods ranging from one to three years.

A summary of the status of the Trust’s non-vested restricted common shares as of December 31, 2015 and changes during the year then ended follow:

	Shares		Weighted Average Grant Date Fair Value
Restricted shares issued in conjunction with our IPO	250,000		$	11.50
Non-vested at December 31, 2013	250,000		11.50
Granted	152,987		13.79
Vested	(83,333	)	11.50
Non-vested at December 31, 2014	319,654		12.60
Granted	162,522		15.95
Vested	(170,337	)	12.93
Non-vested at December 31, 2015	311,839		$	14.17

For all service awards, the Trust records 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 years ended December 31, 2015, 2014, and 2013 the Trust recognized non-cash share compensation of $2.9 million, $2.2 million, and $0.4 million, respectively. Unrecognized compensation expense at December 31, 2015, 2014, and 2013 was $2.1 million, $2.4 million, and $2.5 million, respectively. 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.

Restricted Share Units:

In March 2015 and March 2014, under the Trust’s 2013 Plan, the Trust granted restricted share units at target level of 75,250and 55,680, respectively, to its officers, which are subject to certain performance and market conditions and a three year service period. In March 2015, the Trust additionally granted 40,957 restricted share units to the Board of Trustees which are subject to a two year vesting period. In addition, 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.

     Approximately 80% of the restricted share units issued to officers in 2015 vest based on certain market conditions. The market conditions were valued with the assistance of independent valuation specialists. The Trust utilized a Monte Carlo simulation to calculate the weighted average grant date fair values in 2015 and 2014 of $20.06 and $19.25 per unit, respectively, using the following assumptions:

	2015			2014
Volatility	20.7		%	18.8% - 34.2%
Dividend assumption	reinvested			reinvested
Expected term in years	2.8 years			2.8 years
Risk-free rate	1.14		%	0.65		%
Stock price (per share)	$	15.87		$	13.47

 The remaining 20% of the restricted share units issued to officers in 2015 vest based upon certain performance conditions. With respect to the performance conditions, the grant date fair value of $15.87 per unit was calculated on the grant date. The restricted stock units’ combined weighted average grant date fair value is $19.22 per unit.

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The following is a summary of the activity in the Trust’s restricted share units during 2014 and 2015: 

	Restricted Share Units	Weighted Average Grant Date Fair Value
Non-vested at December 31, 2013	—	$	—
Granted	55,680	16.94
Non-vested at December 31, 2014	55,680	16.94
Granted	116,207	19.22
Non-vested at December 31, 2015	171,887	$	18.48

The Trust recognized $0.9 million and $0.3 million of non-cash share unit compensation expense for the year ended December 31, 2015 and 2014, respectively. Unrecognized compensation expense at December 31, 2015 and 2014 was $1.6 million and $0.7 million, respectively.

Note 9. Fair Value Measurements

ASC Topic 820, Fair Value Measurement (“ASC 820”), requires 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 trust has three derivative instruments at December 31, 2015, consisting of the two embedded derivatives detailed in the Redeemable Noncontrolling Interests - Operating Partnership and Partially Owned Properties section of Note 2 (Summary of Significant Accounting Policies) and an interest rate swap.

Neither the embedded derivatives nor the interest rate swap are traded on an exchange. The Trust’s derivative liabilities 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 derivatives at fair value on a recurring basis. The fair values are based on 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. This generally includes assets subject to impairment. There were no such assets measured at fair value as of December 31, 2015.

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 estate loans receivable and mortgage debt are estimated based on rates currently prevailing for similar instruments of similar maturities and are based on Level 2 inputs.

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The following table presents the fair value of the Trust’s financial instruments (in thousands).

	December 31, 2015						December 31, 2014
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Real estate loans receivable	$	39,349		$	39,349		$	15,876		$	15,876
Credit facility	$	(395,000	)	$	(395,000	)	$	(138,000	)	$	(138,000	)
Mortgage debt	$	(94,600	)	$	(95,275	)	$	(78,105	)	$	(78,642	)
Derivative liabilities	$	(8,216	)	$	(8,216	)	$	(233	)	$	(233	)

Note 10. Tenant Operating Leases

The Trust is lessor of medical office buildings and other healthcare facilities. Leases have expirations from 2016 through 2045. As of December 31, 2015, the future minimum rental payments on non-cancelable leases, exclusive of expense recoveries, were as follows (in thousands):

2016	$	119,218
2017	115,974
2018	110,927
2019	106,196
2020	102,326
Thereafter	724,590
Total	$	1,279,231

Note 11. Rent Expense

The Trust leases the land upon which fourteen of its properties are located from third party land owners, pursuant to separate ground leases. In addition, the Trust leases the rights to parking structures at two of its properties, pursuant to separate parking structure leases. The ground and parking leases require fixed annual rental payments and may also include escalation clauses and renewal options. These leases have terms up to 90 years remaining, excluding extension options. As of December 31, 2015, the future minimum lease obligations under non-cancelable ground and parking leases were as follows (in thousands):

2016	$	1,316
2017	1,353
2018	1,394
2019	1,437
2020	1,482
Thereafter	16,377
Total	$	23,359

Rent expense for the ground and parking leases of $1.3 million, $0.9 million and $0.02 million for the years ended December 31, 2015, 2014, and 2013, respectively, are reported in operating expenses in the consolidated and combined statements of operations.

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Note 12. Earnings Per Share

The following table shows the amounts used in computing the Trust’s basic and diluted earnings per share (in thousands, except share and per share data):

	Year Ended December 31,
	2015			2014			2013
Numerator for earnings per share - basic:
Net income (loss)	$	12,741		$	(4,418	)	$	(2,636	)
Net (income) loss attributable to Predecessor:	—			—			576
Net (income) loss attributable to noncontrolling interests:
Operating Partnership	(576		)	695			470
Partially owned properties	(377		)	(314		)	(71		)
Preferred distributions	(1,189		)	—			—
Numerator for earnings per share - basic:	$	10,599		$	(4,037	)	$	(1,661	)
Numerator for earnings per share - diluted:
Numerator for earnings per share - basic:	10,599			(4,037		)	(1,661		)
Operating Partnership net income	576			—			—
Numerator for earnings per share - diluted	$	11,175		$	(4,037	)	$	(1,661	)
Denominator for EPS - basic and diluted:
Weighted average number of shares outstanding - basic	72,750,724			33,063,093			12,883,917
Effect of dilutive securities:
Noncontrolling interest - Operating Partnership units	3,708,494			—			—
Restricted shares	190,619			—			—
Restricted share units	142,236			—			—
Denominator for EPS - diluted	76,792,073			33,063,093			12,883,917
Earnings per share - basic	$	0.15		$	(0.12	)	$	(0.13	)
Earnings per share - diluted	$	0.15		$	(0.12	)	$	(0.13	)

Note 13. Related Party Transactions

Effective July 24, 2013, the Trust entered into a Shared Services Agreement with Ziegler pursuant to which Ziegler provided office space, IT support, accounting support, and other services to the Trust in exchange for an annual fee. The shared service fee amounted to $0.4 million and $0.3 million for the years ended December 31, 2014 and 2013, respectively, and was recorded in general and administrative expense in the consolidated and combined statements of operations. 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 $1.8 million (the “Amendment Payment”), which could 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 Trust made the Amendment Payment by issuing 124,913 common shares to Ziegler. The $1.8 million one-time payment is included in general and administrative expense in the consolidated statement of operations for the year ended December 31, 2014.

The Trust elected to terminate the Agreement effective July 23, 2015 in conjunction with our completed renovations of the Renaissance Office Building. Service fees incurred during the year ended December 31, 2015 were insignificant.

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Note 14. Subsequent Events

As of February 22, 2016, the Trust, through subsidiaries of its Operating Partnership, closed on the below acquisitions during 2016:

Property(1)	Location	Acquisition Date	Investment (in thousands)
Randall Road MOB - Suite 380	Elgin, IL	January 14, 2016	$	704
Great Falls Hospital	Great Falls, MT	January 25, 2016	29,043
Monterey Medical Center ASC	Stuart, FL	February 1, 2016	6,900
Physicians Medical Plaza MOB	Indianapolis, IN	February 1, 2016	8,500
Mezzanine Loan - Davis	Minneapolis, MN	February 4, 2016	500
Park Nicollet Clinic	Chanhassen, MN	February 8, 2016	18,600
HEB Cancer Center	Bedford, TX	February 12, 2016	14,000
Riverview Medical Center	Lancaster, OH	February 26, 2016	12,800
St. Luke's Cornwall MOB	Cornwall, NY	February 26, 2016	14,550
			$	105,597

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

See “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Recent Developments” for a further discussion of these acquisitions.

On January 7, 2016, the Operating Partnership issued and sold $150 million aggregate principal amount of senior notes, comprised of (i) $15,000,000 aggregate principal amount of 4.03% Senior Notes, Series A, due January 7, 2023 (the “Series A Notes”), (ii) $45,000,000 aggregate principal amount of 4.43% Senior Notes, Series B, due January 7, 2026 (the “Series B Notes”), (iii) $45,000,000 aggregate principal amount of 4.57% Senior Notes, Series C, due January 7, 2028 (the “Series C Notes”) and (iv) $45,000,000 aggregate principal amount of 4.74% Senior Notes, Series D, due January 7, 2031 (the “Series D Notes,” and together with the Series A Notes, the Series B Notes and the Series C Notes, the “Notes”). The proceeds of the Notes were used to repay borrowings under the Trust’s unsecured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

On January 25, 2016, the Trust completed a follow-on public offering of 21,275,000 common shares of beneficial interest, including 2,775,000 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to it of approximately $320.9 million. The Trust contributed the net proceeds of this offering to its Operating Partnership in exchange for 21,275,000 OP Units, and its Operating Partnership used the net proceeds of the public offering to repay borrowings under its unsecured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

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Note 15. Quarterly Data

The following unaudited quarterly data has been prepared on the basis of a December 31 year-end. Amounts are in thousands, except for common share and per share amounts.

	Quarter Ended
2015	March 31			June 30		September 30		December 31
Total revenues	$	24,484		$	29,683	$	34,870	$	40,404
Operating (loss) income	(459		)	3,271		3,812		5,883
Net (loss) income	(448		)	3,297		3,983		5,909
Net (loss) income attributable to common shareholders	(522		)	2,571		3,404		5,146
Earnings per share – basic:
Net (loss) income available to common shareholders	$	(0.01	)	$	0.04	$	0.05	$	0.06
Weighted average common shares outstanding	65,649,478			70,376,959		71,034,747		83,761,536
Earnings per share – diluted:
Net (loss) income available to common shareholder	$	(0.01	)	$	0.04	$	0.05	$	0.06
Weighted average common shares outstanding	65,649,478			74,267,284		75,104,821		87,911,097

As a result of the acquisition activity and equity offerings throughout 2015, the quarterly periods are not comparable quarter over quarter.

	Quarter Ended
2014	March 31			June 30			September 30			December 31
Total revenues	$	8,032		$	11,447		$	14,161		$	19,694
Operating loss (income)	(3,575		)	(626		)	(2,311		)	1,967
Net loss (income)	(3,558		)	(600		)	(2,251		)	1,991
Net loss (income) available to common shareholders	(3,093		)	(561		)	(2,094		)	1,711
Earnings per share – basic:
Net (loss) income available to common shareholders	$	(0.15	)	$	(0.02	)	$	(0.06	)	$	0.04
Weighted average common shares outstanding	21,298,597			26,163,982			36,313,644			48,145,409
Earnings per share – diluted:
Net (loss) income available to common shareholders	$	(0.15	)	$	(0.02	)	$	(0.06	)	$	0.04
Weighted average common shares outstanding	21,298,597			26,163,982			36,313,644			48,354,493

93

Physicians Realty Trust

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2015

(dollars in thousands)

				Initial Cost to Company						Gross Amount at Which Carried as of Close of Period
Description	Location	Encumbrances		Land		Buildings and Improvements		Cost Capitalized Subsequent to Acquisitions		Land		Buildings and Improvements		Total		Accumulated Depreciation			Date of Construction	Date Acquired	Life on Which Building Depreciation in Income Statement is Computed
Arrowhead Commons	Phoenix, AZ	$	—	$	740	$	2,551	$	420	$	740	$	2,971	$	3,711	$	(427	)	2004	5/31/2008	46
Aurora Medical Office Building	Green Bay, WI	—		500		1,566		—		500		1,566		2,066		(180		)	2010	4/15/2010	50
Austell Medical Office Building	Atlanta, GA	—		289		1,992		334		289		2,326		2,615		(482		)	1971	6/30/2008	36
Canton Medical Office Building	Atlanta, GA	6,099		710		7,225		114		710		7,339		8,049		(2,095		)	1994	5/25/2007	35
Decatur Medical Office Building	Atlanta, GA	—		740		2,604		44		740		2,648		3,388		(774		)	1974	10/12/2007	28
El Paso Medical Office Building	El Paso, TX	—		860		2,866		369		860		3,235		4,095		(1,465		)	1987	8/24/2006	21
Farmington Professional Pavilion	Detroit, MI	—		580		1,793		110		580		1,903		2,483		(1,204		)	1972	1/5/2006	15
Firehouse Square	Milwaukee, WI	2,699		1,120		2,768		—		1,120		2,768		3,888		(777		)	2002	8/15/2007	30
Hackley Medical Center	Grand Rapids, MI	5,283		1,840		6,402		36		1,840		6,438		8,278		(1,908		)	1968	12/22/2006	30
MeadowView Professional Center	Kingsport, TN	10,225		2,270		11,344		—		2,270		11,344		13,614		(3,300		)	2005	5/10/2007	30
Mid Coast Hospital MOB	Portland, ME	7,656		—		11,247		20		—		11,267		11,267		(2,854		)	2008	5/1/2008	42
New Albany Professional Building	Columbus, OH	—		237		2,767		317		237		3,084		3,321		(550		)	2000	1/4/2008	42
Northpark Trail	Atlanta, GA	—		839		1,245		235		839		1,480		2,319		(582		)	2001	12/28/2005	35
Remington Medical Commons	Chicago, IL	4,262		895		6,499		319		895		6,818		7,713		(1,719		)	2008	6/1/2008	30
Summit Healthplex	Atlanta, GA	—		2,633		15,576		5,012		2,633		20,588		23,221		(4,311		)	2002	7/3/2008	44
Valley West Hospital MOB	Chicago, IL	4,768		—		6,275		611		—		6,886		6,886		(1,845		)	2007	11/1/2007	30
East El Paso Medical Office Building	El Paso, TX	—		710		4,500		—		710		4,500		5,210		(300		)	2004	8/30/2013	35
East El Paso Surgical Hospital	El Paso, TX	—		3,070		23,627		—		3,070		23,627		26,697		(1,531		)	2004	8/30/2013	36
LifeCare Plano LTACH	Plano, TX	—		3,370		11,689		455		3,370		12,144		15,514		(1,115		)	1987	9/18/2013	25
Crescent City Surgical Centre	New Orleans, LA	18,750		—		34,208		—		—		34,208		34,208		(1,604		)	2010	9/30/2013	48
Foundation Surgical Affiliates Medical Office Building	Oklahoma City, OK	7,474		1,300		12,724		—		1,300		12,724		14,024		(666		)	2004	9/30/2013	43
Pensacola Medical Office Building	Pensacola, FL	—		990		5,005		15		990		5,020		6,010		(230		)	2012	10/4/2013	49
Central Ohio Neurosurgical Surgeons Medical Office	Columbus, OH	—		981		7,620		—		981		7,620		8,601		(361		)	2007	11/27/2013	44
Great Falls Ambulatory Surgery Center	Great Falls, MT	—		203		3,224		—		203		3,224		3,427		(199		)	1999	12/11/2013	33
Eagles Landing Family Practice Medical Office Building	McDonough, GA	—		800		3,345		1,548		800		4,893		5,693		(254		)	2007	2/19/2014	36
Eagles Landing Family Practice Medical Office Building	Jackson, GA	—		800		3,345		1,255		800		4,600		5,400		(227		)	2006	2/19/2014	38
Eagles Landing Family Practice Medical Office Building	Conyers, GA	—		1,000		3,345		—		1,000		3,345		4,345		(172		)	2008	2/19/2014	37
Eagles Landing Family Practice Medical Office Building	McDonough, GA	—		400		3,345		1,741		400		5,086		5,486		(254		)	2010	2/19/2014	37
Foundation San Antonio Surgical Hospital	San Antonio, TX	9,120		2,230		23,346		23		2,230		23,369		25,599		(1,395		)	2007	2/19/2014	35
21st Century Radiation Oncology Centers — Sarasota	Sarasota, FL	—		633		6,557		—		633		6,557		7,190		(464		)	1975	2/26/2014	27
21st Century Radiation Oncology Centers - Venice	Venice, FL	—		814		2,952		—		814		2,952		3,766		(174		)	1987	2/26/2014	35

94

Physicians Realty Trust

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2015

(dollars in thousands)

			Initial Cost to Company			Gross Amount at Which Carried as of Close of Period
Description	Location	Encumbrances	Land	Buildings and Improvements	Cost Capitalized Subsequent to Acquisitions	Land	Buildings and Improvements	Total	Accumulated Depreciation		Date of Construction	Date Acquired	Life on Which Building Depreciation in Income Statement is Computed
21st Century Radiation Oncology Centers - Engelwood	Engelwood, FL	—	350	1,878	—	350	1,878	2,228	(100	)	1992	2/26/2014	38
21st Century Radiation Oncology Centers — Port Charlotte	Port Charlotte, FL	—	269	2,326	—	269	2,326	2,595	(125	)	1996	2/26/2014	36
Foundation San Antonio Healthplex	San Antonio, TX	—	911	4,189	—	911	4,189	5,100	(230	)	2007	2/28/2014	35
Peachtree Dunwoody Medical Center	Atlanta, GA	—	6,046	27,435	54	6,046	27,489	33,535	(2,063	)	1987	2/28/2014	25
LifeCare LTACH — Fort Worth	Fort Worth, TX	—	2,730	24,639	—	2,730	24,639	27,369	(1,476	)	1985	3/28/2014	30
LifeCare LTACH — Pittsburgh	Pittsburgh, PA	—	1,142	11,737	—	1,142	11,737	12,879	(735	)	1987	3/28/2014	30
PinnacleHealth Medical Office Building	Harrisburg, PA	—	795	4,601	—	795	4,601	5,396	(332	)	1990	4/22/2014	25
Pinnacle Health Medical Office Building	Carlisle, PA	—	424	2,232	—	424	2,232	2,656	(116	)	2002	4/22/2014	35
South Bend Orthopaedics Medical Office Building	Mishawaka, IN	—	2,418	11,355	—	2,418	11,355	13,773	(543	)	2007	4/30/2014	40
Grenada Medical Complex	Grenada, MS	—	185	5,820	50	185	5,870	6,055	(381	)	1975	4/30/2014	30
Mississippi Ortho Medical Office Building	Jackson, MS	—	1,272	14,177	626	1,272	14,803	16,075	(713	)	1987	5/23/2014	35
Carmel Medical Pavilion	Carmel, IN	—	—	3,917	—	—	3,917	3,917	(262	)	1993	5/28/2014	25
Renaissance Ambulatory Surgery Center	Oshkosh, WI	—	228	7,658	—	228	7,658	7,886	(298	)	2007	6/30/2014	40
Presbyterian Medical Plaza	Monroe, NC	—	1,195	5,681	6	1,195	5,687	6,882	(202	)	2008	6/30/2014	15
Summit Urology	Bloomington, IN	—	125	4,792	—	125	4,792	4,917	(246	)	1996	6/30/2014	30
500 Landmark	Bloomington, IN	—	627	3,549	—	627	3,549	4,176	(158	)	2000	7/1/2014	35
550 Landmark	Bloomington, IN	—	2,717	15,224	—	2,717	15,224	17,941	(680	)	2000	7/1/2014	35
574 Landmark	Bloomington, IN	—	418	1,493	—	418	1,493	1,911	(68	)	2004	7/1/2014	35
Carlisle II MOB	Carlisle, PA	—	412	3,962	—	412	3,962	4,374	(131	)	1996	7/25/2014	45
Surgical Institute of Monroe	Monroe, MI	—	410	5,743	—	410	5,743	6,153	(273	)	2010	7/28/2014	35
The Oaks @ Lady Lake	Lady Lake, FL	—	1,065	8,642	—	1,065	8,642	9,707	(294	)	2011	7/31/2014	42
Mansfield ASC	Mansfield, TX	—	1,491	6,471	—	1,491	6,471	7,962	(207	)	2010	9/2/2014	46
Eye Center of Southern Indiana	Bloomington, IN	—	910	11,477	—	910	11,477	12,387	(453	)	1995	9/5/2014	35
Wayne State	Troy, MI	—	3,560	43,052	—	3,560	43,052	46,612	(1,568	)	1986	9/10/2014	38
Zangmeister	Columbus, OH	—	1,610	31,120	—	1,610	31,120	32,730	(1,017	)	2007	9/30/2014	40
Orthopedic One - Columbus	Columbus, OH	—	—	16,234	7	—	16,241	16,241	(503	)	2009	9/30/2014	45
Orthopedic One - Westerville	Columbus, OH	—	362	3,944	—	362	3,944	4,306	(126	)	2007	9/30/2014	43
Berger Medical Center	Columbus, OH	—	—	5,950	—	—	5,950	5,950	(216	)	2007	9/30/2014	38
El Paso - Lee Trevino	El Paso, TX	—	2,294	11,316	365	2,294	11,681	13,975	(514	)	1983	9/30/2014	30
El Paso - Murchison	El Paso, TX	—	2,283	24,543	27	2,283	24,570	26,853	(1,055	)	1970	9/30/2014	30
El Paso - Kenworthy	El Paso, TX	—	728	2,178	—	728	2,178	2,906	(87	)	1983	9/30/2014	35
Pinnacle - 32 Northeast	Harrisburg, PA	—	408	3,232	12	408	3,244	3,652	(128	)	1994	10/29/2014	33
Pinnacle - 4518 Union Deposit	Harrisburg, PA	—	617	7,305	—	617	7,305	7,922	(295	)	2000	10/29/2014	31

95

Physicians Realty Trust

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2015

(dollars in thousands)

			Initial Cost to Company			Gross Amount at Which Carried as of Close of Period
Description	Location	Encumbrances	Land	Buildings and Improvements	Cost Capitalized Subsequent to Acquisitions	Land	Buildings and Improvements	Total	Accumulated Depreciation		Date of Construction	Date Acquired	Life on Which Building Depreciation in Income Statement is Computed
Pinnacle - 4520 Union Deposit	Harrisburg, PA	—	169	2,055	—	169	2,055	2,224	(90	)	1997	10/29/2014	28
Pinnacle - 240 Grandview	Harrisburg, PA	—	321	4,242	—	321	4,242	4,563	(151	)	1980	10/29/2014	35
Pinnacle - Market Place Way	Harrisburg, PA	—	808	2,383	6	808	2,389	3,197	(115	)	2004	10/29/2014	35
CRHS - 2000 10th Avenue	Columbus, GA	—	380	2,737	—	380	2,737	3,117	(152	)	1989	11/20/2014	22
CRHS - 1942 North Avenue	Columbus, GA	—	91	273	—	91	273	364	(26	)	1971	11/20/2014	12
CRHS - 920 18th Street	Columbus, GA	—	110	281	—	110	281	391	(40	)	1982	11/20/2014	8
CRHS - 1900 10th Avenue	Columbus, GA	—	474	5,580	5	474	5,585	6,059	(247	)	1976	11/20/2014	26
CRHS - 1800 10th Avenue	Columbus, GA	—	539	5,238	—	539	5,238	5,777	(216	)	1980	11/20/2014	28
CRHS - 705 17th Street	Columbus, GA	—	372	2,346	278	372	2,624	2,996	(189	)	1994	11/20/2014	15
CRHS - 615 19th Street	Columbus, GA	—	75	113	—	75	113	188	(39	)	1976	11/20/2014	3
CRHS - 1968 North Avenue	Columbus, GA	—	89	32	—	89	32	121	(9	)	1966	11/20/2014	4
CRHS - 633 19th Street	Columbus, GA	—	99	255	—	99	255	354	(33	)	1972	11/20/2014	9
CRHS - 500 18th Street	Columbus, GA	—	430	170	—	430	170	600	(39	)	1982	11/20/2014	8
CRHS - 2200 Hamilton Road	Columbus, GA	—	267	1,579	—	267	1,579	1,846	(86	)	1992	11/20/2014	22
CRHS - 1810 Stadium Drive	Phenix City, AL	—	202	149	19	202	168	370	(31	)	1999	11/20/2014	30
Carle Danville MOB	Danville, IL	—	607	7,136	—	607	7,136	7,743	(250	)	2007	11/26/2014	33
Middletown Medical - 111 Maltese	Middletown, NY	—	670	9,921	37	670	9,958	10,628	(319	)	1988	11/28/2014	35
Middletown Medical - 2 Edgewater	Middletown, NY	—	200	2,966	11	200	2,977	3,177	(96	)	1992	11/28/2014	35
Napoleon Medical Office Building	New Orleans, LA	—	1,202	7,412	79	1,202	7,491	8,693	(318	)	1974	12/19/2014	25
West TN Bone & Joint - Physicians Drive	Jackson, TN	—	650	2,960	—	650	2,960	3,610	(90	)	1991	12/30/2014	35
West TN Bone & Joint	Jackson, TN	—	1,250	5,210	—	1,250	5,210	6,460	(181	)	1996	12/30/2014	31
Edina MOB	Edina MN	—	504	10,006	208	504	10,214	10,718	(513	)	1979	1/22/2015	24
Crystal MOB	Crystal, MN	—	945	11,862	1	945	11,863	12,808	(276	)	2012	1/22/2015	47
Savage MOB	Savage, MN	5,753	1,281	10,021	—	1,281	10,021	11,302	(242	)	2011	1/22/2015	48
Dell Road MOB	Chanhassen, MN	—	800	4,520	—	800	4,520	5,320	(120	)	2008	1/22/2015	43
Columbus MOB	Columbus, GA	—	845	2,708	—	845	2,708	3,553	(148	)	1980	1/23/2015	22
Methodist Sports MOB	Greenwood, IN	—	1,050	8,556	—	1,050	8,556	9,606	(250	)	2008	1/28/2015	33
Vadnais Heights MOB	Vadnais Heights, MN	—	2,751	12,233	—	2,751	12,233	14,984	(336	)	2013	1/29/2015	43
Minnetonka MOB	Minnetonka, MN	—	1,770	19,797	—	1,770	19,797	21,567	(458	)	2014	2/5/2015	49
Jamestown MOB	Jamestown, ND	—	656	9,440	—	656	9,440	10,096	(269	)	2013	2/5/2015	43
Indiana American II	Greenwood, IN	—	862	6,901	—	862	6,901	7,763	(185	)	2008	2/13/2015	38
Indiana American III	Greenwood, IN	—	741	1,846	185	741	2,031	2,772	(93	)	2001	2/13/2015	31
Indiana American IV	Greenwood, IN	—	771	1,928	3	771	1,931	2,702	(63	)	2001	2/13/2015	31
Southpointe	Indianapolis, IN	—	563	1,741	1	563	1,742	2,305	(77	)	1993	2/13/2015	27
Minnesota Eye MOB	Minnetonka, MN	—	1,143	7,470	—	1,143	7,470	8,613	(174	)	2014	2/17/2015	44
Baylor Cancer Center	Dallas, TX	—	855	6,007	—	855	6,007	6,862	(125	)	2001	2/27/2015	43
Bridgeport Medical Center	Lakewood, WA	—	1,397	10,435	—	1,397	10,435	11,832	(264	)	2004	2/27/2015	35

96

Physicians Realty Trust

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2015

(dollars in thousands)

			Initial Cost to Company			Gross Amount at Which Carried as of Close of Period
Description	Location	Encumbrances	Land	Buildings and Improvements	Cost Capitalized Subsequent to Acquisitions	Land	Buildings and Improvements	Total	Accumulated Depreciation		Date of Construction	Date Acquired	Life on Which Building Depreciation in Income Statement is Computed
Renaissance Office Building	Milwaukee, WI	—	1,379	4,182	1,178	1,379	5,360	6,739	(240	)	1896	3/27/2015	15
Calkins 125	Rochester, NY	—	534	10,164	—	534	10,164	10,698	(315	)	1997	3/31/2015	32
Calkins 200	Rochester, NY	—	210	3,317	—	210	3,317	3,527	(88	)	2000	3/31/2015	38
Calkins 300	Rochester, NY	—	372	6,645	—	372	6,645	7,017	(178	)	2002	3/31/2015	39
Calkins 400	Rochester, NY	—	353	8,226	—	353	8,226	8,579	(235	)	2007	3/31/2015	39
Calkins 500	Rochester, NY	—	282	7,074	5	282	7,079	7,361	(160	)	2008	3/31/2015	41
Avalon Park Florida Hospital MOB	Avalon Park, FL	—	1,041	10,685	—	1,041	10,685	11,726	(213	)	2009	3/31/2015	41
Premier Surgery Center of Louisville	Louisville, KY	—	1,106	5,437	—	1,106	5,437	6,543	(102	)	2013	4/10/2015	43
Baton Rouge MOB	Baton Rouge, LA	—	711	7,720	—	711	7,720	8,431	(173	)	2003	4/15/2015	35
Healthpark Medical Center	Grand Blanc, MI	—	—	17,624	—	—	17,624	17,624	(358	)	2006	4/30/2015	36
Plaza HCA MOB	Jacksonville, FL	11,837	1,112	12,553	—	1,112	12,553	13,665	(226	)	2007	4/30/2015	39
Northern Ohio Medical Center	Sheffield, OH	—	644	9,162	—	644	9,162	9,806	(277	)	1999	5/28/2015	20
University of Michigan - Northville MOB	Livonia, MI	—	2,200	8,627	31	2,200	8,658	10,858	(180	)	1988	5/29/2015	30
Coon Rapids Medical Center MOB	Coon Rapids, MN	—	607	5,857	—	607	5,857	6,464	(106	)	2007	6/1/2015	35
Premier Landmark MOB	Bloomington, IN	—	872	10,537	—	872	10,537	11,409	(165	)	2008	6/5/2015	39
Palm Beach ASC	Palm Beach, FL	—	2,576	7,675	—	2,576	7,675	10,251	(101	)	2003	6/26/2015	40
Brookstone Physician Center MOB	Jacksonville, AL	—	—	1,913	—	—	1,913	1,913	(33	)	2007	6/30/2015	31
Jackson Woman's Clinic MOB	Jackson, TN	—	555	3,800	—	555	3,800	4,355	(58	)	1998	6/30/2015	35
Hillside Medical Center MOB	Hanover, PA	—	812	13,217	—	812	13,217	14,029	(138	)	2003	6/30/2015	35
Randall Road MOB	Elgin, IL	—	—	15,404	—	—	15,404	15,404	(191	)	2006	6/30/2015	38
Medical Specialists of Palm Beach MOB	Atlantis, FL	—	—	7,560	—	—	7,560	7,560	(91	)	2002	7/24/2015	37
OhioHealth - SW Health Center MOB	Grove City, OH	—	1,363	8,516	—	1,363	8,516	9,879	(110	)	2001	7/31/2015	37
Trios Health MOB	Kennewick, WA	—	—	55,178	—	—	55,178	55,178	(525	)	2015	7/31/2015	45
IMS - Paradise Valley MOB	Phoenix, AZ	—	—	25,893	—	—	25,893	25,893	(282	)	2004	8/14/2015	43
IMS - Avondale MOB	Avondale, AZ	—	1,818	18,108	—	1,818	18,108	19,926	(145	)	2006	8/19/2015	45
IMS - Palm Valley MOB	Goodyear, AZ	—	2,666	28,655	—	2,666	28,655	31,321	(240	)	2006	8/19/2015	43
IMS - North Mountain MOB	Phoenix, AZ	—	—	42,877	—	—	42,877	42,877	(335	)	2008	8/31/2015	47
Memorial Hermann - Phase I	Katy, TX	—	822	6,797	—	822	6,797	7,619	(62	)	2005	9/1/2015	39
Memorial Hermann - Phase II	Katy, TX	—	1,560	25,601	—	1,560	25,601	27,161	(224	)	2006	9/1/2015	40
New Albany Medical Center MOB	New Albany, OH	—	1,600	8,505	—	1,600	8,505	10,105	(87	)	2005	9/9/2015	37
Fountain Hills Medical Campus MOB	Fountain Hills, AZ	—	2,593	7,635	—	2,593	7,635	10,228	(55	)	1995	9/30/2015	39
Fairhope MOB	Fairhope, AL	—	640	5,227	—	640	5,227	5,867	(39	)	2005	10/13/2015	38
Foley MOB	Foley, AL	—	365	732	—	365	732	1,097	(5	)	1997	10/13/2015	40
Foley Venture	Foley, AL	—	420	1,118	—	420	1,118	1,538	(8	)	2002	10/13/2015	38

97

Physicians Realty Trust

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2015

(dollars in thousands)

				Initial Cost to Company						Gross Amount at Which Carried as of Close of Period
Description	Location	Encumbrances		Land		Buildings and Improvements		Cost Capitalized Subsequent to Acquisitions		Land		Buildings and Improvements		Total		Accumulated Depreciation			Date of Construction	Date Acquired	Life on Which Building Depreciation in Income Statement is Computed
North Okaloosa MOB	Crestview, FL	—		190		1,010		—		190		1,010		1,200		(7		)	2005	10/13/2015	41
Commons on North Davis	Pensacola, FL	—		380		1,237		—		380		1,237		1,617		(8		)	2009	10/13/2015	41
Sorrento Road	Pensacola, FL	—		170		894		—		170		894		1,064		(6		)	2010	10/13/2015	41
Breakfast Point Medical Park	Panama City, FL	—		—		817		—		—		817		817		(5		)	2012	10/13/2015	42
Panama City Beach	Panama City, FL	—		—		739		—		—		739		739		(5		)	2012	10/13/2015	42
Perdido Medical Park	Pensacola, FL	—		100		1,147		—		100		1,147		1,247		(8		)	2010	10/13/2015	41
Ft. Walton Beach	Ft. Walton Beach, FL	—		230		914		—		230		914		1,144		(7		)	1979	10/13/2015	35
Panama City	Panama City, FL	—		—		661		—		—		661		661		(5		)	2003	10/13/2015	38
Pensacola - Catalyst	Pensacola, FL	—		220		1,685		—		220		1,685		1,905		(12		)	2001	10/13/2015	39
Arete Surgical Center	Johnstown, CO	—		399		6,667		—		399		6,667		7,066		(26		)	2013	10/19/2015	45
Cambridge Professional Center MOB	Waldorf, MD	—		590		8,520		—		590		8,520		9,110		(45		)	1999	10/30/2015	35
HonorHealth 44th Street MOB	Phoenix, AZ	—		515		3,884		—		515		3,884		4,399		(24		)	1988	11/13/2015	28
Mercy Medical Center MOB	Fenton, MO	—		1,201		6,778		—		1,201		6,778		7,979		(15		)	1999	12/1/2015	40
Nashville MOB	Nashville, TN	—		1,555		39,713		—		1,555		39,713		41,268		—			2015	12/17/2015	45
KSF Orthopaedic MOB	Houston, TX	—		530		3,712		—		530		3,712		4,242		—			1984	12/22/2015	19
Great Falls Clinic MOB	Great Falls, MT	—		—		27,402		—		—		27,402		27,402		—			2004	12/29/2015	40
		$	93,926	$	130,788	$	1,277,934	$	16,172	$	130,788	$	1,294,106	$	1,424,894	$	(61,242	)

98

Physicians Realty Trust

Schedule III – Real Estate and Accumulated Depreciation

December 31, 2015

The cost capitalized subsequent to acquisitions is net of dispositions.

The changes in total real estate for the years ended December 31, 2015, 2014 and 2013 are as follows (in thousands):

	Year Ended December 31,
	2015			2014			2013
Balance as of the beginning of the year	$	729,034		$	224,730		$	111,149
Acquisitions	695,693			505,379			113,225
Additions	4,440			900			806
Impairment	—			(1,750		)	—
Dispositions	(4,273		)	(225		)	(450		)
Balance as of the end of the year	$	1,424,894		$	729,034		$	224,730

The changes in accumulated depreciation for the years ended December 31, 2015, 2014 and 2013 are as follows (in thousands):

	Year Ended December 31,
	2015			2014		2013
Balance as of the beginning of the year	$	32,772		$	20,299	$	16,495
Acquisitions	9,512			6,575		694
Additions	20,446			5,898		3,110
Dispositions	(1,488		)	—		—
Balance as of the end of the year	$	61,242		$	32,772	$	20,299

99

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a- 15(e) and 15d- 15(e) under the Exchange Act), as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2015, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting.

There have been no changes in our system of internal control over financial reporting during the quarter ended December 31, 2015, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on the assessment, management has concluded that its internal control over financial reporting was effective as of December 31, 2015 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2015 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report included in Part II, Item 8 of this Annual Report on Form 10-K.

Limitations on Effectiveness of Controls and Procedures.

In designing and evaluating the disclosure controls and procedures and our internal control over financial reporting, 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. In addition, the design of disclosure controls and procedures and our internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

ITEM 9B. OTHER INFORMATION

None.

100

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Incorporated herein by reference are “Proposal 1 — Election of Trustees”, “Section 16(a) Beneficial Ownership Reporting Compliance”, “Corporate Governance Matters”, “Executive Officers” and “Report of the Audit Committee of the Board of Trustees” to be included in our 2016 Proxy Statement, which will be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2015.

Code of Business Conduct and Ethics

Information regarding our Code of Business Conduct and Ethics is provided in “Part I., Item 1. Business – Available Information” and is incorporated herein by reference. 

ITEM 11. EXECUTIVE COMPENSATION

Incorporated herein by reference are “Executive Compensation”, “2015 Non-Employee Trustee Compensation”, “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report” to be included in our 2016 Proxy Statement, which will be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2015.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Incorporated herein by reference are “Security Ownership of Certain Beneficial Owners and Management” to be included in our 2016 Proxy Statement, which will be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2015.

Equity Compensation Plan Information

The table below presents information as of December 31, 2015 for the 2013 Equity Incentive Plan. We do not have any equity compensation plans that have not been approved by shareholders.

Plan Category	Number of securities to be issued upon exercise of outstanding warrants and rights (a)		Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by shareholders	433,747	(1)	—	$	2,016,253
Equity compensation plans not approved by shareholders	—		—	—
Total	433,747		—	$	2,016,253

(1) Includes (i) performance-based restricted stock units at maximum level granted to our officers under the 2013 Equity Incentive Plan, which will vest, if at all, based on achievement of performance criteria over a performance period, subject to the terms of the grant, and (ii) time-based restricted stock units granted to our non-employee trustees under the 2013 Equity Incentive Plan. Performance-based restricted stock units are reflected at maximum levels for each of the awards because actual performance through December 31, 2015 was either at maximum level or between target and maximum levels for each of the awards under the 2013 Equity Incentive Plan. The actual number of performance-based restricted stock units granted has not been determined and will be determined based on the Company’s performance over the 3-year performance periods applicable to each award.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Incorporated herein by reference are “Certain Relationships and Related Transactions” and “Trustee Independence” to be included in our 2016 Proxy Statement, which will be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2015.

