(State of Organization) | (IRS Employer Identification No.) | ||||||||||
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Page Number | ||||||||
September 30, 2022 | December 31, 2021 | ||||||||||
(unaudited) | |||||||||||
ASSETS | |||||||||||
Investment properties: | |||||||||||
Land and improvements | $ | $ | |||||||||
Building and improvements | |||||||||||
Tenant improvements | |||||||||||
Acquired lease intangibles | |||||||||||
Accumulated depreciation | ( | ( | |||||||||
Net real estate property | |||||||||||
Real estate held for sale | |||||||||||
Right-of-use lease assets, net | |||||||||||
Real estate loans receivable, net | |||||||||||
Investments in unconsolidated entities | |||||||||||
Net real estate investments | |||||||||||
Cash and cash equivalents | |||||||||||
Tenant receivables, net | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND EQUITY | |||||||||||
Liabilities: | |||||||||||
Credit facility | $ | $ | |||||||||
Notes payable | |||||||||||
Mortgage debt | |||||||||||
Accounts payable | |||||||||||
Dividends and distributions payable | |||||||||||
Accrued expenses and other liabilities | |||||||||||
Lease liabilities | |||||||||||
Acquired lease intangibles, net | |||||||||||
Total liabilities | |||||||||||
Redeemable noncontrolling interests - partially owned properties | |||||||||||
Equity: | |||||||||||
Common shares, $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated deficit | ( | ( | |||||||||
Accumulated other comprehensive income (loss) | ( | ||||||||||
Total shareholders’ equity | |||||||||||
Noncontrolling interests: | |||||||||||
Operating Partnership | |||||||||||
Partially owned properties | |||||||||||
Total noncontrolling interests | |||||||||||
Total equity | |||||||||||
Total liabilities and equity | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Rental and related revenues | $ | $ | $ | $ | |||||||||||||||||||
Interest income on real estate loans and other | |||||||||||||||||||||||
Total revenues | |||||||||||||||||||||||
Expenses: | |||||||||||||||||||||||
Interest expense | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Impairment loss | |||||||||||||||||||||||
Total expenses | |||||||||||||||||||||||
Income before equity in loss of unconsolidated entities and gain on sale of investment properties, net: | |||||||||||||||||||||||
Equity in loss of unconsolidated entities | ( | ( | ( | ( | |||||||||||||||||||
Gain on sale of investment properties, net | |||||||||||||||||||||||
Net income | |||||||||||||||||||||||
Net income attributable to noncontrolling interests: | |||||||||||||||||||||||
Operating Partnership | ( | ( | ( | ( | |||||||||||||||||||
Partially owned properties (1) | ( | ( | ( | ( | |||||||||||||||||||
Net income attributable to controlling interest | |||||||||||||||||||||||
Preferred distributions | ( | ||||||||||||||||||||||
Net income attributable to common shareholders | $ | $ | $ | $ | |||||||||||||||||||
Net income per share: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ | |||||||||||||||||||
Weighted average common shares: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted | |||||||||||||||||||||||
Dividends and distributions declared per common share | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Other comprehensive income: | |||||||||||||||||||||||
Change in fair value of interest rate swap agreements, net | |||||||||||||||||||||||
Total other comprehensive income | |||||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||
Comprehensive income attributable to noncontrolling interests - Operating Partnership | ( | ( | ( | ( | |||||||||||||||||||
Comprehensive income attributable to noncontrolling interests - partially owned properties | ( | ( | ( | ( | |||||||||||||||||||
Comprehensive income attributable to common shareholders | $ | $ | $ | $ |
Par Value | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | Operating Partnership Noncontrolling Interest | Partially Owned Properties Noncontrolling Interest | Total Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Net proceeds from sale of common shares | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Restricted share award grants, net | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Purchase of OP Units | — | — | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Dividends/distributions declared | — | — | ( | — | ( | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Contributions | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Distributions | — | — | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Change in market value of Redeemable Noncontrolling Interest in partially owned properties | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Change in fair value of interest rate swap agreement | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Adjustment for Noncontrolling Interests ownership in Operating Partnership | — | ( | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2022 | $ | $ | $ | ( | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Net proceeds from sale of common shares | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Restricted share award grants, net | ( | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Dividends/distributions declared | — | — | ( | — | ( | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Distributions | — | — | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Change in market value of Redeemable Noncontrolling Interest in partially owned properties | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Change in fair value of interest rate swap agreement | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Adjustment for Noncontrolling Interests ownership in Operating Partnership | — | ( | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2022 | $ | $ | $ | ( | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Net proceeds from sale of common shares | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Restricted share award grants, net | — | ( | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Purchase of OP Units | — | — | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Dividends/distributions declared | — | — | ( | — | ( | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Distributions | — | — | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Change in market value of Redeemable Noncontrolling Interest in partially owned properties | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Change in fair value of interest rate swap agreement | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Adjustment for Noncontrolling Interests ownership in Operating Partnership | — | ( | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of September 30, 2022 | $ | $ | $ | ( | $ | $ | $ | $ | $ | $ |
