8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 30, 2017

PHYSICIANS REALTY TRUST

PHYSICIANS REALTY L.P.

(Exact name of registrant as specified in its charter)

Maryland (Physicians Realty Trust) Delaware (Physicians Realty L.P.) (State or other jurisdiction of incorporation or organization) 001-36007 333-205034-01 (Commission File Number) 46-2519850 80-0941870  (I.R.S. Employer Identification No.)

309 N. Water Street, Suite 500
Milwaukee, Wisconsin (Address of principal executive offices) 53202 (Zip Code)

Registrant’s telephone number, including area code: (414) 367-5600

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Physicians Realty Trust Emerging growth company o Physicians Realty L.P. Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Physicians Realty Trust o Physicians Realty L.P. o

Explanatory Note

This Current Report on Form 8-K/A amends and supplements the Current Report on Form 8-K, as filed on July 7, 2017, by Physicians Realty Trust (together with its consolidated subsidiaries, including Physicians Realty L.P., the "Company") and Physicians Realty L.P. (together with its consolidated subsidiaries, the "Operating Partnership") to include historical financial statements and unaudited pro forma financial information required to be filed by Item 9.01 (a) and (b), for the Company’s acquisition, through a subsidiary of the Operating Partnership, of the Baylor Charles A. Sammons Cancer Center, a multi-tenant, on-campus medical office building located in Dallas, Texas and comprising approximately 458,396 net leasable square feet (the “Baylor Cancer Center”) on June 30, 2017.

Item 9.01       Financial Statements and Exhibits

(a)   Financial Statements of Property Acquired.

The following Statements of Revenues and Certain Direct Operating Expenses are set forth in Exhibit 99.1 which are attached hereto and incorporated herein by reference.

Independent Auditors' Report. 

Statements of Revenues and Certain Direct Operating Expenses for the three months ended March 31, 2017 and the year ended December 31, 2016. 

Notes to the Statements of Revenues and Certain Direct Operating Expenses.

(b)   Unaudited Pro Forma Financial Information.

This Current Report on Form 8-K/A includes unaudited pro forma financial information that gives effect to the acquisition of the Baylor Cancer Center and the 2016 CHI Portfolio (defined below) as if these acquisitions occurred on January 1, 2016. During 2016, the Company completed the acquisition from regional health systems controlled by Catholic Health Initiatives (“CHI”) of 49 medical office facilities representing approximately 3,016,926 net leasable square feet (the "2016 CHI Portfolio"). This pro forma financial information is not necessarily indicative of the expected financial position or results of the Company's or the Operating Partnership's operations for any future period. Differences could result from numerous factors, including future changes in the Company's portfolio of investments, changes in interest rates, changes in the Company's or the Operating Partnership's capital structure, changes in property level operating expenses, changes in property level revenues, including rents expected to be received on the Company's existing leases or leases it may enter into during and after 2017, and for other reasons.

The following pro forma financial statements are set forth in Exhibit 99.2 which are attached hereto and incorporated herein by reference.

Unaudited Pro Forma Condensed Consolidated Balance Sheets as of March 31, 2017.

Notes to the Unaudited Pro Forma Condensed Consolidated Balance Sheets.

Unaudited Pro Forma Condensed Consolidated Statements of Operations for the three months ended March 31, 2017 and the year ended December 31, 2016.

Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations.

(c) Not applicable.

(d) Exhibits

23.1Consent of Ernst & Young LLP - Physicians Realty Trust

23.2Consent of Ernst & Young LLP - Physicians Realty L.P.

99.1Financial Statements of Property Acquired - Baylor Cancer Center

99.2Unaudited Pro Forma Financial Information

2

SIGNATURES

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

Date: September 8, 2017	PHYSICIANS REALTY TRUST
	By:	/s/ John T. Thomas
		John T. Thomas
		President and Chief Executive Officer
Date: September 8, 2017	PHYSICIANS REALTY L.P.
	by: Physicians Realty Trust, its general partner
	By:	/s/ John T. Thomas
		John T. Thomas
		President and Chief Executive Officer

3

EXHIBIT INDEX

Exhibit No.	Description
23.1	Consent of Ernst & Young LLP - Physicians Realty Trust
23.2	Consent of Ernst & Young LLP - Physicians Realty L.P.
99.1	Financial Statements of Property Acquired - Baylor Cancer Center
99.2	Unaudited Pro Forma Financial Information