101

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Incorporated herein by reference is “Proposal 2 – Ratification of Independent Registered Public Accounting Firm” to be included in our 2016 Proxy Statement, which will be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2015.

102

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)The following documents are filed as part of this report:

(1)Financial Statements:

Physicians Realty Trust	Page
Report of Independent Registered Public Accounting Firm	63
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting	64
Consolidated Balance Sheets at December 31, 2015 and 2014	66
Consolidated and Combined Statements of Operations for the Years Ended December 31, 2015, 2014, and 2013	67
Consolidated and Combined Statements of Equity for the Year Ended December 31, 2015, 2014, and 2013	68
Consolidated and Combined Statements of Cash Flows for the Years Ended December 31, 2015, 2014, and 2013	69
Notes to Consolidated and Combined Financial Statements	70

(2)Financial Statement Schedules:

Schedule III – Real Estate and Accumulated Depreciation 94

All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are omitted because they are not required under the related instructions or are not applicable, or because the required information is shown in the consolidated financial statements or notes thereto.

(3)Exhibits:

See the Exhibit Index immediately following the signature page of this report on Form 10-K.

103

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PHYSICIANS REALTY TRUST
Dated: February 29, 2016	/s/ John T. Thomas
	John T. Thomas
	Chief Executive Officer and President
	(Principal Executive Officer)

Power of Attorney

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints John T. Thomas and Jeffrey N. Theiler and each of them severally, his or her true and lawful attorney-in-fact with power of substitution and resubstitution to sign in his or her name, place and stead, in any and all capacities, to do any and all things and execute any and all instruments that such attorney may deem necessary or advisable under the Securities Exchange Act of 1934 and any rules, regulations and requirements of the Securities and Exchange Commission in connection with this Annual Report on Form 10-K and any and all amendments hereto, as fully and for all intents and purposes as he or she might do or could do in person, and hereby ratifies and confirms all said attorneys-in-fact and agents, each acting alone, and his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

104

Signature	Title	Date
/s/ JOHN T. THOMAS	Chief Executive Officer and
John T. Thomas	President and Trustee
	(Principal Executive Officer)	February 29, 2016
/s/ JEFFREY N. THEILER	Executive Vice President and
Jeffrey N. Theiler	Chief Financial Officer	February 29, 2016
	(Principal Financial Officer)
/s/ JOHN W. LUCEY	Senior Vice President-Principal Accounting and
John W. Lucey	Reporting Officer (Principal Accounting Officer)	February 29, 2016
/s/ STANTON D. ANDERSON	Trustee	February 29, 2016
Stanton D. Anderson
/s/ MARK A. BAUMGARTNER	Trustee	February 29, 2016
Mark A. Baumgartner
/s/ ALBERT C. BLACK, JR.	Trustee	February 29, 2016
Albert C. Black, Jr.
/s/ WILLIAM A. EBINGER, M.D.	Trustee	February 29, 2016
William A. Ebinger, M.D.
/s/ TOMMY G. THOMPSON	Chairman	February 29, 2016
Tommy G. Thompson
/s/ RICHARD A. WEISS
Richard A. Weiss	Trustee	February 29, 2016

105

EXHIBIT INDEX

Exhibit No.		Title
3.1	(1)	Articles of Amendment and Restatement of Physicians Realty Trust
3.2	(2)	Bylaws of Physicians Realty Trust, as amended through November 5, 2015
3.3	(3)	Certificate of Limited Partnership of Physicians Realty L.P.
4.1	(1)	Form of Certificate of Common Shares of Physicians Realty Trust
10.1	(4)	Second Amended and Restated Agreement of Limited Partnership of Physicians Realty L.P., dated February 5, 2015
10.2	(5)	Form of Restricted Shares Award Agreement (Time Vesting)**
10.3	(1)	Form of Indemnification Agreement between Physicians Realty Trust and its trustees and officers
10.4	(5)	Contribution Agreement by and among Physicians Realty L.P., Physicians Realty Trust and Ziegler Healthcare Real Estate Fund I, dated as of June 19, 2013
10.5	(5)	Contribution Agreement by and among Physicians Realty L.P., Physicians Realty Trust and Ziegler Healthcare Real Estate Fund II, dated as of June 19, 2013
10.6	(5)	Contribution Agreement by and among Physicians Realty L.P., Physicians Realty Trust and Ziegler Healthcare Real Estate Fund III, dated as of June 19, 2013
10.7	(5)	Contribution Agreement by and among Physicians Realty L.P., Physicians Realty Trust and Ziegler Healthcare Real Estate Fund IV, LP, dated as of June 19, 2013
10.8	(6)	Form of Shared Services Agreement by and among Physicians Realty Trust, Physicians Realty L.P. and B.C. Ziegler and Company
10.9	(6)	Membership Interest Purchase Agreement for the Arrowhead Commons property by and among Physicians Realty L.P., Birdie Zone, L.L.C., Ziegler Healthcare Real Estate Fund I and Ziegler-Arizona 23, LLC dated as of June 24, 2013
10.10	(7)	Agreement of Sale and Purchase, by and between Physicians Realty L.P., a Delaware Limited Partnership, and 6800 Preston Limited, a Texas Limited Partnership, dated August 21, 2013
10.11	(8)	Assignment and Assumption Agreement of Sale and Purchase by and between Foundation Surgical Hospital Affiliates, L.L.C., a Nevada limited liability company, and DOC-FSH El Paso Medical Center, LLC, a Wisconsin limited liability company, as of August 30, 2013
10.12	(8)	Agreement of Sale and Purchase by and between HCRI Texas Properties, Ltd., a Texas limited partnership, Health Care REIT, Inc., a Delaware Corporation and Foundation Surgical Hospital Affiliates, L.L.C., a Nevada limited liability company, as of August 30, 2013
10.13	(8)	Membership Interest Contribution Agreement by and among DOC-CCSC Crescent City Surgical Centre, LLC, Crescent City Surgical Centre Facility, LLC, Physicians Realty L.P. and the Members of Crescent City Surgical Centre Facility, LLC, dated as of September 30, 2013
10.14	(9)	Assignment and Assumption of Agreement of Sale and Purchase by and between Graymark Healthcare, Inc. and DOC-Greymark HQ OKC MOB, LLC, dated September 30, 2013
10.15	(9)	Agreement of Sale and Purchase, dated as of November 7, 2013, by and among Steele Properties I, LLC, a Nevada limited liability company, Collyn Williams and Physicians Realty L.P.
10.16	(10)	Agreement of Sale and Purchase, dated as of January 29, 2014, by and between Octopods, LLC, an Indiana limited liability company, and Physicians Realty L.P., a Delaware limited Partnership
10.17	(10)	Amendment to Agreement of Sale and Purchase, dated as of February 28, 2014, by and between Octopods, LLC, an Indiana limited liability company, and Physicians Realty L.P., a Delaware limited Partnership
10.18	(10)	Second Amendment to Agreement of Sale and Purchase, dated as of April 30, 2014, by and between Octopods, LLC, an Indiana limited liability company, and Physicians Realty L.P., a Delaware limited Partnership
10.19	(10)	Agreement of Sale and Purchase, dated as of February 10, 2014, by and between those Sellers set forth on Exhibit A thereto and Physicians Realty L.P., a Delaware limited partnership
10.20	(10)	Agreement of Sale and Purchase, dated as of February 19, 2014, by and between Foundation Bariatric Real Estate of San Antonio, LLLP, a Texas limited liability limited partnership, and DOC-FSH San Antonio Hospital, LLC, a Wisconsin limited liability company
10.21	(10)	Agreement of Sale and Purchase, dated as of February 28, 2014, by and between North American Property Corporation, a British Columbia corporation, and DOC-PDMC Atlanta, LLC, a Wisconsin limited liability company
10.22	(10)	Agreement of Sale and Purchase, dated as of March 28, 2014, by and between New LifeCare Hospitals of Pittsburgh, LLC, a Delaware limited liability company, and New LifeCare Hospitals of North Texas, LLC a Delaware limited liability company, and DOC-LifeCare Ft. Worth Ltach, LLC, a Wisconsin limited liability company, and DOC-LifeCare Pittsburgh Ltach, LLC, a Wisconsin limited liability company

106

Exhibit No.		Title
10.23	(11)	Amended and Restated Employment Agreement dated as of May 6, 2014, between the Company and John T. Thomas**
10.24	(11)	Amended and Restated Employment Agreement dated as of May 6, 2014, between the Company and John W. Lucey**
10.25	(11)	Amended and Restated Employment Agreement dated as of May 6, 2014, between the Company and Mark D. Theine**
10.26	(11)	Physicians Realty Trust Incentive Bonus Plan**
10.27	(11)	Form of Restricted Share Award Agreement - Executive (Time Vesting)**
10.28	(11)	Form of Restricted Share Award Agreement - Trustees (Time Vesting)**
10.29	(11)	Form of Restricted Share Unit Award Agreement (Performance Units)**
10.30	(12)	Employment Agreement dated as of May 13, 2014, between the Company and Jeffrey Theiler**
10.31	(13)	First Amendment to Shared Services Agreement dated July 31, 2014, among B.C. Ziegler and Company, Physicians Realty Trust, and Physicians Realty L.P.
10.32	(14)	Physicians Realty Trust 2013 Equity Incentive Plan, as amended effective August 7, 2014**
10.33	(15)	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
10.34	(15)	Contribution Agreement, dated as of September 8, 2014, by and between Curie Building, LLC, a Texas limited liability company, as successor by conversion to Cure Building, Ltd., a Texas limited partnership, and DOC-1755 Curie Drive MOB, LLC, a Wisconsin limited liability company
10.35	(15)	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
10.36	(16)	Agreement of Sale and Purchase, dated as of November 18, 2014, by and between Kennewick Trios 2014 LLC, a Wisconsin limited liability company and Physicians Realty L.P., a Delaware limited partnership
10.37	(16)	Contribution Agreement, dated as of February 5, 2015, by and among United Properties Investment, LLC, a Minnesota limited liability company, Minnetonka Medical Building, LLC, a Minnesota limited liability company and DOC-15450 State Highway 7 MOB, LLC, a Wisconsin limited liability company
10.38	(16)	Employment Agreement dated January 8, 2015, between the Company and Bradley D. Page**
10.39	(17)	Amended and Restated Employment Agreement dated as of February 19, 2015, between the Company and John Sweet**
10.40	(16)	Form of Restricted Share Award Agreement - Executive (Time Vesting)**
10.41	(16)	Form of Restricted Share Unit Award Agreement - Executive (Performance Vesting)**
10.42	(16)	Form of Restricted Share Unit Award Agreement - Trustees (Time Vesting)**
10.43	(18)	Second Amendment to Credit Agreement, dated as of July 22, 2015, among Physicians Realty L.P., Physicians Realty Trust and certain subsidiaries and other affiliates party thereto, KeyBank National Association, as administrative agent, KeyBanc Capital Markets Inc., Regions Capital Markets and BMO Capital Markets, and the lenders party thereto (including the conformed copy of the Credit Agreement as an exhibit thereto)
10.44		Third Amendment to the Credit Agreement, dated as of December 16, 2015, among Physicians Realty L.P., Physicians Realty Trust, and KeyBank National Association, as administrative agent for and on behalf of the lenders party thereto*
10.45		Fourth Amendment to the Credit Agreement, dated as of January 6, 2016, among Physicians Realty L.P., Physicians Realty Trust, and KeyBank National Association, as administrative agent for and on behalf of the lenders party thereto*
10.46	(19)	Physicians Realty Trust 2015 Employee Stock Purchase Plan**
10.47	(20)	Note Purchase and Guarantee Agreement, dated as of January 7, 2016, among the Operating Partnership, the Company and each of the Purchasers
10.48	(20)	Form of 4.03% Senior Notes, Series A, due January 7, 2023 (included in Exhibit 10.47)
10.49	(20)	Form of 4.43% Senior Notes, Series B, due January 7, 2026 (included in Exhibit 10.47)
10.50	(20)	Form of 4.57% Senior Notes, Series C, due January 7, 2028 (included in Exhibit 10.47)
10.51	(20)	Form of 4.74% Senior Notes, Series D, due January 7, 2031 (included in Exhibit 10.47)
16.1	(21)	Letter from Plante & Moran, PLLC to the Securities and Exchange Commission, dated April 4, 2014
21.1		List of Subsidiaries of the Registrant*
23.1		Consent of Plante & Moran, PLLC*
23.2		Consent of Ernst & Young LLP*
24.1		Power of Attorney (included on signature page)*

107

Exhibit No.	Title
31.1	Certification of John T. Thomas, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2	Certification of Jeffrey N. Theiler, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1	Certification of John T. Thomas and Jeffrey N. 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(†)

*Filed herewith

**Indicates a management contract or compensatory plan or arrangement.

(1) Incorporated by reference to Amendment No. 2 to the Registrant’s Registration Statement on Form S-11 filed with the SEC on June 14, 2013 (File No. 333-188862).

(2) Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 9, 2015 (File No. 001-36007).

(3) Incorporated by reference to the Registrant’s Registration Statement on Form S-3 filed with the SEC on June 17, 2015 (File No. 333-205034).

(4) Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on February 6, 2015.

(5) Incorporated by reference to Amendment No. 3 to the Registrant’s Registration Statement on Form S-11 filed with the SEC on June 20, 2013 (File No. 333-188862).

(6) Incorporated by reference to Amendment No. 4 to the Registrant’s Registration Statement on Form S-11 filed with the SEC on July 3, 2013 (File No. 333-188862).

(7) Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on August 30, 2013 (File No. 001-36007).

(8) Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 12, 2013 (File No. 001-36007).

(9) Incorporated by reference to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 21, 2014 (File No. 001-36007).

(10) Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 7, 2014 (File No. 001-36007).

(11) Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on May 7, 2014 (File No. 001-36007).

(12) Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on May 14, 2014 (File No. 001-36007).

(13) Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on August 6, 2014 (File No. 001-36007).

(14) Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on August 7, 2014 (File No. 001-36007).

(15) Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 13, 2014 (File No. 001-36007).

(16) Incorporated by reference to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 12, 2015 (File No. 001-36007).

(17) Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on February 20, 2015 (File No. 001-36007).

(18) Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on July 28, 2015 (File No. 001-36007).

(19) Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on August 10, 2015 (File No. 001-36007).

(20) Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on January 12, 2016 (File No. 001-36007).

(21) Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on April 7, 2014 (File No. 001-36007).

108

(†) 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.

109

EX-10.44

Exhibit 10.44

THIRD AMENDMENT TO CREDIT AGREEMENT

This Third Amendment to Credit Agreement (this “Amendment”) is made as of this 16 day of December, 2015, among PHYSICIANS REALTY L.P., a Delaware limited partnership (the “Borrower”), PHYSICIANS REALTY TRUST, a Maryland real estate investment trust (the “Parent” together with Borrower, the “Credit Parties”), KEYBANK NATIONAL ASSOCIATION, a national banking association, as administrative agent (the “Administrative Agent”) for and behalf of the Lenders (as defined in the Credit Agreement referenced in the recitals below).

WITNESSETH:

WHEREAS, the Credit Parties, Administrative Agent and the Lenders have entered into a certain Credit Agreement dated as of September 18, 2014, as amended by that certain First Amendment to Credit Agreement dated as of June 5, 2014, and that certain Second Amendment to Credit Agreement dated as of July 22, 2015 (collectively, the “Credit Agreement”) wherein Administrative Agent and the Lenders agreed to provide a revolving credit facility to Borrower in the aggregate principal amount of up to $750,000,000.00 evidenced by those certain Amended and Restated Notes dated as of July 22, 2015 (collectively, the “Notes”) made by Borrower in favor of each Lender; and

WHEREAS, the Credit Parties, Administrative Agent and the Lenders have agreed to amend the Credit Agreement as set forth herein.

NOW, THEREFORE, the parties hereto agree as follows:

1.Defined Terms; References. Unless otherwise specifically defined herein, each term used herein that is defined in the Credit Agreement has the meaning assigned to such term in the Credit Agreement. Each reference to “hereof”, “hereunder”, “herein” and “hereby” and each other similar reference and each reference to “this Amendment” and each other similar reference contained in the Credit Agreement and other Credit Documents shall, after this Amendment becomes effective, refer to the Credit Agreement as amended hereby.

2.Amendment to Credit Agreement. The Credit Agreement is hereby amended as follows:

(a) The definition of “Interest Payment Date” is hereby deleted in its entirety and shall be replaced by the following:

““Interest Payment Date” means with respect to (a) any Base Rate Loan and any Adjusted LIBOR Rate Loan, the last Business Day of each calendar month; and (b) any Swingline Loan, the date on which repayment of such Swingline Loan was due.”

3.Representations and Warranties.

(a) The Credit Parties hereby represent, warrant and covenant with Administrative Agent and the Lenders that, as of the date hereof:

(i)All representations and warranties made in the Credit Agreement and other Credit Documents remain and continue to be true and correct in all material respects, except to the extent that such representations and warranties expressly refer to an earlier date.

(ii)To the knowledge of the Credit Parties, there exists no Default or Event of Default under any of the Credit Documents.

(iii)This Amendment has been duly authorized, executed and delivered by the Credit Parties so as to constitute the legal, valid and binding obligations of each Credit Party, enforceable in accordance with its terms, except as the same may be limited by insolvency, bankruptcy, reorganization or other laws relating to or affecting the enforcement of creditors’ rights or by general equitable principles.

4.General Terms. This Amendment, which may be executed in multiple counterparts, constitutes the entire agreement of the parties regarding the matters contained herein and shall not be modified by any prior oral or written discussions. Delivery of an executed counterpart of a signature page of this Amendment by telecopy or other electronic imaging transmission (e.g. PDF by email) shall be effective as delivery of a manually executed counterpart of this Amendment. The Credit Parties hereby ratify, confirm and reaffirm all of the terms and conditions of the Credit Agreement, and each of the other Credit Documents, and further acknowledge and agree that all of the terms and conditions of the Credit Agreement shall remain in full force and effect

except as expressly provided in this Amendment. Except where the context clearly requires otherwise, all references to the Credit Agreement in any other Credit Document shall be to the Credit Agreement as amended by this Amendment. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.

5.Illegality. Any determination that any provision of this Amendment or any application hereof is invalid, illegal or unenforceable in any respect and in any instance shall not affect the validity, legality or enforceability of such provision in any other instance, or the validity, legality or enforceability of any other provisions of this Amendment.

6.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

[SIGNATURES ON FOLLOWING PAGE]

It is intended that this Amendment take effect as an instrument under seal as of the date first written above.

BORROWER:

PHYSICIANS REALTY L.P., a Delaware limited partnership

By: Physicians Realty Trust, as General Partner

By: /s/ Jeff Theiler.

 Jeff Theiler

 EVP, Chief Financial Officer

PARENT:

PHYSICIANS REALTY TRUST, a Maryland real estate investment trust

By: /s/ Jeff Theiler.

Jeff Theiler

EVP, Chief Financial Officer

KEYBANK NATIONAL ASSOCIATION

AS ADMINISTRATIVE AGENT ON BEHALF OF THE ISSUING BANK, THE SWINGLINE LENDER, AND EACH LENDER:

By: /s/ Laura Conway.

Name: Laura Conway

Title: Senior Vice President

GUARANTOR CONFIRMATION

The undersigned Guarantor hereby acknowledges and consents to the foregoing Third Amendment to Credit Agreement and acknowledges and agrees that it remains obligated for the various obligations and liabilities of the Borrower to the Administrative Agent and the Lenders under the Credit Agreement as provided for in, and subject to the provisions of, the guaranty provided by the undersigned as set forth in Section 4 of the Credit Agreement

PARENT:

PHYSICIANS REALTY TRUST, a Maryland real estate investment trust

By: /s/ Jeff Theiler.

Jeff Theiler

EVP, Chief Financial Officer

EX-10.45

Exhibit 10.45

FOURTH AMENDMENT TO CREDIT AGREEMENT

This Fourth Amendment to Credit Agreement (this “Amendment”) is made as of this 6^th day of January, 2016, among PHYSICIANS REALTY L.P., a Delaware limited partnership (the “Borrower”), PHYSICIANS REALTY TRUST, a Maryland real estate investment trust (the “Parent” together with Borrower, the “Credit Parties”), KEYBANK NATIONAL ASSOCIATION, a national banking association, as administrative agent (the “Administrative Agent”), and the Lenders party hereto.

W I T N E S S E T H:

WHEREAS, the Credit Parties, Administrative Agent and the Lenders have entered into a certain Credit Agreement dated as of September 18, 2014, as amended by that certain First Amendment to Credit Agreement dated as of June 5, 2015, that certain Second Amendment to Credit Agreement dated as of July 22, 2015, and that certain Third Amendment to Credit Agreement dated as of December 16, 2015 (collectively, the “Credit Agreement”) wherein Administrative Agent and the Lenders agreed to provide a revolving credit facility to Borrower in the aggregate principal amount of up to $750,000,000.00 evidenced by those certain Amended and Restated Notes dated as of July 22, 2015 (collectively, the “Notes”) made by Borrower in favor of each Lender; and

WHEREAS, the Credit Parties, Administrative Agent and the Lenders have agreed to amend the Credit Agreement as set forth herein.

NOW, THEREFORE, the parties hereto agree as follows:

1.Defined Terms; References. Unless otherwise specifically defined herein, each term used herein that is defined in the Credit Agreement has the meaning assigned to such term in the Credit Agreement. Each reference to “hereof”, “hereunder”, “herein” and “hereby” and each other similar reference and each reference to “this Amendment” and each other similar reference contained in the Credit Agreement and other Credit Documents shall, after this Amendment becomes effective, refer to the Credit Agreement as amended hereby.

2.Amendment to Credit Agreement. The Credit Agreement is hereby amended as follows:

(a) Section 8.3 of the Credit Agreement is hereby deleted in its entirety and shall be replaced by the following:

“8.3 No Further Negative Pledges. No Credit Party shall, nor shall it permit any of its Subsidiaries to, enter into any Contractual Obligation (other than this Agreement and the other Credit Documents) that limits the ability of the Borrower or any such Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person; provided, however, that this Section 8.3 shall not prohibit (i) any negative pledge incurred or provided in favor of any holder of Indebtedness permitted under Section 8.1(e), solely to the extent any such negative pledge relates to the property financed by or subject to Permitted Liens securing such Indebtedness, (ii) any Contractual Obligation incurred or provided in favor of any holder of Indebtedness permitted under Section 8.1(l), solely to the extent such Contractual Obligation prohibits the pledge of the Capital Stock of the Borrower to secure any Indebtedness, (iii) any Permitted Lien or any document or instrument governing any Permitted Lien; provided that any such restriction contained therein relates only to the asset or assets subject to such Permitted Lien, (iv) customary restrictions and conditions contained in any agreement relating to the disposition of any property or assets permitted under Section 8.10 pending the consummation of such disposition, (v) customary provisions restricting assignments, subletting or other transfers contained in leases, licenses, joint venture agreements and similar agreements entered into in the ordinary course of business, and (vi) any Contractual Obligation (including, without limitation, any negative pledge) incurred or provided in favor of any holder of Indebtedness permitted under Section 8.1(k).”

(b) Section 8.5 of the Credit Agreement is hereby deleted in its entirety and shall be replaced by the following:

“8.5. Burdensome Agreements. No Credit Party shall, nor shall it permit any of its Subsidiaries to, enter into, or permit to exist, any Contractual Obligation that encumbers or restricts the ability of any such Person to (i) pay dividends or make any other distributions to the Borrower or other Credit Party on its Capital Stock or with respect to any other interest or participation in, or measured by, its profits, (ii) pay any Indebtedness or other obligation owed to the Borrower or any other Credit Party, (iii) make loans or advances to the Borrower or any other Credit Party, (iv) sell, lease or transfer any of its property to the Borrower or any other Credit Party, (v) pledge its property pursuant to the Credit Documents or any renewals, refinancings, exchanges, refundings or extension thereof or (vi) other than customary Subsidiary Indebtedness limitations or covenants, act as a Borrower pursuant to the Credit Documents or any renewals, refinancings,

exchanges, refundings or extension thereof, except (in respect of any of the matters referred to in clauses (i)-(v) above) for (1) this Agreement and the other Credit Documents, (2) any document or instrument governing Indebtedness incurred pursuant to Section 8.1(e) or Section 8.1(j); provided that any such restriction contained therein relates only to the asset or assets constructed or acquired in connection therewith or secured thereby, (3) any Permitted Lien or any document or instrument governing any Permitted Lien, provided that any such restriction contained therein relates only to the asset or assets subject to such Permitted Lien, (4) customary restrictions and conditions contained in any agreement relating to the sale of any property permitted under Section 8.10 pending the consummation of such sale, or (5) any document or instrument governing Indebtedness incurred pursuant to Section 8.1(k).”

3.Representations and Warranties.

(a) The Credit Parties hereby represent, warrant and covenant with Administrative Agent and the Lenders that, as of the date hereof:

(i)    All representations and warranties made in the Credit Agreement and other Credit Documents remain and continue to be true and correct in all material respects, except to the extent that such representations and warranties expressly refer to an earlier date.

(ii)    To the knowledge of the Credit Parties, there exists no Default or Event of Default under any of the Credit Documents.

(iii)    This Amendment has been duly authorized, executed and delivered by the Credit Parties so as to constitute the legal, valid and binding obligations of each Credit Party, enforceable in accordance with its terms, except as the same may be limited by insolvency, bankruptcy, reorganization or other laws relating to or affecting the enforcement of creditors’ rights or by general equitable principles.

4.General Terms. This Amendment, which may be executed in multiple counterparts, constitutes the entire agreement of the parties regarding the matters contained herein and shall not be modified by any prior oral or written discussions. Delivery of an executed counterpart of a signature page of this Amendment by telecopy or other electronic imaging transmission (e.g. PDF by email) shall be effective as delivery of a manually executed counterpart of this Amendment. The Credit Parties hereby ratify, confirm and reaffirm all of the terms and conditions of the Credit Agreement, and each of the other Credit Documents, and further acknowledge and agree that all of the terms and conditions of the Credit Agreement shall remain in full force and effect except as expressly provided in this Amendment. Except where the context clearly requires otherwise, all references to the Credit Agreement in any other Credit Document shall be to the Credit Agreement as amended by this Amendment. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.

5.Illegality. Any determination that any provision of this Amendment or any application hereof is invalid, illegal or unenforceable in any respect and in any instance shall not affect the validity, legality or enforceability of such provision in any other instance, or the validity, legality or enforceability of any other provisions of this Amendment.

6.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

[SIGNATURES ON FOLLOWING PAGE]

It is intended that this Amendment take effect as an instrument under seal as of the date first written above.

BORROWER:

PHYSICIANS REALTY L.P., a Delaware limited partnership

By: Physicians Realty Trust, as General Partner

By: /s/ Jeff Theiler.

Jeff Theiler

EVP, Chief Financial Officer

PARENT:

PHYSICIANS REALTY TRUST, a Maryland real estate investment trust

By: /s/ Jeff Theiler.

Jeff Theiler

EVP, Chief Financial Officer

ADMINISTRATIVE AGENT, ISSUING BANK,

SWINGLINE LENDER, and a LENDER:

KEYBANK NATIONAL ASSOCIATION

By: /s/ Laura Conway.

Name: Laura Conway

Title: Senior Vice President

LENDER:

JPMORGAN CHASE BANK, N.A.

By: /s/ Elizabeth Johnson.

Name:     Elizabeth Johnson

Title:    Executive Director

LENDER:

CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK

By: /s/ Gary Herzog.

Name: Gary Herzog

Title: Managing Director    

By: /s/ Mark Koneval

Name:     Mark Koneval

Title: Managing Director    

LENDER:

COMERICA BANK, a Texas Banking Association

By: /s/ Sam F. Meehan.

Name:     Sam F. Meehan

Title:      Vice President

LENDER:

PNC BANK, NATIONAL ASSOCIATION

By: /s/ John Murphy.

Name: John Murphy     

Title:    Senior Vice President

LENDER:

BRANCH BANKING AND TRUST COMPANY    

By: /s/ Mark Edwards.

Name:     Mark Edwards

Title:      Senior Vice President

LENDER:

CITIZENS BANK, N.A.

By: /s/ Donald W. Woods.

Name:    Donald W. Woods

Title:     Senior Vice President

LENDER:

THE HUNTINGTON NATIONAL BANK

By: /s/ Cheryl B. Holm.

Name:     Cheryl B. Holm

Title:    Senior Vice President

LENDER:

MORGAN STANLEY BANK, N.A.

By: /s/ Emanuel Ma.

Name: Emanuel Ma

Title: Authorized Signatory

LENDER:

MORGAN STANLEY SENIOR FUNDING, INC.

By: /s/ Emanuel Ma.

Name:     Emanuel Ma

Title:    Vice President

LENDER:

ASSOCIATED BANK, NATIONAL ASSOCIATION

By: /s/ Greg Conner.

Name:     Greg Conner

Title:    Vice President

LENDER:

REGIONS BANK

By: /s/ Brian Higdon.

Name:     Brian Higdon

Title:     Vice President

LENDER:

BANK OF AMERICA, N.A.

By: /s/ Yinghua Zhang.

Name:     Yinghua Zhang

Title:      Director

LENDER:

SYNOVUS BANK

By: /s/ David Bowman.

Name:     David Bowman

Title:      Director of Corporate Banking

LENDER:

BMO HARRIS BANK N.A.

By: /s/ Kevin Fennell.

Name:     Kevin Fennell

Title:     Vice President

LENDER:

RAYMOND JAMES BANK, N.A.

By: /s/ James M. Armstrong.

Name:     James M. Armstrong

Title:     Senior Vice President

LENDER:

ROYAL BANK OF CANADA

By: /s/ Joshua Freedman.

Name:     Joshua Freedman

Title:     Authorized Signatory

GUARANTOR CONFIRMATION

The undersigned Guarantor hereby acknowledges and consents to the foregoing Fourth Amendment to Credit Agreement and acknowledges and agrees that it remains obligated for the various obligations and liabilities of the Borrower to the Administrative Agent and the Lenders under the Credit Agreement as provided for in, and subject to the provisions of, the guaranty provided by the undersigned as set forth in Section 4 of the Credit Agreement

PARENT:

PHYSICIANS REALTY TRUST, a Maryland real estate investment trust

By: /s/ Jeff Theiler

Jeff Theiler

EVP, Chief Financial Officer

EX-21.1

Exhibit 21.1

LIST OF SUBSIDIARIES

(as of December 31, 2015)

ENTITY	STATE OF ORIGIN
Physicians Realty L.P.	Delaware
Ziegler - El Paso 8 Limited Partnership	Wisconsin
Ziegler - Georgia 17, LLC	Wisconsin
Ziegler - Georgia 20, LLC	Wisconsin
Ziegler - Georgia 21, LLC	Wisconsin
Ziegler - Wisconsin 24, LLC	Wisconsin
Ziegler - Arizona 23, LLC	Wisconsin
Ziegler - Georgia 6, LLC	Wisconsin
Ziegler - Michigan 5, LLC	Wisconsin
Ziegler - Michigan 6, LLC	Wisconsin
Ziegler - Ohio 9, LLC	Wisconsin
Ziegler - Ohio 19, LLC	Wisconsin
Ziegler - Texas 8, LLC	Wisconsin
Ziegler - Illinois 12, LLC	Wisconsin
Ziegler - Maine 15, LLC	Wisconsin
Ziegler - Illinois 18, LLC	Wisconsin
DOC-FSH El Paso Medical Center, LLC	Wisconsin
DOC-ELFP Atlanta MOBs, LLC	Wisconsin
DOC-LifeCare Plano LTACH, LLC	Wisconsin
DOC-CCSC Crescent City Surgical Centre, LLC	Wisconsin
DOC-MP TXAZ, LLC	Wisconsin
DOC-SSH Slidell Surgical Center, LLC	Wisconsin
DOC-Cornerstone Pensacola MOB, LLC	Wisconsin
DOC-CONS Columbus MOB, LLC	Wisconsin
Eastwind MOB, LLC	Ohio
DOC-CCSC Crescent City Land, LLC	Wisconsin
DOC-Great Falls MT ASC, LLC	Wisconsin
DOC-FSH San Antonio MOB, LLC	Wisconsin
DOC-PDMC Atlanta, LLC	Wisconsin
DOC-21st Century Sarasota, LLC	Wisconsin
DOC-LifeCare Pittsburgh LTACH, LLC	Wisconsin
DOC-LifeCare Ft. Worth LTACH, LLC	Wisconsin
DOC-Pinnacle Harrisburg MOBs, LLC	Wisconsin
DOC-SBO MOB, LLC	Wisconsin
DOC-Grenada MOB, LLC	Wisconsin
DOC-Carmel MOB, LLC	Wisconsin
DOC-MSMOC Jackson MOB, LLC	Wisconsin
DOC-Premier Landmark MOBs, LLC	Wisconsin
DOC-PMP Monroe MOB, LLC	Wisconsin
DOC-Summit Bloomington MOB, LLC	Wisconsin
DOC-Renaissance Oshkosh MOB, LLC	Wisconsin
DOC-SIM Monroe ASC, LLC	Wisconsin
DOC-Oaks Lady Lake MOB, LLC	Wisconsin
DOC-CRMC Carlisle MOB, LLC	Wisconsin
DOC-WSUPG Troy MOB, LLC	Wisconsin
DOC-6138 Kennerly Road MOB, LLC	Wisconsin
DOC-Indiana 7 MOB, LLC	Wisconsin

ENTITY	STATE OF ORIGIN
DOC-2625 Market Place MOB, LLC	Wisconsin
DOC-4518 Union Deposit MOB, LLC	Wisconsin
DOC-4520 Union Deposit MOB, LLC	Wisconsin
DOC-240 Grandview Avenue MOB, LLC	Wisconsin
DOC-32 Northeast Drive MOB, LLC	Wisconsin
DOC-1755 Curie Drive MOB, LLC	Wisconsin
DOC-3100 Lee Trevino Drive MOB, LLC	Wisconsin
DOC-9999 Kenworthy Street MOB, LLC	Wisconsin
DOC-9085 Southern Street MOB, LLC	Wisconsin
Southern Point LLC	Delaware
DOC-3100 Plaza Properties Boulevard MOB, LLC	Wisconsin
Zangmeister Center LLC	Delaware
DOC-170 Taylor Station Road MOB, LLC	Wisconsin
COG Real Estate Partners II, LLC	Ohio
DOC-560 North Cleveland Avenue MOB, LLC	Wisconsin
Cardinal Westerville II LLC	Ohio
DOC-1810 Stadium Drive MOB, LLC	Wisconsin
DOC-500 18th Street MOB, LLC	Wisconsin
DOC-633 19th Street MOB, LLC	Wisconsin
DOC-920 18th Street MOB, LLC	Wisconsin
DOC-705 17th Street MOB, LLC	Wisconsin
DOC-615 19th Street MOB, LLC	Wisconsin
DOC-1800 10th Avenue MOB, LLC	Wisconsin
DOC-2000 10th Avenue MOB, LLC	Wisconsin
DOC-1942 North Avenue MOB, LLC	Wisconsin
DOC-1900 10th Avenue MOB, LLC	Wisconsin
DOC-1968 North Avenue MOB, LLC	Wisconsin
DOC-2200 Hamilton Road MOB, LLC	Wisconsin
DOC-610 19th Street MOB, LLC	Wisconsin
DOC-Middletown Medical MOBs, LLC	Wisconsin
DOC-311 West Fairchild Street MOB, LLC	Wisconsin
DOC-2633 Napoleon Avenue MOB, LLC	Wisconsin
DOC-8550 Naab Street MOB, LLC* (converted to DE LLC - DOC-8550 Naab Road MOB, LLC)	Delaware
DOC-24 Physicians Drive MOB, LLC	Wisconsin
DOC-207 Stonebridge Boulevard ASC, LLC	Wisconsin
DOC-DG Holding, LLC	Wisconsin
DOC-2422 20th Street SW MOB, LLC	Wisconsin
DOC-3400 West 66th Street MOB, LLC	Wisconsin
MMB Medical Partners, LLC	Delaware
MTKA II MP LLC	Delaware
VH Medical Partners LLC	Delaware
Crystal Medical Building, LLC	Minnesota
Savage Medical Building, LLC	Minnesota
Dell Medical Building, LLC	Minnesota
DOC-MSM Greenwood MOBs, LLC	Wisconsin

ENTITY	STATE OF ORIGIN
CAN Real Estate, LLC	Indiana
DOC-Indiana American MOBs, LLC	Wisconsin
DOC-MP Holding, LLC	Wisconsin
DOC-4352 North Josey Lane MOB, LLC	Wisconsin
DOC-7308 Bridgeport Way W MOB, LLC	Wisconsin
DOC-309 Renaissance, LLC	Wisconsin
DOC-3701 Avalon Park W Boulevard MOB, LLC	Wisconsin
DOC-CCP MOBs, LLC	New York
DOC-2511 Terra Crossing Boulevard MOB, LLC	Wisconsin
DOC-9118 Bluebonnet Centre Boulevard MOB, LLC	Wisconsin
DOC-19900 Haggerty Road MOB, LLC	Wisconsin
DOC-679 East County Line Road MOB, LLC	Wisconsin
DOC-600 Health Park Boulevard MOB, LLC	Wisconsin
DOC-5319 Hoag Drive MOB, LLC	Wisconsin
DOC-15255 Max Leggett Parkway MOB, LLC	Wisconsin
DOC-3833 Coon Rapids Boulevard NW MOB, LLC	Wisconsin
DOC-2605 East Creeks Edge Drive MOB, LLC	Wisconsin
DOC-1701B Pelham Road South MOB, LLC	Wisconsin
DOC-244 Coatsland Drive MOB, LLC	Wisconsin
DOC-1710 North Randall Road MOB, LLC	Wisconsin
DOC-250 Fame Avenue MOB, LLC	Wisconsin
DOC-3602 Kyoto Gardens Drive MOB, LLC	Wisconsin
DOC-5401 South Congress Avenue MOB, LLC	Wisconsin
DOC-3730 Plaza Way MOB, LLC	Wisconsin
DOC-2030 Stringtown Road MOB, LLC	Ohio
DOC-3815 East Bell Road MOB, LLC	Wisconsin
DOC-13555 West McDowell Road MOB, LLC	Wisconsin
DOC-10815 West McDowell Road MOB, LLC	Wisconsin
DOC-9250 North 3rd Street MOB, LLC	Wisconsin
DOC-MP Kyle, LLC	Wisconsin
DOC-Katy Medical MOBs, LLC	Wisconsin
DOC-7277 Smith’s Mill Road MOB, LLC	Wisconsin
DOC-16838 East Palisades Boulevard MOBs, LLC	Wisconsin
DOC-Great Falls Holding, LLC	Wisconsin
DOC-2000 Lewis Turner Boulevard MOB, LLC	Wisconsin
DOC-2101 Northside Drive MOB, LLC	Wisconsin
DOC-411 North Section Street MOB, LLC	Wisconsin
DOC-1624 North McKenzie Street MOB, LLC	Wisconsin
DOC-669 South McKenzie Street MOB, LLC	Wisconsin
DOC-12601 Sorrento Road MOB, LLC	Wisconsin
DOC-5150 North Davis Highway MOB, LLC	Wisconsin
DOC-1299 Industrial Drive MOB, LLC	Wisconsin
DOC-5101 North Davis Highway MOB, LLC	Wisconsin
DOC-10800 Panama City Beach Parkway MOB, LLC	Wisconsin
DOC-12600 Sorrento Road MOB, LLC	Wisconsin

ENTITY	STATE OF ORIGIN
DOC-4397 Ronald Reagan Boulevard ASC, LLC	Wisconsin
DOC-3510 Old Washington Road MOB, LLC	Wisconsin
DOC-LM Kansas City MOB, LLC	Wisconsin
DOC-3311 North 44th Street MOBs, LLC	Wisconsin
DOC-1203 Smizer Mill Road MOB, LLC	Wisconsin
DOC-Nashville MOB, LLC	Wisconsin
Cambridge Nashville Medical Center, L.P.	Tennesee
DOC-1709 Medical Park Drive MOB, LLC	Wisconsin
DOC-17270 Red Oak Drive MOB, LLC	Wisconsin
Great Falls Clinic-Frauenshuh, LLC	Minnesota
DOC-1155 SE Monterey Road ASC, LLC	Wisconsin
DOC-1609 Hospital Parkway MOB, LLC	Wisconsin
DOC-Davis Group MOB Portfolio, LLC	Wisconsin
DOC-300 Lake Drive East MOB, LLC	Wisconsin
DOC-67 Prospect Avenue MOB, LLC	Wisconsin
DOC-21 Laurel Avenue MOB, LLC	Wisconsin

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-190085, 333-198715, and 333-204032 on Form S-8 and Registration Statement Nos. 333-197842, 333-198400, and 333-205034 on Form S-3 of our report dated March 21, 2014, relating to the consolidated and combined financial statements of Physicians Realty Trust for the year ended December 31, 2013, appearing in the Annual Report on Form 10-K of Physicians Realty Trust.