Par Value | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | Operating Partnership Noncontrolling Interest | Partially Owned Properties Noncontrolling Interest | Total Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Net proceeds from sale of common shares | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Restricted share award grants, net | ( | ( | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
Purchase of OP Units | — | — | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Dividends/distributions declared | — | — | ( | — | ( | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Preferred distributions | — | — | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Distributions | — | — | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Change in market value of Redeemable Noncontrolling Interests | — | ( | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Change in fair value of interest rate swap agreements | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Adjustment for Noncontrolling Interests ownership in Operating Partnership | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2021 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Net proceeds from sale of common shares | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Restricted share award grants, net | — | ( | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Purchase of OP Units | — | — | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Dividends/distributions declared | — | — | ( | — | ( | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Distributions | — | — | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Change in market value of Redeemable Noncontrolling Interests | — | — | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Change in fair value of interest rate swap agreements | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Adjustment for Noncontrolling Interests ownership in Operating Partnership | — | ( | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2021 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Net proceeds from sale of common shares | — | ( | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Restricted share award grants, net | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Dividends/distributions declared | — | — | ( | — | ( | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Distributions | — | — | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Change in market value of Redeemable Noncontrolling Interests | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Change in fair value of interest rate swap agreements | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Adjustment for Noncontrolling Interests ownership in Operating Partnership | — | ( | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of September 30, 2021 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | $ |
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Cash Flows from Operating Activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||||||
Depreciation and amortization | |||||||||||
Amortization of deferred financing costs | |||||||||||
Amortization of lease inducements and above/below-market lease intangibles | |||||||||||
Straight-line rental revenue/expense | ( | ( | |||||||||
Amortization of discount on unsecured senior notes | |||||||||||
Amortization of above market assumed debt | ( | ( | |||||||||
Gain on sale of investment properties, net | ( | ( | |||||||||
Equity in loss of unconsolidated entities | |||||||||||
Distributions from unconsolidated entities | |||||||||||
Provision for bad debts | ( | ||||||||||
Non-cash share compensation | |||||||||||
Impairment on investment property | |||||||||||
Change in operating assets and liabilities: | |||||||||||
Tenant receivables | ( | ( | |||||||||
Other assets | ( | ||||||||||
Accounts payable | ( | ( | |||||||||
Accrued expenses and other liabilities | ( | ||||||||||
Net cash provided by operating activities | |||||||||||
Cash Flows from Investing Activities: | |||||||||||
Proceeds from sale of investment properties | |||||||||||
Acquisition of investment properties, net | ( | ( | |||||||||
Investment in unconsolidated entities | ( | ( | |||||||||
Escrowed cash - acquisition deposits/earnest deposits | ( | ||||||||||
Capital expenditures on investment properties | ( | ( | |||||||||
Investment in real estate loans receivable | ( | ( | |||||||||
Repayment of real estate loans receivable | |||||||||||
Leasing commissions | ( | ( | |||||||||
Lease inducements | ( | ||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash Flows from Financing Activities: | |||||||||||
Net proceeds from sale of common shares | |||||||||||
Proceeds from credit facility borrowings | |||||||||||
Repayment of credit facility borrowings | ( | ( | |||||||||
Principal payments on mortgage debt | ( | ( | |||||||||
Debt issuance costs | ( | ( | |||||||||
Payments made on financing lease | ( | ||||||||||
Dividends paid - shareholders | ( | ( | |||||||||
Distributions to noncontrolling interests - Operating Partnership | ( | ( | |||||||||
Preferred distributions paid - OP Unit holder | ( | ||||||||||
Contributions from noncontrolling interest | |||||||||||
Distributions to noncontrolling interests - partially owned properties | ( | ( | |||||||||
Payments of employee taxes for withheld stock-based compensation shares | ( | ( | |||||||||
Purchase of Series A Preferred Units | ( | ||||||||||
Purchase of OP Units | ( | ( | |||||||||
Net cash used in financing activities | ( | ( | |||||||||
Net (decrease) increase in cash and cash equivalents | ( | ||||||||||
Cash and cash equivalents, beginning of period | |||||||||||
Cash and cash equivalents, end of period | $ | $ | |||||||||