4

EX-23.1

Exhibit 23.1

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 No. 333-204032 on Forms S-8 and No. 333-198400, No. 333-205034 and 333-216214 on Forms S-3) of Physicians Realty Trust of our report dated September 8, 2017 with respect to the statement of revenues and certain direct operating expenses of the Baylor Charles A. Sammons Cancer Center for the year ended December 31, 2016 appearing in Physicians Realty Trust's and Physician Realty L.P.'s Current Report on Form 8-K/A dated September 8, 2017, filed with the Securities and Exchange Commission.

/s/ Ernst & Young LLP

Chicago, Illinois

September 8, 2017

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. 333-205034 and 333-216214 on Forms S-3) of Physicians Realty L.P. of our report dated September 8, 2017 with respect to the statement of revenues and certain direct operating expenses of the Baylor Charles A. Sammons Cancer Center for the year ended December 31, 2016 appearing in Physicians Realty Trust's and Physicians Realty L.P.'s Current Report on Form 8-K/A dated September 8, 2017, filed with the Securities and Exchange Commission.

/s/ Ernst & Young LLP

Chicago, Illinois

September 8, 2017

EX-99.1

Exhibit 99.1

Independent Auditors' Report

To the Board of Trustees

Physicians Realty Trust

The Partners

Physicians Realty L.P.

We have audited the accompanying Statement of Revenues and Certain Direct Operating Expenses of the Baylor Charles A. Sammons Cancer Center for the year ended December 31, 2016, and the related notes to the financial statement.

Management’s Responsibility for the Financial Statement

Management is responsible for the preparation and fair presentation of the financial statement in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of a financial statement that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statement. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statement in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statement.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the Statement of Revenues and Certain Direct Operating Expenses referred to above presents fairly, in all material respects, the revenues and certain direct operating expenses described in Note 1 to the financial statement, in conformity with U.S. generally accepted accounting principles.

Basis of Accounting

As described in Note 1, the Statement of Revenues and Certain Direct Operating Expenses has been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, and is not intended to be a complete presentation of the Baylor Charles A. Sammons Cancer Center’s revenues and expenses. Our opinion is not modified with respect to this matter.

/s/ Ernst & Young LLP

Chicago, Illinois

September 8, 2017

Baylor Charles A. Sammons Cancer Center

Statements of Revenues and Certain Direct Operating Expenses

(in thousands)

	Three Months Ended March 31, 2017			Year Ended December 31, 2016
	(unaudited)
Rental revenues	$	3,235		$	12,941
Other revenues	166			503
Expense recoveries	1,844			7,326
Total revenues	5,245			20,770
Operating expenses	(1,878		)	(7,461		)
Revenues in excess of operating expenses	$	3,367		$	13,309

See accompanying notes.

Baylor Charles A. Sammons Cancer Center

Notes to Statements of Revenues and Certain Direct Operating Expenses

1. Business

On June 30, 2017, Physicians Realty Trust (together with its consolidated subsidiaries, the “Company”), through a subsidiary of its operating partnership, Physicians Realty L.P. (the “Operating Partnership”), closed on an agreement to acquire the Baylor Charles A. Sammons Cancer Center, a multi-tenant, on-campus medical office building located in Dallas, Texas (the "Baylor Cancer Center") from BCC Cancer Center Venture, L.P. for an aggregate purchase price of approximately $290.0 million, subject to closing prorations and other adjustments.

The Baylor Cancer Center is leased to tenants under separate long-term operating leases, where the landlord is responsible for operating expenses and the tenants reimburse the landlord for their share of operating expenses. The accompanying statements of revenues and certain direct operating expenses have been prepared in accordance with Rule 3-14 of Regulation S-X promulgated under the Securities Act of 1933, as amended. Accordingly, the statements are not representative of the actual operations for the periods presented as revenues and certain direct operating expenses, which may not be directly attributable to the revenues and expenses expected to be incurred in the future operations of the property, have been excluded. Such items include depreciation, amortization, interest expense, and income taxes. The accompanying unaudited statement of revenues and certain direct operating expenses for the three months ended March 31, 2017 reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the period pursuant to the instructions to Rule 3-14.