/s/ Plante & Moran, PLLC

Chicago, Illinois

February 29, 2016

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (No. 333-190085, No. 333-198715 and 333-204032 on Forms S-8 and No. 333-197842, No. 333-198400 and No. 333-205034 on Forms S-3) of Physicians Realty Trust of our report dated February 29, 2016 with respect to the consolidated financial statements and schedule of Physicians Realty Trust and the effectiveness of internal control over financial reporting of Physicians Realty Trust included in this Annual Report (Form 10-K) for the year ended December 31, 2015.  

/s/ Ernst & Young LLP

Ernst & Young LLP

Chicago, Illinois

February 29, 2016

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 Annual Report on Form 10-K for the fiscal year ended December 31, 2015, of Physicians Realty Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 29, 2016	/s/ John T. Thomas
	John T. Thomas
	Chief Executive Officer and President

EX-31.2

Exhibit 31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jeffrey N. Theiler, certify that:

1. I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2015, of Physicians Realty Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 29, 2016	/s/ Jeffrey N. Theiler
	Jeffrey N. 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

Each of the undersigned hereby certifies, for the purposes of 18 U.S.C. Section 1350, in his capacity as an officer of Physicians Realty Trust (the “Company”), that, to such person’s knowledge:

a. the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 2015, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

b. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 29, 2016

/s/ John T. Thomas

John T. Thomas

Chief Executive Officer and President

/s/ Jeffrey N. Theiler

Jeffrey N. Theiler

Executive Vice President and Chief Financial Officer

This certification is not deemed to be “filed” for purposes of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liability under the Exchange Act. This certification is not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

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Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2015	Feb. 22, 2016	Jun. 30, 2015
Document And Entity Information
Entity Registrant Name	Physicians Realty Trust
Entity Central Index Key	0001574540
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-K
Document Period End Date	Dec. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q4
Amendment Flag	false
Entity Common Stock, Shares Outstanding		108,596,965
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 1,081,225,866

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Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Investment properties:
Land and improvements	$ 130,788	$ 79,334
Building and improvements	1,284,863	644,086
Tenant improvements	9,243	5,614
Acquired lease intangibles	205,168	72,985
Gross real estate property	1,630,062	802,019
Accumulated depreciation	(91,250)	(45,569)
Net real estate property	1,538,812	756,450
Real estate loans receivable	39,349	15,876
Investment in unconsolidated entity	1,322	1,324
Net real estate investments	1,579,483	773,650
Cash and cash equivalents	3,143	15,923
Tenant receivables, net	2,977	1,324
Deferred costs, net	7,037	4,870
Other assets	52,231	15,806
Total assets	1,644,871	811,573
Liabilities:
Credit facility	395,000	138,000
Mortgage debt	94,600	78,105
Accounts payable	644	700
Dividends payable	20,783	16,548
Accrued expenses and other liabilities	24,473	6,140
Acquired lease intangibles, net	5,950	2,871
Total liabilities	541,450	242,364
Redeemable noncontrolling interest – Operating Partnership and partially owned properties	26,960	0
Equity:
Common shares, $0.01 par value, 500,000,000 common shares authorized, 86,864,063 and 50,640,863 common shares issued and outstanding as of December 31, 2015 and December 31, 2014, respectively.	872	510
Additional paid-in capital	1,129,284	586,017
Accumulated deficit	(109,024)	(51,797)
Total shareholders’ equity	1,021,132	534,730
Noncontrolling interests:
Operating Partnership	45,451	33,727
Partially owned properties	9,878	752
Total noncontrolling interests	55,329	34,479
Total equity	1,076,461	569,209
Total liabilities and equity	$ 1,644,871	$ 811,573

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Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Common stock, shares outstanding (in shares)	86,864,063	50,640,863
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares issued (in shares)	86,864,063	50,640,863

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Consolidated and Combined Statements of Operations - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Revenues:
Rental revenues	$ 103,974	$ 46,397	$ 13,565
Expense recoveries	21,587	5,871	3,234
Interest income on real estate loans and other	3,880	1,066	246
Total revenues	129,441	53,334	17,045
Expenses:
Interest expense	10,636	6,907	4,295
General and administrative	14,908	11,440	3,214
Operating expenses	31,026	10,154	4,650
Depreciation and amortization	45,471	16,731	5,107
Acquisition expenses	14,893	10,897	1,938
Management fees	0	0	475
Impairment loss	0	1,750	0
Total expenses	116,934	57,879	19,679
Income (loss) before equity in income of unconsolidated entity, gain (loss) on sale of investment properties and noncontrolling interests:	12,507	(4,545)	(2,634)
Equity in income of unconsolidated entity	104	95	0
Gain (loss) on sale of investment properties	130	32	(2)
Net income (loss)	12,741	(4,418)	(2,636)
Net (income) loss attributable to noncontrolling interests:
Predecessor	0	0	576
Operating Partnership	(576)	695	470
Partially owned properties	(377)	(314)	(71)
Net income (loss) attributable to controlling interest	11,788	(4,037)	(1,661)
Preferred distributions	(1,189)	0	0
Net income (loss) attributable to common shareholders	$ 10,599	$ (4,037)	$ (1,661)
Net income (loss) per share:
Basic (in dollars per share)	$ 0.15	$ (0.12)	$ (0.13)
Diluted (in dollars per share)	$ 0.15	$ (0.12)	$ (0.13)
Weighted average common shares:
Basic (in shares)	72,750,724	33,063,093	12,883,917
Diluted (in shares)	76,792,073	33,063,093	12,883,917
Dividends and distributions declared per common share and unit (in dollars per share)	$ 0.9	$ 0.9	$ 0.41

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Consolidated and Combined Statement of Equity - USD ($) $ in Thousands	Total	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
Balance (Predecessor) at Dec. 31, 2012	$ 19,097				$ 19,068	$ 19,068		$ 29	$ 29
Increase (Decrease) in Partners' Capital [Roll Forward]
Net (loss) income | Predecessor	(576)				(712)	(712)		136	136
Transfer | Predecessor					36	36		(36)	(36)
Distributions | Predecessor	(420)				(211)	(211)		(209)	(209)
Balance (Predecessor) at Jul. 24, 2013	18,101				18,181	18,181		(80)	(80)
Balance (Predecessor) at Dec. 31, 2012	19,097				19,068	19,068		29	29
Increase (Decrease) in stockholders' Equity
Net income	(2,636)
Preferred distributions	0
Balance at Dec. 31, 2013	240,837	$ 215	$ 213,359	$ (8,670)		204,904	$ 35,310	623	35,933
Balance (Predecessor) at Jul. 24, 2013	18,101				18,181	18,181		(80)	(80)
Increase (Decrease) in stockholders' Equity
Net proceeds from sale of common shares	225,920	213	225,707			225,920
Formation transactions	(354)		35		$ (18,181)	(18,146)	18,181	(389)	17,792
Restricted share award grants	433	2	431			433
Dividends declared	(8,335)			(7,009)		(7,009)	(1,326)		(1,326)
Adjustment for noncontrolling interests ownership in Operating Partnership			(7,391)			(7,391)	7,391		7,391
Contributions	7,387		(5,423)			(5,423)	11,534	1,276	12,810
Distributions	(255)							(255)	(255)
Net income	(2,060)			(1,661)		(1,661)	(470)	71	(399)
Balance at Dec. 31, 2013	240,837	215	213,359	(8,670)		204,904	35,310	623	35,933
Increase (Decrease) in stockholders' Equity
Net proceeds from sale of common shares	350,385	272	350,113			350,385
Restricted share award grants	2,060	2	2,100	(42)		2,060
Issuance of common shares in connection with the Ziegler shared service amendment payment	1,800	1	1,799			1,800
Dividends declared	(42,313)			(39,048)		(39,048)	(3,265)		(3,265)
Adjustment for noncontrolling interests ownership in Operating Partnership			5,380			5,380	(5,380)		(5,380)
Distributions	(185)							(185)	(185)
Net income	(4,418)			(4,037)		(4,037)	(695)	314	(381)
Purchase of OP Units	(7,546)						(7,546)		(7,546)
Conversion of OP Units		20	13,266			13,286	(13,286)		(13,286)
Preferred distributions	0
Issuance of OP Units in connection with acquisitions	28,589						28,589		28,589
Balance at Dec. 31, 2014	569,209	510	586,017	(51,797)		534,730	33,727	752	34,479
Increase (Decrease) in stockholders' Equity
Net proceeds from sale of common shares	545,117	361	544,756			545,117
Restricted share award grants	2,908	1	3,191	(284)		2,908
Dividends declared	(70,886)			(67,542)		(67,542)	(3,344)		(3,344)
Adjustment for noncontrolling interests ownership in Operating Partnership	0		(4,778)			(4,778)	4,778		4,778
Contributions	8,962							8,962	8,962
Distributions	(213)							(213)	(213)
Net income	12,741			11,788		11,788	576	377	953
Purchase of OP Units	(1,088)						(1,088)		(1,088)
Conversion of OP Units	0		171			171	(171)		(171)
Preferred distributions	(1,189)			(1,189)		(1,189)
Issuance of OP Units in connection with acquisitions	10,973						10,973		10,973
Change in market value of Redeemable Noncontrolling Interest in Operating Partnership	(73)		(73)			(73)
Balance at Dec. 31, 2015	$ 1,076,461	$ 872	$ 1,129,284	$ (109,024)		$ 1,021,132	$ 45,451	$ 9,878	$ 55,329

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Cash Flows from Operating Activities:
Net income (loss)	$ 12,741	$ (4,418)	$ (2,636)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	45,471	16,731	5,107
Amortization of deferred financing costs	1,373	1,097	510
Amortization of lease inducements and above/below market lease intangibles	2,577	571	141
Straight-line rental revenue/expense	(9,000)	(4,366)	(675)
Amortization of above market assumed debt	(173)	0	0
(Gain) loss on sale of investment properties	(130)	(32)	2
Equity in income of unconsolidated entity	(104)	(95)	0
Distribution from unconsolidated entity	106	71	0
Change in fair value of derivatives	(166)	(161)	(246)
Provision for bad debts	69	9	30
Non-cash share compensation	3,798	2,422	433
Ziegler shared service amendment payment	0	1,800	0
Impairment on investment properties	0	1,750	0
Change in operating assets and liabilities:
Tenant receivables	(2,836)	(986)	(184)
Other assets	(630)	(3,518)	(1,074)
Accounts payable to related parties	0	0	(1,530)
Accounts payable	(56)	(136)	34
Accrued expenses and other liabilities	8,312	2,556	1,256
Net cash provided by operating activities	61,352	13,295	1,168
Cash Flows from Investing Activities:
Proceeds on sales of investment properties	3,039	235	448
Acquisition of investment properties, net	(752,807)	(501,127)	(125,728)
Capital expenditures on existing investment properties	(4,988)	(900)	0
Pay down of contingent consideration	(999)	0	0
Real estate loans receivable	(22,359)	(15,386)	0
Note receivable	(20,545)	0	0
Leasing commissions	(579)	(100)	(163)
Lease inducements	(2,478)	(1,532)	(1,000)
Net cash used in investing activities	(801,716)	(518,810)	(126,443)
Cash Flows from Financing Activities:
Net proceeds from sale of common shares	545,117	350,384	225,920
Formation transactions	0	0	(354)
Proceeds from credit facility borrowings	620,000	395,200	52,350
Payment on credit facility borrowings	(363,000)	(257,200)	(52,350)
Proceeds from issuance of mortgage debt	0	26,550	162
Principal payments on mortgage debt	(2,022)	(6,549)	(41,832)
Debt issuance costs	(3,105)	(3,887)	(1,428)
Dividends paid – shareholders	(63,720)	(28,104)	(2,161)
Distributions to noncontrolling interest – Operating Partnership	(3,216)	(3,382)	(493)
Distributions to members and partners	(563)	0	(211)
Distributions to noncontrolling interest – partially owned properties	(213)	(185)	(464)
Purchase of OP Units	(1,088)	(7,546)	0
Common shares repurchased and retired	(606)	(321)	0
Net cash provided by financing activities	727,584	464,960	179,139
Net (decrease) increase in cash and cash equivalents	(12,780)	(40,555)	53,864
Cash and cash equivalents, beginning of period	15,923	56,478	2,614
Cash and cash equivalents, end of period	3,143	15,923	56,478
Supplemental disclosure of cash flow information – interest paid during the year	9,550	5,606	3,942
Supplemental disclosure of noncash activity – assumed debt	18,690	15,283	0
Supplemental disclosure of noncash activity – issuance of OP Units and Series A Preferred Units in connection with acquisitions	40,376	28,589	11,535
Supplemental disclosure of noncash activity – contingent consideration	$ 2,718	$ 840	$ 0

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Organization and Business

12 Months Ended

Dec. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Business

Note 1. Organization and Business

Physicians Realty Trust (the “Trust”) was organized in the state of Maryland on April 9, 2013. As of December 31, 2015, 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

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 (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 common units of partnership interest (“OP Units”) on July 24, 2013. 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 provided office space, IT support, accounting support and other services to the Trust in exchange for an annual fee. The Trust elected to terminate the shared services agreement effective July 23, 2015 in conjunction with completed renovations of the Renaissance Office Building.

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 per share to the public in the IPO. These formation transactions were effected concurrently with the completion of the IPO.

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 former senior secured revolving credit facility. The balance of the net proceeds was subsequently invested in healthcare properties.

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.

Equity Offerings

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 former 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 former senior secured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

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 former senior secured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

On January 21, 2015, the Trust completed a follow-on public offering of 18,975,000 common shares at $16.40 per share, including 2,475,000 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to the Trust of approximately $297.3 million. The Trust contributed the net proceeds of this offering to the Operating Partnership in exchange for 18,975,000 partnership interests in the Operating Partnership (“OP Units”), and the Operating Partnership used the net proceeds of the public offering to repay borrowings under the unsecured revolving credit facility and for general corporate purposes, including working capital and investment in real estate.

On June 17, 2015, the Trust filed an automatic shelf registration statement on Form S-3 with the Commission covering an indeterminate amount of common shares, preferred shares, convertible shares, debt securities, convertible debt securities or other types of securities from time to time.

On October 19, 2015, the Trust completed a follow-on public offering of 15,812,500common shares at $15.00 per share, including2,062,500common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to the Trust of approximately$226.8 million. The Trust contributed the net proceeds of this offering to the Operating Partnership in exchange for15,812,500 OP Units, and the Operating Partnership used the net proceeds of the public offering to repay a portion of the outstanding indebtedness under the unsecured revolving credit facility and for general corporate purposes, including working capital and investment in real estate.

On August 19, 2014, the Trust 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 the Trust 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 a shelf registration statement on Form S-3 (the “ATM Program”). During 2015 and 2014, the Trust’s issuance and sale of common shares pursuant to the ATM Program is as follows (in thousands, except common shares and price): 

	2015					2014
	Common shares sold	Weighted average price		Net proceeds		Common shares sold	Weighted average price		Net proceeds
Quarterly period ended March 31	247,397	$	16.96	$	4,139	—	$	—	$	—
Quarterly period ended June 30	1,007,695	16.56		16,439		—	—		—
Quarterly period ended September 30	—	—		—		—	—		—
Quarterly period ended December 31	—	—		—		3,576,010	15.54		54,789
Year ended December 31	1,255,092	$	16.63	$	20,578	3,576,010	$	15.54	$	54,789

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation

GAAP requires the Trust to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The Trust consolidates its investment in a VIE when it determines that it is its primary beneficiary. The Trust may change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary.

The Trust identifies the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. The Trust performs this analysis on an ongoing basis.

For property holding entities not determined to be VIEs, the Trust consolidates such entities in which the Trust or the Operating Partnership owns 100% of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest. All intercompany balances and transactions are eliminated in consolidation. For entities in which the 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 noncontrolling interest representing equity held by noncontrolling interests.

Noncontrolling Interests

The Trust presents the portion of any equity it does not own in entities that it controls (and thus consolidates) as noncontrolling interests and classifies such interests as a component of consolidated equity, separate from the Trust’s total shareholders’ equity, on the consolidated balance sheets.

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 and the payment of approximately $36.9 million of debt related to such properties.

During the year ended December 31, 2013, the Operating Partnership partially funded one property acquisition by issuing 954,877 OP Units valued at approximately $11.5 million on the date of issuance. The acquisition had a total purchase price of approximately $37.5 million.

During the year ended December 31, 2014, the Operating Partnership partially funded five property acquisitions by issuing an aggregate of 2,042,313 OP Units valued at approximately $28.6 million on the date of issuance. The five acquisitions had a total purchase price of approximately $103.6 million.

During the year ended December 31, 2015, the Operating Partnership partially funded three property acquisitions by issuing an aggregate of 648,649 OP Units valued at approximately $11.0 million on the date of issuance. The three acquisitions had a total purchase price of approximately $32.5 million.

Noncontrolling interests in the Trust represent OP Units held by the Predecessor’s prior investors and other investors. As of December 31, 2015, the Trust held a 95.7% 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 unregistered common shares on a one-for-one basis. Such selection to pay cash or issue common 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 sheet.

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 statement of operations.

Redeemable Noncontrolling Interests - Operating Partnership and Partially Owned Properties 

On February 5, 2015, the Trust entered into a Second Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”) which provides for the designation and issuance of the newly designated Series A Participating Redeemable Preferred Units of the Operating Partnership (“Series A Preferred Units”). Series A Preferred Units have priority over all other partnership interests of the Operating Partnership with respect to distributions and liquidation. Holders of Series A Preferred Units are entitled to a 5% cumulative return and upon redemption, the receipt of one common share and $200. The holders of the Series A Preferred Units have agreed not to cause the Operating Partnership to redeem their Series A Preferred Units prior to one year from the issuance date. In addition, Series A Preferred Units are redeemable at the option of the holders which redemption obligation may be satisfied, at the Trust’s option, in cash or registered common shares. Instruments that require settlement in registered common shares may not be classified in permanent equity as it is not always completely within an issuer’s control to deliver registered common shares. Due to the redemption rights associated with the Series A Preferred Units, the Trust classifies the Series A Preferred Units in the mezzanine section of its consolidated balance sheet. 

On February 5, 2015, the acquisition of the Minnetonka MOB was partially funded with the issuance of 44,685 Series A Preferred Units which are valued at $9.7 million. On December 17, 2015, the acquisition of the Nashville MOB was partially funded with the issuance of 91,236 Series A Preferred Units which are valued at $19.7 million. The Series A Preferred Units were evaluated for embedded features that should be bifurcated and separately accounted for as a freestanding derivative. The Trust determined that the Series A Preferred Units contained features that require bifurcation. The fair value of the embedded derivative is $8.1 million and is included on the Trust’s consolidated balance sheets in accrued expenses and other liabilities.

In connection with the acquisition of the Minnetonka MOB, the Trust received a $5 million equity investment from a third party, effective March 1, 2015. This investment earns a 15% cumulative preferred return. At any point subsequent to the third anniversary of the investment, the holder can require the Trust to redeem the instrument at a price for which the investor will realize a 15% internal rate of return. Due to the redemption provision, which is outside of the control of the Trust, the Trust classifies the investment in the mezzanine section of its consolidated balance sheet. The Trust records the carrying amount of the redeemable noncontrolling interests at the greater of the carrying value or redemption value.

Dividends and Distributions

Declaration Date	Record Date	Payment Date	Cash Dividend per Share/Unit
December 31, 2015	January 15, 2016	January 29, 2016	$	0.225
September 28, 2015	October 16, 2015	October 30, 2015	$	0.225
July 1, 2015	July 17, 2015	July 31, 2015	$	0.225
April 6, 2015	April 17, 2015	May 1, 2015	$	0.225
December 30, 2014	January 23, 2015	February 6, 2015	$	0.225
September 26, 2014	October 17, 2014	October 30, 2014	$	0.225
June 26, 2014	July 18, 2014	August 1, 2014	$	0.225
March 27, 2014	April 11, 2014	April 25, 2014	$	0.225
December 30, 2013	January 24, 2014	February 7, 2014	$	0.225
September 30, 2013	October 18, 2013	November 1, 2013	$	0.180	(1)

(1) Prorated cash dividend of $0.18 per share for the quarterly period from July 19, 2013 (the date of the IPO) through September 30, 2013, which was equivalent to a full quarterly dividend of $0.225 per share. The dividend was paid on November 1, 2013 to common shareholders and common OP Unit holders of record on October 18, 2013, with the exception of the OP Units issued in the acquisition of Crescent City Surgical Centre.

Purchase of 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 the acquired tangible assets and assumed liabilities 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 (“ASC 805”), and assets acquired and liabilities assumed, including identified intangible assets and liabilities, are recorded at fair value.

The determination of fair value involves the use of significant judgment and estimation. The Trust makes estimates of the fair value of the tangible and intangible acquired assets and assumed liabilities using information obtained from multiple sources as a result of pre-acquisition due diligence and may include the assistance of a third party appraiser. The Trust estimates the fair value of buildings acquired on an as-if-vacant basis and depreciates the building value over the estimated remaining life of the building. The Trust determines the allocated value of other fixed assets, such as site improvements, based upon the replacement cost and depreciates such value over the assets’ estimated remaining useful lives as determined at the applicable acquisition date. The fair value of land is determined either by considering the sales prices of similar properties in recent transactions or based on internal analyses of recently acquired and existing comparable properties within the Trust’s portfolio.

In recognizing identified intangible assets and liabilities in connection with a business combination, the value of above-or-below market leases is estimated based on the present value (using an interest rate which reflected the risks associated with the leases acquired) of the difference between contractual amounts to be received pursuant to the leases and management’s estimate of market lease rates measured over a period equal to the estimated remaining term of the lease. The capitalized above-market or below-market lease intangibles are amortized as a reduction or addition to rental income over the estimated remaining term of the respective leases.

In determining the value of in-place leases, management considers current market conditions and costs to execute similar leases in arriving at an estimate of the carrying costs during the expected lease-up period from vacant to existing occupancy. In estimating carrying costs, management includes real estate taxes, insurance, other operating expenses, estimates of lost rental revenue during the expected lease-up periods, and costs to execute similar leases, including leasing commissions, tenant improvements, legal, and other related costs based on current market demand. The values assigned to in-place leases are amortized over the estimated remaining term of the lease.

The values assigned to all lease intangible assets and liabilities are amortized over the estimated remaining term of the lease. If a lease terminates prior to its scheduled expiration, all unamortized costs related to that lease are written off.

The Trust calculates the fair value of any long-term debt assumed by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings, which the Trust approximates based on the rate at which it would expect to incur on a replacement instrument on the date of acquisition, and recognize any fair value adjustments related to long-term debt as effective yield adjustments over the remaining term of the instrument.

Based on these estimates, the Trust recognizes the acquired assets and assumed liabilities at their estimated fair values, which are generally determined using Level 3 inputs, such as market rental rates, capitalization rates, discount rates, or other available market data. Initial valuations are subject to change until the information is finalized, no later than 12 months from the acquisition date. The Trust expenses transaction costs associated with acquisitions accounted for as business combinations in the period incurred.

Impairment of Intangible and Long-Lived Assets

The Trust periodically evaluates its long-lived assets, primarily consisting of investments in real estate, for impairment indicators or whenever events or changes in circumstances indicate that the recorded amount of an asset may not be fully recoverable. If indicators of impairment are present, the Trust evaluates the carrying value of the related real estate properties in relation to the undiscounted expected future cash flows of the underlying operations. In performing this evaluation, management considers market conditions and current intentions with respect to holding or disposing of the real estate property. The Trust adjusts the net book value of real estate properties to fair value if the sum of the expected future undiscounted cash flows, including sales proceeds, is less than book value. The Trust recognizes an impairment loss at the time it makes any such determination. 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. Fair value is typically determined using a discounted future cash flow analysis or other acceptable valuation techniques, which are based, in turn, upon Level 3 inputs, such as revenue and expense growth rates, capitalization rates, discount rates or other available market data.

The Trust recorded real estate impairment charges of $1.8 million year ended December 31, 2014.

Assets Held for Sale and Discontinued Operations

The Trust may sell properties from time to time for various reasons, including favorable market conditions. The Trust classifies certain long-lived assets as held for sale once the criteria, as defined by GAAP, has been met. Long-lived assets to be disposed of are reported at the lower of their carrying amount or fair value minus cost to sell and are no longer depreciated.

In 2014, the FASB issued Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), which raises the threshold for disposals to qualify as discontinued operations. A discontinued operation is defined as: (1) a component of an entity or group of components that has been disposed of or classified as held for sale and represents a strategic shift that has or will have a major effect on an entity’s operations and financial results; or (2) an acquired business that is classified as held for sale on the acquisition date. ASU 2014-08 also requires additional disclosures regarding discontinued operations, as well as material disposals that do not meet the definition of discontinued operations. The application of this guidance is prospective from the date of adoption and applies only to disposals (or new classifications to held for sale) that have not been reported as discontinued operations in the Trust’s previously issued financial statements. The Trust early adopted ASU 2014-08 for the quarter ended March 31, 2014. Such adoption has had no impact on the Trust’s financial statements as no dispositions that qualify as discontinued operations occurred during the year ended December 31, 2015 and 2014.

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 equity interest.

During 2014, the Trust completed the acquisition of a 40% limited liability company membership interest in Jeff-Orleans Medical Development Real Estate, L.L.C., the entity that owns and leases to the Trust the land on which the Crescent City Surgical Centre is situated, for $1.3 million.

Real Estate Loans Receivable

Real estate loans receivable consists of seven mezzanine loans and a term loan. Each mezzanine loan is collateralized by an ownership interest in the respective borrower, while the term loan is secured by an equity interest in one medical office building development. Interest income on the loans are recognized as earned based on the terms of the loans subject to evaluation of collectability risks and are included in the Trust’s consolidated statement of operations.

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and short-term investments with maturities of three months or less from the date of purchase.

The Trust is subject to concentrations of credit risk as a result of its temporary cash investments. The Trust places its temporary cash investments with high credit quality financial institutions in order to mitigate that risk.

Escrow reserves

The Trust is required to maintain various escrow reserves on certain notes payable to cover future property taxes and insurance and tenant improvements costs as defined in each loan agreement. The total reserves as of December 31, 2015 and 2014 are $4.8 million and $1.9 million, respectively, which are included in other assets in the consolidated balance sheets.

Deferred costs

Deferred costs consist primarily of fees paid to obtain financing and costs associated with the origination of long-term leases on real estate properties. After the purchase of a property, lease commissions incurred to extend in-place leases or generate new lease are added to deferred lease costs. Deferred lease costs are amortized on a straight-line basis over the terms of their respective agreements. The Trust amortizes deferred financing costs as a component of interest expense over the terms of the related borrowings using a method that approximates a level yield.

Derivatives

Derivatives consist of two embedded derivatives and an interest rate swap and are recognized as liabilities on the consolidated balance sheets in accrued expenses and other liabilities and are measured at fair value. For the interest rate swap any change in the fair value is recognized immediately in earnings unless the derivative qualified as a hedge and for the embedded derivatives any change in fair value is recognized in Redeemable noncontrolling interest – Operating Partnership and partially owned properties. No derivatives have been designated as hedges.

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 measured and reported in the consolidated balance sheets at fair value. The Trust has elected not to apply hedge accounting to its derivative financial instruments and as such, any changes in the fair values of its derivatives are recognized immediately in earnings. 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. 

Tenant receivables, net

Tenant accounts receivable are stated net of the applicable allowance. Rental payments under these contracts are primarily due monthly. The Trust assesses the collectability of tenant receivables, including straight-line rent receivables, and defers recognition of revenue if collectability is not reasonably assured. The Trust bases its assessment of the collectability of rent receivables on several factors, including, among other things, payment history, the financial strength of the tenant and current economic conditions. If management’s evaluation of these factors indicates it is probable that the Trust will be unable to recover the full value of the receivable, the Trust provides a reserve against the portion of the receivable that it estimates may not be recovered. At December 31, 2015 and 2014, the allowance for doubtful accounts was $0.1 million.

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 approximately $15.6 million and $6.4 million as of December 31, 2015 and 2014, 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 adjusted by amortization of lease inducements and above or below market rents on certain leases. Lease inducements and above or below market rents 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, 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 expense recoveries.

Income Taxes

The Trust elected to be taxed as a REIT for federal tax purposes commencing with the filing of its tax return for the short taxable year ending December 31, 2013. The Trust had no taxable income prior to electing REIT status. To qualify as a REIT, the Trust must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income to its shareholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Trust generally will not be subject to federal income tax to the extent it distributes qualifying dividends to its shareholders. If the Trust fails to qualify as a REIT in any taxable year, it will be subject to federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants the Trust relief under certain statutory provisions. Such an event could materially adversely affect the Trust’s net income and net cash available for distribution to shareholders. However, the Trust intends to continue to operate in such a manner as to continue qualifying for treatment as a REIT. Even if the Trust continues to qualify for taxation as a REIT, the Trust may be subject to state and local taxes on its income and property and federal income and excise taxes on its undistributed income.

Management Estimates

The preparation of consolidated and combined financial statements in conformity with GAAP 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 fair value assessments with respect to purchase price allocations, impairment assessments, and the valuation of financial instruments. Actual results could differ from these estimates.

Contingent Liability

The Trust records 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.

Reclassifications

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

Segment Reporting

Under the provision of Codification Topic 280, Segment Reporting, the Company has determined that it has one reportable segment with activities related to leasing and managing healthcare properties.

New Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-9, 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, 2017 and allows for either full retrospective or modified retrospective adoption. Early adoption of this standard is permitted for reporting periods beginning after December 15, 2016. While the Trust is currently evaluating the impact the adoption of Topic 606 will have on its consolidated financial statements, we do not expect its adoption to have a significant impact on our consolidated financial statements, as a substantial portion of our revenue consists of rental income from leasing arrangements, which are specifically excluded from ASU 2014-09.

In February 2015, the FASB issued ASU 2015-2, Amendments to the Consolidation Analysis. This update is intended to improve targeted areas of consolidation guidance by simplifying the consolidation evaluation process and by placing more emphasis on risk of loss when determining a controlling financial interest. The provisions of this ASU are effective for interim and annual periods beginning after December 15, 2015. The Company will adopt ASU 2015-2 on January 1, 2016, and it is not expected to have a material impact on the Company’s consolidated financial statements and disclosures.

In April 2015, the FASB issued ASU 2015-3, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. ASU 2015-3 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. ASU 2015-3 is effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The Company will adopt ASU 2015-3 on January 1, 2016, and it is not expected to have a material impact on the Company’s consolidated financial statements and disclosures.

In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. The update requires that acquiring entities in a business combination recognize adjustments to provisional amounts identified in the reporting period in which the adjustment amounts are determined, including the cumulative effect of the change in provisional amount, as if the accounting had been completed at the acquisition date. Adjustments related to previous reporting periods must be disclosed by income statement line item, either on the face of the income statement or in the notes, in the period for which the adjustment was identified. ASU 2015-16 is effective for annual reporting periods beginning after December 15, 2015. The Company will adopt ASU 2015-16 on January 1, 2016, and it is not expected to have a material impact on the Company’s consolidated financial statements and disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases. The update amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. ASU 2016-02 will be effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted. We are currently evaluating the impact of adopting the new leases standard on our consolidated financial statements.

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Acquisitions and Disposition

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

Acquisitions and Disposition

Note 3. Acquisitions and Dispositions

During 2015, the Trust completed acquisitions of 66 properties located in 22 states for an aggregate purchase price of approximately $818.6 million. In addition, the Trust completed loan investments totaling $22.4 million. Acquisition activity for the year ending December 31, 2015 is summarized below:

Property (1)		Location	Acquisition Date	Purchase Price (in thousands)
Minnesota Portfolio	(2)
Edina MOB	(5)	Edina MN	January 22, 2015	$	14,190
Crystal MOB	(5)	Crystal, MN	January 22, 2015	14,782
Savage MOB	(5)	Savage, MN	January 22, 2015	12,800
Dell Road MOB	(5)	Chanhassen, MN	January 22, 2015	6,410
Vadnais Heights MOB	(5)	Vadnais Heights, MN	January 29, 2015	18,422
Minnetonka MOB	(3) (5)	Minnetonka, MN	February 5, 2015	26,000
Jamestown MOB	(5)	Jamestown, ND	February 5, 2015	12,819
Minnesota Eye MOB	(5)	Minnetonka, MN	February 17, 2015	10,882
Columbus MOB	(5)	Columbus, GA	January 23, 2015	6,540
Methodist Sports MOB	(4) (6)	Greenwood, IN	January 28, 2015	10,000
Indianapolis South (4 MOBs)	(5)	Greenwood, IN	February 13, 2015	17,183
Baylor Cancer Center	(5)	Dallas, TX	February 27, 2015	8,200
Bridgeport Medical Center	(5)	Lakewood, WA	February 27, 2015	13,750
Renaissance Office Building	(5)	Milwaukee, WI	March 27, 2015	6,500
University of Rochester Strong Memorial Portfolio (5 MOBs)	(5)	Rochester, NY	March 31, 2015	41,000
Avalon Park Florida Hospital MOB	(5)	Avalon Park, FL	March 31, 2015	14,600
Premier Surgery Center of Louisville	(5)	Louisville, KY	April 10, 2015	8,000
Baton Rouge MOB	(5)	Baton Rouge, LA	April 15, 2015	10,486
Healthpark Medical Center	(5)	Grand Blanc, MI	April 30, 2015	18,913
Plaza HCA MOB	(5)	Jacksonville, FL	April 30, 2015	19,000
Northern Ohio Medical Center	(4)	Sheffield, OH	May 28, 2015	11,236
University of Michigan - Northville MOB	(5)	Livonia, MI	May 29, 2015	14,750
Coon Rapids Medical Center MOB	(5)	Coon Rapids, MN	June 1, 2015	7,298
Mezzanine Loan - UF Health MOB	(7)	Jacksonville, FL	June 1, 2015	9,000
Premier Landmark MOB	(4) (8)	Bloomington, IN	June 5, 2015	11,308
Palm Beach ASC	(5)	Palm Beach, FL	June 26, 2015	14,070
Brookstone Physician Center MOB	(5)	Jacksonville, AL	June 30, 2015	2,800
Jackson Woman's Clinic MOB	(5)	Jackson, TN	June 30, 2015	5,672
Hillside Medical Center MOB	(5)	Hanover, PA	June 30, 2015	11,400
Randall Road MOB	(5)	Elgin, IL	June 30, 2015	13,045
Randall Road MOB - Unit 140	(4)	Elgin, IL	July 17, 2015	1,750
Medical Specialists of Palm Beach MOB	(5)	Atlantis, FL	July 24, 2015	11,051
OhioHealth - SW Health Center MOB	(5)	Grove City, OH	July 31, 2015	11,460
Trios Health MOB	(5)	Kennewick, WA	July 31, 2015	64,000
Integrated Medical Services (IMS) Portfolio
IMS - Paradise Valley MOB	(5)	Phoenix, AZ	August 14, 2015	31,814
IMS - Avondale MOB	(5)	Avondale, AZ	August 19, 2015	22,144
IMS - Palm Valley MOB	(5)	Goodyear, AZ	August 19, 2015	35,184
IMS - North Mountain MOB	(5)	Phoenix, AZ	August 31, 2015	51,740

Property (1)		Location	Acquisition Date	Purchase Price (in thousands)
Mezzanine Loan - Warm Springs Rehab Hospital	(9)	Kyle, TX	August 21, 2015	3,138
Memorial Hermann Medical Complex (2 MOBs)	(5)	Katy, TX	September 1, 2015	40,400
Construction Loan - Tinseltown	(10)	Jacksonville, FL	September 4, 2015	1,005
New Albany Medical Center MOB	(5) (11)	New Albany, OH	September 9, 2015	11,200
Fountain Hills Medical Campus MOB	(5)	Fountain Hills, AZ	September 30, 2015	13,250
Catalyst Portfolio (12 MOBs)	(5)	AL & FL	October 13, 2015	23,805
Mezzanine Loan - Truman Medical Center	(12)	Kansas City, MO	October 16, 2015	4,500
Arete Surgical Center	(5)	Johnstown, CO	October 19, 2015	9,100
Cambridge Professional Center MOB	(5)	Waldorf, MD	October 30, 2015	11,550
Mezzanine Loan - Great Falls Replacement Surgical Hospital	(13)	Great Falls, MT	November 2, 2015	4,500
HonorHealth 44th Street MOB	(5)	Phoenix, AZ	November 13, 2015	7,163
Mercy Medical Center MOB	(5)	Fenton, MO	December 1, 2015	9,850
Nashville MOB	(5) (14)	Nashville, TN	December 17, 2015	45,440
Mezzanine Loan - Wilson Surgery Center	(15)	Wilson, NC	December 17, 2015	216
Hillside Medical Center - Suite 100	(4)	Hanover, PA	December 18, 2015	4,240
Randall Road MOB - Suite 170	(4)	Elgin, IL	December 21, 2015	408
KSF Orthopaedic MOB	(5)	Houston, TX	December 22, 2015	6,250
Great Falls Clinic MOB	(5) (16)	Great Falls, MT	December 29, 2015	24,244
Randall Road MOB - Suite 320	(4)	Elgin, IL	December 30, 2015	500
Total				$	840,958

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

(2) Through subsidiaries of the Operating Partnership, the Trust acquired seven medical office facilities located in the Minneapolis-St. Paul Metropolitan area and one additional medical office facility located in Jamestown, North Dakota from affiliates of The Davis Group and investors associated with The Davis Group. The Davis Group retained a less than 1% minority interest in the property holding entities.