Supplemental disclosure of cash flow information—interest paid during the period | $ | $ | |||||||||
Supplemental disclosure of noncash activity—settlement of note receivable in exchange for Series A Preferred Units | $ | $ | |||||||||
Supplemental disclosure of noncash activity—change in fair value of interest rate swap agreements | $ | $ | |||||||||
Supplemental disclosure of noncash activity—conversion of loan receivable in connection to the acquisition of investment property | $ | $ | |||||||||
Common shares sold | Weighted average price | Net proceeds | |||||||||||||||
Quarter ended March 31, 2022 | $ | $ | |||||||||||||||
Quarter ended June 30, 2022 | |||||||||||||||||
Quarter ended September 30, 2022 | |||||||||||||||||
Year to date | $ | $ |
1st Quarter | 2nd Quarter | 3rd Quarter | Total | ||||||||||||||||||||
Land | $ | $ | $ | $ | |||||||||||||||||||
Building and improvements | |||||||||||||||||||||||
In-place lease intangibles | |||||||||||||||||||||||
Above market in-place lease intangibles | |||||||||||||||||||||||
Below market in-place lease intangibles | ( | ( | |||||||||||||||||||||
Right-of-use asset | |||||||||||||||||||||||
Net assets acquired | $ | $ | $ | $ | |||||||||||||||||||
Satisfaction of real estate loans receivable | ( | ( | |||||||||||||||||||||
NCI-redeemable | ( | ( | |||||||||||||||||||||
Cash used in acquisition of investment property | $ | $ | $ | $ |
September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
Cost | Accumulated Amortization | Net | Cost | Accumulated Amortization | Net | ||||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||||
In-place leases | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Above-market leases | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||||||
Below-market leases | $ | $ | ( | $ | $ | $ | ( | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Amortization expense related to in-place leases | $ | $ | $ | $ | |||||||||||||||||||
Decrease in rental income related to above-market leases | |||||||||||||||||||||||
Increase in rental income related to below-market leases |
Net Decrease in Revenue | Net Increase in Expenses | ||||||||||
2022 | $ | $ | |||||||||
2023 | |||||||||||
2024 | |||||||||||
2025 | |||||||||||
2026 | |||||||||||
Thereafter | ( | ||||||||||
Total | $ | $ |
September 30, 2022 | December 31, 2021 | ||||||||||
Straight line rent receivable, net | $ | $ | |||||||||
Prepaid expenses | |||||||||||
Leasing commissions, net | |||||||||||
Lease inducements, net | |||||||||||
Interest rate swap | |||||||||||
Escrows | |||||||||||
Notes receivable, net | |||||||||||
Other | |||||||||||
Total | $ | $ |
September 30, 2022 | December 31, 2021 | ||||||||||
Fixed interest mortgage notes (1) | $ | $ | |||||||||
Variable interest mortgage notes (2) | |||||||||||
Total mortgage debt | |||||||||||
$ | |||||||||||
$ | |||||||||||
$ | |||||||||||
$ | |||||||||||
$ | |||||||||||
$ | |||||||||||
Total principal | |||||||||||
Unamortized deferred financing costs | ( | ( | |||||||||
Unamortized discounts | ( | ( | |||||||||
Unamortized fair value adjustments | |||||||||||
Total debt | $ | $ |
Credit Rating | Applicable Margin for Revolving Loans: LIBOR Rate Loans and Letter of Credit Fee | Applicable Margin for Revolving Loans: Base Rate Loans | Applicable Margin for Term Loans: LIBOR Rate Loans and Letter of Credit Fee | Applicable Margin for Term Loans: Base Rate Loans | ||||||||||||||||||||||
At Least A- or A3 | LIBOR + | % | LIBOR + | % | ||||||||||||||||||||||
At Least BBB+ or Baa1 | LIBOR + | % | LIBOR + | % | ||||||||||||||||||||||
At Least BBB or Baa2 | LIBOR + | % | LIBOR + | % | ||||||||||||||||||||||
At Least BBB- or Baa3 | LIBOR + | % | LIBOR + | % | ||||||||||||||||||||||
Below BBB- or Baa3 | LIBOR + | % | LIBOR + | % |
2022 | $ | ||||
2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
Thereafter | |||||
Total Payments | $ |
Total notional amount | $ | |||||||
Effective fixed interest rate | (1) | % | ||||||
Effective date | ||||||||
Maturity date | ||||||||
Asset balance at September 30, 2022 (included in Other assets) | $ | |||||||
Liability balance at December 31, 2021 (included in Accrued expenses and other liabilities) | $ |
September 30, 2022 | December 31, 2021 | ||||||||||
Real estate taxes payable | $ | $ | |||||||||
Prepaid rent | |||||||||||
Accrued interest | |||||||||||
Accrued expenses | |||||||||||
Accrued incentive compensation | |||||||||||
Security deposits | |||||||||||
Tenant improvement allowances | |||||||||||
Interest rate swap | |||||||||||
Other | |||||||||||
Total | $ | $ |
Common Shares | Weighted Average Grant Date Fair Value | ||||||||||
Non-vested at December 31, 2021 | $ | ||||||||||
Granted | |||||||||||
Vested | ( | ||||||||||
Forfeited | ( | ||||||||||
Non-vested at September 30, 2022 | $ |
Volatility | % | ||||
Dividend assumption | reinvested | ||||
Expected term in years | |||||
Risk-free rate | % | ||||
Share price (per share) | $ |
Executive Awards | Trustee Awards | ||||||||||||||||||||||
Restricted Share Units | Weighted Average Grant Date Fair Value | Restricted Share Units | Weighted Average Grant Date Fair Value | ||||||||||||||||||||
Non-vested at December 31, 2021 | $ | $ | |||||||||||||||||||||
Granted | |||||||||||||||||||||||
Vested | ( | (1) | ( | ||||||||||||||||||||
Non-vested at September 30, 2022 | $ | $ |
September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Real estate loans receivable, net | $ | $ | $ | $ | |||||||||||||||||||
Notes receivable, net | $ | $ | $ | $ | |||||||||||||||||||
Derivative assets | $ | $ | $ | $ | |||||||||||||||||||
Liabilities: | |||||||||||||||||||||||
Credit facility | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Notes payable | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Mortgage debt | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Derivative liabilities | $ | $ | $ | ( | $ | ( |
2022 | $ | ||||
2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
Thereafter | |||||
Total | $ |
2022 | $ | ||||
2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
Thereafter | |||||
Total undiscounted lease payments | $ | ||||
Less: Interest | ( | ||||
Present value of lease liabilities | $ |
Fixed lease cost | $ | ||||
Variable lease cost | |||||
Total lease cost | $ |