2. Summary of Significant Accounting Policies

Use of Estimates - Preparation of the financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that may affect the amounts reported in the financial statements and related notes. Actual results could differ from those estimates.

Revenue Recognition -Tenant leases are accounted for as operating leases. Rental income is recognized on a monthly basis at the amounts due under the terms of each lease, adjusted to reflect a straight-line impact for specified increases in rent amounts, which are included in the leases.

3. Tenant Leases

The Company assumed all of the non-cancelable operating leases with the tenants that occupy the Baylor Cancer Center. The leases are subject to fixed escalators over and through the end of the lease term. The leases have remaining lease terms expiring at various dates from 2021 and 2026 and contain extension options as specified in the lease agreements.

Future minimum annual base rents, exclusive of operating expense reimbursements and extensions, to be collected under the leases as of December 31, 2016 are as follows:

2017	$	12,515,560
2018	12,807,088
2019	13,104,614
2020	13,409,847
2021	13,596,018
Thereafter	60,417,857
Total	$	125,850,984

For the year ended December 31, 2016, and for the three months ended March 31, 2017, two tenants, Baylor Health Care System and US Oncology, Inc., represented approximately 57% and 42% of total rental revenue, respectively.

4. Subsequent Events

Subsequent events were evaluated through September 8, 2017, the date the financial statements were available to be issued.

EX-99.2

Exhibit 99.2

Physicians Realty Trust

Unaudited Pro Forma Condensed Consolidated Balance Sheet

March 31, 2017

(in thousands)

	Historical			July 2017 Offering		Baylor Cancer Center			Pro Forma Reflecting Acquisition
ASSETS
Investment properties:
Land and improvements	$	201,372		$	—	$	—		$	201,372
Building and improvements	2,577,895			—		256,652			2,834,547
Tenant improvements	15,646			—		234			15,880
Acquired lease intangibles	341,417			—		33,795			375,212
	3,136,330			—		290,681			3,427,011
Accumulated depreciation	(204,516		)	—		—			(204,516		)
Net real estate property	2,931,814			—		290,681			3,222,495
Real estate held for sale	11,926					—			11,926
Real estate loans receivable	40,258			—		—			40,258
Investment in unconsolidated entities	2,231			—		—			2,231
Net real estate investments	2,986,229			—		290,681			3,276,910
Cash and cash equivalents	117,484			421,051		(290,000		)	248,535
Tenant receivables, net	6,882			—		—			6,882
Other assets	85,798			—		—			85,798
Total assets	$	3,196,393		$	421,051	$	681		$	3,618,125
LIABILITIES AND EQUITY
Liabilities:
Credit facility	$	243,163		$	—	$	—		$	243,163
Notes payable	619,972			—		—			619,972
Mortgage debt	143,543			—		—			143,543
Accounts payable	3,126			—		—			3,126
Dividends and distributions payable	36,485			—		—			36,485
Accrued expenses and other liabilities	36,206			—		—			36,206
Acquired lease intangibles, net	9,433			—		681			10,114
Total liabilities	1,091,928			—		681			1,092,609
Redeemable noncontrolling interest - partially owned properties	11,931			—		—			11,931
Equity:
Total shareholders' equity	2,020,843			421,051		—			2,441,894
Total noncontrolling interests	71,691			—		—			71,691
Total equity	2,092,534			421,051		—			2,513,585
Total liabilities and equity	$	3,196,393		$	421,051	$	681		$	3,618,125

See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheets.

Physicians Realty L.P.

Unaudited Pro Forma Condensed Consolidated Balance Sheet

March 31, 2017

(in thousands)