(3) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 44,685 Series A Preferred Units valued at approximately $9.7 million in the aggregate on the date of issuance.

(4) The Trust accounted for these acquisitions as asset acquisitions and capitalized $0.4 million of total acquisition costs to the basis of the properties.

(5) The Trust accounted for these acquisitions as business combinations pursuant to the acquisition method and expensed total acquisition costs of $14.9 million.

(6) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 420,963 OP Units valued at approximately $7.3 million in the aggregate on the date of issuance.

(7) The Trust made a $9.0 million mezzanine term loan to fund the development of a MOB in Jacksonville, Florida. The loan is collateralized by an equity interest in the medical building development and accrues interest at a rate of 8.4% per year.

(8) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 210,820 OP Units valued at approximately $3.4 million in the aggregate on the date of issuance.

(9) The Trust made a $3.1 million mezzanine term loan to partially fund the borrower’s acquisition of the 54,500 square foot Warm Springs Rehabilitation Hospital in Kyle, Texas. The mezzanine loan is collateralized by an equity interest in the property and accrues interest at a rate of 8.5% per year. The Trust has an option to purchase the property.

(10) The Trust made additional advances on a construction loan to Tinseltown Partners, LLC to fund the renovations and additions of two re-purposed buildings in Jacksonville, Florida. The additional advances total $1.0 million and accrue at an interest rate of 9.0% per year.

(11) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 16,866 OP Units valued at approximately $0.2 million in the aggregate on the date of issuance.

(12) The Trust made a $4.5 million mezzanine term loan to partially fund the owner’s permanent financing of the 87,500 square foot Truman Medical Center in Kansas City, Missouri. The loan accrues interest at the rate of 8.02% per year. The Trust has rights of first offer and first refusal to purchase the property.

(13) The Trust made a $4.5 million mezzanine term loan to partially fund the construction of the 63,250 square foot Great Falls Hospital in Great Falls, Montana. The loan accrues interest at the rate of 9.0% per year. The Trust has a contract to purchase the property upon completion of construction.

(14) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 91,236 Series A Preferred Units valued at approximately $19.7 million in the aggregate on the date of issuance. Holders of the Series A Preferred Units issued in connection with the acquisition of the Nashville MOB are entitled to certain redemption rights under the partnership agreement of the Operating Partnership which allow them to cause the Operating Partnership to redeem the Series A Preferred Units in exchange for cash, or at the Trust’s option, for common shares, pursuant to a formula provided in the partnership agreement. The investors in the Series A Preferred Units have agreed not cause the Operating Partnership to redeem their Series A Preferred Units prior to December 17, 2016.

(15) The Trust made a $0.2 million short term mezzanine loan to partially fund the owner’s acquisition of a 9,890 square foot ambulatory surgery center in Wilson, North Carolina. The loan accrues interest at the rate of 8.8% per year.

(16) The Trust’s $24.2 million investment represents the acquisition of an approximate 75% membership interest in the entity which owns the Great Falls Clinic.

For 2015, the Trust recorded revenues and net income of $41.4 million and $10.6 million, respectively, from its 2015 acquisitions.

During 2014, the Trust completed acquisitions of 61 properties located in 15 states for an aggregate purchase price of approximately $543.4 million. Acquisition activity for the year ending December 31, 2014 is 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 Orthopaedic 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) (5)	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) (6)	Bloomington, IN	July 1, 2014	23,837
Carlisle II MOB	(3)	Carlisle, PA	July 25, 2014	4,500
Surgical Institute of Monroe ASC		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) (7)	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) (8)	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 Westerville, OH	September 30, 2014	24,500
Pinnacle Health Portfolio 5 MOBs	(3)	Harrisburg, PA	October 29, 2014	23,100
Columbus Regional Health Portfolio 12 MOBs Columbus Regional Health Portfolio 1 MOB	(3)	Columbus, GA Phenix City, AL	November 20, 2014	27,997
Middletown Medical 2 MOBs	(2)	Middletown, NY	November 26, 2014	14,399
Carle Danville Clinic MOB	(3)	Danville, IL	November 26, 2014	10,300
Napoleon Medical Building MOB	(3)	New Orleans, LA	December 18, 2014	10,500
West Tennessee Bone & Joint 1 MOB 1 ASC	(2)	Jackson, TN	December 30, 2014	9,936
Total				$	543,436

(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 $1.7 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 $10.9 million.

(4) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 147,659 OP Units valued at approximately $1.9 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 96,099 OP Units valued at approximately $1.2 million in the aggregate on the date of issuance.

(6) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 576,040 OP Units valued at approximately $8.3 million in the aggregate on the date of issuance.

(7) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 272,191 OP Units valued at approximately $4.0 million in the aggregate on the date of issuance.

(8) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 950,324 OP Units valued at approximately $13.2 million in the aggregate on the date of issuance.

The following table summarizes the preliminary purchase price allocations of the assets acquired and the liabilities assumed, which the Trust determined using Level 2 and Level 3 inputs (in thousands):

	December 31, 2015			December 31, 2014
Land	$	52,224		$	53,687
Building and improvements	643,470			451,691
In-place lease intangibles	99,763			35,720
Above market lease intangibles	19,337			5,270
Below market lease intangibles	(3,738		)	(2,330		)
Below market ground lease	13,941			—
Above market ground lease	—			(701		)
Investment in unconsolidated entity	—			1,300
Lease inducement	2,478			1,532
Leasehold interest	—			759
Derivative liability assumed	—			(197		)
Contingent consideration	(2,718		)	(840		)
Receivable	3,564			640
Debt assumed	(18,690		)	(15,283		)
Issuance of OP Units	(10,973		)	(28,589		)
Issuance of Series A Preferred Units	(29,403		)	—
Noncontrolling interest	(13,970		)	—
Net assets acquired	$	755,285		$	502,659

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 consolidated revenue, net income, and earnings per share as if the Trust had acquired the 2015 acquisitions detailed above as of January 1, 2014 (in thousands, except share and per share amounts):

	Year Ended December 31,
	2015		2014
Revenue	$	168,154	$	133,411
Net income	38,959		17,512
Net income available to common shareholders	36,938		16,599
Earnings per share	$	0.42	$	0.19
Common shares outstanding	87,175,904		87,175,904

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Intangibles

12 Months Ended

Dec. 31, 2015

Finite-Lived Intangible Assets, Net [Abstract]

Intangibles

Note 4. Intangibles

The following is a summary of the carrying amount of intangible assets and liabilities as of December 31, 2015 and 2014 (in thousands):

	December 31, 2015							December 31, 2014
	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
Assets
In-place leases	$	163,728	$	(26,702	)	$	137,026	$	64,777	$	(12,213	)	$	52,564
Above market leases	26,787		(3,174		)	23,613		7,449		(578		)	6,871
Leasehold interest	712		(64		)	648		759		(5		)	754
Below market ground lease	13,941		(68		)	13,873		—		—			—
Total	$	205,168	$	(30,008	)	$	175,160	$	72,985	$	(12,796	)	$	60,189
Liability
Below market lease	$	6,068	$	(799	)	$	5,269	$	2,330	$	(156	)	$	2,174
Above market ground lease	701		(20		)	681		701		(4		)	697
Total	$	6,769	$	(819	)	$	5,950	$	3,031	$	(160	)	$	2,871

The following is a summary of the acquired lease intangible amortization for the years ended December 31, 2015, 2014 and 2013 (in thousands):

	December 31,
	2015		2014		2013
Amortization expense related to in-place leases	$	15,300	$	4,133	$	1,252
Decrease of rental income related to above-market leases	2,596		530		48
Decrease of rental income related to leasehold interests	59		5		—
Increase of rental income related to below-market leases	643		156		—
Decrease of operating expense related to above market ground leases	16		4		—
Increase in operating expense related to below market ground leases	68		—		—

Future aggregate net amortization of the acquired lease intangibles as of December 31, 2015, is as follows (in thousands):

	Net Decrease in Revenue			Net Increase in Expenses
2016	$	(3,016	)	$	20,760
2017	(2,447		)	18,743
2018	(2,162		)	17,283
2019	(1,982		)	14,161
2020	(1,886		)	12,427
Thereafter	(7,499		)	66,844
Total	$	(18,992	)	$	150,218

For the year ended December 31, 2015, the weighted average amortization period for asset lease intangibles and liability lease intangibles are 15 years and 12 years, respectively.

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Other Assets

12 Months Ended

Dec. 31, 2015

Other Assets, Unclassified [Abstract]

Other Assets

Note 5. Other Assets

Other assets consisted of the following as of December 31, 2015 and 2014 (in thousands):

	December 31,
	2015		2014
Straight line rent receivable	$	15,584	$	6,431
Lease inducements, net	4,970		2,845
Escrows	4,788		1,906
Earnest deposits	343		2,343
Notes receivable	20,620		—
Prepaid expenses and other	5,926		2,281
Total	$	52,231	$	15,806

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Debt

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Debt

Note 6. Debt

The following is a summary of debt as of December 31, 2015 and 2014 (in thousands):

	December 31,
	2015			2014
Fixed interest mortgage notes	$	89,664	(1)	$	73,706	(2)
Variable interest mortgage note	4,262		(3)	4,399		(4)
Total mortgage debt	93,926			78,105
$750 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.20%, due September 2019.	395,000			138,000
Total principal	488,926			216,105
Unamortized fair value adjustment	674			—
Total debt	$	489,600		$	216,105

(1) Fixed interest mortgage notes, bearing interest from 4.71% to 6.58%, with a weighted average interest rate of 5.40%, and due in 2016, 2017, 2019, 2020, 2021 and 2022 collateralized by 11 properties with a net book value of $145,038.

(2) Fixed interest mortgage notes, bearing interest from 4.71% to 6.58%, with a weighted average interest rate of 5.26%, and due in 2016, 2017, 2018, 2019, 2021 and 2022 collateralized by nine properties with a net book value of $118,247.

(3) Variable interest mortgage note bearing variable interest of LIBOR plus 2.75% and due in 2017, collateralized by one property with a net book value of $5,994.

(4) Variable interest mortgage note bearing variable interest of LIBOR plus 2.75% and due in 2017, collateralized by one property with a net book value of $6,249.

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.

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 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 (“Credit Agreement”). 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.

On July 22, 2015, the Operating Partnership, as borrower, and the Trust and certain subsidiaries and other affiliates of the Operating Partnership, as guarantors, entered into an amendment to the existing 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 (as amended, the “Credit Agreement”) which increased the maximum principal amount available under the unsecured revolving credit facility from $400 million to $750 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 $1.1 billion.

The Credit Agreement has a maturity date of September 18, 2019 and includes a one year extension option. Borrowings under the Credit Agreement bear interest on the outstanding principal amount at an adjusted LIBOR rate, which is based on the Trust’s investment grade rating under the Credit Agreement. As of December 31, 2015, the Trust had an investment grade rating from Moody’s of Baa3 and as such, borrowings under the Credit Agreement accrued interest on the outstanding principal at a rate of LIBOR plus 1.20%. The Credit Agreement includes a facility fee equal to 0.25% per annum, which is also determined by the Trust’s investment grade rating.

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 December 31, 2015, 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 Trust’s investment grade rating as follows:

Investment Grade Rating	Adjusted LIBOR Rate Loans and Letter of Credit Fee	Base Rate Loans
At Least A- or A3	LIBOR + 0.85%	—	%
At Least BBB+ or BAA1	LIBOR + 0.90%	—	%
At Least BBB or BAA2	LIBOR + 1.00%	0.10	%
At Least BBB- or BAA3	LIBOR + 1.20%	0.20	%
Below BBB- or BAA3	LIBOR + 1.55%	0.60	%

As of December 31, 2015, there were $395.0 million of borrowings outstanding under our unsecured revolving credit facility and $198.7 million available for us to borrow without adding additional properties to the unencumbered borrowing base of assets, as defined by the Credit Agreement.

Certain properties have mortgage debt that contains financial covenants. As of December 31, 2015, the Trust was in compliance with all mortgage debt financial covenants.

Scheduled principal payments due on debt as of December 31, 2015, are as follows (in thousands):

2016	$	9,748
2017	40,658
2018	1,265
2019	415,081
2020	5,521
Thereafter	16,653
Total Payments	$	488,926

For the years ended December 31, 2015 and 2014, the Trust incurred interest expense on its debt of $9.3 million and $5.8 million, respectively.

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Accrued Expenses and Other Liabilities Accrued Expenses and Other Liabilities

12 Months Ended

Dec. 31, 2015

Other Liabilities Disclosure [Abstract]

Accrued Expenses and Other Liabilities

Note 7. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following as of December 31, 2015 and 2014 (in thousands):

	December 31,
	2015		2014
Embedded derivatives	$	8,149	$	—
Security deposits	4,038		1,191
Prepaid rent	2,778		839
Contingent consideration	2,559		840
Accrued expenses and other	6,949		3,270
Total	$	24,473	$	6,140

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Stock-based Compensation

12 Months Ended

Dec. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based Compensation

Note 8. Stock-based Compensation

The Trust follows ASC 718, Compensation – Stock Compensation (“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 (“2013 Plan”), which made available 600,000 common 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 Plan to increase the number of common shares authorized for issuance under the 2013 Plan by 1,850,000 common shares, for a total of 2,450,000 common shares authorized for issuance.

The committee has broad discretion in administering the terms of the 2013 Plan. Restricted shares granted under the 2013 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 Plan at a value per share of $11.50 and total value of $2.9 million with a vesting period of three years. During 2014, a total of 152,987 restricted common shares with a total value of $2.1 million were granted to Trust employees and the Board of Trustees with vesting periods ranging from one to three years. During 2015, a total of 162,522 restricted common shares with a value of $2.6 million were granted to Trust employees with vesting periods ranging from one to three years.

A summary of the status of the Trust’s non-vested restricted common shares as of December 31, 2015 and changes during the year then ended follow:

	Shares		Weighted Average Grant Date Fair Value
Restricted shares issued in conjunction with our IPO	250,000		$	11.50
Non-vested at December 31, 2013	250,000		11.50
Granted	152,987		13.79
Vested	(83,333	)	11.50
Non-vested at December 31, 2014	319,654		12.60
Granted	162,522		15.95
Vested	(170,337	)	12.93
Non-vested at December 31, 2015	311,839		$	14.17

For all service awards, the Trust records 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 years ended December 31, 2015, 2014, and 2013 the Trust recognized non-cash share compensation of $2.9 million, $2.2 million, and $0.4 million, respectively. Unrecognized compensation expense at December 31, 2015, 2014, and 2013 was $2.1 million, $2.4 million, and $2.5 million, respectively. 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.

Restricted Share Units:

In March 2015 and March 2014, under the Trust’s 2013 Plan, the Trust granted restricted share units at target level of 75,250and 55,680, respectively, to its officers, which are subject to certain performance and market conditions and a three year service period. In March 2015, the Trust additionally granted 40,957 restricted share units to the Board of Trustees which are subject to a two year vesting period. In addition, 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.

     Approximately 80% of the restricted share units issued to officers in 2015 vest based on certain market conditions. The market conditions were valued with the assistance of independent valuation specialists. The Trust utilized a Monte Carlo simulation to calculate the weighted average grant date fair values in 2015 and 2014 of $20.06 and $19.25 per unit, respectively, using the following assumptions:

	2015			2014
Volatility	20.7		%	18.8% - 34.2%
Dividend assumption	reinvested			reinvested
Expected term in years	2.8 years			2.8 years
Risk-free rate	1.14		%	0.65		%
Stock price (per share)	$	15.87		$	13.47

 The remaining 20% of the restricted share units issued to officers in 2015 vest based upon certain performance conditions. With respect to the performance conditions, the grant date fair value of $15.87 per unit was calculated on the grant date. The restricted stock units’ combined weighted average grant date fair value is $19.22 per unit.

The following is a summary of the activity in the Trust’s restricted share units during 2014 and 2015: 

	Restricted Share Units	Weighted Average Grant Date Fair Value
Non-vested at December 31, 2013	—	$	—
Granted	55,680	16.94
Non-vested at December 31, 2014	55,680	16.94
Granted	116,207	19.22
Non-vested at December 31, 2015	171,887	$	18.48

The Trust recognized $0.9 million and $0.3 million of non-cash share unit compensation expense for the year ended December 31, 2015 and 2014, respectively. Unrecognized compensation expense at December 31, 2015 and 2014 was $1.6 million and $0.7 million, respectively.

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Fair Value Measurements

12 Months Ended

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 9. Fair Value Measurements

ASC Topic 820, Fair Value Measurement (“ASC 820”), requires 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 trust has three derivative instruments at December 31, 2015, consisting of the two embedded derivatives detailed in the Redeemable Noncontrolling Interests - Operating Partnership and Partially Owned Properties section of Note 2 (Summary of Significant Accounting Policies) and an interest rate swap.

Neither the embedded derivatives nor the interest rate swap are traded on an exchange. The Trust’s derivative liabilities 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 derivatives at fair value on a recurring basis. The fair values are based on 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. This generally includes assets subject to impairment. There were no such assets measured at fair value as of December 31, 2015.

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 estate loans receivable and mortgage debt are estimated based on rates currently prevailing for similar instruments of similar maturities and are based on Level 2 inputs.

The following table presents the fair value of the Trust’s financial instruments (in thousands).

	December 31, 2015						December 31, 2014
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Real estate loans receivable	$	39,349		$	39,349		$	15,876		$	15,876
Credit facility	$	(395,000	)	$	(395,000	)	$	(138,000	)	$	(138,000	)
Mortgage debt	$	(94,600	)	$	(95,275	)	$	(78,105	)	$	(78,642	)
Derivative liabilities	$	(8,216	)	$	(8,216	)	$	(233	)	$	(233	)

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Tenant Operating Leases

12 Months Ended

Dec. 31, 2015

Leases [Abstract]

Tenant Operating Leases

Note 10. Tenant Operating Leases

The Trust is lessor of medical office buildings and other healthcare facilities. Leases have expirations from 2016 through 2045. As of December 31, 2015, the future minimum rental payments on non-cancelable leases, exclusive of expense recoveries, were as follows (in thousands):

2016	$	119,218
2017	115,974
2018	110,927
2019	106,196
2020	102,326
Thereafter	724,590
Total	$	1,279,231

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Rent Expense

12 Months Ended

Dec. 31, 2015

Leases [Abstract]

Rent Expense

Note 11. Rent Expense

The Trust leases the land upon which fourteen of its properties are located from third party land owners, pursuant to separate ground leases. In addition, the Trust leases the rights to parking structures at two of its properties, pursuant to separate parking structure leases. The ground and parking leases require fixed annual rental payments and may also include escalation clauses and renewal options. These leases have terms up to 90 years remaining, excluding extension options. As of December 31, 2015, the future minimum lease obligations under non-cancelable ground and parking leases were as follows (in thousands):

2016	$	1,316
2017	1,353
2018	1,394
2019	1,437
2020	1,482
Thereafter	16,377
Total	$	23,359

Rent expense for the ground and parking leases of $1.3 million, $0.9 million and $0.02 million for the years ended December 31, 2015, 2014, and 2013, respectively, are reported in operating expenses in the consolidated and combined statements of operations.

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Earnings Per Share

12 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Earnings Per Share

Note 12. Earnings Per Share

The following table shows the amounts used in computing the Trust’s basic and diluted earnings per share (in thousands, except share and per share data):

	Year Ended December 31,
	2015			2014			2013
Numerator for earnings per share - basic:
Net income (loss)	$	12,741		$	(4,418	)	$	(2,636	)
Net (income) loss attributable to Predecessor:	—			—			576
Net (income) loss attributable to noncontrolling interests:
Operating Partnership	(576		)	695			470
Partially owned properties	(377		)	(314		)	(71		)
Preferred distributions	(1,189		)	—			—
Numerator for earnings per share - basic:	$	10,599		$	(4,037	)	$	(1,661	)
Numerator for earnings per share - diluted:
Numerator for earnings per share - basic:	10,599			(4,037		)	(1,661		)
Operating Partnership net income	576			—			—
Numerator for earnings per share - diluted	$	11,175		$	(4,037	)	$	(1,661	)
Denominator for EPS - basic and diluted:
Weighted average number of shares outstanding - basic	72,750,724			33,063,093			12,883,917
Effect of dilutive securities:
Noncontrolling interest - Operating Partnership units	3,708,494			—			—
Restricted shares	190,619			—			—
Restricted share units	142,236			—			—
Denominator for EPS - diluted	76,792,073			33,063,093			12,883,917
Earnings per share - basic	$	0.15		$	(0.12	)	$	(0.13	)
Earnings per share - diluted	$	0.15		$	(0.12	)	$	(0.13	)

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Related Party Transactions

12 Months Ended

Dec. 31, 2015

Related Party Transactions [Abstract]

Related Party Transactions

Note 13. Related Party Transactions

Effective July 24, 2013, the Trust entered into a Shared Services Agreement with Ziegler pursuant to which Ziegler provided office space, IT support, accounting support, and other services to the Trust in exchange for an annual fee. The shared service fee amounted to $0.4 million and $0.3 million for the years ended December 31, 2014 and 2013, respectively, and was recorded in general and administrative expense in the consolidated and combined statements of operations. 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 $1.8 million (the “Amendment Payment”), which could 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 Trust made the Amendment Payment by issuing 124,913 common shares to Ziegler. The $1.8 million one-time payment is included in general and administrative expense in the consolidated statement of operations for the year ended December 31, 2014.

The Trust elected to terminate the Agreement effective July 23, 2015 in conjunction with our completed renovations of the Renaissance Office Building. Service fees incurred during the year ended December 31, 2015 were insignificant.

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Subsequent Events

12 Months Ended

Dec. 31, 2015

Subsequent Events [Abstract]

Subsequent Events

Note 14. Subsequent Events

As of February 22, 2016, the Trust, through subsidiaries of its Operating Partnership, closed on the below acquisitions during 2016:

Property(1)	Location	Acquisition Date	Investment (in thousands)
Randall Road MOB - Suite 380	Elgin, IL	January 14, 2016	$	704
Great Falls Hospital	Great Falls, MT	January 25, 2016	29,043
Monterey Medical Center ASC	Stuart, FL	February 1, 2016	6,900
Physicians Medical Plaza MOB	Indianapolis, IN	February 1, 2016	8,500
Mezzanine Loan - Davis	Minneapolis, MN	February 4, 2016	500
Park Nicollet Clinic	Chanhassen, MN	February 8, 2016	18,600
HEB Cancer Center	Bedford, TX	February 12, 2016	14,000
Riverview Medical Center	Lancaster, OH	February 26, 2016	12,800
St. Luke's Cornwall MOB	Cornwall, NY	February 26, 2016	14,550
			$	105,597

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

See “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Recent Developments” for a further discussion of these acquisitions.

On January 7, 2016, the Operating Partnership issued and sold $150 million aggregate principal amount of senior notes, comprised of (i) $15,000,000 aggregate principal amount of 4.03% Senior Notes, Series A, due January 7, 2023 (the “Series A Notes”), (ii) $45,000,000 aggregate principal amount of 4.43% Senior Notes, Series B, due January 7, 2026 (the “Series B Notes”), (iii) $45,000,000 aggregate principal amount of 4.57% Senior Notes, Series C, due January 7, 2028 (the “Series C Notes”) and (iv) $45,000,000 aggregate principal amount of 4.74% Senior Notes, Series D, due January 7, 2031 (the “Series D Notes,” and together with the Series A Notes, the Series B Notes and the Series C Notes, the “Notes”). The proceeds of the Notes were used to repay borrowings under the Trust’s unsecured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

On January 25, 2016, the Trust completed a follow-on public offering of 21,275,000 common shares of beneficial interest, including 2,775,000 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to it of approximately $320.9 million. The Trust contributed the net proceeds of this offering to its Operating Partnership in exchange for 21,275,000 OP Units, and its Operating Partnership used the net proceeds of the public offering to repay borrowings under its unsecured revolving credit facility and for general corporate and working capital purposes and funding acquisitions.

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Quarterly Data

12 Months Ended

Dec. 31, 2015

Quarterly Financial Information Disclosure [Abstract]

Quarterly Data

Note 15. Quarterly Data

The following unaudited quarterly data has been prepared on the basis of a December 31 year-end. Amounts are in thousands, except for common share and per share amounts.

	Quarter Ended
2015	March 31			June 30		September 30		December 31
Total revenues	$	24,484		$	29,683	$	34,870	$	40,404
Operating (loss) income	(459		)	3,271		3,812		5,883
Net (loss) income	(448		)	3,297		3,983		5,909
Net (loss) income attributable to common shareholders	(522		)	2,571		3,404		5,146
Earnings per share – basic:
Net (loss) income available to common shareholders	$	(0.01	)	$	0.04	$	0.05	$	0.06
Weighted average common shares outstanding	65,649,478			70,376,959		71,034,747		83,761,536
Earnings per share – diluted:
Net (loss) income available to common shareholder	$	(0.01	)	$	0.04	$	0.05	$	0.06
Weighted average common shares outstanding	65,649,478			74,267,284		75,104,821		87,911,097

As a result of the acquisition activity and equity offerings throughout 2015, the quarterly periods are not comparable quarter over quarter.

	Quarter Ended
2014	March 31			June 30			September 30			December 31
Total revenues	$	8,032		$	11,447		$	14,161		$	19,694
Operating loss (income)	(3,575		)	(626		)	(2,311		)	1,967
Net loss (income)	(3,558		)	(600		)	(2,251		)	1,991
Net loss (income) available to common shareholders	(3,093		)	(561		)	(2,094		)	1,711
Earnings per share – basic:
Net (loss) income available to common shareholders	$	(0.15	)	$	(0.02	)	$	(0.06	)	$	0.04
Weighted average common shares outstanding	21,298,597			26,163,982			36,313,644			48,145,409
Earnings per share – diluted:
Net (loss) income available to common shareholders	$	(0.15	)	$	(0.02	)	$	(0.06	)	$	0.04
Weighted average common shares outstanding	21,298,597			26,163,982			36,313,644			48,354,493

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SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

12 Months Ended

Dec. 31, 2015

SEC Schedule III, Real Estate and Accumulated Depreciation Disclosure [Abstract]

SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

				Initial Cost to Company						Gross Amount at Which Carried as of Close of Period
Description	Location	Encumbrances		Land		Buildings and Improvements		Cost Capitalized Subsequent to Acquisitions		Land		Buildings and Improvements		Total		Accumulated Depreciation			Date of Construction	Date Acquired	Life on Which Building Depreciation in Income Statement is Computed
Arrowhead Commons	Phoenix, AZ	$	—	$	740	$	2,551	$	420	$	740	$	2,971	$	3,711	$	(427	)	2004	5/31/2008	46
Aurora Medical Office Building	Green Bay, WI	—		500		1,566		—		500		1,566		2,066		(180		)	2010	4/15/2010	50
Austell Medical Office Building	Atlanta, GA	—		289		1,992		334		289		2,326		2,615		(482		)	1971	6/30/2008	36
Canton Medical Office Building	Atlanta, GA	6,099		710		7,225		114		710		7,339		8,049		(2,095		)	1994	5/25/2007	35
Decatur Medical Office Building	Atlanta, GA	—		740		2,604		44		740		2,648		3,388		(774		)	1974	10/12/2007	28
El Paso Medical Office Building	El Paso, TX	—		860		2,866		369		860		3,235		4,095		(1,465		)	1987	8/24/2006	21
Farmington Professional Pavilion	Detroit, MI	—		580		1,793		110		580		1,903		2,483		(1,204		)	1972	1/5/2006	15
Firehouse Square	Milwaukee, WI	2,699		1,120		2,768		—		1,120		2,768		3,888		(777		)	2002	8/15/2007	30
Hackley Medical Center	Grand Rapids, MI	5,283		1,840		6,402		36		1,840		6,438		8,278		(1,908		)	1968	12/22/2006	30
MeadowView Professional Center	Kingsport, TN	10,225		2,270		11,344		—		2,270		11,344		13,614		(3,300		)	2005	5/10/2007	30
Mid Coast Hospital MOB	Portland, ME	7,656		—		11,247		20		—		11,267		11,267		(2,854		)	2008	5/1/2008	42
New Albany Professional Building	Columbus, OH	—		237		2,767		317		237		3,084		3,321		(550		)	2000	1/4/2008	42
Northpark Trail	Atlanta, GA	—		839		1,245		235		839		1,480		2,319		(582		)	2001	12/28/2005	35
Remington Medical Commons	Chicago, IL	4,262		895		6,499		319		895		6,818		7,713		(1,719		)	2008	6/1/2008	30
Summit Healthplex	Atlanta, GA	—		2,633		15,576		5,012		2,633		20,588		23,221		(4,311		)	2002	7/3/2008	44
Valley West Hospital MOB	Chicago, IL	4,768		—		6,275		611		—		6,886		6,886		(1,845		)	2007	11/1/2007	30
East El Paso Medical Office Building	El Paso, TX	—		710		4,500		—		710		4,500		5,210		(300		)	2004	8/30/2013	35
East El Paso Surgical Hospital	El Paso, TX	—		3,070		23,627		—		3,070		23,627		26,697		(1,531		)	2004	8/30/2013	36
LifeCare Plano LTACH	Plano, TX	—		3,370		11,689		455		3,370		12,144		15,514		(1,115		)	1987	9/18/2013	25
Crescent City Surgical Centre	New Orleans, LA	18,750		—		34,208		—		—		34,208		34,208		(1,604		)	2010	9/30/2013	48
Foundation Surgical Affiliates Medical Office Building	Oklahoma City, OK	7,474		1,300		12,724		—		1,300		12,724		14,024		(666		)	2004	9/30/2013	43
Pensacola Medical Office Building	Pensacola, FL	—		990		5,005		15		990		5,020		6,010		(230		)	2012	10/4/2013	49
Central Ohio Neurosurgical Surgeons Medical Office	Columbus, OH	—		981		7,620		—		981		7,620		8,601		(361		)	2007	11/27/2013	44
Great Falls Ambulatory Surgery Center	Great Falls, MT	—		203		3,224		—		203		3,224		3,427		(199		)	1999	12/11/2013	33
Eagles Landing Family Practice Medical Office Building	McDonough, GA	—		800		3,345		1,548		800		4,893		5,693		(254		)	2007	2/19/2014	36
Eagles Landing Family Practice Medical Office Building	Jackson, GA	—		800		3,345		1,255		800		4,600		5,400		(227		)	2006	2/19/2014	38
Eagles Landing Family Practice Medical Office Building	Conyers, GA	—		1,000		3,345		—		1,000		3,345		4,345		(172		)	2008	2/19/2014	37
Eagles Landing Family Practice Medical Office Building	McDonough, GA	—		400		3,345		1,741		400		5,086		5,486		(254		)	2010	2/19/2014	37
Foundation San Antonio Surgical Hospital	San Antonio, TX	9,120		2,230		23,346		23		2,230		23,369		25,599		(1,395		)	2007	2/19/2014	35
21st Century Radiation Oncology Centers — Sarasota	Sarasota, FL	—		633		6,557		—		633		6,557		7,190		(464		)	1975	2/26/2014	27
21st Century Radiation Oncology Centers - Venice	Venice, FL	—		814		2,952		—		814		2,952		3,766		(174		)	1987	2/26/2014	35

			Initial Cost to Company			Gross Amount at Which Carried as of Close of Period
Description	Location	Encumbrances	Land	Buildings and Improvements	Cost Capitalized Subsequent to Acquisitions	Land	Buildings and Improvements	Total	Accumulated Depreciation		Date of Construction	Date Acquired	Life on Which Building Depreciation in Income Statement is Computed
21st Century Radiation Oncology Centers - Engelwood	Engelwood, FL	—	350	1,878	—	350	1,878	2,228	(100	)	1992	2/26/2014	38
21st Century Radiation Oncology Centers — Port Charlotte	Port Charlotte, FL	—	269	2,326	—	269	2,326	2,595	(125	)	1996	2/26/2014	36
Foundation San Antonio Healthplex	San Antonio, TX	—	911	4,189	—	911	4,189	5,100	(230	)	2007	2/28/2014	35
Peachtree Dunwoody Medical Center	Atlanta, GA	—	6,046	27,435	54	6,046	27,489	33,535	(2,063	)	1987	2/28/2014	25
LifeCare LTACH — Fort Worth	Fort Worth, TX	—	2,730	24,639	—	2,730	24,639	27,369	(1,476	)	1985	3/28/2014	30
LifeCare LTACH — Pittsburgh	Pittsburgh, PA	—	1,142	11,737	—	1,142	11,737	12,879	(735	)	1987	3/28/2014	30
PinnacleHealth Medical Office Building	Harrisburg, PA	—	795	4,601	—	795	4,601	5,396	(332	)	1990	4/22/2014	25
Pinnacle Health Medical Office Building	Carlisle, PA	—	424	2,232	—	424	2,232	2,656	(116	)	2002	4/22/2014	35
South Bend Orthopaedics Medical Office Building	Mishawaka, IN	—	2,418	11,355	—	2,418	11,355	13,773	(543	)	2007	4/30/2014	40
Grenada Medical Complex	Grenada, MS	—	185	5,820	50	185	5,870	6,055	(381	)	1975	4/30/2014	30
Mississippi Ortho Medical Office Building	Jackson, MS	—	1,272	14,177	626	1,272	14,803	16,075	(713	)	1987	5/23/2014	35
Carmel Medical Pavilion	Carmel, IN	—	—	3,917	—	—	3,917	3,917	(262	)	1993	5/28/2014	25
Renaissance Ambulatory Surgery Center	Oshkosh, WI	—	228	7,658	—	228	7,658	7,886	(298	)	2007	6/30/2014	40
Presbyterian Medical Plaza	Monroe, NC	—	1,195	5,681	6	1,195	5,687	6,882	(202	)	2008	6/30/2014	15
Summit Urology	Bloomington, IN	—	125	4,792	—	125	4,792	4,917	(246	)	1996	6/30/2014	30
500 Landmark	Bloomington, IN	—	627	3,549	—	627	3,549	4,176	(158	)	2000	7/1/2014	35
550 Landmark	Bloomington, IN	—	2,717	15,224	—	2,717	15,224	17,941	(680	)	2000	7/1/2014	35
574 Landmark	Bloomington, IN	—	418	1,493	—	418	1,493	1,911	(68	)	2004	7/1/2014	35
Carlisle II MOB	Carlisle, PA	—	412	3,962	—	412	3,962	4,374	(131	)	1996	7/25/2014	45
Surgical Institute of Monroe	Monroe, MI	—	410	5,743	—	410	5,743	6,153	(273	)	2010	7/28/2014	35
The Oaks @ Lady Lake	Lady Lake, FL	—	1,065	8,642	—	1,065	8,642	9,707	(294	)	2011	7/31/2014	42
Mansfield ASC	Mansfield, TX	—	1,491	6,471	—	1,491	6,471	7,962	(207	)	2010	9/2/2014	46
Eye Center of Southern Indiana	Bloomington, IN	—	910	11,477	—	910	11,477	12,387	(453	)	1995	9/5/2014	35
Wayne State	Troy, MI	—	3,560	43,052	—	3,560	43,052	46,612	(1,568	)	1986	9/10/2014	38
Zangmeister	Columbus, OH	—	1,610	31,120	—	1,610	31,120	32,730	(1,017	)	2007	9/30/2014	40
Orthopedic One - Columbus	Columbus, OH	—	—	16,234	7	—	16,241	16,241	(503	)	2009	9/30/2014	45
Orthopedic One - Westerville	Columbus, OH	—	362	3,944	—	362	3,944	4,306	(126	)	2007	9/30/2014	43
Berger Medical Center	Columbus, OH	—	—	5,950	—	—	5,950	5,950	(216	)	2007	9/30/2014	38
El Paso - Lee Trevino	El Paso, TX	—	2,294	11,316	365	2,294	11,681	13,975	(514	)	1983	9/30/2014	30
El Paso - Murchison	El Paso, TX	—	2,283	24,543	27	2,283	24,570	26,853	(1,055	)	1970	9/30/2014	30
El Paso - Kenworthy	El Paso, TX	—	728	2,178	—	728	2,178	2,906	(87	)	1983	9/30/2014	35
Pinnacle - 32 Northeast	Harrisburg, PA	—	408	3,232	12	408	3,244	3,652	(128	)	1994	10/29/2014	33
Pinnacle - 4518 Union Deposit	Harrisburg, PA	—	617	7,305	—	617	7,305	7,922	(295	)	2000	10/29/2014	31