Tenant | Total Leased GLA | Percent of Leased GLA | ||||||||||||
CommonSpirit - CHI - Nebraska | % | |||||||||||||
Northside Hospital | % | |||||||||||||
UofL Health - Louisville, Inc. | % | |||||||||||||
HonorHealth | % | |||||||||||||
US Oncology | % | |||||||||||||
Remaining portfolio | % | |||||||||||||
Total | % |
State | Total GLA | Percent of GLA | ||||||||||||
Texas | % | |||||||||||||
Georgia | % | |||||||||||||
Indiana | % | |||||||||||||
Nebraska | % | |||||||||||||
Kentucky | % | |||||||||||||
Other | % | |||||||||||||
Total | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Numerator for earnings per share - basic: | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Net income attributable to noncontrolling interests: | |||||||||||||||||||||||
Operating Partnership | ( | ( | ( | ( | |||||||||||||||||||
Partially owned properties | ( | ( | ( | ( | |||||||||||||||||||
Preferred distributions | ( | ||||||||||||||||||||||
Numerator for earnings per share - basic | $ | $ | $ | $ | |||||||||||||||||||
Numerator for earnings per share - diluted: | |||||||||||||||||||||||
Numerator for earnings per share - basic | $ | $ | $ | $ | |||||||||||||||||||
Noncontrolling interest - Operating Partnership income | |||||||||||||||||||||||
Numerator for earnings per share - diluted | $ | $ | $ | $ | |||||||||||||||||||
Denominator for earnings per share - basic and diluted: | |||||||||||||||||||||||
Weighted average number of shares outstanding - basic | |||||||||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||
Noncontrolling interest - Operating Partnership units | |||||||||||||||||||||||
Restricted common shares | |||||||||||||||||||||||
Restricted share units | |||||||||||||||||||||||
Denominator for earnings per share - diluted: | |||||||||||||||||||||||
Earnings per share - basic | $ | $ | $ | $ | |||||||||||||||||||
Earnings per share - diluted | $ | $ | $ | $ |
2022 | 2021 | Change | % | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Rental and related revenues | $ | 127,381 | $ | 110,314 | $ | 17,067 | 15.5 | % | |||||||||||||||
Interest income on real estate loans and other | 4,132 | 4,997 | (865) | (17.3) | % | ||||||||||||||||||
Total revenues | 131,513 | 115,311 | 16,202 | 14.1 | % | ||||||||||||||||||
Expenses: | |||||||||||||||||||||||
Interest expense | 18,299 | 13,498 | 4,801 | 35.6 | % | ||||||||||||||||||
General and administrative | 10,079 | 9,534 | 545 | 5.7 | % | ||||||||||||||||||
Operating expenses | 43,647 | 35,679 | 7,968 | 22.3 | % | ||||||||||||||||||
Depreciation and amortization | 47,040 | 38,582 | 8,458 | 21.9 | % | ||||||||||||||||||
Impairment loss | — | 340 | (340) | NM | |||||||||||||||||||
Total expenses | 119,065 | 97,633 | 21,432 | 22.0 | % | ||||||||||||||||||
Income before equity in loss of unconsolidated entities and gain on sale of investment properties, net: | 12,448 | 17,678 | (5,230) | (29.6) | % | ||||||||||||||||||
Equity in loss of unconsolidated entities | (62) | (390) | 328 | 84.1 | % | ||||||||||||||||||
Gain on sale of investment properties, net | 53,894 | 4,757 | 49,137 | NM | |||||||||||||||||||
Net income | $ | 66,280 | $ | 22,045 | $ | 44,235 | 200.7 | % |
2022 | 2021 | Change | % | ||||||||||||||||||||
Rental revenues | $ | 90,818 | $ | 81,096 | $ | 9,722 | 12.0 | % | |||||||||||||||
Expense recoveries | 36,563 | 29,218 | 7,345 | 25.1 | % | ||||||||||||||||||
Rental and related revenues | $ | 127,381 | $ | 110,314 | $ | 17,067 | 15.5 | % |
2022 | 2021 | Change | % | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Rental and related revenues | $ | 381,785 | $ | 326,017 | $ | 55,768 | 17.1 | % | |||||||||||||||
Interest income on real estate loans and other | 12,285 | 15,558 | (3,273) | (21.0) | % | ||||||||||||||||||
Total revenues | 394,070 | 341,575 | 52,495 | 15.4 | % | ||||||||||||||||||
Expenses: | |||||||||||||||||||||||
Interest expense | 52,356 | 40,754 | 11,602 | 28.5 | % | ||||||||||||||||||
General and administrative | 30,400 | 28,116 | 2,284 | 8.1 | % | ||||||||||||||||||
Operating expenses | 128,080 | 103,069 | 25,011 | 24.3 | % | ||||||||||||||||||
Depreciation and amortization | 142,002 | 114,663 | 27,339 | 23.8 | % | ||||||||||||||||||
Impairment loss | — | 340 | (340) | NM | |||||||||||||||||||
Total expenses | 352,838 | 286,942 | 65,896 | 23.0 | % | ||||||||||||||||||
Income before equity in loss of unconsolidated entities and gain on sale of investment properties, net: | 41,232 | 54,633 | (13,401) | (24.5) | % | ||||||||||||||||||
Equity in loss of unconsolidated entities | (452) | (1,213) | 761 | 62.7 | % | ||||||||||||||||||
Gain on sale of investment properties, net | 57,375 | 5,111 | 52,264 | NM | |||||||||||||||||||
Net income | $ | 98,155 | $ | 58,531 | $ | 39,624 | 67.7 | % |
2022 | 2021 | Change | % | ||||||||||||||||||||
Rental revenues | $ | 274,260 | $ | 242,062 | $ | 32,198 | 13.3 | % | |||||||||||||||
Expense recoveries | 107,525 | 83,955 | 23,570 | 28.1 | % | ||||||||||||||||||
Rental and related revenues | $ | 381,785 | $ | 326,017 | $ | 55,768 | 17.1 | % |
2022 | 2021 | ||||||||||
Cash provided by operating activities | $ | 202,353 | $ | 175,747 | |||||||
Cash used in investing activities | (41,680) | (118,965) | |||||||||
Cash used in financing activities | (168,037) | (53,931) | |||||||||
(Decrease) increase in cash and cash equivalents | $ | (7,364) | $ | 2,851 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net income | $ | 66,280 | $ | 22,045 | $ | 98,155 | $ | 58,531 | |||||||||||||||
Earnings per share - diluted | $ | 0.28 | $ | 0.10 | $ | 0.41 | $ | 0.26 | |||||||||||||||
Net income | $ | 66,280 | $ | 22,045 | $ | 98,155 | $ | 58,531 | |||||||||||||||
Net income attributable to noncontrolling interests - partially owned properties | (70) | (152) | (384) | (455) | |||||||||||||||||||
Preferred distributions | — | — | — | (13) | |||||||||||||||||||
Depreciation and amortization expense | 46,939 | 38,463 | 141,677 | 114,340 | |||||||||||||||||||
Depreciation and amortization expense - partially owned properties | (101) | (70) | (241) | (210) | |||||||||||||||||||
Gain on sale of investment properties, net | (53,894) | (4,757) | (57,375) | (5,111) | |||||||||||||||||||
Impairment loss | — | 340 | — | 340 | |||||||||||||||||||