	Historical			July 2017 Offering		Baylor Cancer Center			Pro Forma Reflecting Acquisition
ASSETS
Investment properties:
Land and improvements	$	201,372		$	—	$	—		$	201,372
Building and improvements	2,577,895			—		256,652			2,834,547
Tenant improvements	15,646			—		234			15,880
Acquired lease intangibles	341,417			—		33,795			375,212
	3,136,330			—		290,681			3,427,011
Accumulated depreciation	(204,516		)	—		—			(204,516		)
Net real estate property	2,931,814			—		290,681			3,222,495
Real estate held for sale	11,926			—		—			11,926
Real estate loans receivable	40,258			—		—			40,258
Investment in unconsolidated entities	2,231			—		—			2,231
Net real estate investments	2,986,229			—		290,681			3,276,910
Cash and cash equivalents	117,484			421,051		(290,000		)	248,535
Tenant receivables, net	6,882			—		—			6,882
Other assets	85,798			—		—			85,798
Total assets	$	3,196,393		$	421,051	$	681		$	3,618,125
LIABILITIES AND CAPITAL
Liabilities:
Credit facility	$	243,163		$	—	$	—		$	243,163
Notes payable	619,972			—		—			619,972
Mortgage debt	143,543			—		—			143,543
Accounts payable	3,126			—		—			3,126
Dividends and distributions payable	36,485			—		—			36,485
Accrued expenses and other liabilities	36,206			—		—			36,206
Acquired lease intangibles, net	9,433			—		681			10,114
Total liabilities	1,091,928			—		681			1,092,609
Redeemable noncontrolling interest - partially owned properties	11,931			—		—			11,931
Capital:
Total partners' capital	2,091,886			421,051		—			2,512,937
Total noncontrolling interests - partially owned properties	648			—		—			648
Total capital	2,092,534			421,051		—			2,513,585
Total liabilities and capital	$	3,196,393		$	421,051	$	681		$	3,618,125

See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.

Physicians Realty Trust and Physicians Realty L.P.

Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheets

Basis of Presentation

The Unaudited Pro Forma Condensed Consolidated Balance Sheets of Physicians Realty Trust (together with its consolidated subsidiaries, including Physicians Realty L.P., the "Company") and Physicians Realty L.P. (together with its consolidated subsidiaries, the “Operating Partnership”) as of March 31, 2017 reflect the Company’s acquisition of the Baylor Charles A. Sammons Cancer Center, a multi-tenant, on-campus medical office building located in Dallas, Texas (the "Baylor Cancer Center") through a subsidiary of the Operating Partnership. The Baylor Cancer Center was subject to existing leases, and as such, was accounted for as a business combination and recorded at preliminary estimated fair value, which approximated the purchase price, exclusive of acquisition costs, which were expensed. The purchase price of approximately $290.0 million was fully funded from proceeds from the Company's unsecured revolving credit facility and the purchase price fair value estimates were completed in accordance with the Company's accounting policy. For the purpose of these pro forma condensed consolidated balance sheets, the purchase of the Baylor Cancer Center is shown as being funded from proceeds of the Company's follow-on public offering of common shares in July 2017, as proceeds from the offering were used to repay borrowings on the Company's unsecured revolving credit facility.

Notes and Management Assumptions

The historical consolidated balance sheets of the Company prior to the acquisition of the Baylor Cancer Center have been derived from the unaudited consolidated balance sheets included in the Company’s and the Operating Partnership's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the Securities and Exchange Commission (“SEC”) on May 5, 2017.

Physicians Realty Trust

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the Three Months Ended March 31, 2017

(in thousands, except share and per share data)

	Historical			July 2017 Offering		Baylor Cancer Center			Pro Forma Reflecting Acquisition
Revenues:
Rental revenues	$	59,092		$	—	$	3,235		$	62,327
Expense recoveries	16,354			—		1,844			18,198
Interest income on real estate loans and other	1,220			—		166			1,386
Total revenues	76,666			—		5,245			81,911
Expenses:
Interest expense	9,815			—		—			9,815
General and administrative	4,736			—		—			4,736
Operating expenses	22,089			—		1,878			23,967
Depreciation and amortization	27,933			—		2,379			30,312
Acquisition expenses	5,405			—		641			6,046
Total expenses	69,978			—		4,898			74,876
Income before equity in income of unconsolidated entities:	6,688			—		347			7,035
Equity in income of unconsolidated entities	28			—		—			28
Net income	6,716			—		347			7,063
Net income attributable to noncontrolling interests
Operating Partnership	(147		)	—		(8		)	(155		)
Partially owned properties	(167		)	—		—			(167		)
Net income attributable to controlling interests	6,402			—		339			6,741
Preferred distributions	(211		)	—		—			(211		)
Net income attributable to common shareholders	$	6,191		$	—	$	339		$	6,530
Net income per share:
Basic	$	0.04							$	0.04
Diluted	$	0.04							$	0.04
Weighted average common shares:
Basic	138,986,629			21,500,000					160,486,629
Diluted	142,605,930			21,500,000					164,105,930

See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations.