			Initial Cost to Company			Gross Amount at Which Carried as of Close of Period
Description	Location	Encumbrances	Land	Buildings and Improvements	Cost Capitalized Subsequent to Acquisitions	Land	Buildings and Improvements	Total	Accumulated Depreciation		Date of Construction	Date Acquired	Life on Which Building Depreciation in Income Statement is Computed
Pinnacle - 4520 Union Deposit	Harrisburg, PA	—	169	2,055	—	169	2,055	2,224	(90	)	1997	10/29/2014	28
Pinnacle - 240 Grandview	Harrisburg, PA	—	321	4,242	—	321	4,242	4,563	(151	)	1980	10/29/2014	35
Pinnacle - Market Place Way	Harrisburg, PA	—	808	2,383	6	808	2,389	3,197	(115	)	2004	10/29/2014	35
CRHS - 2000 10th Avenue	Columbus, GA	—	380	2,737	—	380	2,737	3,117	(152	)	1989	11/20/2014	22
CRHS - 1942 North Avenue	Columbus, GA	—	91	273	—	91	273	364	(26	)	1971	11/20/2014	12
CRHS - 920 18th Street	Columbus, GA	—	110	281	—	110	281	391	(40	)	1982	11/20/2014	8
CRHS - 1900 10th Avenue	Columbus, GA	—	474	5,580	5	474	5,585	6,059	(247	)	1976	11/20/2014	26
CRHS - 1800 10th Avenue	Columbus, GA	—	539	5,238	—	539	5,238	5,777	(216	)	1980	11/20/2014	28
CRHS - 705 17th Street	Columbus, GA	—	372	2,346	278	372	2,624	2,996	(189	)	1994	11/20/2014	15
CRHS - 615 19th Street	Columbus, GA	—	75	113	—	75	113	188	(39	)	1976	11/20/2014	3
CRHS - 1968 North Avenue	Columbus, GA	—	89	32	—	89	32	121	(9	)	1966	11/20/2014	4
CRHS - 633 19th Street	Columbus, GA	—	99	255	—	99	255	354	(33	)	1972	11/20/2014	9
CRHS - 500 18th Street	Columbus, GA	—	430	170	—	430	170	600	(39	)	1982	11/20/2014	8
CRHS - 2200 Hamilton Road	Columbus, GA	—	267	1,579	—	267	1,579	1,846	(86	)	1992	11/20/2014	22
CRHS - 1810 Stadium Drive	Phenix City, AL	—	202	149	19	202	168	370	(31	)	1999	11/20/2014	30
Carle Danville MOB	Danville, IL	—	607	7,136	—	607	7,136	7,743	(250	)	2007	11/26/2014	33
Middletown Medical - 111 Maltese	Middletown, NY	—	670	9,921	37	670	9,958	10,628	(319	)	1988	11/28/2014	35
Middletown Medical - 2 Edgewater	Middletown, NY	—	200	2,966	11	200	2,977	3,177	(96	)	1992	11/28/2014	35
Napoleon Medical Office Building	New Orleans, LA	—	1,202	7,412	79	1,202	7,491	8,693	(318	)	1974	12/19/2014	25
West TN Bone & Joint - Physicians Drive	Jackson, TN	—	650	2,960	—	650	2,960	3,610	(90	)	1991	12/30/2014	35
West TN Bone & Joint	Jackson, TN	—	1,250	5,210	—	1,250	5,210	6,460	(181	)	1996	12/30/2014	31
Edina MOB	Edina MN	—	504	10,006	208	504	10,214	10,718	(513	)	1979	1/22/2015	24
Crystal MOB	Crystal, MN	—	945	11,862	1	945	11,863	12,808	(276	)	2012	1/22/2015	47
Savage MOB	Savage, MN	5,753	1,281	10,021	—	1,281	10,021	11,302	(242	)	2011	1/22/2015	48
Dell Road MOB	Chanhassen, MN	—	800	4,520	—	800	4,520	5,320	(120	)	2008	1/22/2015	43
Columbus MOB	Columbus, GA	—	845	2,708	—	845	2,708	3,553	(148	)	1980	1/23/2015	22
Methodist Sports MOB	Greenwood, IN	—	1,050	8,556	—	1,050	8,556	9,606	(250	)	2008	1/28/2015	33
Vadnais Heights MOB	Vadnais Heights, MN	—	2,751	12,233	—	2,751	12,233	14,984	(336	)	2013	1/29/2015	43
Minnetonka MOB	Minnetonka, MN	—	1,770	19,797	—	1,770	19,797	21,567	(458	)	2014	2/5/2015	49
Jamestown MOB	Jamestown, ND	—	656	9,440	—	656	9,440	10,096	(269	)	2013	2/5/2015	43
Indiana American II	Greenwood, IN	—	862	6,901	—	862	6,901	7,763	(185	)	2008	2/13/2015	38
Indiana American III	Greenwood, IN	—	741	1,846	185	741	2,031	2,772	(93	)	2001	2/13/2015	31
Indiana American IV	Greenwood, IN	—	771	1,928	3	771	1,931	2,702	(63	)	2001	2/13/2015	31
Southpointe	Indianapolis, IN	—	563	1,741	1	563	1,742	2,305	(77	)	1993	2/13/2015	27
Minnesota Eye MOB	Minnetonka, MN	—	1,143	7,470	—	1,143	7,470	8,613	(174	)	2014	2/17/2015	44
Baylor Cancer Center	Dallas, TX	—	855	6,007	—	855	6,007	6,862	(125	)	2001	2/27/2015	43
Bridgeport Medical Center	Lakewood, WA	—	1,397	10,435	—	1,397	10,435	11,832	(264	)	2004	2/27/2015	35

			Initial Cost to Company			Gross Amount at Which Carried as of Close of Period
Description	Location	Encumbrances	Land	Buildings and Improvements	Cost Capitalized Subsequent to Acquisitions	Land	Buildings and Improvements	Total	Accumulated Depreciation		Date of Construction	Date Acquired	Life on Which Building Depreciation in Income Statement is Computed
Renaissance Office Building	Milwaukee, WI	—	1,379	4,182	1,178	1,379	5,360	6,739	(240	)	1896	3/27/2015	15
Calkins 125	Rochester, NY	—	534	10,164	—	534	10,164	10,698	(315	)	1997	3/31/2015	32
Calkins 200	Rochester, NY	—	210	3,317	—	210	3,317	3,527	(88	)	2000	3/31/2015	38
Calkins 300	Rochester, NY	—	372	6,645	—	372	6,645	7,017	(178	)	2002	3/31/2015	39
Calkins 400	Rochester, NY	—	353	8,226	—	353	8,226	8,579	(235	)	2007	3/31/2015	39
Calkins 500	Rochester, NY	—	282	7,074	5	282	7,079	7,361	(160	)	2008	3/31/2015	41
Avalon Park Florida Hospital MOB	Avalon Park, FL	—	1,041	10,685	—	1,041	10,685	11,726	(213	)	2009	3/31/2015	41
Premier Surgery Center of Louisville	Louisville, KY	—	1,106	5,437	—	1,106	5,437	6,543	(102	)	2013	4/10/2015	43
Baton Rouge MOB	Baton Rouge, LA	—	711	7,720	—	711	7,720	8,431	(173	)	2003	4/15/2015	35
Healthpark Medical Center	Grand Blanc, MI	—	—	17,624	—	—	17,624	17,624	(358	)	2006	4/30/2015	36
Plaza HCA MOB	Jacksonville, FL	11,837	1,112	12,553	—	1,112	12,553	13,665	(226	)	2007	4/30/2015	39
Northern Ohio Medical Center	Sheffield, OH	—	644	9,162	—	644	9,162	9,806	(277	)	1999	5/28/2015	20
University of Michigan - Northville MOB	Livonia, MI	—	2,200	8,627	31	2,200	8,658	10,858	(180	)	1988	5/29/2015	30
Coon Rapids Medical Center MOB	Coon Rapids, MN	—	607	5,857	—	607	5,857	6,464	(106	)	2007	6/1/2015	35
Premier Landmark MOB	Bloomington, IN	—	872	10,537	—	872	10,537	11,409	(165	)	2008	6/5/2015	39
Palm Beach ASC	Palm Beach, FL	—	2,576	7,675	—	2,576	7,675	10,251	(101	)	2003	6/26/2015	40
Brookstone Physician Center MOB	Jacksonville, AL	—	—	1,913	—	—	1,913	1,913	(33	)	2007	6/30/2015	31
Jackson Woman's Clinic MOB	Jackson, TN	—	555	3,800	—	555	3,800	4,355	(58	)	1998	6/30/2015	35
Hillside Medical Center MOB	Hanover, PA	—	812	13,217	—	812	13,217	14,029	(138	)	2003	6/30/2015	35
Randall Road MOB	Elgin, IL	—	—	15,404	—	—	15,404	15,404	(191	)	2006	6/30/2015	38
Medical Specialists of Palm Beach MOB	Atlantis, FL	—	—	7,560	—	—	7,560	7,560	(91	)	2002	7/24/2015	37
OhioHealth - SW Health Center MOB	Grove City, OH	—	1,363	8,516	—	1,363	8,516	9,879	(110	)	2001	7/31/2015	37
Trios Health MOB	Kennewick, WA	—	—	55,178	—	—	55,178	55,178	(525	)	2015	7/31/2015	45
IMS - Paradise Valley MOB	Phoenix, AZ	—	—	25,893	—	—	25,893	25,893	(282	)	2004	8/14/2015	43
IMS - Avondale MOB	Avondale, AZ	—	1,818	18,108	—	1,818	18,108	19,926	(145	)	2006	8/19/2015	45
IMS - Palm Valley MOB	Goodyear, AZ	—	2,666	28,655	—	2,666	28,655	31,321	(240	)	2006	8/19/2015	43
IMS - North Mountain MOB	Phoenix, AZ	—	—	42,877	—	—	42,877	42,877	(335	)	2008	8/31/2015	47
Memorial Hermann - Phase I	Katy, TX	—	822	6,797	—	822	6,797	7,619	(62	)	2005	9/1/2015	39
Memorial Hermann - Phase II	Katy, TX	—	1,560	25,601	—	1,560	25,601	27,161	(224	)	2006	9/1/2015	40
New Albany Medical Center MOB	New Albany, OH	—	1,600	8,505	—	1,600	8,505	10,105	(87	)	2005	9/9/2015	37
Fountain Hills Medical Campus MOB	Fountain Hills, AZ	—	2,593	7,635	—	2,593	7,635	10,228	(55	)	1995	9/30/2015	39
Fairhope MOB	Fairhope, AL	—	640	5,227	—	640	5,227	5,867	(39	)	2005	10/13/2015	38
Foley MOB	Foley, AL	—	365	732	—	365	732	1,097	(5	)	1997	10/13/2015	40
Foley Venture	Foley, AL	—	420	1,118	—	420	1,118	1,538	(8	)	2002	10/13/2015	38

				Initial Cost to Company						Gross Amount at Which Carried as of Close of Period
Description	Location	Encumbrances		Land		Buildings and Improvements		Cost Capitalized Subsequent to Acquisitions		Land		Buildings and Improvements		Total		Accumulated Depreciation			Date of Construction	Date Acquired	Life on Which Building Depreciation in Income Statement is Computed
North Okaloosa MOB	Crestview, FL	—		190		1,010		—		190		1,010		1,200		(7		)	2005	10/13/2015	41
Commons on North Davis	Pensacola, FL	—		380		1,237		—		380		1,237		1,617		(8		)	2009	10/13/2015	41
Sorrento Road	Pensacola, FL	—		170		894		—		170		894		1,064		(6		)	2010	10/13/2015	41
Breakfast Point Medical Park	Panama City, FL	—		—		817		—		—		817		817		(5		)	2012	10/13/2015	42
Panama City Beach	Panama City, FL	—		—		739		—		—		739		739		(5		)	2012	10/13/2015	42
Perdido Medical Park	Pensacola, FL	—		100		1,147		—		100		1,147		1,247		(8		)	2010	10/13/2015	41
Ft. Walton Beach	Ft. Walton Beach, FL	—		230		914		—		230		914		1,144		(7		)	1979	10/13/2015	35
Panama City	Panama City, FL	—		—		661		—		—		661		661		(5		)	2003	10/13/2015	38
Pensacola - Catalyst	Pensacola, FL	—		220		1,685		—		220		1,685		1,905		(12		)	2001	10/13/2015	39
Arete Surgical Center	Johnstown, CO	—		399		6,667		—		399		6,667		7,066		(26		)	2013	10/19/2015	45
Cambridge Professional Center MOB	Waldorf, MD	—		590		8,520		—		590		8,520		9,110		(45		)	1999	10/30/2015	35
HonorHealth 44th Street MOB	Phoenix, AZ	—		515		3,884		—		515		3,884		4,399		(24		)	1988	11/13/2015	28
Mercy Medical Center MOB	Fenton, MO	—		1,201		6,778		—		1,201		6,778		7,979		(15		)	1999	12/1/2015	40
Nashville MOB	Nashville, TN	—		1,555		39,713		—		1,555		39,713		41,268		—			2015	12/17/2015	45
KSF Orthopaedic MOB	Houston, TX	—		530		3,712		—		530		3,712		4,242		—			1984	12/22/2015	19
Great Falls Clinic MOB	Great Falls, MT	—		—		27,402		—		—		27,402		27,402		—			2004	12/29/2015	40
		$	93,926	$	130,788	$	1,277,934	$	16,172	$	130,788	$	1,294,106	$	1,424,894	$	(61,242	)

The cost capitalized subsequent to acquisitions is net of dispositions.

The changes in total real estate for the years ended December 31, 2015, 2014 and 2013 are as follows (in thousands):

	Year Ended December 31,
	2015			2014			2013
Balance as of the beginning of the year	$	729,034		$	224,730		$	111,149
Acquisitions	695,693			505,379			113,225
Additions	4,440			900			806
Impairment	—			(1,750		)	—
Dispositions	(4,273		)	(225		)	(450		)
Balance as of the end of the year	$	1,424,894		$	729,034		$	224,730

The changes in accumulated depreciation for the years ended December 31, 2015, 2014 and 2013 are as follows (in thousands):

	Year Ended December 31,
	2015			2014		2013
Balance as of the beginning of the year	$	32,772		$	20,299	$	16,495
Acquisitions	9,512			6,575		694
Additions	20,446			5,898		3,110
Dispositions	(1,488		)	—		—
Balance as of the end of the year	$	61,242		$	32,772	$	20,299

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

GAAP requires the Trust to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The Trust consolidates its investment in a VIE when it determines that it is its primary beneficiary. The Trust may change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary.

The Trust identifies the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. The Trust performs this analysis on an ongoing basis.

For property holding entities not determined to be VIEs, the Trust consolidates such entities in which the Trust or the Operating Partnership owns 100% of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest. All intercompany balances and transactions are eliminated in consolidation. For entities in which the 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 noncontrolling interest representing equity held by noncontrolling interests.

Noncontrolling Interests

Noncontrolling Interests

The Trust presents the portion of any equity it does not own in entities that it controls (and thus consolidates) as noncontrolling interests and classifies such interests as a component of consolidated equity, separate from the Trust’s total shareholders’ equity, on the consolidated balance sheets.

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 and the payment of approximately $36.9 million of debt related to such properties.

During the year ended December 31, 2013, the Operating Partnership partially funded one property acquisition by issuing 954,877 OP Units valued at approximately $11.5 million on the date of issuance. The acquisition had a total purchase price of approximately $37.5 million.

During the year ended December 31, 2014, the Operating Partnership partially funded five property acquisitions by issuing an aggregate of 2,042,313 OP Units valued at approximately $28.6 million on the date of issuance. The five acquisitions had a total purchase price of approximately $103.6 million.

During the year ended December 31, 2015, the Operating Partnership partially funded three property acquisitions by issuing an aggregate of 648,649 OP Units valued at approximately $11.0 million on the date of issuance. The three acquisitions had a total purchase price of approximately $32.5 million.

Noncontrolling interests in the Trust represent OP Units held by the Predecessor’s prior investors and other investors. As of December 31, 2015, the Trust held a 95.7% 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 unregistered common shares on a one-for-one basis. Such selection to pay cash or issue common 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 sheet.

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 statement of operations.

Redeemable Noncontrolling Interests - Operating Partnership and Partially Owned Properties 

On February 5, 2015, the Trust entered into a Second Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”) which provides for the designation and issuance of the newly designated Series A Participating Redeemable Preferred Units of the Operating Partnership (“Series A Preferred Units”). Series A Preferred Units have priority over all other partnership interests of the Operating Partnership with respect to distributions and liquidation. Holders of Series A Preferred Units are entitled to a 5% cumulative return and upon redemption, the receipt of one common share and $200. The holders of the Series A Preferred Units have agreed not to cause the Operating Partnership to redeem their Series A Preferred Units prior to one year from the issuance date. In addition, Series A Preferred Units are redeemable at the option of the holders which redemption obligation may be satisfied, at the Trust’s option, in cash or registered common shares. Instruments that require settlement in registered common shares may not be classified in permanent equity as it is not always completely within an issuer’s control to deliver registered common shares. Due to the redemption rights associated with the Series A Preferred Units, the Trust classifies the Series A Preferred Units in the mezzanine section of its consolidated balance sheet. 

On February 5, 2015, the acquisition of the Minnetonka MOB was partially funded with the issuance of 44,685 Series A Preferred Units which are valued at $9.7 million. On December 17, 2015, the acquisition of the Nashville MOB was partially funded with the issuance of 91,236 Series A Preferred Units which are valued at $19.7 million. The Series A Preferred Units were evaluated for embedded features that should be bifurcated and separately accounted for as a freestanding derivative. The Trust determined that the Series A Preferred Units contained features that require bifurcation. The fair value of the embedded derivative is $8.1 million and is included on the Trust’s consolidated balance sheets in accrued expenses and other liabilities.

In connection with the acquisition of the Minnetonka MOB, the Trust received a $5 million equity investment from a third party, effective March 1, 2015. This investment earns a 15% cumulative preferred return. At any point subsequent to the third anniversary of the investment, the holder can require the Trust to redeem the instrument at a price for which the investor will realize a 15% internal rate of return. Due to the redemption provision, which is outside of the control of the Trust, the Trust classifies the investment in the mezzanine section of its consolidated balance sheet. The Trust records the carrying amount of the redeemable noncontrolling interests at the greater of the carrying value or redemption value.

Dividends and Distributions

Dividends and Distributions

Declaration Date	Record Date	Payment Date	Cash Dividend per Share/Unit
December 31, 2015	January 15, 2016	January 29, 2016	$	0.225
September 28, 2015	October 16, 2015	October 30, 2015	$	0.225
July 1, 2015	July 17, 2015	July 31, 2015	$	0.225
April 6, 2015	April 17, 2015	May 1, 2015	$	0.225
December 30, 2014	January 23, 2015	February 6, 2015	$	0.225
September 26, 2014	October 17, 2014	October 30, 2014	$	0.225
June 26, 2014	July 18, 2014	August 1, 2014	$	0.225
March 27, 2014	April 11, 2014	April 25, 2014	$	0.225
December 30, 2013	January 24, 2014	February 7, 2014	$	0.225
September 30, 2013	October 18, 2013	November 1, 2013	$	0.180	(1)

(1) Prorated cash dividend of $0.18 per share for the quarterly period from July 19, 2013 (the date of the IPO) through September 30, 2013, which was equivalent to a full quarterly dividend of $0.225 per share. The dividend was paid on November 1, 2013 to common shareholders and common OP Unit holders of record on October 18, 2013, with the exception of the OP Units issued in the acquisition of Crescent City Surgical Centre.

Purchase of Investment Properties

Purchase of 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 the acquired tangible assets and assumed liabilities 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 (“ASC 805”), and assets acquired and liabilities assumed, including identified intangible assets and liabilities, are recorded at fair value.

The determination of fair value involves the use of significant judgment and estimation. The Trust makes estimates of the fair value of the tangible and intangible acquired assets and assumed liabilities using information obtained from multiple sources as a result of pre-acquisition due diligence and may include the assistance of a third party appraiser. The Trust estimates the fair value of buildings acquired on an as-if-vacant basis and depreciates the building value over the estimated remaining life of the building. The Trust determines the allocated value of other fixed assets, such as site improvements, based upon the replacement cost and depreciates such value over the assets’ estimated remaining useful lives as determined at the applicable acquisition date. The fair value of land is determined either by considering the sales prices of similar properties in recent transactions or based on internal analyses of recently acquired and existing comparable properties within the Trust’s portfolio.

In recognizing identified intangible assets and liabilities in connection with a business combination, the value of above-or-below market leases is estimated based on the present value (using an interest rate which reflected the risks associated with the leases acquired) of the difference between contractual amounts to be received pursuant to the leases and management’s estimate of market lease rates measured over a period equal to the estimated remaining term of the lease. The capitalized above-market or below-market lease intangibles are amortized as a reduction or addition to rental income over the estimated remaining term of the respective leases.

In determining the value of in-place leases, management considers current market conditions and costs to execute similar leases in arriving at an estimate of the carrying costs during the expected lease-up period from vacant to existing occupancy. In estimating carrying costs, management includes real estate taxes, insurance, other operating expenses, estimates of lost rental revenue during the expected lease-up periods, and costs to execute similar leases, including leasing commissions, tenant improvements, legal, and other related costs based on current market demand. The values assigned to in-place leases are amortized over the estimated remaining term of the lease.

The values assigned to all lease intangible assets and liabilities are amortized over the estimated remaining term of the lease. If a lease terminates prior to its scheduled expiration, all unamortized costs related to that lease are written off.

The Trust calculates the fair value of any long-term debt assumed by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings, which the Trust approximates based on the rate at which it would expect to incur on a replacement instrument on the date of acquisition, and recognize any fair value adjustments related to long-term debt as effective yield adjustments over the remaining term of the instrument.

Based on these estimates, the Trust recognizes the acquired assets and assumed liabilities at their estimated fair values, which are generally determined using Level 3 inputs, such as market rental rates, capitalization rates, discount rates, or other available market data. Initial valuations are subject to change until the information is finalized, no later than 12 months from the acquisition date. The Trust expenses transaction costs associated with acquisitions accounted for as business combinations in the period incurred.

Impairment of Intangible and Long-Lived Assets

Impairment of Intangible and Long-Lived Assets

The Trust periodically evaluates its long-lived assets, primarily consisting of investments in real estate, for impairment indicators or whenever events or changes in circumstances indicate that the recorded amount of an asset may not be fully recoverable. If indicators of impairment are present, the Trust evaluates the carrying value of the related real estate properties in relation to the undiscounted expected future cash flows of the underlying operations. In performing this evaluation, management considers market conditions and current intentions with respect to holding or disposing of the real estate property. The Trust adjusts the net book value of real estate properties to fair value if the sum of the expected future undiscounted cash flows, including sales proceeds, is less than book value. The Trust recognizes an impairment loss at the time it makes any such determination. 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. Fair value is typically determined using a discounted future cash flow analysis or other acceptable valuation techniques, which are based, in turn, upon Level 3 inputs, such as revenue and expense growth rates, capitalization rates, discount rates or other available market data.

Assets Held for Sale and Discontinued Operations

Assets Held for Sale and Discontinued Operations

The Trust may sell properties from time to time for various reasons, including favorable market conditions. The Trust classifies certain long-lived assets as held for sale once the criteria, as defined by GAAP, has been met. Long-lived assets to be disposed of are reported at the lower of their carrying amount or fair value minus cost to sell and are no longer depreciated.

In 2014, the FASB issued Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), which raises the threshold for disposals to qualify as discontinued operations. A discontinued operation is defined as: (1) a component of an entity or group of components that has been disposed of or classified as held for sale and represents a strategic shift that has or will have a major effect on an entity’s operations and financial results; or (2) an acquired business that is classified as held for sale on the acquisition date. ASU 2014-08 also requires additional disclosures regarding discontinued operations, as well as material disposals that do not meet the definition of discontinued operations. The application of this guidance is prospective from the date of adoption and applies only to disposals (or new classifications to held for sale) that have not been reported as discontinued operations in the Trust’s previously issued financial statements. The Trust early adopted ASU 2014-08 for the quarter ended March 31, 2014. Such adoption has had no impact on the Trust’s financial statements as no dispositions that qualify as discontinued operations occurred during the year ended December 31, 2015 and 2014.

Investments in Unconsolidated Entities

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 equity interest.

Real Estate Loans Receivable

Real Estate Loans Receivable

Real estate loans receivable consists of seven mezzanine loans and a term loan. Each mezzanine loan is collateralized by an ownership interest in the respective borrower, while the term loan is secured by an equity interest in one medical office building development. Interest income on the loans are recognized as earned based on the terms of the loans subject to evaluation of collectability risks and are included in the Trust’s consolidated statement of operations.

Cash and Cash Equivalents

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and short-term investments with maturities of three months or less from the date of purchase.

The Trust is subject to concentrations of credit risk as a result of its temporary cash investments. The Trust places its temporary cash investments with high credit quality financial institutions in order to mitigate that risk.

Escrow Reserves

Escrow reserves

The Trust is required to maintain various escrow reserves on certain notes payable to cover future property taxes and insurance and tenant improvements costs as defined in each loan agreement.

Deferred Costs

Deferred costs

Deferred costs consist primarily of fees paid to obtain financing and costs associated with the origination of long-term leases on real estate properties. After the purchase of a property, lease commissions incurred to extend in-place leases or generate new lease are added to deferred lease costs. Deferred lease costs are amortized on a straight-line basis over the terms of their respective agreements. The Trust amortizes deferred financing costs as a component of interest expense over the terms of the related borrowings using a method that approximates a level yield.

Derivatives

Derivatives

Derivatives consist of two embedded derivatives and an interest rate swap and are recognized as liabilities on the consolidated balance sheets in accrued expenses and other liabilities and are measured at fair value. For the interest rate swap any change in the fair value is recognized immediately in earnings unless the derivative qualified as a hedge and for the embedded derivatives any change in fair value is recognized in Redeemable noncontrolling interest – Operating Partnership and partially owned properties. No derivatives have been designated as hedges.

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 measured and reported in the consolidated balance sheets at fair value. The Trust has elected not to apply hedge accounting to its derivative financial instruments and as such, any changes in the fair values of its derivatives are recognized immediately in earnings. 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.

Tenant Receivables, Net

Tenant receivables, net

Tenant accounts receivable are stated net of the applicable allowance. Rental payments under these contracts are primarily due monthly. The Trust assesses the collectability of tenant receivables, including straight-line rent receivables, and defers recognition of revenue if collectability is not reasonably assured. The Trust bases its assessment of the collectability of rent receivables on several factors, including, among other things, payment history, the financial strength of the tenant and current economic conditions. If management’s evaluation of these factors indicates it is probable that the Trust will be unable to recover the full value of the receivable, the Trust provides a reserve against the portion of the receivable that it estimates may not be recovered.

Rental Revenue

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 approximately $15.6 million and $6.4 million as of December 31, 2015 and 2014, 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 adjusted by amortization of lease inducements and above or below market rents on certain leases. Lease inducements and above or below market rents are amortized over the average remaining life of the lease.

Expense Recoveries

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, 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 expense recoveries.

Income Taxes

Income Taxes

The Trust elected to be taxed as a REIT for federal tax purposes commencing with the filing of its tax return for the short taxable year ending December 31, 2013. The Trust had no taxable income prior to electing REIT status. To qualify as a REIT, the Trust must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income to its shareholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Trust generally will not be subject to federal income tax to the extent it distributes qualifying dividends to its shareholders. If the Trust fails to qualify as a REIT in any taxable year, it will be subject to federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants the Trust relief under certain statutory provisions. Such an event could materially adversely affect the Trust’s net income and net cash available for distribution to shareholders. However, the Trust intends to continue to operate in such a manner as to continue qualifying for treatment as a REIT. Even if the Trust continues to qualify for taxation as a REIT, the Trust may be subject to state and local taxes on its income and property and federal income and excise taxes on its undistributed income.

Management Estimates

Management Estimates

The preparation of consolidated and combined financial statements in conformity with GAAP 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 fair value assessments with respect to purchase price allocations, impairment assessments, and the valuation of financial instruments. Actual results could differ from these estimates.

Contingent Liabilities

Contingent Liability

The Trust records 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.

Reclassifications

Reclassifications

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

Segment Reporting

Segment Reporting

Under the provision of Codification Topic 280, Segment Reporting, the Company has determined that it has one reportable segment with activities related to leasing and managing healthcare properties.

New Accounting Pronouncements

New Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-9, 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, 2017 and allows for either full retrospective or modified retrospective adoption. Early adoption of this standard is permitted for reporting periods beginning after December 15, 2016. While the Trust is currently evaluating the impact the adoption of Topic 606 will have on its consolidated financial statements, we do not expect its adoption to have a significant impact on our consolidated financial statements, as a substantial portion of our revenue consists of rental income from leasing arrangements, which are specifically excluded from ASU 2014-09.

In February 2015, the FASB issued ASU 2015-2, Amendments to the Consolidation Analysis. This update is intended to improve targeted areas of consolidation guidance by simplifying the consolidation evaluation process and by placing more emphasis on risk of loss when determining a controlling financial interest. The provisions of this ASU are effective for interim and annual periods beginning after December 15, 2015. The Company will adopt ASU 2015-2 on January 1, 2016, and it is not expected to have a material impact on the Company’s consolidated financial statements and disclosures.

In April 2015, the FASB issued ASU 2015-3, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. ASU 2015-3 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. ASU 2015-3 is effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The Company will adopt ASU 2015-3 on January 1, 2016, and it is not expected to have a material impact on the Company’s consolidated financial statements and disclosures.

In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. The update requires that acquiring entities in a business combination recognize adjustments to provisional amounts identified in the reporting period in which the adjustment amounts are determined, including the cumulative effect of the change in provisional amount, as if the accounting had been completed at the acquisition date. Adjustments related to previous reporting periods must be disclosed by income statement line item, either on the face of the income statement or in the notes, in the period for which the adjustment was identified. ASU 2015-16 is effective for annual reporting periods beginning after December 15, 2015. The Company will adopt ASU 2015-16 on January 1, 2016, and it is not expected to have a material impact on the Company’s consolidated financial statements and disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases. The update amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. ASU 2016-02 will be effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted. We are currently evaluating the impact of adopting the new leases standard on our consolidated financial statements.

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Organization and Business (Tables)

12 Months Ended

Dec. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Trust's common shares issuance and sale

During 2015 and 2014, the Trust’s issuance and sale of common shares pursuant to the ATM Program is as follows (in thousands, except common shares and price): 

	2015					2014
	Common shares sold	Weighted average price		Net proceeds		Common shares sold	Weighted average price		Net proceeds
Quarterly period ended March 31	247,397	$	16.96	$	4,139	—	$	—	$	—
Quarterly period ended June 30	1,007,695	16.56		16,439		—	—		—
Quarterly period ended September 30	—	—		—		—	—		—
Quarterly period ended December 31	—	—		—		3,576,010	15.54		54,789
Year ended December 31	1,255,092	$	16.63	$	20,578	3,576,010	$	15.54	$	54,789

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Schedule of dividends declared

Declaration Date	Record Date	Payment Date	Cash Dividend per Share/Unit
December 31, 2015	January 15, 2016	January 29, 2016	$	0.225
September 28, 2015	October 16, 2015	October 30, 2015	$	0.225
July 1, 2015	July 17, 2015	July 31, 2015	$	0.225
April 6, 2015	April 17, 2015	May 1, 2015	$	0.225
December 30, 2014	January 23, 2015	February 6, 2015	$	0.225
September 26, 2014	October 17, 2014	October 30, 2014	$	0.225
June 26, 2014	July 18, 2014	August 1, 2014	$	0.225
March 27, 2014	April 11, 2014	April 25, 2014	$	0.225
December 30, 2013	January 24, 2014	February 7, 2014	$	0.225
September 30, 2013	October 18, 2013	November 1, 2013	$	0.180	(1)

(1) Prorated cash dividend of $0.18 per share for the quarterly period from July 19, 2013 (the date of the IPO) through September 30, 2013, which was equivalent to a full quarterly dividend of $0.225 per share. The dividend was paid on November 1, 2013 to common shareholders and common OP Unit holders of record on October 18, 2013, with the exception of the OP Units issued in the acquisition of Crescent City Surgical Centre.

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Acquisitions and Disposition (Tables)

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

Schedule of acquisitions and aggregate purchase price

Acquisition activity for the year ending December 31, 2015 is summarized below:

Property (1)		Location	Acquisition Date	Purchase Price (in thousands)
Minnesota Portfolio	(2)
Edina MOB	(5)	Edina MN	January 22, 2015	$	14,190
Crystal MOB	(5)	Crystal, MN	January 22, 2015	14,782
Savage MOB	(5)	Savage, MN	January 22, 2015	12,800
Dell Road MOB	(5)	Chanhassen, MN	January 22, 2015	6,410
Vadnais Heights MOB	(5)	Vadnais Heights, MN	January 29, 2015	18,422
Minnetonka MOB	(3) (5)	Minnetonka, MN	February 5, 2015	26,000
Jamestown MOB	(5)	Jamestown, ND	February 5, 2015	12,819
Minnesota Eye MOB	(5)	Minnetonka, MN	February 17, 2015	10,882
Columbus MOB	(5)	Columbus, GA	January 23, 2015	6,540
Methodist Sports MOB	(4) (6)	Greenwood, IN	January 28, 2015	10,000
Indianapolis South (4 MOBs)	(5)	Greenwood, IN	February 13, 2015	17,183
Baylor Cancer Center	(5)	Dallas, TX	February 27, 2015	8,200
Bridgeport Medical Center	(5)	Lakewood, WA	February 27, 2015	13,750
Renaissance Office Building	(5)	Milwaukee, WI	March 27, 2015	6,500
University of Rochester Strong Memorial Portfolio (5 MOBs)	(5)	Rochester, NY	March 31, 2015	41,000
Avalon Park Florida Hospital MOB	(5)	Avalon Park, FL	March 31, 2015	14,600
Premier Surgery Center of Louisville	(5)	Louisville, KY	April 10, 2015	8,000
Baton Rouge MOB	(5)	Baton Rouge, LA	April 15, 2015	10,486
Healthpark Medical Center	(5)	Grand Blanc, MI	April 30, 2015	18,913
Plaza HCA MOB	(5)	Jacksonville, FL	April 30, 2015	19,000
Northern Ohio Medical Center	(4)	Sheffield, OH	May 28, 2015	11,236
University of Michigan - Northville MOB	(5)	Livonia, MI	May 29, 2015	14,750
Coon Rapids Medical Center MOB	(5)	Coon Rapids, MN	June 1, 2015	7,298
Mezzanine Loan - UF Health MOB	(7)	Jacksonville, FL	June 1, 2015	9,000
Premier Landmark MOB	(4) (8)	Bloomington, IN	June 5, 2015	11,308
Palm Beach ASC	(5)	Palm Beach, FL	June 26, 2015	14,070
Brookstone Physician Center MOB	(5)	Jacksonville, AL	June 30, 2015	2,800
Jackson Woman's Clinic MOB	(5)	Jackson, TN	June 30, 2015	5,672
Hillside Medical Center MOB	(5)	Hanover, PA	June 30, 2015	11,400
Randall Road MOB	(5)	Elgin, IL	June 30, 2015	13,045
Randall Road MOB - Unit 140	(4)	Elgin, IL	July 17, 2015	1,750
Medical Specialists of Palm Beach MOB	(5)	Atlantis, FL	July 24, 2015	11,051
OhioHealth - SW Health Center MOB	(5)	Grove City, OH	July 31, 2015	11,460
Trios Health MOB	(5)	Kennewick, WA	July 31, 2015	64,000
Integrated Medical Services (IMS) Portfolio
IMS - Paradise Valley MOB	(5)	Phoenix, AZ	August 14, 2015	31,814
IMS - Avondale MOB	(5)	Avondale, AZ	August 19, 2015	22,144
IMS - Palm Valley MOB	(5)	Goodyear, AZ	August 19, 2015	35,184
IMS - North Mountain MOB	(5)	Phoenix, AZ	August 31, 2015	51,740

Property (1)		Location	Acquisition Date	Purchase Price (in thousands)
Mezzanine Loan - Warm Springs Rehab Hospital	(9)	Kyle, TX	August 21, 2015	3,138
Memorial Hermann Medical Complex (2 MOBs)	(5)	Katy, TX	September 1, 2015	40,400
Construction Loan - Tinseltown	(10)	Jacksonville, FL	September 4, 2015	1,005
New Albany Medical Center MOB	(5) (11)	New Albany, OH	September 9, 2015	11,200
Fountain Hills Medical Campus MOB	(5)	Fountain Hills, AZ	September 30, 2015	13,250
Catalyst Portfolio (12 MOBs)	(5)	AL & FL	October 13, 2015	23,805
Mezzanine Loan - Truman Medical Center	(12)	Kansas City, MO	October 16, 2015	4,500
Arete Surgical Center	(5)	Johnstown, CO	October 19, 2015	9,100
Cambridge Professional Center MOB	(5)	Waldorf, MD	October 30, 2015	11,550
Mezzanine Loan - Great Falls Replacement Surgical Hospital	(13)	Great Falls, MT	November 2, 2015	4,500
HonorHealth 44th Street MOB	(5)	Phoenix, AZ	November 13, 2015	7,163
Mercy Medical Center MOB	(5)	Fenton, MO	December 1, 2015	9,850
Nashville MOB	(5) (14)	Nashville, TN	December 17, 2015	45,440
Mezzanine Loan - Wilson Surgery Center	(15)	Wilson, NC	December 17, 2015	216
Hillside Medical Center - Suite 100	(4)	Hanover, PA	December 18, 2015	4,240
Randall Road MOB - Suite 170	(4)	Elgin, IL	December 21, 2015	408
KSF Orthopaedic MOB	(5)	Houston, TX	December 22, 2015	6,250
Great Falls Clinic MOB	(5) (16)	Great Falls, MT	December 29, 2015	24,244
Randall Road MOB - Suite 320	(4)	Elgin, IL	December 30, 2015	500
Total				$	840,958

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

(2) Through subsidiaries of the Operating Partnership, the Trust acquired seven medical office facilities located in the Minneapolis-St. Paul Metropolitan area and one additional medical office facility located in Jamestown, North Dakota from affiliates of The Davis Group and investors associated with The Davis Group. The Davis Group retained a less than 1% minority interest in the property holding entities.

(3) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 44,685 Series A Preferred Units valued at approximately $9.7 million in the aggregate on the date of issuance.

(4) The Trust accounted for these acquisitions as asset acquisitions and capitalized $0.4 million of total acquisition costs to the basis of the properties.

(5) The Trust accounted for these acquisitions as business combinations pursuant to the acquisition method and expensed total acquisition costs of $14.9 million.

(6) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 420,963 OP Units valued at approximately $7.3 million in the aggregate on the date of issuance.

(7) The Trust made a $9.0 million mezzanine term loan to fund the development of a MOB in Jacksonville, Florida. The loan is collateralized by an equity interest in the medical building development and accrues interest at a rate of 8.4% per year.

(8) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 210,820 OP Units valued at approximately $3.4 million in the aggregate on the date of issuance.

(9) The Trust made a $3.1 million mezzanine term loan to partially fund the borrower’s acquisition of the 54,500 square foot Warm Springs Rehabilitation Hospital in Kyle, Texas. The mezzanine loan is collateralized by an equity interest in the property and accrues interest at a rate of 8.5% per year. The Trust has an option to purchase the property.

(10) The Trust made additional advances on a construction loan to Tinseltown Partners, LLC to fund the renovations and additions of two re-purposed buildings in Jacksonville, Florida. The additional advances total $1.0 million and accrue at an interest rate of 9.0% per year.

(11) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 16,866 OP Units valued at approximately $0.2 million in the aggregate on the date of issuance.

(12) The Trust made a $4.5 million mezzanine term loan to partially fund the owner’s permanent financing of the 87,500 square foot Truman Medical Center in Kansas City, Missouri. The loan accrues interest at the rate of 8.02% per year. The Trust has rights of first offer and first refusal to purchase the property.

(13) The Trust made a $4.5 million mezzanine term loan to partially fund the construction of the 63,250 square foot Great Falls Hospital in Great Falls, Montana. The loan accrues interest at the rate of 9.0% per year. The Trust has a contract to purchase the property upon completion of construction.