Proportionate share of unconsolidated joint venture adjustments | 2,298 | 2,226 | 7,031 | 6,564 | |||||||||||||||||||
FFO applicable to common shares | $ | 61,452 | $ | 58,095 | $ | 188,863 | $ | 173,986 | |||||||||||||||
Proportionate share of unconsolidated joint venture adjustments | (82) | — | (360) | — | |||||||||||||||||||
Normalized FFO applicable to common shares | $ | 61,370 | $ | 58,095 | $ | 188,503 | $ | 173,986 | |||||||||||||||
FFO per common share - diluted | $ | 0.26 | $ | 0.26 | $ | 0.79 | $ | 0.79 | |||||||||||||||
Normalized FFO per common share - diluted | $ | 0.26 | $ | 0.26 | $ | 0.79 | $ | 0.79 | |||||||||||||||
Weighted average common shares outstanding - diluted | 239,898,462 | 223,992,049 | 239,145,383 | 221,399,649 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net income | $ | 66,280 | $ | 22,045 | $ | 98,155 | $ | 58,531 | |||||||||||||||
Normalized FFO applicable to common shares | $ | 61,370 | $ | 58,095 | $ | 188,503 | $ | 173,986 | |||||||||||||||
Normalized FFO applicable to common shares | $ | 61,370 | $ | 58,095 | $ | 188,503 | $ | 173,986 | |||||||||||||||
Non-cash share compensation expense | 4,349 | 3,665 | 12,400 | 10,840 | |||||||||||||||||||
Straight-line rent adjustments | (1,478) | (2,171) | (5,359) | (7,276) | |||||||||||||||||||
Amortization of acquired above/below-market leases/assumed debt | 1,133 | 833 | 3,773 | 2,557 | |||||||||||||||||||
Amortization of lease inducements | 225 | 394 | 675 | 922 | |||||||||||||||||||
Amortization of deferred financing costs | 581 | 581 | 1,739 | 1,744 | |||||||||||||||||||
TI/LC and recurring capital expenditures | (4,129) | (6,673) | (16,660) | (17,984) | |||||||||||||||||||
Loan reserve adjustments | 152 | 20 | 159 | (111) | |||||||||||||||||||
Proportionate share of unconsolidated joint venture adjustments | (403) | (153) | (900) | (578) | |||||||||||||||||||
Normalized FAD applicable to common shares | $ | 61,800 | $ | 54,591 | $ | 184,330 | $ | 164,100 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net income | $ | 66,280 | $ | 22,045 | $ | 98,155 | $ | 58,531 | |||||||||||||||
General and administrative | 10,079 | 9,534 | 30,400 | 28,116 | |||||||||||||||||||
Depreciation and amortization expense | 47,040 | 38,582 | 142,002 | 114,663 | |||||||||||||||||||
Interest expense | 18,299 | 13,498 | 52,356 | 40,754 | |||||||||||||||||||
Gain on sale of investment properties, net | (53,894) | (4,757) | (57,375) | (5,111) | |||||||||||||||||||
Impairment loss | — | 340 | — | 340 | |||||||||||||||||||
Proportionate share of unconsolidated joint venture adjustments | 3,463 | 3,653 | 10,289 | 10,725 | |||||||||||||||||||
NOI | $ | 91,267 | $ | 82,895 | $ | 275,827 | $ | 248,018 | |||||||||||||||
NOI | $ | 91,267 | $ | 82,895 | $ | 275,827 | $ | 248,018 | |||||||||||||||
Straight-line rent adjustments | (1,478) | (2,171) | (5,359) | (7,276) | |||||||||||||||||||
Amortization of acquired above/below-market leases | 1,133 | 849 | 3,783 | 2,604 | |||||||||||||||||||
Amortization of lease inducements | 225 | 394 | 675 | 922 | |||||||||||||||||||
Loan reserve adjustments | 152 | 20 | 159 | (111) | |||||||||||||||||||
Proportionate share of unconsolidated joint venture adjustments | (176) | (143) | (346) | (459) | |||||||||||||||||||
Cash NOI | $ | 91,123 | $ | 81,844 | $ | 274,739 | $ | 243,698 | |||||||||||||||
Cash NOI | $ | 91,123 | $ | 81,844 | |||||||||||||||||||
Assets not held for all periods or held for sale | (12,785) | (3,304) | |||||||||||||||||||||
Hospital Cash NOI | (2,775) | (2,519) | |||||||||||||||||||||
Lease termination fees | — | (158) | |||||||||||||||||||||
Interest income on real estate loans | (2,517) | (3,797) | |||||||||||||||||||||
Joint venture and other income | (3,595) | (3,350) | |||||||||||||||||||||
MOB Same-Store Cash NOI | $ | 69,451 | $ | 68,716 |
Three Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Net income | $ | 66,280 | $ | 22,045 | |||||||
Depreciation and amortization expense | 47,040 | 38,582 | |||||||||
Interest expense | 18,299 | 13,498 | |||||||||
Gain on sale of investment properties, net | (53,894) | (4,757) | |||||||||
Impairment loss | — | 340 | |||||||||
Proportionate share of unconsolidated joint venture adjustments | 3,545 | 3,627 | |||||||||
EBITDAre | $ | 81,270 | $ | 73,335 | |||||||
Non-cash share compensation expense | 4,349 | 3,665 | |||||||||
Pursuit costs | 149 | 75 | |||||||||
Non-cash intangible amortization | 1,358 | 1,227 | |||||||||
Proportionate share of unconsolidated joint venture adjustments | (82) | — | |||||||||
Pro forma adjustments for investment activity | 871 | 585 | |||||||||
Adjusted EBITDAre | $ | 87,915 | $ | 78,887 |
Common shares sold | Weighted average price | Net proceeds | |||||||||||||||
Quarter ended March 31, 2022 | 259,977 | $ | 18.93 | $ | 4,871 | ||||||||||||
Quarter ended June 30, 2022 | 977,800 | 18.61 | 18,020 | ||||||||||||||
Quarter ended September 30, 2022 | 440,400 | 18.15 | 7,913 | ||||||||||||||
Year to date | 1,678,177 | $ | 18.54 | $ | 30,804 |
Period | (a) Total Number of Shares (or Units) Purchased | (b) Average Price Paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | ||||||||||||||||||||||
July 1, 2022 - July 31, 2022 | 123,903 | (1) | $ | 17.26 | N/A | N/A | ||||||||||||||||||||
August 1, 2022 - August 31, 2022 | — | — | N/A | N/A | ||||||||||||||||||||||
September 1, 2022 - September 30, 2022 | — | — | N/A | N/A | ||||||||||||||||||||||
Total | 123,903 | $ | 17.26 | — | — |
Exhibit No. | Description | |||||||
101.INS | This instance document does not appear in the interactive data file because of XBRL tags are embedded within the inline XBRL document. | |||||||
101.SCH | Inline XBRL Extension Schema Document (+) | |||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document (+) | |||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document (+) | |||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document (+) | |||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document (+) | |||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
PHYSICIANS REALTY TRUST | |||||
Date: November 4, 2022 | /s/ John T. Thomas | ||||
John T. Thomas | |||||
President and Chief Executive Officer | |||||
(Principal Executive Officer) | |||||