Physicians Realty Trust

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the Year Ended December 31, 2016

(in thousands, except share and per share data)

	Historical			July 2017 Offering		Baylor Cancer Center			2016 Acquisition Properties			Pro Forma Reflecting Acquisitions
Revenues:
Rental revenues	$	186,301		$	—	$	12,941		$	23,142		$	222,384
Expense recoveries	45,875			—		7,326			8,028			61,229
Interest income on real estate loans and other	8,858			—		503			26			9,387
Total revenues	241,034			—		20,770			31,196			293,000
Expenses:
Interest expense	23,864			—		—			2,952			26,816
General and administrative	18,397			—		—			—			18,397
Operating expenses	65,999			—		7,461			10,869			84,329
Depreciation and amortization	86,589			—		9,516			10,626			106,731
Acquisition expenses	14,778			—		641			—			15,419
Total expenses	209,627			—		17,618			24,447			251,692
Income before equity in income of unconsolidated entities:	31,407			—		3,152			6,749			41,308
Equity in income of unconsolidated entities	115			—		—			—			115
Net income	31,522			—		3,152			6,749			41,423
Net income attributable to noncontrolling interests:
Operating Partnership	(825		)	—		(82		)	(177		)	(1,084		)
Partially owned properties	(716		)	—		—			—			(716		)
Net income attributable to controlling interest	29,981			—		3,070			6,572			39,623
Preferred distributions	(1,857		)	—		—			—			(1,857		)
Net income attributable to common shareholders	$	28,124		$	—	$	3,070		$	6,572		$	37,766
Net income per share:
Basic	$	0.22										$	0.24
Diluted	$	0.22										$	0.24
Weighted average common shares:
Basic	126,143,114			21,500,000					7,140,369			154,783,483
Diluted	130,466,893			21,500,000					7,140,369			159,107,262

See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations.

Physicians Realty L.P.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the Three Months Ended March 31, 2017

(in thousands, except unit and per unit data)

	Historical			July 2017 Offering		Baylor Cancer Center		Pro Forma Reflecting Acquisition
Revenues:
Rental revenues	$	59,092		$	—	$	3,235	$	62,327
Expense recoveries	16,354			—		1,844		18,198
Interest income on real estate loans and other	1,220			—		166		1,386
Total revenues	76,666			—		5,245		81,911
Expenses:
Interest expense	9,815			—		—		9,815
General and administrative	4,736			—		—		4,736
Operating expenses	22,089			—		1,878		23,967
Depreciation and amortization	27,933			—		2,379		30,312
Acquisition expenses	5,405			—		641		6,046
Total expenses	69,978			—		4,898		74,876
Income before equity in income of unconsolidated entities:	6,688			—		347		7,035
Equity in income of unconsolidated entities	28			—		—		28
Net income	6,716			—		347		7,063
Net income attributable to noncontrolling interests - partially owned properties	(167		)	—		—		(167		)
Net income attributable to controlling interest	6,549			—		347		6,896
Preferred distributions	(211		)	—		—		(211		)
Net income attributable to common unitholders	$	6,338		$	—	$	347	$	6,685
Net income per common unit:
Basic	$	0.04						$	0.04
Diluted	$	0.04						$	0.04
Weighted average common units:
Basic	142,172,746			21,500,000				163,672,746
Diluted	142,605,930			21,500,000				164,105,930

See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations.