(14) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 91,236 Series A Preferred Units valued at approximately $19.7 million in the aggregate on the date of issuance. Holders of the Series A Preferred Units issued in connection with the acquisition of the Nashville MOB are entitled to certain redemption rights under the partnership agreement of the Operating Partnership which allow them to cause the Operating Partnership to redeem the Series A Preferred Units in exchange for cash, or at the Trust’s option, for common shares, pursuant to a formula provided in the partnership agreement. The investors in the Series A Preferred Units have agreed not cause the Operating Partnership to redeem their Series A Preferred Units prior to December 17, 2016.

(15) The Trust made a $0.2 million short term mezzanine loan to partially fund the owner’s acquisition of a 9,890 square foot ambulatory surgery center in Wilson, North Carolina. The loan accrues interest at the rate of 8.8% per year.

(16) The Trust’s $24.2 million investment represents the acquisition of an approximate 75% membership interest in the entity which owns the Great Falls Clinic.

For 2015, the Trust recorded revenues and net income of $41.4 million and $10.6 million, respectively, from its 2015 acquisitions.

During 2014, the Trust completed acquisitions of 61 properties located in 15 states for an aggregate purchase price of approximately $543.4 million. Acquisition activity for the year ending December 31, 2014 is 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 Orthopaedic 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) (5)	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) (6)	Bloomington, IN	July 1, 2014	23,837
Carlisle II MOB	(3)	Carlisle, PA	July 25, 2014	4,500
Surgical Institute of Monroe ASC		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) (7)	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) (8)	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 Westerville, OH	September 30, 2014	24,500
Pinnacle Health Portfolio 5 MOBs	(3)	Harrisburg, PA	October 29, 2014	23,100
Columbus Regional Health Portfolio 12 MOBs Columbus Regional Health Portfolio 1 MOB	(3)	Columbus, GA Phenix City, AL	November 20, 2014	27,997
Middletown Medical 2 MOBs	(2)	Middletown, NY	November 26, 2014	14,399
Carle Danville Clinic MOB	(3)	Danville, IL	November 26, 2014	10,300
Napoleon Medical Building MOB	(3)	New Orleans, LA	December 18, 2014	10,500
West Tennessee Bone & Joint 1 MOB 1 ASC	(2)	Jackson, TN	December 30, 2014	9,936
Total				$	543,436

(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 $1.7 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 $10.9 million.

(4) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 147,659 OP Units valued at approximately $1.9 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 96,099 OP Units valued at approximately $1.2 million in the aggregate on the date of issuance.

(6) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 576,040 OP Units valued at approximately $8.3 million in the aggregate on the date of issuance.

(7) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 272,191 OP Units valued at approximately $4.0 million in the aggregate on the date of issuance.

(8) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 950,324 OP Units valued at approximately $13.2 million in the aggregate on the date of issuance.

Schedule of preliminary purchase price allocations of assets acquired and liabilities assumed

The following table summarizes the preliminary purchase price allocations of the assets acquired and the liabilities assumed, which the Trust determined using Level 2 and Level 3 inputs (in thousands):

	December 31, 2015			December 31, 2014
Land	$	52,224		$	53,687
Building and improvements	643,470			451,691
In-place lease intangibles	99,763			35,720
Above market lease intangibles	19,337			5,270
Below market lease intangibles	(3,738		)	(2,330		)
Below market ground lease	13,941			—
Above market ground lease	—			(701		)
Investment in unconsolidated entity	—			1,300
Lease inducement	2,478			1,532
Leasehold interest	—			759
Derivative liability assumed	—			(197		)
Contingent consideration	(2,718		)	(840		)
Receivable	3,564			640
Debt assumed	(18,690		)	(15,283		)
Issuance of OP Units	(10,973		)	(28,589		)
Issuance of Series A Preferred Units	(29,403		)	—
Noncontrolling interest	(13,970		)	—
Net assets acquired	$	755,285		$	502,659

Schedule of pro forma combined revenue, net income, and earnings per share-basic and diluted

The following table illustrates the pro forma consolidated revenue, net income, and earnings per share as if the Trust had acquired the 2015 acquisitions detailed above as of January 1, 2014 (in thousands, except share and per share amounts):

	Year Ended December 31,
	2015		2014
Revenue	$	168,154	$	133,411
Net income	38,959		17,512
Net income available to common shareholders	36,938		16,599
Earnings per share	$	0.42	$	0.19
Common shares outstanding	87,175,904		87,175,904

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Intangibles (Tables)

12 Months Ended

Dec. 31, 2015

Finite-Lived Intangible Assets, Net [Abstract]

Summary of the carrying amount of intangible assets and liabilities

The following is a summary of the carrying amount of intangible assets and liabilities as of December 31, 2015 and 2014 (in thousands):

	December 31, 2015							December 31, 2014
	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
Assets
In-place leases	$	163,728	$	(26,702	)	$	137,026	$	64,777	$	(12,213	)	$	52,564
Above market leases	26,787		(3,174		)	23,613		7,449		(578		)	6,871
Leasehold interest	712		(64		)	648		759		(5		)	754
Below market ground lease	13,941		(68		)	13,873		—		—			—
Total	$	205,168	$	(30,008	)	$	175,160	$	72,985	$	(12,796	)	$	60,189
Liability
Below market lease	$	6,068	$	(799	)	$	5,269	$	2,330	$	(156	)	$	2,174
Above market ground lease	701		(20		)	681		701		(4		)	697
Total	$	6,769	$	(819	)	$	5,950	$	3,031	$	(160	)	$	2,871

Summary of the carrying amount of acquired lease intangibles

The following is a summary of the acquired lease intangible amortization for the years ended December 31, 2015, 2014 and 2013 (in thousands):

	December 31,
	2015		2014		2013
Amortization expense related to in-place leases	$	15,300	$	4,133	$	1,252
Decrease of rental income related to above-market leases	2,596		530		48
Decrease of rental income related to leasehold interests	59		5		—
Increase of rental income related to below-market leases	643		156		—
Decrease of operating expense related to above market ground leases	16		4		—
Increase in operating expense related to below market ground leases	68		—		—

Schedule of future amortization of the acquired lease intangibles

Future aggregate net amortization of the acquired lease intangibles as of December 31, 2015, is as follows (in thousands):

	Net Decrease in Revenue			Net Increase in Expenses
2016	$	(3,016	)	$	20,760
2017	(2,447		)	18,743
2018	(2,162		)	17,283
2019	(1,982		)	14,161
2020	(1,886		)	12,427
Thereafter	(7,499		)	66,844
Total	$	(18,992	)	$	150,218

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Other Assets (Tables)

12 Months Ended

Dec. 31, 2015

Other Assets, Unclassified [Abstract]

Schedule of other assets

Other assets consisted of the following as of December 31, 2015 and 2014 (in thousands):

	December 31,
	2015		2014
Straight line rent receivable	$	15,584	$	6,431
Lease inducements, net	4,970		2,845
Escrows	4,788		1,906
Earnest deposits	343		2,343
Notes receivable	20,620		—
Prepaid expenses and other	5,926		2,281
Total	$	52,231	$	15,806

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Debt (Tables)

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Schedule of debt

The following is a summary of debt as of December 31, 2015 and 2014 (in thousands):

	December 31,
	2015			2014
Fixed interest mortgage notes	$	89,664	(1)	$	73,706	(2)
Variable interest mortgage note	4,262		(3)	4,399		(4)
Total mortgage debt	93,926			78,105
$750 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.20%, due September 2019.	395,000			138,000
Total principal	488,926			216,105
Unamortized fair value adjustment	674			—
Total debt	$	489,600		$	216,105

(1) Fixed interest mortgage notes, bearing interest from 4.71% to 6.58%, with a weighted average interest rate of 5.40%, and due in 2016, 2017, 2019, 2020, 2021 and 2022 collateralized by 11 properties with a net book value of $145,038.

(2) Fixed interest mortgage notes, bearing interest from 4.71% to 6.58%, with a weighted average interest rate of 5.26%, and due in 2016, 2017, 2018, 2019, 2021 and 2022 collateralized by nine properties with a net book value of $118,247.

(3) Variable interest mortgage note bearing variable interest of LIBOR plus 2.75% and due in 2017, collateralized by one property with a net book value of $5,994.

(4) Variable interest mortgage note bearing variable interest of LIBOR plus 2.75% and due in 2017, collateralized by one property with a net book value of $6,249.

Schedule of consolidated leverage ratios

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 Trust’s investment grade rating as follows:

Investment Grade Rating	Adjusted LIBOR Rate Loans and Letter of Credit Fee	Base Rate Loans
At Least A- or A3	LIBOR + 0.85%	—	%
At Least BBB+ or BAA1	LIBOR + 0.90%	—	%
At Least BBB or BAA2	LIBOR + 1.00%	0.10	%
At Least BBB- or BAA3	LIBOR + 1.20%	0.20	%
Below BBB- or BAA3	LIBOR + 1.55%	0.60	%

Schedule of principal payments due on debt

Scheduled principal payments due on debt as of December 31, 2015, are as follows (in thousands):

2016	$	9,748
2017	40,658
2018	1,265
2019	415,081
2020	5,521
Thereafter	16,653
Total Payments	$	488,926

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Accrued Expenses and Other Liabilities Accrued Expenses and Other Liabilities (Tables)

12 Months Ended

Dec. 31, 2015

Other Liabilities Disclosure [Abstract]

Schedule of accrued expenses and other liabilities

Accrued expenses and other liabilities consisted of the following as of December 31, 2015 and 2014 (in thousands):

	December 31,
	2015		2014
Embedded derivatives	$	8,149	$	—
Security deposits	4,038		1,191
Prepaid rent	2,778		839
Contingent consideration	2,559		840
Accrued expenses and other	6,949		3,270
Total	$	24,473	$	6,140

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Stock-based Compensation (Tables)

12 Months Ended

Dec. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of non-vested restricted common shares

A summary of the status of the Trust’s non-vested restricted common shares as of December 31, 2015 and changes during the year then ended follow:

	Shares		Weighted Average Grant Date Fair Value
Restricted shares issued in conjunction with our IPO	250,000		$	11.50
Non-vested at December 31, 2013	250,000		11.50
Granted	152,987		13.79
Vested	(83,333	)	11.50
Non-vested at December 31, 2014	319,654		12.60
Granted	162,522		15.95
Vested	(170,337	)	12.93
Non-vested at December 31, 2015	311,839		$	14.17

Schedule of weighted average grant date fair value assumptions

The Trust utilized a Monte Carlo simulation to calculate the weighted average grant date fair values in 2015 and 2014 of $20.06 and $19.25 per unit, respectively, using the following assumptions:

	2015			2014
Volatility	20.7		%	18.8% - 34.2%
Dividend assumption	reinvested			reinvested
Expected term in years	2.8 years			2.8 years
Risk-free rate	1.14		%	0.65		%
Stock price (per share)	$	15.87		$	13.47

Summary of the activity in the restricted share units

The following is a summary of the activity in the Trust’s restricted share units during 2014 and 2015: 

	Restricted Share Units	Weighted Average Grant Date Fair Value
Non-vested at December 31, 2013	—	$	—
Granted	55,680	16.94
Non-vested at December 31, 2014	55,680	16.94
Granted	116,207	19.22
Non-vested at December 31, 2015	171,887	$	18.48

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Schedule of fair value of other financial instruments

The following table presents the fair value of the Trust’s financial instruments (in thousands).

	December 31, 2015						December 31, 2014
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Real estate loans receivable	$	39,349		$	39,349		$	15,876		$	15,876
Credit facility	$	(395,000	)	$	(395,000	)	$	(138,000	)	$	(138,000	)
Mortgage debt	$	(94,600	)	$	(95,275	)	$	(78,105	)	$	(78,642	)
Derivative liabilities	$	(8,216	)	$	(8,216	)	$	(233	)	$	(233	)

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Tenant Operating Leases (Tables)

12 Months Ended

Dec. 31, 2015

Leases [Abstract]

Schedule of future minimum rental payments on non-cancelable leases, exclusive of expense recoveries

As of December 31, 2015, the future minimum rental payments on non-cancelable leases, exclusive of expense recoveries, were as follows (in thousands):

2016	$	119,218
2017	115,974
2018	110,927
2019	106,196
2020	102,326
Thereafter	724,590
Total	$	1,279,231

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Rent Expense (Tables)

12 Months Ended

Dec. 31, 2015

Leases [Abstract]

Schedule of future minimum lease obligations under non-cancelable ground leases

As of December 31, 2015, the future minimum lease obligations under non-cancelable ground and parking leases were as follows (in thousands):

2016	$	1,316
2017	1,353
2018	1,394
2019	1,437
2020	1,482
Thereafter	16,377
Total	$	23,359

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Schedule of amounts used in computing basic and diluted earnings per share

The following table shows the amounts used in computing the Trust’s basic and diluted earnings per share (in thousands, except share and per share data):

	Year Ended December 31,
	2015			2014			2013
Numerator for earnings per share - basic:
Net income (loss)	$	12,741		$	(4,418	)	$	(2,636	)
Net (income) loss attributable to Predecessor:	—			—			576
Net (income) loss attributable to noncontrolling interests:
Operating Partnership	(576		)	695			470
Partially owned properties	(377		)	(314		)	(71		)
Preferred distributions	(1,189		)	—			—
Numerator for earnings per share - basic:	$	10,599		$	(4,037	)	$	(1,661	)
Numerator for earnings per share - diluted:
Numerator for earnings per share - basic:	10,599			(4,037		)	(1,661		)
Operating Partnership net income	576			—			—
Numerator for earnings per share - diluted	$	11,175		$	(4,037	)	$	(1,661	)
Denominator for EPS - basic and diluted:
Weighted average number of shares outstanding - basic	72,750,724			33,063,093			12,883,917
Effect of dilutive securities:
Noncontrolling interest - Operating Partnership units	3,708,494			—			—
Restricted shares	190,619			—			—
Restricted share units	142,236			—			—
Denominator for EPS - diluted	76,792,073			33,063,093			12,883,917
Earnings per share - basic	$	0.15		$	(0.12	)	$	(0.13	)
Earnings per share - diluted	$	0.15		$	(0.12	)	$	(0.13	)

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Subsequent Events (Tables)

12 Months Ended

Dec. 31, 2015

Subsequent Events [Abstract]

Schedule of acquisitions through subsidiaries of operating partnership

As of February 22, 2016, the Trust, through subsidiaries of its Operating Partnership, closed on the below acquisitions during 2016:

Property(1)	Location	Acquisition Date	Investment (in thousands)
Randall Road MOB - Suite 380	Elgin, IL	January 14, 2016	$	704
Great Falls Hospital	Great Falls, MT	January 25, 2016	29,043
Monterey Medical Center ASC	Stuart, FL	February 1, 2016	6,900
Physicians Medical Plaza MOB	Indianapolis, IN	February 1, 2016	8,500
Mezzanine Loan - Davis	Minneapolis, MN	February 4, 2016	500
Park Nicollet Clinic	Chanhassen, MN	February 8, 2016	18,600
HEB Cancer Center	Bedford, TX	February 12, 2016	14,000
Riverview Medical Center	Lancaster, OH	February 26, 2016	12,800
St. Luke's Cornwall MOB	Cornwall, NY	February 26, 2016	14,550
			$	105,597

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

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Quarterly Data (Tables)

12 Months Ended

Dec. 31, 2015

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Data

The following unaudited quarterly data has been prepared on the basis of a December 31 year-end. Amounts are in thousands, except for common share and per share amounts.

	Quarter Ended
2015	March 31			June 30		September 30		December 31
Total revenues	$	24,484		$	29,683	$	34,870	$	40,404
Operating (loss) income	(459		)	3,271		3,812		5,883
Net (loss) income	(448		)	3,297		3,983		5,909
Net (loss) income attributable to common shareholders	(522		)	2,571		3,404		5,146
Earnings per share – basic:
Net (loss) income available to common shareholders	$	(0.01	)	$	0.04	$	0.05	$	0.06
Weighted average common shares outstanding	65,649,478			70,376,959		71,034,747		83,761,536
Earnings per share – diluted:
Net (loss) income available to common shareholder	$	(0.01	)	$	0.04	$	0.05	$	0.06
Weighted average common shares outstanding	65,649,478			74,267,284		75,104,821		87,911,097

As a result of the acquisition activity and equity offerings throughout 2015, the quarterly periods are not comparable quarter over quarter.

	Quarter Ended
2014	March 31			June 30			September 30			December 31
Total revenues	$	8,032		$	11,447		$	14,161		$	19,694
Operating loss (income)	(3,575		)	(626		)	(2,311		)	1,967
Net loss (income)	(3,558		)	(600		)	(2,251		)	1,991
Net loss (income) available to common shareholders	(3,093		)	(561		)	(2,094		)	1,711
Earnings per share – basic:
Net (loss) income available to common shareholders	$	(0.15	)	$	(0.02	)	$	(0.06	)	$	0.04
Weighted average common shares outstanding	21,298,597			26,163,982			36,313,644			48,145,409
Earnings per share – diluted:
Net (loss) income available to common shareholders	$	(0.15	)	$	(0.02	)	$	(0.06	)	$	0.04
Weighted average common shares outstanding	21,298,597			26,163,982			36,313,644			48,354,493

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Organization and Business - Narrative (Details)									3 Months Ended								12 Months Ended
	Oct. 19, 2015 USD ($) $ / shares shares	Feb. 05, 2015 USD ($)	Jan. 21, 2015 USD ($) $ / shares shares	Sep. 12, 2014 USD ($) shares	Aug. 19, 2014 USD ($)	May. 27, 2014 USD ($) shares	Dec. 11, 2013 USD ($) shares	Jul. 24, 2013 USD ($) properties healthcareproperty shares	Dec. 31, 2015 USD ($) $ / shares shares	Sep. 30, 2015 USD ($) shares	Jun. 30, 2015 USD ($) shares	Mar. 31, 2015 USD ($) shares	Dec. 31, 2014 USD ($) $ / shares shares	Sep. 30, 2014 USD ($) shares	Jun. 30, 2014 USD ($) shares	Mar. 31, 2014 USD ($) shares	Dec. 31, 2015 USD ($) $ / shares shares	Dec. 31, 2014 USD ($) $ / shares shares
Organization and Business
Common stock, shares authorized (in shares) | shares				10,925,000		12,650,000	9,545,000		500,000,000				500,000,000				500,000,000	500,000,000
Common stock, par value (in dollars per share) | $ / shares									$ 0.01				$ 0.01				$ 0.01	$ 0.01
Common shares sold (in shares) | shares	15,812,500		18,975,000					11,753,597
Proceeds from issuance initial public offering								$ 123,800,000
Number of medical office buildings | properties								19
Number of healthcare real estate funds | healthcareproperty								4
Debt assumed								$ 84,300,000	$ 18,690,000				$ 15,283,000				$ 18,690,000	$ 15,283,000
Number of partnership units issued | shares	15,812,500		18,975,000					2,744,000
Value of Preferred Units		$ 9,700,000						$ 31,600,000
Percentage of interest held								79.60%									95.70%
Aggregate purchase price																	$ 818,600,000
Shares issued upon exercise of the underwriters' overallotment option | shares	2,062,500		2,475,000	1,425,000		1,650,000	1,245,000
Net proceeds from issuance of common stock	$ 226,800,000		$ 297,300,000	$ 145,700,000		$ 149,900,000	$ 103,100,000
Common share price (in dollars per share) | $ / shares	$ 15.00		$ 16.40
ATM Program | Operating Partnership
Organization and Business
Common shares sold (in shares) | shares									0	0	1,007,695	247,397	3,576,010	0	0	0	1,255,092	3,576,010
Net proceeds from issuance of common stock									$ 0	$ 0	$ 16,439,000	$ 4,139,000	$ 54,789,000	$ 0	$ 0	$ 0	$ 20,578,000	$ 54,789,000
ATM Program | Maximum
Organization and Business
Aggregate offering price of common stock					$ 150,000,000
Ziegler Arizona 23 LLC
Organization and Business
Percentage of interest acquired								50.00%
Aggregate purchase price								$ 850,000
Percentage of ownership after transaction								100.00%

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Organization and Business - Schedule of Issuance and Sale of Common Stock (Details 2) - USD ($) $ / shares in Units, $ in Thousands							3 Months Ended								12 Months Ended
	Oct. 19, 2015	Jan. 21, 2015	Sep. 12, 2014	May. 27, 2014	Dec. 11, 2013	Jul. 24, 2013	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014
Class of Stock [Line Items]
Common shares sold (in shares)	15,812,500	18,975,000				11,753,597
Net proceeds from issuance of common stock	$ 226,800	$ 297,300	$ 145,700	$ 149,900	$ 103,100
ATM Program | Operating Partnership
Class of Stock [Line Items]
Common shares sold (in shares)							0	0	1,007,695	247,397	3,576,010	0	0	0	1,255,092	3,576,010
Weighted average price (in dollars per share)							$ 0.00	$ 0.00	$ 16.56	$ 16.96	$ 15.54	$ 0.00	$ 0.00	$ 0.00	$ 16.63	$ 15.54
Net proceeds from issuance of common stock							$ 0	$ 0	$ 16,439	$ 4,139	$ 54,789	$ 0	$ 0	$ 0	$ 20,578	$ 54,789

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Summary of Significant Accounting Policies - (Details) $ / shares in Units, $ in Thousands					12 Months Ended
	Dec. 17, 2015 USD ($) shares	Mar. 01, 2015 USD ($)	Feb. 05, 2015 USD ($) shares	Jul. 24, 2013 USD ($) properties states shares	Dec. 31, 2015 USD ($) properties $ / shares shares	Dec. 31, 2014 USD ($) properties shares	Dec. 31, 2013 USD ($) properties shares	Oct. 19, 2015 shares	Jan. 21, 2015 shares
Business Acquisition [Line Items]
Ownership interest in consolidated subsidiaries (as a percent)					100.00%
Number of medical office buildings | properties				19
Number of partnership units issued | shares				2,744,000				15,812,500	18,975,000
Principal payments on mortgage debt					$ 2,022	$ 6,549	$ 41,832
Acquisition price					$ 840,958	543,436
Percentage of interest held				79.60%	95.70%
Conversion ratio					1
Value of Preferred Units			$ 9,700	$ 31,600
Embedded derivatives					$ 8,149	$ 0
Minnetonka MOB
Business Acquisition [Line Items]
Number of units issued for funding purchase price (in shares) | shares			44,685
Acquisition price			$ 26,000
Cumulative preferred return		15.00%
Equity investment		$ 5,000
Internal rate of return		15.00%
Nashville MOB
Business Acquisition [Line Items]
Number of units issued for funding purchase price (in shares) | shares	91,236
Acquisition price	$ 45,440
Value of Preferred Units	$ 19,700
Series A Preferred units
Business Acquisition [Line Items]
Cumulative preferred return					5.00%
Shares issued upon conversion					1
Redemption value per share | $ / shares					$ 200
Period of time before redeemable					1 year
Operating Partnership | Ziegler Funds Property Interests
Business Acquisition [Line Items]
Number of medical office buildings | properties				19
Number of states | states				10
Number of partnership units issued | shares				2,744,000
Principal payments on mortgage debt				$ 36,900
Operating Partnership | Units
Business Acquisition [Line Items]
Number of additional acquisitions | properties					3	5	1
Number of units issued for funding purchase price (in shares) | shares					648,649	2,042,313	954,877
Value of units issued for funding purchase price					$ 11,000	$ 28,600	$ 11,500
Acquisition price					$ 32,500	$ 103,600	$ 37,500
Operating Partnership | Series A Preferred units | Units | Minnetonka MOB
Business Acquisition [Line Items]
Number of units issued for funding purchase price (in shares) | shares			44,685
Operating Partnership | Series A Preferred units | Units | Nashville MOB
Business Acquisition [Line Items]
Number of units issued for funding purchase price (in shares) | shares	91,236
Value of units issued for funding purchase price	$ 19,700

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Summary of Significant Accounting Policies - (Details 2) - $ / shares																					3 Months Ended	12 Months Ended
	Jan. 29, 2016	Dec. 31, 2015	Oct. 30, 2015	Sep. 28, 2015	Jul. 31, 2015	Jul. 01, 2015	May. 01, 2015	Apr. 06, 2015	Feb. 06, 2015	Dec. 30, 2014	Oct. 30, 2014	Sep. 26, 2014	Aug. 01, 2014	Jun. 26, 2014	Apr. 25, 2014	Mar. 27, 2014	Feb. 07, 2014	Dec. 30, 2013	Nov. 01, 2013	Sep. 30, 2013	Sep. 30, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Class of Stock [Line Items]
Dividends and distributions declared per common share and unit (in dollars per share)		$ 0.225		$ 0.225		$ 0.225		$ 0.225		$ 0.225		$ 0.225		$ 0.225		$ 0.225		$ 0.225		$ 0.18		$ 0.9	$ 0.9	$ 0.41
Dividends and distributions paid per common share and unit (in dollars per share)			$ 0.225		$ 0.225		$ 0.225		$ 0.225		$ 0.225		$ 0.225		$ 0.225		$ 0.225		$ 0.18
Dividends and distributions declared per common share and unit, quarterly equivalent (in dollars per share)																					$ 0.225
Subsequent Events
Class of Stock [Line Items]
Dividends and distributions paid per common share and unit (in dollars per share)	$ 0.225

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Summary of Significant Accounting Policies - (Details 3) $ in Thousands		12 Months Ended
	Jul. 24, 2013	Dec. 31, 2015 USD ($) mezzanine_loan	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Business Acquisition [Line Items]
Impairment loss		$ 0	$ 1,750	$ 0
Percentage of interest held	79.60%	95.70%
Acquisition price		$ 840,958	543,436
Escrows		4,788	1,906
Allowance for doubtful accounts		100	100
Rental revenue due in excess of amounts currently due from tenants		$ 15,600	$ 6,400
Jeff Orleans Medical Development Real Estate L L C
Business Acquisition [Line Items]
Percentage of interest held			40.00%
Acquisition price			$ 1,300
Mezzanine loan
Business Acquisition [Line Items]
Number of loans | mezzanine_loan		7
Term loan
Business Acquisition [Line Items]
Number of loans | mezzanine_loan		1

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Acquisitions and Disposition - 2015 Acquisitions (Details) $ in Thousands																																													1 Months Ended	12 Months Ended
	Dec. 30, 2015 USD ($)	Dec. 29, 2015 USD ($)	Dec. 22, 2015 USD ($)	Dec. 21, 2015 USD ($)	Dec. 18, 2015 USD ($)	Dec. 17, 2015 USD ($) ft² shares	Dec. 01, 2015 USD ($)	Nov. 13, 2015 USD ($)	Nov. 02, 2015 USD ($) ft²	Oct. 30, 2015 USD ($)	Oct. 19, 2015 USD ($)	Oct. 16, 2015 USD ($) ft²	Oct. 13, 2015 USD ($)	Sep. 30, 2015 USD ($)	Sep. 09, 2015 USD ($) shares	Sep. 04, 2015 USD ($) buildings	Sep. 01, 2015 USD ($)	Aug. 31, 2015 USD ($)	Aug. 21, 2015 USD ($) ft²	Aug. 19, 2015 USD ($)	Aug. 14, 2015 USD ($)	Jul. 31, 2015 USD ($)	Jul. 24, 2015 USD ($)	Jul. 17, 2015 USD ($)	Jun. 30, 2015 USD ($)	Jun. 26, 2015 USD ($)	Jun. 05, 2015 USD ($) shares	Jun. 01, 2015 USD ($)	May. 29, 2015 USD ($)	May. 28, 2015 USD ($)	Apr. 30, 2015 USD ($)	Apr. 15, 2015 USD ($)	Apr. 10, 2015 USD ($)	Mar. 31, 2015 USD ($)	Mar. 27, 2015 USD ($)	Feb. 27, 2015 USD ($)	Feb. 17, 2015 USD ($)	Feb. 13, 2015 USD ($)	Feb. 05, 2015 USD ($) properties shares	Jan. 29, 2015 USD ($)	Jan. 28, 2015 USD ($) shares	Jan. 23, 2015 USD ($)	Jan. 22, 2015 USD ($)	Jul. 24, 2013 properties	Feb. 17, 2015 properties	Dec. 31, 2015 USD ($) states healthcareproperty buildings shares	Dec. 31, 2014 USD ($) properties states shares	Dec. 31, 2013 USD ($) shares
Business Acquisition [Line Items]
Number of operating healthcare properties																																														66	61
Number of states in which operating healthcare properties and land parcel located | states																																														22	15
Aggregate purchase price																																														$ 818,600
Loan investments																																														22,400
Acquisition price																																														840,958	$ 543,436
Number of medical office buildings | properties																																												19
Acquisition costs capitalized																																														400	1,700
Acquisition expenses																																														14,893	10,897	$ 1,938
Revenue of acquired since acquisition																																														41,400
Income of acquiree since acquisition																																														$ 10,600
Edina MOB
Business Acquisition [Line Items]
Acquisition price																																											$ 14,190
Crystal MOB
Business Acquisition [Line Items]
Acquisition price																																											14,782
Savage MOB
Business Acquisition [Line Items]
Acquisition price																																											12,800
Dell Road MOB
Business Acquisition [Line Items]
Acquisition price																																											$ 6,410
Vadnais Heights MOB
Business Acquisition [Line Items]
Acquisition price																																								$ 18,422
Minnetonka MOB
Business Acquisition [Line Items]
Acquisition price																																							$ 26,000
Number of units issued for funding purchase price (in shares) | shares																																							44,685
Jamestown MOB
Business Acquisition [Line Items]
Acquisition price																																							$ 12,819
Minnesota Eye MOB
Business Acquisition [Line Items]
Acquisition price																																					$ 10,882
Columbus MOB
Business Acquisition [Line Items]
Acquisition price																																										$ 6,540
Methodist Sports MOB
Business Acquisition [Line Items]
Acquisition price																																									$ 10,000
Indianapolis South (4 MOBs)
Business Acquisition [Line Items]
Acquisition price																																						$ 17,183
Number of medical office buildings | buildings																																														4
Baylor Cancer Center
Business Acquisition [Line Items]
Acquisition price																																				$ 8,200
Bridgeport Medical Center
Business Acquisition [Line Items]
Acquisition price																																				$ 13,750
Renaissance Office Building
Business Acquisition [Line Items]
Acquisition price																																			$ 6,500
University of Rochester Strong Memorial Portfolio (5 MOBs)
Business Acquisition [Line Items]
Acquisition price																																		$ 41,000
Number of medical office buildings | buildings																																														5
Avalon Park Florida Hospital MOB
Business Acquisition [Line Items]
Acquisition price																																		$ 14,600
Premier Surgery Center of Louisville
Business Acquisition [Line Items]
Acquisition price																																	$ 8,000
Baton Rouge MOB
Business Acquisition [Line Items]
Acquisition price																																$ 10,486
Healthpark Medical Center
Business Acquisition [Line Items]
Acquisition price																															$ 18,913
Plaza HCA MOB
Business Acquisition [Line Items]
Acquisition price																															$ 19,000
Northern Ohio Medical Center
Business Acquisition [Line Items]
Acquisition price																														$ 11,236
University of Michigan - Northville MOB
Business Acquisition [Line Items]
Acquisition price																													$ 14,750
Coon Rapids Medical Center MOB
Business Acquisition [Line Items]
Acquisition price																												$ 7,298
Mezzanine Loan - UF Health MOB
Business Acquisition [Line Items]
Acquisition price																												9,000
Mezzanine Loan - UF Health MOB | Mezzanine loan
Business Acquisition [Line Items]
Mezzanine term loan																												$ 9,000
Mortgage loan interest rate																												8.40%
Premier Landmark MOB
Business Acquisition [Line Items]
Acquisition price																											$ 11,308
Palm Beach ASC
Business Acquisition [Line Items]
Acquisition price																										$ 14,070
Brookstone Physician Center MOB
Business Acquisition [Line Items]
Acquisition price																									$ 2,800
Jackson Woman's Clinic MOB
Business Acquisition [Line Items]
Acquisition price																									5,672
Hillside Medical Center MOB
Business Acquisition [Line Items]
Acquisition price																									11,400
Randall Road MOB
Business Acquisition [Line Items]
Acquisition price																									$ 13,045
Randall Road MOB - Unit 140
Business Acquisition [Line Items]
Acquisition price																								$ 1,750
Medical Specialists of Palm Beach MOB
Business Acquisition [Line Items]
Acquisition price																							$ 11,051
OhioHealth - SW Health Center MOB
Business Acquisition [Line Items]
Acquisition price																						$ 11,460
Trios Health MOB
Business Acquisition [Line Items]
Acquisition price																						$ 64,000
IMS - Paradise Valley MOB
Business Acquisition [Line Items]
Acquisition price																					$ 31,814
IMS - Avondale MOB
Business Acquisition [Line Items]
Acquisition price																				$ 22,144
IMS - Palm Valley MOB
Business Acquisition [Line Items]
Acquisition price																				$ 35,184
IMS - North Mountain MOB
Business Acquisition [Line Items]
Acquisition price																		$ 51,740
Mezzanine Loan - Warm Springs Rehab Hospital
Business Acquisition [Line Items]
Acquisition price																			$ 3,138
Mezzanine Loan - Warm Springs Rehab Hospital | Mezzanine loan
Business Acquisition [Line Items]
Mezzanine term loan																			$ 3,100
Mortgage loan interest rate																			8.50%
Memorial Hermann Medical Complex (2 MOBs)
Business Acquisition [Line Items]
Acquisition price																	$ 40,400
Number of medical office buildings | buildings																																														2
Construction Loan - Tinseltown
Business Acquisition [Line Items]
Acquisition price																$ 1,005
Number of medical office buildings | buildings																2
Mezzanine term loan																$ 1,000
Mortgage loan interest rate																9.00%
New Albany Medical Center MOB
Business Acquisition [Line Items]
Acquisition price															$ 11,200
Fountain Hills Medical Campus MOB
Business Acquisition [Line Items]
Acquisition price														$ 13,250
Catalyst Portfolio (12 MOBs)
Business Acquisition [Line Items]
Acquisition price													$ 23,805
Number of medical office buildings | buildings																																														12
Mezzanine Loan - Truman Medical Center
Business Acquisition [Line Items]
Acquisition price												$ 4,500
Area of property (in square feet) | ft²												87,500
Mezzanine term loan												$ 4,500
Mortgage loan interest rate												8.02%
Arete Surgical Center
Business Acquisition [Line Items]
Acquisition price											$ 9,100
Cambridge Professional Center MOB
Business Acquisition [Line Items]
Acquisition price										$ 11,550
Mezzanine Loan - Great Falls Replacement Surgical Hospital
Business Acquisition [Line Items]
Acquisition price									$ 4,500
Area of property (in square feet) | ft²									63,250
Mezzanine Loan - Great Falls Replacement Surgical Hospital | Mezzanine loan
Business Acquisition [Line Items]
Mezzanine term loan									$ 4,500
Mortgage loan interest rate									9.00%
HonorHealth 44th Street MOB
Business Acquisition [Line Items]
Acquisition price								$ 7,163
Mercy Medical Center MOB
Business Acquisition [Line Items]
Acquisition price							$ 9,850
Nashville MOB
Business Acquisition [Line Items]
Acquisition price						$ 45,440
Number of units issued for funding purchase price (in shares) | shares						91,236
Mezzanine Loan - Wilson Surgery Center
Business Acquisition [Line Items]
Acquisition price						$ 216
Area of property (in square feet) | ft²						9,890
Mezzanine Loan - Wilson Surgery Center | Mezzanine loan
Business Acquisition [Line Items]
Mezzanine term loan						$ 200
Mortgage loan interest rate						8.80%
Hillside Medical Center - Suite 100
Business Acquisition [Line Items]
Acquisition price					$ 4,240
Randall Road MOB - Suite 170
Business Acquisition [Line Items]
Acquisition price				$ 408
KSF Orthopaedic MOB
Business Acquisition [Line Items]
Acquisition price			$ 6,250
Great Falls Clinic MOB
Business Acquisition [Line Items]
Acquisition price		$ 24,244
Percentage of interest acquired		75.00%
Randall Road MOB - Suite 320
Business Acquisition [Line Items]
Acquisition price	$ 500
Operating Partnership | Units
Business Acquisition [Line Items]
Acquisition price																																														$ 32,500	$ 103,600	$ 37,500
Number of units issued for funding purchase price (in shares) | shares																																														648,649	2,042,313	954,877
Value of units issued for funding purchase price																																														$ 11,000	$ 28,600	$ 11,500
Operating Partnership | Minnesota Portfolio
Business Acquisition [Line Items]
Number of medical office buildings | properties																																							1						7
Ownership percentage by noncontrolling owners																																							1.00%
Operating Partnership | Minnetonka MOB | Series A Preferred units | Units
Business Acquisition [Line Items]
Number of units issued for funding purchase price (in shares) | shares																																							44,685
Acquisition expenses																																							$ 9,700
Operating Partnership | Methodist Sports MOB | Units
Business Acquisition [Line Items]
Number of units issued for funding purchase price (in shares) | shares																																									420,963
Value of units issued for funding purchase price																																									$ 7,300
Operating Partnership | Premier Landmark MOB | Units
Business Acquisition [Line Items]
Number of units issued for funding purchase price (in shares) | shares																											210,820
Value of units issued for funding purchase price																											$ 3,400
Operating Partnership | Mezzanine Loan - Warm Springs Rehab Hospital
Business Acquisition [Line Items]
Area of property (in square feet) | ft²																			54,500
Operating Partnership | New Albany Medical Center MOB | Units
Business Acquisition [Line Items]
Number of units issued for funding purchase price (in shares) | shares															16,866
Value of units issued for funding purchase price															$ 200
Operating Partnership | Nashville MOB | Series A Preferred units | Units
Business Acquisition [Line Items]
Number of units issued for funding purchase price (in shares) | shares						91,236
Value of units issued for funding purchase price						$ 19,700