Date: November 4, 2022 | /s/ Jeffrey N. Theiler | ||||
Jeffrey N. Theiler | |||||
Executive Vice President and Chief Financial Officer | |||||
(Principal Financial Officer) |
Debt Instrument | Issuer | ||||
4.300% Senior Notes due 2027 | Physicians Realty L.P. | ||||
3.950% Senior Notes due 2028 | Physicians Realty L.P. | ||||
2.625% Senior Notes due 2031 | Physicians Realty L.P. |
Date: November 4, 2022 | /s/ John T. Thomas | ||||
John T. Thomas | |||||
President and Chief Executive Officer |
Date: November 4, 2022 | /s/ Jeffrey N. Theiler | ||||
Jeffrey N. Theiler | |||||
Executive Vice President and Chief Financial Officer |
/s/ John T. Thomas | |||||
John T. Thomas | |||||
President and Chief Executive Officer | |||||
/s/ Jeffrey N. Theiler | |||||
Jeffrey N. Theiler | |||||
Executive Vice President and Chief Financial Officer |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Equity: | ||
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 outstanding (in shares) | 226,763,146 | 224,678,116 |
Common stock, shares issued (in shares) | 226,763,146 | 224,678,116 |
Consolidated Statements of Income - USD ($) |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|||
Revenues: | ||||||
Rental and related revenues | $ 127,381,000 | $ 110,314,000 | $ 381,785,000 | $ 326,017,000 | ||
Interest income on real estate loans and other | 4,132,000 | 4,997,000 | 12,285,000 | 15,558,000 | ||
Total revenues | 131,513,000 | 115,311,000 | 394,070,000 | 341,575,000 | ||
Expenses: | ||||||
Interest expense | 18,299,000 | 13,498,000 | 52,356,000 | 40,754,000 | ||
General and administrative | 10,079,000 | 9,534,000 | 30,400,000 | 28,116,000 | ||
Operating expenses | 43,647,000 | 35,679,000 | 128,080,000 | 103,069,000 | ||
Depreciation and amortization | 47,040,000 | 38,582,000 | 142,002,000 | 114,663,000 | ||
Impairment loss | 0 | 340,000 | 0 | 340,000 | ||
Total expenses | 119,065,000 | 97,633,000 | 352,838,000 | 286,942,000 | ||
Income before equity in loss of unconsolidated entities and gain on sale of investment properties, net: | 12,448,000 | 17,678,000 | 41,232,000 | 54,633,000 | ||
Equity in loss of unconsolidated entities | (62,000) | (390,000) | (452,000) | (1,213,000) | ||
Gain on sale of investment properties, net | 53,894,000 | 4,757,000 | 57,375,000 | 5,111,000 | ||
Net income | 66,280,000 | 22,045,000 | 98,155,000 | 58,531,000 | ||
Net income attributable to noncontrolling interests: | ||||||
Operating Partnership | (3,252,000) | (529,000) | (4,830,000) | (1,405,000) | ||
Partially owned properties | [1] | (70,000) | (152,000) | (384,000) | (455,000) | |
Net income attributable to controlling interest | 62,958,000 | 21,364,000 | 92,941,000 | 56,671,000 | ||
Preferred distributions | 0 | 0 | 0 | (13,000) | ||
Net income attributable to common shareholders | $ 62,958,000 | $ 21,364,000 | $ 92,941,000 | $ 56,658,000 | ||
Net income per share: | ||||||
Basic (in dollars per share) | $ 0.28 | $ 0.10 | $ 0.41 | $ 0.26 | ||
Diluted (in dollars per share) | $ 0.28 | $ 0.10 | $ 0.41 | $ 0.26 | ||
Weighted average common shares: | ||||||
Weighted average common shares - basic (in shares) | 226,529,041 | 217,406,657 | 225,743,856 | 214,616,482 | ||
Weighted average common shares - diluted (in shares) | 239,898,462 | 223,992,049 | 239,145,383 | 221,399,649 | ||
Dividends and distributions declared per common share (in usd per share) | $ 0.23 | $ 0.23 | $ 0.69 | $ 0.69 | ||
|
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 66,280 | $ 22,045 | $ 98,155 | $ 58,531 |
Other comprehensive income: | ||||
Change in fair value of interest rate swap agreements, net | 1,753 | 465 | 6,215 | 1,805 |
Total other comprehensive income | 1,753 | 465 | 6,215 | 1,805 |
Comprehensive income | 68,033 | 22,510 | 104,370 | 60,336 |
Comprehensive income attributable to noncontrolling interests - Operating Partnership | (3,336) | (541) | (5,137) | (1,449) |
Comprehensive income attributable to noncontrolling interests - partially owned properties | (70) | (152) | (384) | (455) |
Comprehensive income attributable to common shareholders | $ 64,627 | $ 21,817 | $ 98,849 | $ 58,432 |
Organization and Business |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Business | Organization and Business Physicians Realty Trust (the “Trust” or the “Company”) was organized in the state of Maryland on April 9, 2013. As of September 30, 2022, the Trust was authorized to issue up to 500,000,000 common shares of beneficial interest, par value $0.01 per share. The Trust filed a Registration Statement on Form S-11 with 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, a Delaware limited partnership (the “Operating 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 REIT formed primarily to acquire, selectively develop, own, and manage health care properties that are leased to physicians, hospitals, and health care delivery systems. ATM Program In May 2021, the Trust and the Operating Partnership entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with KeyBanc Capital Markets Inc., Credit Agricole Securities (USA) Inc., BMO Capital Markets Corp., and Raymond James & Associates, Inc. in their capacity as agents for the Company and/or forward sellers and Stifel, Nicolaus & Company, Incorporated in its capacity as sales agent for the Company (collectively, the “Agents”) and Bank of Montreal, Credit Agricole Corporate and Investments Bank, KeyBanc Capital Markets Inc., and Raymond James & Associates, Inc. as forward purchasers for the Company (the “Forward Purchasers”), pursuant to which the Trust may issue and sell, from time to time, its common shares having an aggregate offering price of up to $500 million through the Agents (the “ATM Program”). The Sales Agreement contemplates that, in addition to the issuance and sale of the Trust’s common shares through the Agents, the Trust may also enter into one or more forward sales agreements from time to time in the future with each of the Forward Purchasers. During the quarters ended March 31, 2022, June 30, 2022 and September 30, 2022, the Trust issued and sold common shares through the ATM Program as follows (net proceeds in thousands):
As of September 30, 2022, the Trust has $300.1 million of common shares remaining available under the ATM Program.