Physicians Realty L.P.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the Year Ended December 31, 2016

(in thousands, except unit and per unit data)

	Historical			July 2017 Offering		Baylor Cancer Center		2016 Acquisition Properties		Pro Forma Reflecting Acquisitions
Revenues:
Rental revenues	$	186,301		$	—	$	12,941	$	23,142	$	222,384
Expense recoveries	45,875			—		7,326		8,028		61,229
Interest income on real estate loans and other	8,858			—		503		26		9,387
Total revenues	241,034			—		20,770		31,196		293,000
Expenses:
Interest expense	23,864			—		—		2,952		26,816
General and administrative	18,397			—		—		—		18,397
Operating expenses	65,999			—		7,461		10,869		84,329
Depreciation and amortization	86,589			—		9,516		10,626		106,731
Acquisition expenses	14,778			—		641		—		15,419
Total expenses	209,627			—		17,618		24,447		251,692
Income before equity in income of unconsolidated entities:	31,407			—		3,152		6,749		41,308
Equity in income of unconsolidated entities	115			—		—		—		115
Net income	31,522			—		3,152		6,749		41,423
Net income attributable to noncontrolling interests - partially owned properties	(716		)	—		—		—		(716		)
Net income attributable to controlling interest	30,806			—		3,152		6,749		40,707
Preferred distributions	(1,857		)	—		—		—		(1,857		)
Net income attributable to common unitholders	$	28,949		$	—	$	3,152	$	6,749	$	38,850
Net income per common unit:
Basic	$	0.22								$	0.25
Diluted	$	0.22								$	0.24
Weighted average common units:
Basic	129,835,209			21,500,000				7,140,369		158,475,578
Diluted	130,466,893			21,500,000				7,140,369		159,107,262

See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations.

Physicians Realty Trust and Physicians Realty L.P.

Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations

Basis of Presentation

The Unaudited Pro Forma Condensed Consolidated Statements of Operations for the three months ended March 31, 2017 and the year ended December 31, 2016 include the historical operations of the Company and the Operating Partnership and have been derived from the unaudited consolidated statement of income included in the Company’s and the Operating Partnership's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017 filed with the SEC on May 5, 2017 and the audited consolidated statement of operations included in the Company's and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on February 24, 2017 (the "2016 Annual Report"). Each of the Company’s and the Operating Partnership's historical operations have been adjusted to take into consideration the following acquisitions as if they occurred on January 1, 2016.

During the second quarter of 2017, the Company acquired the Baylor Cancer Center through a subsidiary of the Operating Partnership. Historical financial results for the periods presented for the Baylor Cancer Center are included elsewhere in this Form 8-K/A. Financial results for the period ended March 31, 2017 and for the year ended December 31, 2016 related to the Baylor Cancer Center prior to their acquisition represents the results of operations under the previous owners and are included in the column labeled Baylor Cancer Center and adjusted as noted under “Notes and Management Assumptions.”

During 2016, the Company, through subsidiaries of the Operating Partnership, completed the acquisition from regional health systems controlled by Catholic Health Initiatives (“CHI”) of 49 medical office facilities representing approximately 3,016,926 net leasable square feet (the "2016 CHI Portfolio"). Historical financial results and other information related to the 2016 CHI Portfolio was included in a previously filed Form 8-K/A, filed on July 26, 2016. Financial results prior to their acquisition represents the results of operations under the previous owners and are included in the column labeled "2016 Acquisition Properties" and adjusted as noted under "Notes and Management Assumptions" below. Operating results for the 2016 Acquisition Properties since their acquisition date are included in the Company’s historical results of operations, including acquisition costs associated with the properties.

Notes and Management Assumptions

Revenue and operating expenses for the Baylor Cancer Center are based upon the historical operations under the property's previous ownership. Depreciation and amortization expenses are pro forma adjustments based upon the Company's ownership, utilizing its own depreciation and amortization policies outlined in the 2016 Annual Report. Net income attributable to noncontrolling interests is calculated based on the Company's ownership percentage of the Operating Partnership as of the end of each period.

Revenues and expenses for the 2016 Acquisition Properties are pro forma adjustments for the period in 2016 during which these properties were not owned by the Company and are based on the historical operations of these properties since being acquired by the Company during 2016. Interest expense is a pro forma adjustment relating to the incremental expense associated with borrowings used to finance the 2016 CHI Portfolio as if those borrowings had been outstanding for the period prior to acquisition based upon the Company’s average borrowing rate on its unsecured credit facility. Depreciation and amortization expense are pro forma adjustments based upon the Company’s ownership, utilizing its own depreciation and amortization policies outlined in the 2016 Annual Report. Net income attributable to noncontrolling interests is calculated based on the Company’s ownership percentage of the Operating Partnership as of the end of each period.