XML

Acquisitions and Disposition - 2014 Acquisitions (Details) $ in Thousands																								12 Months Ended
	Dec. 30, 2014 USD ($) buildings	Dec. 18, 2014 USD ($)	Nov. 26, 2014 USD ($) buildings	Nov. 20, 2014 USD ($) buildings	Oct. 29, 2014 USD ($) buildings	Sep. 30, 2014 USD ($) buildings shares	Sep. 10, 2014 USD ($)	Sep. 05, 2014 USD ($) shares	Sep. 02, 2014 USD ($)	Jul. 31, 2014 USD ($)	Jul. 28, 2014 USD ($)	Jul. 25, 2014 USD ($)	Jul. 01, 2014 USD ($) buildings shares	Jun. 30, 2014 USD ($)	May. 28, 2014 USD ($) shares	May. 23, 2014 USD ($) shares	Apr. 30, 2014 USD ($)	Apr. 22, 2014 USD ($) buildings	Mar. 28, 2014 USD ($)	Feb. 28, 2014 USD ($)	Feb. 26, 2014 USD ($) buildings	Feb. 19, 2014 USD ($) buildings	Jul. 24, 2013 properties	Dec. 31, 2015 USD ($) states healthcareproperty	Dec. 31, 2014 USD ($) properties states
Business Acquisition [Line Items]
Number of operating healthcare properties																								66	61
Number of states in which operating healthcare properties and land parcel located | states																								22	15
Number of medical office buildings | properties																							19
Acquisition price																								$ 840,958	$ 543,436
Foundations San Antonio Surgical Hospital
Business Acquisition [Line Items]
Acquisition price																						$ 25,556
Eagles Landing Family Practice 4 MOBs
Business Acquisition [Line Items]
Number of medical office buildings | buildings																						4
Acquisition price																						$ 20,800
21st Century Oncology 4 MOBs
Business Acquisition [Line Items]
Number of medical office buildings | buildings																					4
Acquisition price																					$ 17,486
Foundations San Antonio MOB
Business Acquisition [Line Items]
Acquisition price																				$ 6,800
Peachtree Dunwoody MOB
Business Acquisition [Line Items]
Acquisition price																				$ 36,726
LifeCare LTACH
Business Acquisition [Line Items]
Acquisition price																			$ 27,160
LifeCare LTACH
Business Acquisition [Line Items]
Acquisition price																			$ 12,840
Pinnacle Health Cardiology Portfolio 2 MOBs
Business Acquisition [Line Items]
Number of medical office buildings | buildings																		2
Acquisition price																		$ 9,208
South Bend Orthopaedic MOB
Business Acquisition [Line Items]
Acquisition price																	$ 14,900
Grenada Medical Complex MOB
Business Acquisition [Line Items]
Acquisition price																	$ 7,100
Mississippi Sports Medicine and Orthopaedics Center MOB
Business Acquisition [Line Items]
Acquisition price																$ 16,700
Carmel Medical Pavilion MOB
Business Acquisition [Line Items]
Acquisition price															$ 4,664
Summit Urology MOB
Business Acquisition [Line Items]
Acquisition price														$ 4,783
Renaissance Center
Business Acquisition [Line Items]
Acquisition price														8,500
Presbyterian Medical Plaza MOB
Business Acquisition [Line Items]
Acquisition price														$ 7,750
Landmark Medical Portfolio (Premier) 3 MOBs
Business Acquisition [Line Items]
Number of medical office buildings | buildings													3
Acquisition price													$ 23,837
Carlisle II MOB
Business Acquisition [Line Items]
Acquisition price												$ 4,500
Surgical Institute of Monroe ASC
Business Acquisition [Line Items]
Acquisition price											$ 6,000
The Oaks Medical Building MOB
Business Acquisition [Line Items]
Acquisition price										$ 10,600
Baylor Surgicare ASC — Mansfield
Business Acquisition [Line Items]
Acquisition price									$ 8,500
Eye Center of Southern Indiana
Business Acquisition [Line Items]
Acquisition price								$ 12,174
Wayne State Medical Center and MOB
Business Acquisition [Line Items]
Acquisition price							$ 46,500
El Paso Portfolio (specialty surgical hospital and 2 MOBs)
Business Acquisition [Line Items]
Number of medical office buildings | buildings						2,000
Acquisition price						$ 46,235
The Mark H. Zangmeister Center
Business Acquisition [Line Items]
Acquisition price						36,600
Berger Medical Center
Business Acquisition [Line Items]
Acquisition price						$ 6,785
Orthopedic One 2 MOBs
Business Acquisition [Line Items]
Number of medical office buildings | buildings						2
Acquisition price						$ 24,500
Pinnacle Health Portfolio 5 MOBs
Business Acquisition [Line Items]
Number of medical office buildings | buildings					5
Acquisition price					$ 23,100
Columbus Regional Health Portfolio 12 MOBs Columbus Regional Health Portfolio 1 MOB
Business Acquisition [Line Items]
Acquisition price				$ 27,997
Middletown Medical 2 MOBs
Business Acquisition [Line Items]
Number of medical office buildings | buildings			2
Acquisition price			$ 14,399
Carle Danville Clinic MOB
Business Acquisition [Line Items]
Acquisition price			$ 10,300
Napoleon Medical Building MOB
Business Acquisition [Line Items]
Acquisition price		$ 10,500
West Tennessee Bone & Joint 1 MOB 1 ASC
Business Acquisition [Line Items]
Number of medical office buildings | buildings	1
Number of ambulatory surgical centers | buildings	1,000
Acquisition price	$ 9,936
Operating Partnership | Mississippi Sports Medicine and Orthopaedics Center MOB
Business Acquisition [Line Items]
Number of units issued for funding purchase price (in shares) | shares																147,659
Value of units issued for funding purchase price																$ 1,900
Operating Partnership | Carmel Medical Pavilion MOB
Business Acquisition [Line Items]
Number of units issued for funding purchase price (in shares) | shares															96,099
Value of units issued for funding purchase price															$ 1,200
Operating Partnership | Landmark Medical Portfolio (Premier) 3 MOBs
Business Acquisition [Line Items]
Number of units issued for funding purchase price (in shares) | shares													576,040
Value of units issued for funding purchase price													$ 8,300
Operating Partnership | Eye Center of Southern Indiana
Business Acquisition [Line Items]
Number of units issued for funding purchase price (in shares) | shares								272,191
Value of units issued for funding purchase price								$ 4,000
Operating Partnership | El Paso Portfolio (specialty surgical hospital and 2 MOBs)
Business Acquisition [Line Items]
Number of units issued for funding purchase price (in shares) | shares						950,324
Value of units issued for funding purchase price						$ 13,200
Georgia | Columbus Regional Health Portfolio 12 MOBs Columbus Regional Health Portfolio 1 MOB
Business Acquisition [Line Items]
Number of medical office buildings | buildings				12
Alabama | Columbus Regional Health Portfolio 12 MOBs Columbus Regional Health Portfolio 1 MOB
Business Acquisition [Line Items]
Number of medical office buildings | buildings				1,000

XML

Acquisitions and Disposition - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Jul. 24, 2013
Fair values of the assets acquired and the liabilities assumed
Land	$ 52,224	$ 53,687
Building and improvements	643,470	451,691
Investment in unconsolidated entity	0	1,300
Lease inducement	2,478	1,532
Leasehold interest	0	759
Derivative liability assumed	0	(197)
Contingent consideration	(2,718)	(840)
Receivable	3,564	640
Debt assumed	(18,690)	(15,283)	$ (84,300)
Issuance of OP Units	(10,973)	(28,589)
Issuance of Series A Preferred Units	(29,403)	0
Noncontrolling interest	(13,970)	0
Net assets acquired	755,285	502,659
In-place lease intangibles
Fair values of the assets acquired and the liabilities assumed
Intangible assets	99,763	35,720
Above market lease intangibles
Fair values of the assets acquired and the liabilities assumed
Intangible assets	19,337	5,270
Below market lease intangibles
Fair values of the assets acquired and the liabilities assumed
Intangible liabilities	(3,738)	(2,330)
Below market ground lease
Fair values of the assets acquired and the liabilities assumed
Intangible assets	13,941	0
Above market ground lease
Fair values of the assets acquired and the liabilities assumed
Intangible liabilities	$ 0	$ (701)

XML

Acquisitions and Disposition - Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Unaudited Pro Forma Financial Information
Revenue	$ 168,154	$ 133,411
Net income	38,959	17,512
Net income available to common shareholders	$ 36,938	$ 16,599
Earnings per share basic (in dollars per share)	$ 0.42	$ 0.19
Earnings per share diluted (in dollars per share)	$ 0.42	$ 0.19
Common shares outstanding	87,175,904	87,175,904

XML

Intangibles - Carrying Amount of Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Cost	$ 205,168	$ 72,985
Accumulated Amortization	(30,008)	(12,796)
Net	175,160	60,189
Liability
Cost	6,769	3,031
Accumulated Amortization	(819)	(160)
Net	5,950	2,871
In-place leases
Finite-Lived Intangible Assets [Line Items]
Cost	163,728	64,777
Accumulated Amortization	(26,702)	(12,213)
Net	137,026	52,564
Above market leases
Finite-Lived Intangible Assets [Line Items]
Cost	26,787	7,449
Accumulated Amortization	(3,174)	(578)
Net	23,613	6,871
Leasehold interest
Finite-Lived Intangible Assets [Line Items]
Cost	712	759
Accumulated Amortization	(64)	(5)
Net	648	754
Below Market Ground Lease
Finite-Lived Intangible Assets [Line Items]
Cost	13,941	0
Accumulated Amortization	(68)	0
Net	13,873	0
Below market in-place lease
Liability
Below market lease, cost	6,068	2,330
Below market lease, accumulated amortization	(799)	(156)
Below Market Lease, Net	5,269	2,174
Above market ground lease
Liability
Cost	701	701
Accumulated Amortization	(20)	(4)
Net	$ 681	$ 697

XML

Intangibles - Acquired Lease Intangible Amortization (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
In-place leases
Finite-Lived Intangible Assets [Line Items]
Amortization expense related to in-place leases	$ 15,300	$ 4,133	$ 1,252
Above market leases
Finite-Lived Intangible Assets [Line Items]
Decrease of rental income	2,596	530	48
Leasehold interest
Finite-Lived Intangible Assets [Line Items]
Decrease of rental income	59	5	0
Below market in-place lease
Finite-Lived Intangible Assets [Line Items]
Increase of rental income	643	156	0
Above market ground lease
Finite-Lived Intangible Assets [Line Items]
Decrease (increase) of operating expense	16	4	0
Below Market Ground Lease
Finite-Lived Intangible Assets [Line Items]
Decrease (increase) of operating expense	$ 68	$ 0	$ 0

XML

Intangibles - Amortization of Acquired Lease Intangibles (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($)
Future aggregate net amortization of acquired lease intangibles (Net decrease in Revenue)
2016	$ (3,016)
2017	(2,447)
2018	(2,162)
2019	(1,982)
2020	(1,886)
Thereafter	(7,499)
Total	(18,992)
Future aggregate net amortization of acquired lease intangibles (Net Increase in Expenses)
2016	20,760
2017	18,743
2018	17,283
2019	14,161
2020	12,427
Thereafter	66,844
Total	$ 150,218
Weighted average amortization period for lease intangibles	15 years
Weighted average amortization period for lease intangible liability	12 years

XML

Other Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Other Assets, Unclassified [Abstract]
Straight line rent receivable	$ 15,584	$ 6,431
Lease inducements, net	4,970	2,845
Escrows	4,788	1,906
Earnest deposits	343	2,343
Notes receivable	20,620	0
Prepaid expenses and other	5,926	2,281
Total	$ 52,231	$ 15,806

XML

Debt - Summary of Debt (Details)	12 Months Ended
	Dec. 31, 2015 USD ($) properties	Dec. 31, 2014 USD ($) properties	Jul. 22, 2015 USD ($)	Sep. 18, 2014 USD ($)
Debt
Total mortgage debt	$ 93,926,000	$ 78,105,000
Unsecured Debt	395,000,000	138,000,000
Total principal	488,926,000	216,105,000
Unamortized fair value adjustment	674,000	0
Total debt	489,600,000	216,105,000
Mortgage notes, bearing fixed interest from 4.71% to 6.58%
Debt
Total mortgage debt	$ 89,664,000	$ 73,706,000
Weighted average interest rate (as a percent)	5.40%	5.26%
Number of properties included in collateralized | properties	11	9
Net book value of properties included in the collateralized	$ 145,038,000	$ 118,247,000
Mortgage notes, bearing fixed interest from 4.71% to 6.58% | Minimum
Debt
Interest rate (as a percent)	4.71%	4.71%
Mortgage notes, bearing fixed interest from 4.71% to 6.58% | Maximum
Debt
Interest rate (as a percent)	6.58%	6.58%
Mortgage note, bearing variable interest of LIBOR plus 2.75%
Debt
Total mortgage debt	$ 4,262,000	$ 4,399,000
Number of properties included in collateralized | properties	1	1
Net book value of properties included in the collateralized	$ 5,994,000	$ 6,249,000
Mortgage note, bearing variable interest of LIBOR plus 2.75% | LIBOR
Debt
Reference rate (as a percent)	2.75%	2.75%
Credit Agreement
Debt
Unsecured Debt	$ 395,000,000	$ 138,000,000
Maximum borrowing capacity	$ 750,000,000		$ 400,000,000	$ 400,000,000
Credit Agreement | LIBOR
Debt
Reference rate (as a percent)	1.20%

XML

Debt - Narrative (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Jul. 22, 2015	Sep. 18, 2014
LIBOR | Adjusted LIBOR Rate Loans and Letter of Credit | Consolidated Leverage Ratio, 35%
Debt
Reference rate (as a percent)	0.85%
LIBOR | Adjusted LIBOR Rate Loans and Letter of Credit | Consolidated Leverage Ratio, >35% and 45%
Debt
Reference rate (as a percent)	0.90%
LIBOR | Adjusted LIBOR Rate Loans and Letter of Credit | Consolidated Leverage Ratio, >45% and 45%
Debt
Reference rate (as a percent)	1.00%
LIBOR | Adjusted LIBOR Rate Loans and Letter of Credit | Consolidated Leverage Ratio, >45% and 50%
Debt
Reference rate (as a percent)	1.20%
LIBOR | Adjusted LIBOR Rate Loans and Letter of Credit | Consolidated Leverage Ratio, >50% and 55%
Debt
Reference rate (as a percent)	1.55%
Base Rate | Base Rate Loans | Consolidated Leverage Ratio, 35%
Debt
Reference rate (as a percent)	0.00%
Base Rate | Base Rate Loans | Consolidated Leverage Ratio, >35% and 45%
Debt
Reference rate (as a percent)	0.00%
Base Rate | Base Rate Loans | Consolidated Leverage Ratio, >45% and 45%
Debt
Reference rate (as a percent)	0.10%
Base Rate | Base Rate Loans | Consolidated Leverage Ratio, >45% and 50%
Debt
Reference rate (as a percent)	0.20%
Base Rate | Base Rate Loans | Consolidated Leverage Ratio, >50% and 55%
Debt
Reference rate (as a percent)	0.60%
Credit Agreement
Debt
Maximum borrowing capacity	$ 750,000,000	$ 400,000,000	$ 400,000,000
Maximum borrowing capacity as a percentage of maximum principal amount			10.00%
Increase in maximum borrowing capacity			$ 350,000,000
Maximum borrowing capacity under accordion feature			750,000,000
Term of extension option	1 year
Unused fee (as a percent)	0.25%
Amount outstanding	$ 395,000,000
Current borrowing capacity	$ 198,700,000.0
Credit Agreement | Credit Agreement Amendment
Debt
Maximum borrowing capacity		$ 750,000,000
Maximum borrowing capacity as a percentage of maximum principal amount		10.00%
Increase in maximum borrowing capacity		$ 350,000,000
Maximum borrowing capacity under accordion feature		$ 1,100,000,000.0
Credit Agreement | LIBOR
Debt
Reference rate (as a percent)	1.20%
Prior Credit Facility
Debt
Maximum borrowing capacity			$ 200,000,000

XML

Debt - Principal Payments Due on Debt (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Scheduled principal payments
2016	$ 9,748
2017	40,658
2018	1,265
2019	415,081
2020	5,521
Thereafter	16,653
Total Payments	488,926	$ 216,105
Interest expense	$ 9,300	$ 5,800

XML

Accrued Expenses and Other Liabilities Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Other Liabilities Disclosure [Abstract]
Embedded derivatives	$ 8,149	$ 0
Security deposits	4,038	1,191
Prepaid rent	2,778	839
Contingent consideration	2,559	840
Accrued expenses and other	6,949	3,270
Total	$ 24,473	$ 6,140

XML

Stock-based Compensation - Restricted Shares (Details) - USD ($) $ / shares in Units, $ in Thousands			12 Months Ended
	Aug. 07, 2014	Jul. 24, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Weighted Average Grant Date Fair Value
Non-cash share compensation			$ 3,798	$ 2,422	$ 433
2013 Plan | Restricted common shares
Stock-based compensation
Maximum number of shares authorized	2,450,000	600,000
Increase in number of common shares authorized for issuance	1,850,000
Grant date value		$ 2,900	$ 2,600	$ 2,100
Vesting period		3 years	3 years
Shares
Non-vested at the beginning of the period (in shares)			319,654	250,000
Granted (in shares)		250,000	162,522	152,987
Vested (in shares)			(170,337)	(83,333)
Non-vested at the beginning of the period (in shares)		250,000	311,839	319,654	250,000
Weighted Average Grant Date Fair Value
Non-vested at beginning of period (in dollars per share)			$ 12.60	$ 11.50
Grant date value (in dollars per share)		$ 11.50	15.95	13.79
Vested (in dollars per share)			12.93	11.50
Non-vested at beginning of period (in dollars per share)		$ 11.50	$ 14.17	$ 12.60	$ 11.50
Non-cash share compensation			$ 2,900	$ 2,200	$ 400
Unrecognized compensation expense			$ 2,100	$ 2,400	$ 2,500
Initial estimated cumulative forfeiture rate (as a percent)			0.00%
Minimum | 2013 Plan | Restricted common shares
Stock-based compensation
Vesting period			1 year	1 year
Maximum | 2013 Plan | Restricted common shares
Stock-based compensation
Vesting period				3 years

XML

Stock-based Compensation - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Stock-based compensation
Non-cash share compensation			$ 3,798	$ 2,422	$ 433
2013 Plan | Restricted Share Units
Stock-based compensation
Non-cash share compensation			900	300
Unrecognized compensation expense			$ 1,600	$ 700
Share based compensation fair value assumptions
Volatility	20.70%
Expected term in years	2 years 9 months 18 days	2 years 9 months 18 days
Risk-free rate	1.14%	0.65%
Share price (per share)	$ 15.87	$ 13.47
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Non-vested at the beginning of the period (in shares)			55,680	0
Granted (in shares)	75,250	55,680	116,207		55,680
Non-vested at the beginning of the period (in shares)			171,887	55,680	0
Non-vested at beginning of period (in dollars per share)			$ 16.94	$ 0.00
Grant date value (in dollars per share)			19.22		$ 16.94
Non-vested at beginning of period (in dollars per share)			$ 18.48	$ 16.94	$ 0.00
2013 Plan | Restricted Share Units | Trustees
Stock-based compensation
Vesting period		2 years
Number of dividend equivalent included in award	1
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Granted (in shares)	40,957
2013 Plan | Market Based RSU | Officer
Stock-based compensation
Percentage of shares awarded	80.00%
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Grant date value (in dollars per share)	$ 20.06	$ 19.25
2013 Plan | Performance Based RSU | Officer
Stock-based compensation
Percentage of shares awarded	20.00%
Performance conditions grant date fair value (in dollars per share)	$ 15.87
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Grant date value (in dollars per share)	$ 19.22
Minimum | 2013 Plan | Restricted Share Units
Share based compensation fair value assumptions
Volatility		18.80%
Maximum | 2013 Plan | Restricted Share Units
Share based compensation fair value assumptions
Volatility		34.20%

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Fair Value Measurements (Details) $ in Thousands	Dec. 31, 2015 USD ($) instruments	Dec. 31, 2014 USD ($)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Number of derivative instruments | instruments	3
Real estate loans receivable	$ 39,349	$ 15,876
Credit facility	$ (395,000)	(138,000)
Embedded Derivative Financial Instruments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Number of derivative instruments | instruments	2
Reported Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Real estate loans receivable	$ 39,349	15,876
Credit facility	(395,000)	(138,000)
Mortgage debt	(94,600)	(78,105)
Estimate of Fair Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Real estate loans receivable	39,349	15,876
Credit facility	(395,000)	(138,000)
Mortgage debt	(95,275)	(78,642)
Recurring | Reported Value Measurement | Interest Rate Swaps
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative liabilities	(8,216)	(233)
Recurring | Estimate of Fair Value Measurement | Interest Rate Swaps
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative liabilities	$ (8,216)	$ (233)

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Tenant Operating Leases (Details) $ in Thousands	Dec. 31, 2015 USD ($)
Future minimum rental payments on non-cancelable leases
2016	$ 119,218
2017	115,974
2018	110,927
2019	106,196
2020	102,326
Thereafter	724,590
Total	$ 1,279,231

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Rent Expense (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($) properties	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Leases [Abstract]
Number of properties pursuant to ground leases | properties	14
Number of properties pursuant to parking lease | properties	2
Maximum lease terms	90 years
Future minimum lease obligations under non-cancelable ground leases
2016	$ 1,316
2017	1,353
2018	1,394
2019	1,437
2020	1,482
Thereafter	16,377
Total	23,359
Rent expenses for parking and ground leases	$ 1,300	$ 900	$ 20

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								5 Months Ended	12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Numerator for earnings per share - basic:
Net income (loss)	$ 5,909	$ 3,983	$ 3,297	$ (448)	$ 1,991	$ (2,251)	$ (600)	$ (3,558)	$ (2,060)	$ 12,741	$ (4,418)	$ (2,636)
Net (income) loss attributable to Predecessor:										0	0	576
Net Income (Loss) Attributable to Noncontrolling Interest [Abstract]
Operating Partnership										(576)	695	470
Partially owned properties										(377)	(314)	(71)
Preferred distributions										(1,189)	0	0
Net income (loss) attributable to common shareholders	5,146	3,404	2,571	(522)	1,711	(2,094)	(561)	(3,093)		10,599	(4,037)	(1,661)
Numerator for earnings per share - diluted:
Net income (loss) attributable to common shareholders	$ 5,146	$ 3,404	$ 2,571	$ (522)	$ 1,711	$ (2,094)	$ (561)	$ (3,093)		10,599	(4,037)	(1,661)
Operating Partnership net income										576	0	0
Numerator for earnings per share - diluted										$ 11,175	$ (4,037)	$ (1,661)
Denominator for EPS - basic and diluted:
Denominator for earnings per share - basic (in shares)	83,761,536	71,034,747	70,376,959	65,649,478	48,145,409	36,313,644	26,163,982	21,298,597		72,750,724	33,063,093	12,883,917
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract]
Noncontrolling interest - Operating Partnership units										3,708,494	0	0
Denominator for earnings per share - diluted shares	87,911,097	75,104,821	74,267,284	65,649,478	48,354,493	36,313,644	26,163,982	21,298,597		76,792,073	33,063,093	12,883,917
Earnings per share - basic (in dollars per share)	$ 0.06	$ 0.05	$ 0.04	$ (0.01)	$ 0.04	$ (0.06)	$ (0.02)	$ (0.15)		$ 0.15	$ (0.12)	$ (0.13)
Earnings per share - diluted (in dollars per share)	$ 0.06	$ 0.05	$ 0.04	$ (0.01)	$ 0.04	$ (0.06)	$ (0.02)	$ (0.15)		$ 0.15	$ (0.12)	$ (0.13)
Restricted common shares
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract]
Effect of dilutive securities, Restricted shares and RSU										190,619	0	0
Restricted Share Units
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract]
Effect of dilutive securities, Restricted shares and RSU										142,236	0	0

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Related Party Transactions (Details) - USD ($) $ in Thousands					5 Months Ended	12 Months Ended
	Oct. 19, 2015	Jan. 21, 2015	Aug. 19, 2014	Jul. 24, 2013	Dec. 31, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Jul. 31, 2014
Related Party Transaction [Line Items]
Common shares sold (in shares)	15,812,500	18,975,000		11,753,597
Common shares sold (in shares)					$ 225,920	$ 545,117	$ 350,385
Ziegler
Related Party Transaction [Line Items]
Servicing fee							400	$ 300
Amendment payment									$ 1,800
Common shares sold (in shares)			124,913
Selling, General and Administrative Expenses | Ziegler
Related Party Transaction [Line Items]
Servicing fee							$ 1,800

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Subsequent Events (Details) - USD ($)													1 Months Ended	2 Months Ended	12 Months Ended
	Feb. 26, 2016	Feb. 12, 2016	Feb. 08, 2016	Feb. 04, 2016	Feb. 01, 2016	Jan. 25, 2016	Oct. 19, 2015	Jan. 21, 2015	Sep. 12, 2014	May. 27, 2014	Dec. 11, 2013	Jul. 24, 2013	Feb. 14, 2016	Feb. 22, 2016	Dec. 31, 2015	Dec. 31, 2014	Jan. 07, 2016
Subsequent events
Purchase price															$ 840,958,000	$ 543,436,000
Common shares sold (in shares)							15,812,500	18,975,000				11,753,597
Shares issued upon exercise of the underwriters' overallotment option							2,062,500	2,475,000	1,425,000	1,650,000	1,245,000
Proceeds from Issuance of Common Stock							$ 226,800,000	$ 297,300,000	$ 145,700,000	$ 149,900,000	$ 103,100,000
Subsequent Events
Subsequent events
Purchase price														$ 105,597,000
Common shares sold (in shares)						21,275,000
Shares issued upon exercise of the underwriters' overallotment option						2,775,000
Proceeds from Issuance of Common Stock						$ 320,900,000
Subsequent Events | Medical Office Building Condominium Unit | Randall Road MOB - Suite 380
Subsequent events
Purchase price													$ 704,000
Subsequent Events | Medical Office Building Condominium Unit | Physicians Medical Plaza MOB
Subsequent events
Purchase price					$ 8,500,000
Subsequent Events | Medical Office Building Condominium Unit | St. Luke's Cornwall MOB
Subsequent events
Purchase price	$ 14,550,000
Subsequent Events | Medical Building | Great Falls Hospital
Subsequent events
Purchase price						$ 29,043,000
Subsequent Events | Medical Building | Mezzanine Loan - Davis
Subsequent events
Purchase price				$ 500,000
Subsequent Events | Medical Building | Park Nicollet Clinic
Subsequent events
Purchase price			$ 18,600,000
Subsequent Events | Medical Building | HEB Cancer Center
Subsequent events
Purchase price		$ 14,000,000
Subsequent Events | Medical Building | Riverview Medical Center
Subsequent events
Purchase price	$ 12,800,000
Subsequent Events | Ambulatory Surgical Center | Monterey Medical Center ASC
Subsequent events
Purchase price					$ 6,900,000
Operating Partnership | Subsequent Events
Subsequent events
Common shares sold (in shares)						21,275,000
Series A | Subsequent Events
Subsequent events
Interest rate (as a percent)																	4.03%
Series B | Subsequent Events
Subsequent events
Interest rate (as a percent)																	4.43%
Series C | Subsequent Events
Subsequent events
Interest rate (as a percent)																	4.57%
Series D | Subsequent Events
Subsequent events
Interest rate (as a percent)																	4.74%
Senior Notes | Subsequent Events
Subsequent events
Total mortgage debt																	$ 150,000,000
Senior Notes | Series A | Subsequent Events
Subsequent events
Total mortgage debt																	15,000,000
Senior Notes | Series B | Subsequent Events
Subsequent events
Total mortgage debt																	45,000,000
Senior Notes | Series C | Subsequent Events
Subsequent events
Total mortgage debt																	45,000,000
Senior Notes | Series D | Subsequent Events
Subsequent events
Total mortgage debt																	$ 45,000,000

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Quarterly Data (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								5 Months Ended	12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Quarterly Financial Information Disclosure [Abstract]
Total revenues	$ 40,404	$ 34,870	$ 29,683	$ 24,484	$ 19,694	$ 14,161	$ 11,447	$ 8,032		$ 129,441	$ 53,334	$ 17,045
Operating (loss) income	5,883	3,812	3,271	(459)	1,967	(2,311)	(626)	(3,575)		12,507	(4,545)	(2,634)
Net income	5,909	3,983	3,297	(448)	1,991	(2,251)	(600)	(3,558)	$ (2,060)	12,741	(4,418)	(2,636)
Net (loss) income attributable to common shareholders	$ 5,146	$ 3,404	$ 2,571	$ (522)	$ 1,711	$ (2,094)	$ (561)	$ (3,093)		$ 10,599	$ (4,037)	$ (1,661)
Earnings per share – basic:
Earnings per share - basic (in dollars per share)	$ 0.06	$ 0.05	$ 0.04	$ (0.01)	$ 0.04	$ (0.06)	$ (0.02)	$ (0.15)		$ 0.15	$ (0.12)	$ (0.13)
Basic (in shares)	83,761,536	71,034,747	70,376,959	65,649,478	48,145,409	36,313,644	26,163,982	21,298,597		72,750,724	33,063,093	12,883,917
Earnings per share – diluted:
Earnings per share - diluted (in dollars per share)	$ 0.06	$ 0.05	$ 0.04	$ (0.01)	$ 0.04	$ (0.06)	$ (0.02)	$ (0.15)		$ 0.15	$ (0.12)	$ (0.13)
Diluted (in shares)	87,911,097	75,104,821	74,267,284	65,649,478	48,354,493	36,313,644	26,163,982	21,298,597		76,792,073	33,063,093	12,883,917