|
Summary of Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies The accompanying unaudited consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the periods ended September 30, 2022 and 2021 pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited financial statements included in the Trust’s 2021 Annual Report. The Company has consistently applied its accounting policies to all periods presented in these consolidated financial statements. Noncontrolling Interests As of September 30, 2022, the Trust held a 95.1% interest in the Operating Partnership. As the sole general partner and the majority interest holder, the Trust consolidates the financial position and results of operations of the Operating Partnership. Redeemable Noncontrolling Interests - Partially Owned Properties In connection with the Company’s acquisitions of the medical office building, ambulatory surgery center, and hospital located on the Great Falls Hospital campus in Great Falls, Montana, physicians affiliated with the sellers retained non-controlling interests which were, at the holders’ option, able to be redeemed at any time after May 1, 2023. Due to the redemption provision, which was outside of the control of the Trust, the Trust classified the investment in the mezzanine section of its consolidated balance sheets. On July 14, 2022, the Company disposed of these three properties and removed the related redeemable noncontrolling interest from its consolidated balance sheets. Through a consolidated joint venture with MedProperties Realty Advisors, LLC (“MedProperties”), the Company acquired Calko Medical Center in Brooklyn, New York. As part of the joint venture, MedProperties can redeem its interest, at their option, at any time after September 9, 2025. Due to the redemption provision, which is outside of the control of the Company, the Company classifies the noncontrolling interests in the mezzanine section of its consolidated balance sheets. The Company records the carrying amount of the redeemable noncontrolling interests at the greater of the carrying value or redemption value. Dividends and Distributions On September 23, 2022, the Trust announced that its Board of Trustees authorized and the Trust declared a cash dividend of $0.23 per common share for the quarter ended September 30, 2022. The dividend was paid on October 14, 2022 to common shareholders and holders of record of partnership interests of the Operating Partnership (“OP Units”) as of the close of business on October 4, 2022. Tax Status of Dividends and Distributions The Company’s distributions of current and accumulated earnings and profits for U.S. federal income tax purposes generally are taxable to shareholders as ordinary income. Distributions in excess of these earnings and profits generally are treated as a non-taxable reduction of the shareholders’ basis in the shares to the extent thereof (non-dividend distributions) and thereafter as taxable gain. Any cash distributions received by an OP Unit holder in respect of its OP Units generally will not be taxable to such OP Unit holder for U.S. federal income tax purposes, to the extent that such distribution does not exceed the OP Unit holder’s basis in its OP Units. Any such distribution will instead reduce the OP Unit holder’s basis in its OP Units (and OP Unit holders will be subject to tax on the taxable income allocated to them by the Operating Partnership in respect of their OP Units when such income is earned by the Operating Partnership, with such income allocation increasing the OP Unit holders’ basis in their OP Units). The Company has elected taxable REIT subsidiary (“TRS”) status for certain of its corporate subsidiaries and, as a result, these entities will incur both federal and state income taxes on any taxable income of such entities after consideration of any net operating losses. To date, these income taxes have been de minimis. Impairment of Intangible and Long-Lived Assets The Company 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. The Company did not record impairment charges for the three and nine months ended September 30, 2022. The Company recorded an impairment charge of $0.3 million for the three and nine months ended September 30, 2021. Assets Held for Sale The Company may sell properties from time to time for various reasons, including favorable market conditions. The Company classifies certain long-lived assets as held for sale once the criteria, as defined by GAAP, have been met. The Company classifies a real estate property as held for sale when: (i) management has approved the disposition of the property, (ii) the property is available for sale in its present condition, (iii) an active program to locate a buyer has been initiated, (iv) it is probable that the property will be disposed of within one year, (v) the property is being marketed at a reasonable price relative to its fair value, and (vi) it is unlikely that the disposition plan will significantly change or be withdrawn. Following the classification of a property as “held for sale,” no further depreciation or amortization is recorded for the asset and the book value of the asset is written down to the lower of carrying value or fair market value, less cost to sell. As of September 30, 2022, the Company did not classify any properties as held for sale. Real Estate Loans Receivable, Net Real estate loans receivable consists of nine mezzanine loans, five term loans, and one construction loan as of September 30, 2022. Generally, each mezzanine loan is collateralized by a pledge of the borrower’s ownership interest in the respective real estate owner, each term loan is secured by a mortgage on a related medical office building, and construction loans are secured by mortgages on the land and the improvements as constructed. The reserve for loan losses was $0.3 million as of September 30, 2022. Rental and Related Revenues Rental revenue is recognized on a straight-line basis over the terms of the related leases when collectability is probable. 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, excluding assets classified as held for sale, are included in other assets and were approximately $99.5 million and $95.4 million as of September 30, 2022 and December 31, 2021, respectively. If the Company determines that collectability of straight-line rents is not probable, income recognition is limited to the lesser of cash collected, or lease income reflected on a straight-line basis, plus variable rent when it becomes accruable. In accordance with ASC 842, Leases, Topic 842, if the collectability of a lease changes after the commencement date, any difference between lease income that would have been recognized and the lease payments shall be recognized as an adjustment to lease income. Bad debt recognized as an adjustment to rental and related revenues was $0.2 million for the nine months ended September 30, 2022 and insignificant for the nine months ended September 30, 2021. Rental revenue is adjusted by the amortization of lease inducements and above-market or below-market rents on certain leases. Lease inducements and above-market or below-market rents are amortized on a straight-line basis over the remaining lease term. Rental and related revenues also include expense recoveries, which relate to tenant reimbursement of real estate taxes, insurance, and other operating expenses that are recognized in the period the applicable expenses are incurred. The reimbursements are recorded gross, as these costs are incurred by the Company and reimbursed by the tenants. We have certain tenants with absolute net leases. Under these lease agreements, the tenant is responsible for operating and building expenses and we do not recognize expense recoveries. New Accounting Pronouncements In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting, that provides optional relief to applying reference rate reform to changing reference rates, contracts, hedging relationships, and other transactions that reference LIBOR, which has been discontinued at the end of 2021. The amendments in this update are effective immediately and may be applied through December 31, 2022, though in October 2022, the FASB extended this date through December 31, 2024. The Company will continue to use published LIBOR rates through June of 2023 at which time the Company does not expect the replacement benchmark to have a material impact on the Company’s consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted. The Company adopted ASU 2020-06 on January 1, 2022, with no material effect on its consolidated financial statements.
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Investment and Disposition Activity |
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment and Disposition Activity | Investment and Disposition Activity During the nine months ended September 30, 2022, the Company completed the acquisition of two medical office facilities for an investment of $109.2 million and acquired a 49% membership interest in three properties through Davis Medical Investors, LLC (the “Davis Joint Venture”) for an aggregate purchase price of $8.0 million. The Company also paid $6.0 million of additional purchase consideration under three earn-out agreements and funded one mezzanine loan for $5.8 million, three term loans for $22.2 million, and $1.7 million of previous construction loan commitments. Additionally, the Company invested $4.7 million in funds managed by a real estate technology private equity fund, resulting in total investment activity of approximately $157.6 million as of September 30, 2022. As part of these investments, the Company incurred approximately $2.2 million of capitalized costs. Investment activity for the three months ended September 30, 2022, included the acquisition of one medical office facility for a purchase price of $81.5 million and the funding of two term loans for $14.1 million, $0.6 million of a previously announced term loan, and $0.4 million of previous construction loan commitments. The Company also paid $5.0 million of additional purchase consideration under two earn-out agreements and invested $0.3 million in funds managed by a real estate technology private equity fund, resulting in total investment activity of approximately $101.7 million as of September 30, 2022. The following table summarizes the acquisition date fair values of the assets acquired and the liabilities assumed in connection with the acquisition of the two medical office facilities, as well as follow-on capitalized costs during the nine months ended September 30, 2022, which the Company determined using Level 2 and Level 3 inputs (in thousands):
Dispositions During the nine months ended September 30, 2022, the Company sold five medical facilities, which included four medical office buildings and one hospital, representing 212,295 square feet for approximately $124.7 million, realizing an aggregate net gain of approximately $57.4 million.