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SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 93,926
Initial Cost to Company, Land	130,788
Initial Cost to Company, Buildings and Improvements	1,277,934
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	16,172
Gross Amount at Which Carried as of Close of Period, Land	130,788
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	1,294,106
Gross Amount at Which Carried as of Close of Period, Total	1,424,894	$ 729,034	$ 224,730	$ 111,149
Accumulated Depreciation	(61,242)	$ (32,772)	$ (20,299)	$ (16,495)
Arrowhead Commons
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	0
Initial Cost to Company, Land	740
Initial Cost to Company, Buildings and Improvements	2,551
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	420
Gross Amount at Which Carried as of Close of Period, Land	740
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	2,971
Gross Amount at Which Carried as of Close of Period, Total	3,711
Accumulated Depreciation	$ (427)
Life on Which Building Depreciation in Income Statement is Computed	46 years
Aurora Medical Office Building
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	500
Initial Cost to Company, Buildings and Improvements	1,566
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	500
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	1,566
Gross Amount at Which Carried as of Close of Period, Total	2,066
Accumulated Depreciation	$ (180)
Life on Which Building Depreciation in Income Statement is Computed	50 years
Austell Medical Office Building
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	289
Initial Cost to Company, Buildings and Improvements	1,992
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	334
Gross Amount at Which Carried as of Close of Period, Land	289
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	2,326
Gross Amount at Which Carried as of Close of Period, Total	2,615
Accumulated Depreciation	$ (482)
Life on Which Building Depreciation in Income Statement is Computed	36 years
Canton Medical Office Building
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 6,099
Initial Cost to Company, Land	710
Initial Cost to Company, Buildings and Improvements	7,225
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	114
Gross Amount at Which Carried as of Close of Period, Land	710
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	7,339
Gross Amount at Which Carried as of Close of Period, Total	8,049
Accumulated Depreciation	$ (2,095)
Life on Which Building Depreciation in Income Statement is Computed	35 years
Decatur Medical Office Building
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	740
Initial Cost to Company, Buildings and Improvements	2,604
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	44
Gross Amount at Which Carried as of Close of Period, Land	740
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	2,648
Gross Amount at Which Carried as of Close of Period, Total	3,388
Accumulated Depreciation	$ (774)
Life on Which Building Depreciation in Income Statement is Computed	28 years
El Paso Medical Office Building
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	860
Initial Cost to Company, Buildings and Improvements	2,866
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	369
Gross Amount at Which Carried as of Close of Period, Land	860
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	3,235
Gross Amount at Which Carried as of Close of Period, Total	4,095
Accumulated Depreciation	$ (1,465)
Life on Which Building Depreciation in Income Statement is Computed	21 years
Farmington Professional Pavilion
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	580
Initial Cost to Company, Buildings and Improvements	1,793
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	110
Gross Amount at Which Carried as of Close of Period, Land	580
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	1,903
Gross Amount at Which Carried as of Close of Period, Total	2,483
Accumulated Depreciation	$ (1,204)
Life on Which Building Depreciation in Income Statement is Computed	15 years
Firehouse Square
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 2,699
Initial Cost to Company, Land	1,120
Initial Cost to Company, Buildings and Improvements	2,768
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,120
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	2,768
Gross Amount at Which Carried as of Close of Period, Total	3,888
Accumulated Depreciation	$ (777)
Life on Which Building Depreciation in Income Statement is Computed	30 years
Hackley Medical Center
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 5,283
Initial Cost to Company, Land	1,840
Initial Cost to Company, Buildings and Improvements	6,402
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	36
Gross Amount at Which Carried as of Close of Period, Land	1,840
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	6,438
Gross Amount at Which Carried as of Close of Period, Total	8,278
Accumulated Depreciation	$ (1,908)
Life on Which Building Depreciation in Income Statement is Computed	30 years
MeadowView Professional Center
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 10,225
Initial Cost to Company, Land	2,270
Initial Cost to Company, Buildings and Improvements	11,344
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	2,270
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	11,344
Gross Amount at Which Carried as of Close of Period, Total	13,614
Accumulated Depreciation	$ (3,300)
Life on Which Building Depreciation in Income Statement is Computed	30 years
Mid Coast Hospital MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 7,656
Initial Cost to Company, Land	0
Initial Cost to Company, Buildings and Improvements	11,247
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	20
Gross Amount at Which Carried as of Close of Period, Land	0
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	11,267
Gross Amount at Which Carried as of Close of Period, Total	11,267
Accumulated Depreciation	$ (2,854)
Life on Which Building Depreciation in Income Statement is Computed	42 years
New Albany Professional Building
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	237
Initial Cost to Company, Buildings and Improvements	2,767
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	317
Gross Amount at Which Carried as of Close of Period, Land	237
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	3,084
Gross Amount at Which Carried as of Close of Period, Total	3,321
Accumulated Depreciation	$ (550)
Life on Which Building Depreciation in Income Statement is Computed	42 years
Northpark Trail
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	839
Initial Cost to Company, Buildings and Improvements	1,245
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	235
Gross Amount at Which Carried as of Close of Period, Land	839
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	1,480
Gross Amount at Which Carried as of Close of Period, Total	2,319
Accumulated Depreciation	$ (582)
Life on Which Building Depreciation in Income Statement is Computed	35 years
Remington Medical Commons
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 4,262
Initial Cost to Company, Land	895
Initial Cost to Company, Buildings and Improvements	6,499
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	319
Gross Amount at Which Carried as of Close of Period, Land	895
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	6,818
Gross Amount at Which Carried as of Close of Period, Total	7,713
Accumulated Depreciation	$ (1,719)
Life on Which Building Depreciation in Income Statement is Computed	30 years
Summit Healthplex
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	2,633
Initial Cost to Company, Buildings and Improvements	15,576
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	5,012
Gross Amount at Which Carried as of Close of Period, Land	2,633
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	20,588
Gross Amount at Which Carried as of Close of Period, Total	23,221
Accumulated Depreciation	$ (4,311)
Life on Which Building Depreciation in Income Statement is Computed	44 years
Valley West Hospital MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 4,768
Initial Cost to Company, Land	0
Initial Cost to Company, Buildings and Improvements	6,275
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	611
Gross Amount at Which Carried as of Close of Period, Land	0
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	6,886
Gross Amount at Which Carried as of Close of Period, Total	6,886
Accumulated Depreciation	$ (1,845)
Life on Which Building Depreciation in Income Statement is Computed	30 years
East El Paso Medical Office Building
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	710
Initial Cost to Company, Buildings and Improvements	4,500
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	710
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	4,500
Gross Amount at Which Carried as of Close of Period, Total	5,210
Accumulated Depreciation	$ (300)
Life on Which Building Depreciation in Income Statement is Computed	35 years
East El Paso Surgical Hospital
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	3,070
Initial Cost to Company, Buildings and Improvements	23,627
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	3,070
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	23,627
Gross Amount at Which Carried as of Close of Period, Total	26,697
Accumulated Depreciation	$ (1,531)
Life on Which Building Depreciation in Income Statement is Computed	36 years
LifeCare Plano LTACH
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	3,370
Initial Cost to Company, Buildings and Improvements	11,689
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	455
Gross Amount at Which Carried as of Close of Period, Land	3,370
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	12,144
Gross Amount at Which Carried as of Close of Period, Total	15,514
Accumulated Depreciation	$ (1,115)
Life on Which Building Depreciation in Income Statement is Computed	25 years
Crescent City Surgical Centre
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 18,750
Initial Cost to Company, Land	0
Initial Cost to Company, Buildings and Improvements	34,208
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	0
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	34,208
Gross Amount at Which Carried as of Close of Period, Total	34,208
Accumulated Depreciation	$ (1,604)
Life on Which Building Depreciation in Income Statement is Computed	48 years
Foundation Surgical Affiliates Medical Office Building
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 7,474
Initial Cost to Company, Land	1,300
Initial Cost to Company, Buildings and Improvements	12,724
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,300
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	12,724
Gross Amount at Which Carried as of Close of Period, Total	14,024
Accumulated Depreciation	$ (666)
Life on Which Building Depreciation in Income Statement is Computed	43 years
Pensacola Medical Office Building
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	990
Initial Cost to Company, Buildings and Improvements	5,005
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	15
Gross Amount at Which Carried as of Close of Period, Land	990
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	5,020
Gross Amount at Which Carried as of Close of Period, Total	6,010
Accumulated Depreciation	$ (230)
Life on Which Building Depreciation in Income Statement is Computed	49 years
Central Ohio Neurosurgical Surgeons Medical Office
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	981
Initial Cost to Company, Buildings and Improvements	7,620
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	981
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	7,620
Gross Amount at Which Carried as of Close of Period, Total	8,601
Accumulated Depreciation	$ (361)
Life on Which Building Depreciation in Income Statement is Computed	44 years
Great Falls Ambulatory Surgery Center
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	203
Initial Cost to Company, Buildings and Improvements	3,224
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	203
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	3,224
Gross Amount at Which Carried as of Close of Period, Total	3,427
Accumulated Depreciation	$ (199)
Life on Which Building Depreciation in Income Statement is Computed	33 years
Eagles Landing Family Practice Medical Office Building
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	800
Initial Cost to Company, Buildings and Improvements	3,345
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	1,548
Gross Amount at Which Carried as of Close of Period, Land	800
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	4,893
Gross Amount at Which Carried as of Close of Period, Total	5,693
Accumulated Depreciation	$ (254)
Life on Which Building Depreciation in Income Statement is Computed	36 years
Eagles Landing Family Practice Medical Office Building
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	800
Initial Cost to Company, Buildings and Improvements	3,345
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	1,255
Gross Amount at Which Carried as of Close of Period, Land	800
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	4,600
Gross Amount at Which Carried as of Close of Period, Total	5,400
Accumulated Depreciation	$ (227)
Life on Which Building Depreciation in Income Statement is Computed	38 years
Eagles Landing Family Practice Medical Office Building
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,000
Initial Cost to Company, Buildings and Improvements	3,345
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,000
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	3,345
Gross Amount at Which Carried as of Close of Period, Total	4,345
Accumulated Depreciation	$ (172)
Life on Which Building Depreciation in Income Statement is Computed	37 years
Eagles Landing Family Practice Medical Office Building
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	400
Initial Cost to Company, Buildings and Improvements	3,345
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	1,741
Gross Amount at Which Carried as of Close of Period, Land	400
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	5,086
Gross Amount at Which Carried as of Close of Period, Total	5,486
Accumulated Depreciation	$ (254)
Life on Which Building Depreciation in Income Statement is Computed	37 years
Foundation San Antonio Surgical Hospital
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 9,120
Initial Cost to Company, Land	2,230
Initial Cost to Company, Buildings and Improvements	23,346
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	23
Gross Amount at Which Carried as of Close of Period, Land	2,230
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	23,369
Gross Amount at Which Carried as of Close of Period, Total	25,599
Accumulated Depreciation	$ (1,395)
Life on Which Building Depreciation in Income Statement is Computed	35 years
21st Century Radiation Oncology Centers — Sarasota
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	633
Initial Cost to Company, Buildings and Improvements	6,557
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	633
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	6,557
Gross Amount at Which Carried as of Close of Period, Total	7,190
Accumulated Depreciation	$ (464)
Life on Which Building Depreciation in Income Statement is Computed	27 years
21st Century Radiation Oncology Centers - Venice
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	814
Initial Cost to Company, Buildings and Improvements	2,952
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	814
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	2,952
Gross Amount at Which Carried as of Close of Period, Total	3,766
Accumulated Depreciation	$ (174)
Life on Which Building Depreciation in Income Statement is Computed	35 years
21st Century Radiation Oncology Centers - Engelwood
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	350
Initial Cost to Company, Buildings and Improvements	1,878
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	350
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	1,878
Gross Amount at Which Carried as of Close of Period, Total	2,228
Accumulated Depreciation	$ (100)
Life on Which Building Depreciation in Income Statement is Computed	38 years
21st Century Radiation Oncology Centers — Port Charlotte
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	269
Initial Cost to Company, Buildings and Improvements	2,326
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	269
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	2,326
Gross Amount at Which Carried as of Close of Period, Total	2,595
Accumulated Depreciation	$ (125)
Life on Which Building Depreciation in Income Statement is Computed	36 years
Foundation San Antonio Healthplex
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	911
Initial Cost to Company, Buildings and Improvements	4,189
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	911
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	4,189
Gross Amount at Which Carried as of Close of Period, Total	5,100
Accumulated Depreciation	$ (230)
Life on Which Building Depreciation in Income Statement is Computed	35 years
Peachtree Dunwoody Medical Center
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	6,046
Initial Cost to Company, Buildings and Improvements	27,435
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	54
Gross Amount at Which Carried as of Close of Period, Land	6,046
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	27,489
Gross Amount at Which Carried as of Close of Period, Total	33,535
Accumulated Depreciation	$ (2,063)
Life on Which Building Depreciation in Income Statement is Computed	25 years
LifeCare LTACH — Fort Worth
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	2,730
Initial Cost to Company, Buildings and Improvements	24,639
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	2,730
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	24,639
Gross Amount at Which Carried as of Close of Period, Total	27,369
Accumulated Depreciation	$ (1,476)
Life on Which Building Depreciation in Income Statement is Computed	30 years
LifeCare LTACH — Pittsburgh
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,142
Initial Cost to Company, Buildings and Improvements	11,737
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,142
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	11,737
Gross Amount at Which Carried as of Close of Period, Total	12,879
Accumulated Depreciation	$ (735)
Life on Which Building Depreciation in Income Statement is Computed	30 years
PinnacleHealth Medical Office Building
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	795
Initial Cost to Company, Buildings and Improvements	4,601
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	795
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	4,601
Gross Amount at Which Carried as of Close of Period, Total	5,396
Accumulated Depreciation	$ (332)
Life on Which Building Depreciation in Income Statement is Computed	25 years
Pinnacle Health Medical Office Building
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	424
Initial Cost to Company, Buildings and Improvements	2,232
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	424
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	2,232
Gross Amount at Which Carried as of Close of Period, Total	2,656
Accumulated Depreciation	$ (116)
Life on Which Building Depreciation in Income Statement is Computed	35 years
South Bend Orthopaedics Medical Office Building
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	2,418
Initial Cost to Company, Buildings and Improvements	11,355
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	2,418
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	11,355
Gross Amount at Which Carried as of Close of Period, Total	13,773
Accumulated Depreciation	$ (543)
Life on Which Building Depreciation in Income Statement is Computed	40 years
Grenada Medical Complex
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	185
Initial Cost to Company, Buildings and Improvements	5,820
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	50
Gross Amount at Which Carried as of Close of Period, Land	185
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	5,870
Gross Amount at Which Carried as of Close of Period, Total	6,055
Accumulated Depreciation	$ (381)
Life on Which Building Depreciation in Income Statement is Computed	30 years
Mississippi Ortho Medical Office Building
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,272
Initial Cost to Company, Buildings and Improvements	14,177
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	626
Gross Amount at Which Carried as of Close of Period, Land	1,272
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	14,803
Gross Amount at Which Carried as of Close of Period, Total	16,075
Accumulated Depreciation	$ (713)
Life on Which Building Depreciation in Income Statement is Computed	35 years
Carmel Medical Pavilion
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	0
Initial Cost to Company, Buildings and Improvements	3,917
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	0
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	3,917
Gross Amount at Which Carried as of Close of Period, Total	3,917
Accumulated Depreciation	$ (262)
Life on Which Building Depreciation in Income Statement is Computed	25 years
Renaissance Ambulatory Surgery Center
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	228
Initial Cost to Company, Buildings and Improvements	7,658
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	228
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	7,658
Gross Amount at Which Carried as of Close of Period, Total	7,886
Accumulated Depreciation	$ (298)
Life on Which Building Depreciation in Income Statement is Computed	40 years
Presbyterian Medical Plaza
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,195
Initial Cost to Company, Buildings and Improvements	5,681
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	6
Gross Amount at Which Carried as of Close of Period, Land	1,195
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	5,687
Gross Amount at Which Carried as of Close of Period, Total	6,882
Accumulated Depreciation	$ (202)
Life on Which Building Depreciation in Income Statement is Computed	15 years
Summit Urology
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	125
Initial Cost to Company, Buildings and Improvements	4,792
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	125
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	4,792
Gross Amount at Which Carried as of Close of Period, Total	4,917
Accumulated Depreciation	$ (246)
Life on Which Building Depreciation in Income Statement is Computed	30 years
500 Landmark
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	627
Initial Cost to Company, Buildings and Improvements	3,549
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	627
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	3,549
Gross Amount at Which Carried as of Close of Period, Total	4,176
Accumulated Depreciation	$ (158)
Life on Which Building Depreciation in Income Statement is Computed	35 years
550 Landmark
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	2,717
Initial Cost to Company, Buildings and Improvements	15,224
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	2,717
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	15,224
Gross Amount at Which Carried as of Close of Period, Total	17,941
Accumulated Depreciation	$ (680)
Life on Which Building Depreciation in Income Statement is Computed	35 years
574 Landmark
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	418
Initial Cost to Company, Buildings and Improvements	1,493
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	418
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	1,493
Gross Amount at Which Carried as of Close of Period, Total	1,911
Accumulated Depreciation	$ (68)
Life on Which Building Depreciation in Income Statement is Computed	35 years
Carlisle II MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	412
Initial Cost to Company, Buildings and Improvements	3,962
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	412
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	3,962
Gross Amount at Which Carried as of Close of Period, Total	4,374
Accumulated Depreciation	$ (131)
Life on Which Building Depreciation in Income Statement is Computed	45 years
Surgical Institute of Monroe
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	410
Initial Cost to Company, Buildings and Improvements	5,743
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	410
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	5,743
Gross Amount at Which Carried as of Close of Period, Total	6,153
Accumulated Depreciation	$ (273)
Life on Which Building Depreciation in Income Statement is Computed	35 years
The Oaks @ Lady Lake
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,065
Initial Cost to Company, Buildings and Improvements	8,642
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,065
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	8,642
Gross Amount at Which Carried as of Close of Period, Total	9,707
Accumulated Depreciation	$ (294)
Life on Which Building Depreciation in Income Statement is Computed	42 years
Mansfield ASC
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,491
Initial Cost to Company, Buildings and Improvements	6,471
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,491
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	6,471
Gross Amount at Which Carried as of Close of Period, Total	7,962
Accumulated Depreciation	$ (207)
Life on Which Building Depreciation in Income Statement is Computed	46 years
Eye Center of Southern Indiana
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	910
Initial Cost to Company, Buildings and Improvements	11,477
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	910
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	11,477
Gross Amount at Which Carried as of Close of Period, Total	12,387
Accumulated Depreciation	$ (453)
Life on Which Building Depreciation in Income Statement is Computed	35 years
Wayne State
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	3,560
Initial Cost to Company, Buildings and Improvements	43,052
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	3,560
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	43,052
Gross Amount at Which Carried as of Close of Period, Total	46,612
Accumulated Depreciation	$ (1,568)
Life on Which Building Depreciation in Income Statement is Computed	38 years
Zangmeister
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,610
Initial Cost to Company, Buildings and Improvements	31,120
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,610
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	31,120
Gross Amount at Which Carried as of Close of Period, Total	32,730
Accumulated Depreciation	$ (1,017)
Life on Which Building Depreciation in Income Statement is Computed	40 years
Orthopedic One - Columbus
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	0
Initial Cost to Company, Buildings and Improvements	16,234
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	7
Gross Amount at Which Carried as of Close of Period, Land	0
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	16,241
Gross Amount at Which Carried as of Close of Period, Total	16,241
Accumulated Depreciation	$ (503)
Life on Which Building Depreciation in Income Statement is Computed	45 years
Orthopedic One - Westerville
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	362
Initial Cost to Company, Buildings and Improvements	3,944
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	362
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	3,944
Gross Amount at Which Carried as of Close of Period, Total	4,306
Accumulated Depreciation	$ (126)
Life on Which Building Depreciation in Income Statement is Computed	43 years
Berger Medical Center
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	0
Initial Cost to Company, Buildings and Improvements	5,950
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	0
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	5,950
Gross Amount at Which Carried as of Close of Period, Total	5,950
Accumulated Depreciation	$ (216)
Life on Which Building Depreciation in Income Statement is Computed	38 years
El Paso - Lee Trevino
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	2,294
Initial Cost to Company, Buildings and Improvements	11,316
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	365
Gross Amount at Which Carried as of Close of Period, Land	2,294
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	11,681
Gross Amount at Which Carried as of Close of Period, Total	13,975
Accumulated Depreciation	$ (514)
Life on Which Building Depreciation in Income Statement is Computed	30 years
El Paso - Murchison
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	2,283
Initial Cost to Company, Buildings and Improvements	24,543
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	27
Gross Amount at Which Carried as of Close of Period, Land	2,283
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	24,570
Gross Amount at Which Carried as of Close of Period, Total	26,853
Accumulated Depreciation	$ (1,055)
Life on Which Building Depreciation in Income Statement is Computed	30 years
El Paso - Kenworthy
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	728
Initial Cost to Company, Buildings and Improvements	2,178
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	728
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	2,178
Gross Amount at Which Carried as of Close of Period, Total	2,906
Accumulated Depreciation	$ (87)
Life on Which Building Depreciation in Income Statement is Computed	35 years
Pinnacle - 32 Northeast
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	408
Initial Cost to Company, Buildings and Improvements	3,232
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	12
Gross Amount at Which Carried as of Close of Period, Land	408
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	3,244
Gross Amount at Which Carried as of Close of Period, Total	3,652
Accumulated Depreciation	$ (128)
Life on Which Building Depreciation in Income Statement is Computed	33 years
Pinnacle - 4518 Union Deposit
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	617
Initial Cost to Company, Buildings and Improvements	7,305
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	617
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	7,305
Gross Amount at Which Carried as of Close of Period, Total	7,922
Accumulated Depreciation	$ (295)
Life on Which Building Depreciation in Income Statement is Computed	31 years
Pinnacle - 4520 Union Deposit
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	169
Initial Cost to Company, Buildings and Improvements	2,055
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	169
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	2,055
Gross Amount at Which Carried as of Close of Period, Total	2,224
Accumulated Depreciation	$ (90)
Life on Which Building Depreciation in Income Statement is Computed	28 years
Pinnacle - 240 Grandview
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	321
Initial Cost to Company, Buildings and Improvements	4,242
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	321
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	4,242
Gross Amount at Which Carried as of Close of Period, Total	4,563
Accumulated Depreciation	$ (151)
Life on Which Building Depreciation in Income Statement is Computed	35 years
Pinnacle - Market Place Way
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	808
Initial Cost to Company, Buildings and Improvements	2,383
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	6
Gross Amount at Which Carried as of Close of Period, Land	808
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	2,389
Gross Amount at Which Carried as of Close of Period, Total	3,197
Accumulated Depreciation	$ (115)
Life on Which Building Depreciation in Income Statement is Computed	35 years
CRHS - 2000 10th Avenue
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	380
Initial Cost to Company, Buildings and Improvements	2,737
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	380
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	2,737
Gross Amount at Which Carried as of Close of Period, Total	3,117
Accumulated Depreciation	$ (152)
Life on Which Building Depreciation in Income Statement is Computed	22 years
CRHS - 1942 North Avenue
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	91
Initial Cost to Company, Buildings and Improvements	273
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	91
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	273
Gross Amount at Which Carried as of Close of Period, Total	364
Accumulated Depreciation	$ (26)
Life on Which Building Depreciation in Income Statement is Computed	12 years
CRHS - 920 18th Street
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	110
Initial Cost to Company, Buildings and Improvements	281
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	110
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	281
Gross Amount at Which Carried as of Close of Period, Total	391
Accumulated Depreciation	$ (40)
Life on Which Building Depreciation in Income Statement is Computed	8 years
CRHS - 1900 10th Avenue
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	474
Initial Cost to Company, Buildings and Improvements	5,580
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	5
Gross Amount at Which Carried as of Close of Period, Land	474
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	5,585
Gross Amount at Which Carried as of Close of Period, Total	6,059
Accumulated Depreciation	$ (247)
Life on Which Building Depreciation in Income Statement is Computed	26 years
CRHS - 1800 10th Avenue
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	539
Initial Cost to Company, Buildings and Improvements	5,238
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	539
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	5,238
Gross Amount at Which Carried as of Close of Period, Total	5,777
Accumulated Depreciation	$ (216)
Life on Which Building Depreciation in Income Statement is Computed	28 years
CRHS - 705 17th Street
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	372
Initial Cost to Company, Buildings and Improvements	2,346
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	278
Gross Amount at Which Carried as of Close of Period, Land	372
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	2,624
Gross Amount at Which Carried as of Close of Period, Total	2,996
Accumulated Depreciation	$ (189)
Life on Which Building Depreciation in Income Statement is Computed	15 years
CRHS - 615 19th Street
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	75
Initial Cost to Company, Buildings and Improvements	113
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	75
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	113
Gross Amount at Which Carried as of Close of Period, Total	188
Accumulated Depreciation	$ (39)
Life on Which Building Depreciation in Income Statement is Computed	3 years
CRHS - 1968 North Avenue
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	89
Initial Cost to Company, Buildings and Improvements	32
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	89
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	32
Gross Amount at Which Carried as of Close of Period, Total	121
Accumulated Depreciation	$ (9)
Life on Which Building Depreciation in Income Statement is Computed	4 years
CRHS - 633 19th Street
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	99
Initial Cost to Company, Buildings and Improvements	255
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	99
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	255
Gross Amount at Which Carried as of Close of Period, Total	354
Accumulated Depreciation	$ (33)
Life on Which Building Depreciation in Income Statement is Computed	9 years
CRHS - 500 18th Street
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	430
Initial Cost to Company, Buildings and Improvements	170
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	430
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	170
Gross Amount at Which Carried as of Close of Period, Total	600
Accumulated Depreciation	$ (39)
Life on Which Building Depreciation in Income Statement is Computed	8 years
CRHS - 2200 Hamilton Road
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	267
Initial Cost to Company, Buildings and Improvements	1,579
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	267
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	1,579
Gross Amount at Which Carried as of Close of Period, Total	1,846
Accumulated Depreciation	$ (86)
Life on Which Building Depreciation in Income Statement is Computed	22 years
CRHS - 1810 Stadium Drive
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	202
Initial Cost to Company, Buildings and Improvements	149
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	19
Gross Amount at Which Carried as of Close of Period, Land	202
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	168
Gross Amount at Which Carried as of Close of Period, Total	370
Accumulated Depreciation	$ (31)
Life on Which Building Depreciation in Income Statement is Computed	30 years
Carle Danville MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	607
Initial Cost to Company, Buildings and Improvements	7,136
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	607
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	7,136
Gross Amount at Which Carried as of Close of Period, Total	7,743
Accumulated Depreciation	$ (250)
Life on Which Building Depreciation in Income Statement is Computed	33 years
Middletown Medical - 111 Maltese
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	670
Initial Cost to Company, Buildings and Improvements	9,921
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	37
Gross Amount at Which Carried as of Close of Period, Land	670
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	9,958
Gross Amount at Which Carried as of Close of Period, Total	10,628
Accumulated Depreciation	$ (319)
Life on Which Building Depreciation in Income Statement is Computed	35 years
Middletown Medical - 2 Edgewater
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	200
Initial Cost to Company, Buildings and Improvements	2,966
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	11
Gross Amount at Which Carried as of Close of Period, Land	200
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	2,977
Gross Amount at Which Carried as of Close of Period, Total	3,177
Accumulated Depreciation	$ (96)
Life on Which Building Depreciation in Income Statement is Computed	35 years
Napoleon Medical Office Building
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,202
Initial Cost to Company, Buildings and Improvements	7,412
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	79
Gross Amount at Which Carried as of Close of Period, Land	1,202
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	7,491
Gross Amount at Which Carried as of Close of Period, Total	8,693
Accumulated Depreciation	$ (318)
Life on Which Building Depreciation in Income Statement is Computed	25 years
West TN Bone & Joint - Physicians Drive
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	650
Initial Cost to Company, Buildings and Improvements	2,960
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	650
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	2,960
Gross Amount at Which Carried as of Close of Period, Total	3,610
Accumulated Depreciation	$ (90)
Life on Which Building Depreciation in Income Statement is Computed	35 years
West TN Bone & Joint
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,250
Initial Cost to Company, Buildings and Improvements	5,210
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,250
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	5,210
Gross Amount at Which Carried as of Close of Period, Total	6,460
Accumulated Depreciation	$ (181)
Life on Which Building Depreciation in Income Statement is Computed	31 years
Edina MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	504
Initial Cost to Company, Buildings and Improvements	10,006
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	208
Gross Amount at Which Carried as of Close of Period, Land	504
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	10,214
Gross Amount at Which Carried as of Close of Period, Total	10,718
Accumulated Depreciation	$ (513)
Life on Which Building Depreciation in Income Statement is Computed	24 years
Crystal MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	945
Initial Cost to Company, Buildings and Improvements	11,862
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	1
Gross Amount at Which Carried as of Close of Period, Land	945
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	11,863
Gross Amount at Which Carried as of Close of Period, Total	12,808
Accumulated Depreciation	$ (276)
Life on Which Building Depreciation in Income Statement is Computed	47 years
Savage MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 5,753
Initial Cost to Company, Land	1,281
Initial Cost to Company, Buildings and Improvements	10,021
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,281
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	10,021
Gross Amount at Which Carried as of Close of Period, Total	11,302
Accumulated Depreciation	$ (242)
Life on Which Building Depreciation in Income Statement is Computed	48 years
Dell Road MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	800
Initial Cost to Company, Buildings and Improvements	4,520
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	800
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	4,520
Gross Amount at Which Carried as of Close of Period, Total	5,320
Accumulated Depreciation	$ (120)
Life on Which Building Depreciation in Income Statement is Computed	43 years
Columbus MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	845
Initial Cost to Company, Buildings and Improvements	2,708
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	845
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	2,708
Gross Amount at Which Carried as of Close of Period, Total	3,553
Accumulated Depreciation	$ (148)
Life on Which Building Depreciation in Income Statement is Computed	22 years
Methodist Sports MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,050
Initial Cost to Company, Buildings and Improvements	8,556
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,050
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	8,556
Gross Amount at Which Carried as of Close of Period, Total	9,606
Accumulated Depreciation	$ (250)
Life on Which Building Depreciation in Income Statement is Computed	33 years
Vadnais Heights MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	2,751
Initial Cost to Company, Buildings and Improvements	12,233
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	2,751
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	12,233
Gross Amount at Which Carried as of Close of Period, Total	14,984
Accumulated Depreciation	$ (336)
Life on Which Building Depreciation in Income Statement is Computed	43 years
Minnetonka MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,770
Initial Cost to Company, Buildings and Improvements	19,797
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,770
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	19,797
Gross Amount at Which Carried as of Close of Period, Total	21,567
Accumulated Depreciation	$ (458)
Life on Which Building Depreciation in Income Statement is Computed	49 years
Jamestown MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	656
Initial Cost to Company, Buildings and Improvements	9,440
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	656
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	9,440
Gross Amount at Which Carried as of Close of Period, Total	10,096
Accumulated Depreciation	$ (269)
Life on Which Building Depreciation in Income Statement is Computed	43 years
Indiana American II
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	862
Initial Cost to Company, Buildings and Improvements	6,901
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	862
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	6,901
Gross Amount at Which Carried as of Close of Period, Total	7,763
Accumulated Depreciation	$ (185)
Life on Which Building Depreciation in Income Statement is Computed	38 years
Indiana American III
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	741
Initial Cost to Company, Buildings and Improvements	1,846
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	185
Gross Amount at Which Carried as of Close of Period, Land	741
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	2,031
Gross Amount at Which Carried as of Close of Period, Total	2,772
Accumulated Depreciation	$ (93)
Life on Which Building Depreciation in Income Statement is Computed	31 years
Indiana American IV
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	771
Initial Cost to Company, Buildings and Improvements	1,928
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	3
Gross Amount at Which Carried as of Close of Period, Land	771
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	1,931
Gross Amount at Which Carried as of Close of Period, Total	2,702
Accumulated Depreciation	$ (63)
Life on Which Building Depreciation in Income Statement is Computed	31 years
Southpointe
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	563
Initial Cost to Company, Buildings and Improvements	1,741
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	1
Gross Amount at Which Carried as of Close of Period, Land	563
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	1,742
Gross Amount at Which Carried as of Close of Period, Total	2,305
Accumulated Depreciation	$ (77)
Life on Which Building Depreciation in Income Statement is Computed	27 years
Minnesota Eye MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,143
Initial Cost to Company, Buildings and Improvements	7,470
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,143
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	7,470
Gross Amount at Which Carried as of Close of Period, Total	8,613
Accumulated Depreciation	$ (174)
Life on Which Building Depreciation in Income Statement is Computed	44 years
Baylor Cancer Center
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	855
Initial Cost to Company, Buildings and Improvements	6,007
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	855
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	6,007
Gross Amount at Which Carried as of Close of Period, Total	6,862
Accumulated Depreciation	$ (125)
Life on Which Building Depreciation in Income Statement is Computed	43 years
Bridgeport Medical Center
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,397
Initial Cost to Company, Buildings and Improvements	10,435
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,397
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	10,435
Gross Amount at Which Carried as of Close of Period, Total	11,832
Accumulated Depreciation	$ (264)
Life on Which Building Depreciation in Income Statement is Computed	35 years
Renaissance Office Building
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,379
Initial Cost to Company, Buildings and Improvements	4,182
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	1,178
Gross Amount at Which Carried as of Close of Period, Land	1,379
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	5,360
Gross Amount at Which Carried as of Close of Period, Total	6,739
Accumulated Depreciation	$ (240)
Life on Which Building Depreciation in Income Statement is Computed	15 years
Calkins 125
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	534
Initial Cost to Company, Buildings and Improvements	10,164
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	534
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	10,164
Gross Amount at Which Carried as of Close of Period, Total	10,698
Accumulated Depreciation	$ (315)
Life on Which Building Depreciation in Income Statement is Computed	32 years
Calkins 200
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	210
Initial Cost to Company, Buildings and Improvements	3,317
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	210
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	3,317
Gross Amount at Which Carried as of Close of Period, Total	3,527
Accumulated Depreciation	$ (88)
Life on Which Building Depreciation in Income Statement is Computed	38 years
Calkins 300
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	372
Initial Cost to Company, Buildings and Improvements	6,645
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	372
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	6,645
Gross Amount at Which Carried as of Close of Period, Total	7,017
Accumulated Depreciation	$ (178)
Life on Which Building Depreciation in Income Statement is Computed	39 years
Calkins 400
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	353
Initial Cost to Company, Buildings and Improvements	8,226
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	353
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	8,226
Gross Amount at Which Carried as of Close of Period, Total	8,579
Accumulated Depreciation	$ (235)
Life on Which Building Depreciation in Income Statement is Computed	39 years
Calkins 500
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	282
Initial Cost to Company, Buildings and Improvements	7,074
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	5
Gross Amount at Which Carried as of Close of Period, Land	282
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	7,079
Gross Amount at Which Carried as of Close of Period, Total	7,361
Accumulated Depreciation	$ (160)
Life on Which Building Depreciation in Income Statement is Computed	41 years
Avalon Park Florida Hospital MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,041
Initial Cost to Company, Buildings and Improvements	10,685
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,041
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	10,685
Gross Amount at Which Carried as of Close of Period, Total	11,726
Accumulated Depreciation	$ (213)
Life on Which Building Depreciation in Income Statement is Computed	41 years
Premier Surgery Center of Louisville
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,106
Initial Cost to Company, Buildings and Improvements	5,437
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,106
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	5,437
Gross Amount at Which Carried as of Close of Period, Total	6,543
Accumulated Depreciation	$ (102)
Life on Which Building Depreciation in Income Statement is Computed	43 years
Baton Rouge MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	711
Initial Cost to Company, Buildings and Improvements	7,720
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	711
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	7,720
Gross Amount at Which Carried as of Close of Period, Total	8,431
Accumulated Depreciation	$ (173)
Life on Which Building Depreciation in Income Statement is Computed	35 years
Healthpark Medical Center
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	0
Initial Cost to Company, Buildings and Improvements	17,624
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	0
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	17,624
Gross Amount at Which Carried as of Close of Period, Total	17,624
Accumulated Depreciation	$ (358)
Life on Which Building Depreciation in Income Statement is Computed	36 years
Plaza HCA MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 11,837
Initial Cost to Company, Land	1,112
Initial Cost to Company, Buildings and Improvements	12,553
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,112
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	12,553
Gross Amount at Which Carried as of Close of Period, Total	13,665
Accumulated Depreciation	$ (226)
Life on Which Building Depreciation in Income Statement is Computed	39 years
Northern Ohio Medical Center
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	644
Initial Cost to Company, Buildings and Improvements	9,162
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	644
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	9,162
Gross Amount at Which Carried as of Close of Period, Total	9,806
Accumulated Depreciation	$ (277)
Life on Which Building Depreciation in Income Statement is Computed	20 years
University of Michigan - Northville MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	2,200
Initial Cost to Company, Buildings and Improvements	8,627
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	31
Gross Amount at Which Carried as of Close of Period, Land	2,200
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	8,658
Gross Amount at Which Carried as of Close of Period, Total	10,858
Accumulated Depreciation	$ (180)
Life on Which Building Depreciation in Income Statement is Computed	30 years
Coon Rapids Medical Center MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	607
Initial Cost to Company, Buildings and Improvements	5,857
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	607
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	5,857
Gross Amount at Which Carried as of Close of Period, Total	6,464
Accumulated Depreciation	$ (106)
Life on Which Building Depreciation in Income Statement is Computed	35 years
Premier Landmark MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	872
Initial Cost to Company, Buildings and Improvements	10,537
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	872
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	10,537
Gross Amount at Which Carried as of Close of Period, Total	11,409
Accumulated Depreciation	$ (165)
Life on Which Building Depreciation in Income Statement is Computed	39 years
Palm Beach ASC
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	2,576
Initial Cost to Company, Buildings and Improvements	7,675
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	2,576
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	7,675
Gross Amount at Which Carried as of Close of Period, Total	10,251
Accumulated Depreciation	$ (101)
Life on Which Building Depreciation in Income Statement is Computed	40 years
Brookstone Physician Center MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	0
Initial Cost to Company, Buildings and Improvements	1,913
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	0
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	1,913
Gross Amount at Which Carried as of Close of Period, Total	1,913
Accumulated Depreciation	$ (33)
Life on Which Building Depreciation in Income Statement is Computed	31 years
Jackson Woman's Clinic MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	555
Initial Cost to Company, Buildings and Improvements	3,800
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	555
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	3,800
Gross Amount at Which Carried as of Close of Period, Total	4,355
Accumulated Depreciation	$ (58)
Life on Which Building Depreciation in Income Statement is Computed	35 years
Hillside Medical Center MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	812
Initial Cost to Company, Buildings and Improvements	13,217
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	812
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	13,217
Gross Amount at Which Carried as of Close of Period, Total	14,029
Accumulated Depreciation	$ (138)
Life on Which Building Depreciation in Income Statement is Computed	35 years
Randall Road MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	0
Initial Cost to Company, Buildings and Improvements	15,404
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	0
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	15,404
Gross Amount at Which Carried as of Close of Period, Total	15,404
Accumulated Depreciation	$ (191)
Life on Which Building Depreciation in Income Statement is Computed	38 years
Medical Specialists of Palm Beach MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	0
Initial Cost to Company, Buildings and Improvements	7,560
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	0
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	7,560
Gross Amount at Which Carried as of Close of Period, Total	7,560
Accumulated Depreciation	$ (91)
Life on Which Building Depreciation in Income Statement is Computed	37 years
OhioHealth - SW Health Center MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,363
Initial Cost to Company, Buildings and Improvements	8,516
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,363
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	8,516
Gross Amount at Which Carried as of Close of Period, Total	9,879
Accumulated Depreciation	$ (110)
Life on Which Building Depreciation in Income Statement is Computed	37 years
Trios Health MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	0
Initial Cost to Company, Buildings and Improvements	55,178
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	0
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	55,178
Gross Amount at Which Carried as of Close of Period, Total	55,178
Accumulated Depreciation	$ (525)
Life on Which Building Depreciation in Income Statement is Computed	45 years
IMS - Paradise Valley MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	0
Initial Cost to Company, Buildings and Improvements	25,893
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	0
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	25,893
Gross Amount at Which Carried as of Close of Period, Total	25,893
Accumulated Depreciation	$ (282)
Life on Which Building Depreciation in Income Statement is Computed	43 years
IMS - Avondale MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,818
Initial Cost to Company, Buildings and Improvements	18,108
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,818
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	18,108
Gross Amount at Which Carried as of Close of Period, Total	19,926
Accumulated Depreciation	$ (145)
Life on Which Building Depreciation in Income Statement is Computed	45 years
IMS - Palm Valley MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	2,666
Initial Cost to Company, Buildings and Improvements	28,655
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	2,666
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	28,655
Gross Amount at Which Carried as of Close of Period, Total	31,321
Accumulated Depreciation	$ (240)
Life on Which Building Depreciation in Income Statement is Computed	43 years
IMS - North Mountain MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	0
Initial Cost to Company, Buildings and Improvements	42,877
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	0
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	42,877
Gross Amount at Which Carried as of Close of Period, Total	42,877
Accumulated Depreciation	$ (335)
Life on Which Building Depreciation in Income Statement is Computed	47 years
Memorial Hermann - Phase I
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	822
Initial Cost to Company, Buildings and Improvements	6,797
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	822
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	6,797
Gross Amount at Which Carried as of Close of Period, Total	7,619
Accumulated Depreciation	$ (62)
Life on Which Building Depreciation in Income Statement is Computed	39 years
Memorial Hermann - Phase II
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,560
Initial Cost to Company, Buildings and Improvements	25,601
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,560
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	25,601
Gross Amount at Which Carried as of Close of Period, Total	27,161
Accumulated Depreciation	$ (224)
Life on Which Building Depreciation in Income Statement is Computed	40 years
New Albany Medical Center MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,600
Initial Cost to Company, Buildings and Improvements	8,505
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,600
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	8,505
Gross Amount at Which Carried as of Close of Period, Total	10,105
Accumulated Depreciation	$ (87)
Life on Which Building Depreciation in Income Statement is Computed	37 years
Fountain Hills Medical Campus MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	2,593
Initial Cost to Company, Buildings and Improvements	7,635
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	2,593
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	7,635
Gross Amount at Which Carried as of Close of Period, Total	10,228
Accumulated Depreciation	$ (55)
Life on Which Building Depreciation in Income Statement is Computed	39 years
Fairhope MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	640
Initial Cost to Company, Buildings and Improvements	5,227
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	640
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	5,227
Gross Amount at Which Carried as of Close of Period, Total	5,867
Accumulated Depreciation	$ (39)
Life on Which Building Depreciation in Income Statement is Computed	38 years
Foley MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	365
Initial Cost to Company, Buildings and Improvements	732
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	365
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	732
Gross Amount at Which Carried as of Close of Period, Total	1,097
Accumulated Depreciation	$ (5)
Life on Which Building Depreciation in Income Statement is Computed	40 years
Foley Venture
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	420
Initial Cost to Company, Buildings and Improvements	1,118
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	420
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	1,118
Gross Amount at Which Carried as of Close of Period, Total	1,538
Accumulated Depreciation	$ (8)
Life on Which Building Depreciation in Income Statement is Computed	38 years
North Okaloosa MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	190
Initial Cost to Company, Buildings and Improvements	1,010
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	190
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	1,010
Gross Amount at Which Carried as of Close of Period, Total	1,200
Accumulated Depreciation	$ (7)
Life on Which Building Depreciation in Income Statement is Computed	41 years
Commons on North Davis
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	380
Initial Cost to Company, Buildings and Improvements	1,237
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	380
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	1,237
Gross Amount at Which Carried as of Close of Period, Total	1,617
Accumulated Depreciation	$ (8)
Life on Which Building Depreciation in Income Statement is Computed	41 years
Sorrento Road
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	170
Initial Cost to Company, Buildings and Improvements	894
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	170
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	894
Gross Amount at Which Carried as of Close of Period, Total	1,064
Accumulated Depreciation	$ (6)
Life on Which Building Depreciation in Income Statement is Computed	41 years
Breakfast Point Medical Park
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	0
Initial Cost to Company, Buildings and Improvements	817
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	0
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	817
Gross Amount at Which Carried as of Close of Period, Total	817
Accumulated Depreciation	$ (5)
Life on Which Building Depreciation in Income Statement is Computed	42 years
Panama City Beach
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	0
Initial Cost to Company, Buildings and Improvements	739
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	0
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	739
Gross Amount at Which Carried as of Close of Period, Total	739
Accumulated Depreciation	$ (5)
Life on Which Building Depreciation in Income Statement is Computed	42 years
Perdido Medical Park
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	100
Initial Cost to Company, Buildings and Improvements	1,147
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	100
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	1,147
Gross Amount at Which Carried as of Close of Period, Total	1,247
Accumulated Depreciation	$ (8)
Life on Which Building Depreciation in Income Statement is Computed	41 years
Ft. Walton Beach
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	230
Initial Cost to Company, Buildings and Improvements	914
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	230
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	914
Gross Amount at Which Carried as of Close of Period, Total	1,144
Accumulated Depreciation	$ (7)
Life on Which Building Depreciation in Income Statement is Computed	35 years
Panama City
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	0
Initial Cost to Company, Buildings and Improvements	661
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	0
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	661
Gross Amount at Which Carried as of Close of Period, Total	661
Accumulated Depreciation	$ (5)
Life on Which Building Depreciation in Income Statement is Computed	38 years
Pensacola - Catalyst
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	220
Initial Cost to Company, Buildings and Improvements	1,685
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	220
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	1,685
Gross Amount at Which Carried as of Close of Period, Total	1,905
Accumulated Depreciation	$ (12)
Life on Which Building Depreciation in Income Statement is Computed	39 years
Arete Surgical Center
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	399
Initial Cost to Company, Buildings and Improvements	6,667
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	399
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	6,667
Gross Amount at Which Carried as of Close of Period, Total	7,066
Accumulated Depreciation	$ (26)
Life on Which Building Depreciation in Income Statement is Computed	45 years
Cambridge Professional Center MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	590
Initial Cost to Company, Buildings and Improvements	8,520
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	590
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	8,520
Gross Amount at Which Carried as of Close of Period, Total	9,110
Accumulated Depreciation	$ (45)
Life on Which Building Depreciation in Income Statement is Computed	35 years
HonorHealth 44th Street MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	515
Initial Cost to Company, Buildings and Improvements	3,884
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	515
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	3,884
Gross Amount at Which Carried as of Close of Period, Total	4,399
Accumulated Depreciation	$ (24)
Life on Which Building Depreciation in Income Statement is Computed	28 years
Mercy Medical Center MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,201
Initial Cost to Company, Buildings and Improvements	6,778
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,201
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	6,778
Gross Amount at Which Carried as of Close of Period, Total	7,979
Accumulated Depreciation	$ (15)
Life on Which Building Depreciation in Income Statement is Computed	40 years
Nashville MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	1,555
Initial Cost to Company, Buildings and Improvements	39,713
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	1,555
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	39,713
Gross Amount at Which Carried as of Close of Period, Total	41,268
Accumulated Depreciation	$ 0
Life on Which Building Depreciation in Income Statement is Computed	45 years
KSF Orthopaedic MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	530
Initial Cost to Company, Buildings and Improvements	3,712
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	530
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	3,712
Gross Amount at Which Carried as of Close of Period, Total	4,242
Accumulated Depreciation	$ 0
Life on Which Building Depreciation in Income Statement is Computed	19 years
Great Falls Clinic MOB
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Encumbrances	$ 0
Initial Cost to Company, Land	0
Initial Cost to Company, Buildings and Improvements	27,402
Initial Cost to Company, Cost Capitalized Subsequent to Acquisitions	0
Gross Amount at Which Carried as of Close of Period, Land	0
Gross Amount at Which Carried as of Close of Period, Buildings and Improvements	27,402
Gross Amount at Which Carried as of Close of Period, Total	27,402
Accumulated Depreciation	$ 0
Life on Which Building Depreciation in Income Statement is Computed	40 years

XML

SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (Details 2) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
SEC Schedule III, Reconciliation of Carrying Amount of Real Estate Investments [Roll Forward]
Balance as of the beginning of the year	$ 729,034	$ 224,730	$ 111,149
Acquisitions	695,693	505,379	113,225
Additions	4,440	900	806
Impairment	0	(1,750)	0
Dispositions	(4,273)	(225)	(450)
Balance as of the end of the year	1,424,894	729,034	224,730
SEC Schedule III, Reconciliation of Real Estate Accumulated Depreciation [Roll Forward]
Balance as of the beginning of the year	32,772	20,299	16,495
Acquisitions	9,512	6,575	694
Additions	20,446	5,898	3,110
Dispositions	(1,488)	0	0
Balance as of the end of the year	$ 61,242	$ 32,772	$ 20,299