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Intangibles |
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Intangibles | Intangibles The following is a summary of the carrying amount of intangible assets and liabilities, excluding assets classified as held for sale if applicable, as of September 30, 2022 and December 31, 2021 (in thousands):
The following is a summary of acquired lease intangible amortization for the three and nine month periods ended September 30, 2022 and 2021 (in thousands):
Future aggregate net amortization of acquired lease intangibles as of September 30, 2022, is as follows (in thousands):
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Other Assets |
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Other Assets | Other Assets Other assets consisted of the following, excluding assets classified as held for sale, if applicable, as of September 30, 2022 and December 31, 2021 (in thousands):
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Debt |
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Debt | Debt The following is a summary of debt as of September 30, 2022 and December 31, 2021 (in thousands):
(1)As of September 30, 2022, fixed interest mortgage notes bear interest from 3.33% to 4.63%, due in 2024, with a weighted average interest rate of 3.85%. As of December 31, 2021, fixed interest mortgage notes bear interest from 3.33% to 4.83%, due in 2022 and 2024, with a weighted average interest rate of 4.05%. The notes are collateralized by two properties with a net book value of $95.7 million as of September 30, 2022 and three properties with a net book value of $151.9 million as of December 31, 2021. One mortgage bears interest at LIBOR + 1.90% and the Trust entered into a pay-fixed receive-variable interest rate swap, fixing the LIBOR component of this rate at 1.43%. (2)Variable interest mortgage notes bear variable interest of LIBOR + 2.75% and SOFR + 1.85% for a weighted average interest rate of 4.87% and 1.95% as of September 30, 2022 and December 31, 2021, respectively. The notes are due in 2026 and 2028 and collateralized by four properties with a net book value of $297.7 million as of September 30, 2022 and $307.2 million as of December 31, 2021. On September 24, 2021, the Operating Partnership, as borrower, and the Trust, as guarantor, executed a Third Amended and Restated Credit Agreement (the “Credit Agreement”) which extended the maturity date of the revolving credit facility under the Credit Agreement to September 24, 2025 and reduced the interest rate margin applicable to borrowings. The Credit Agreement includes an unsecured revolving credit facility of $1.0 billion and contains a term loan feature of $250.0 million, bringing total borrowing capacity to $1.3 billion. The Credit Agreement also includes a swingline loan commitment for up to 10% of the maximum principal amount and provides an accordion feature allowing the Operating Partnership to increase borrowing capacity by up to an additional $500.0 million, subject to customary terms and conditions, resulting in a maximum borrowing capacity of $1.75 billion. The revolving credit facility under the Credit Agreement also includes two, six-month extension options. 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 September 30, 2022, the Trust had investment grade ratings of BBB from S&P and Baa2 from Moody’s. As such, borrowings under the revolving credit facility of the Credit Agreement accrue interest on the outstanding principal at a rate of LIBOR + 0.85%. The Credit Agreement includes a facility fee equal to 0.20% per annum, which is also determined by the Trust’s investment grade rating. On October 13, 2021, the Operating Partnership issued $500.0 million in aggregate principal amount of 2.625% Senior Notes due November 1, 2031 (the “2031 Senior Notes”) in a public offering and the Company used the proceeds from the 2031 Senior Notes to pay off a $250.0 million term loan feature of the Credit Agreement. The Operating Partnership simultaneously terminated the existing pay-fixed receive-variable rate swaps associated with the full term loan borrowing of $250.0 million. As part of the termination, the Company made total cash payments of $3.3 million to the counterparties of the swap agreements. As defined by the Credit Agreement, the term loan feature is no longer available to the Company. 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:
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, grant liens, or make distributions. The Company may, at any time, voluntarily prepay any revolving or term loan under the Credit Agreement in whole or in part without premium or penalty. As of September 30, 2022, the Company was in compliance with all financial covenants related to the Credit Agreement. The Credit Agreement includes customary representations and warranties by the Trust and the Operating Partnership and imposes customary covenants on the Operating Partnership and the Trust. 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. As of September 30, 2022, the Company had $262.0 million of borrowings outstanding under its unsecured revolving credit facility. As defined by the Credit Agreement, the current unencumbered borrowing base allows the Company to borrow an additional $738.0 million before reaching the maximum allowed under the credit facility. Notes Payable As of September 30, 2022, the Company had $1.5 billion aggregate principal amount of senior notes issued and outstanding by the Operating Partnership, comprised of $15.0 million maturing in 2023, $25.0 million maturing in 2025, $70.0 million maturing in 2026, $425.0 million maturing in 2027, $395.0 million maturing in 2028, and $545.0 million maturing in 2031. Certain properties have mortgage debt that contains financial covenants. As of September 30, 2022, the Trust was in compliance with all mortgage debt financial covenants. Scheduled principal payments due on consolidated debt as of September 30, 2022 are as follows (in thousands):
As of September 30, 2022, the Company had total consolidated indebtedness of approximately $1.9 billion. The weighted average interest rate on consolidated indebtedness was 3.75% (based on the 30-day LIBOR rate of 2.92% and a SOFR rate of 2.98% as of September 30, 2022). For the three months ended September 30, 2022 and 2021, the Company incurred interest expense on its debt, exclusive of deferred financing cost amortization, of $17.7 million and $12.9 million, respectively. For the nine months ended September 30, 2022 and 2021, the Company incurred interest expense on its debt, exclusive of deferred financing cost amortization, of $50.6 million and $39.0 million, respectively.
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Derivatives |
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Derivative Instrument Detail [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | Derivatives In the normal course of business, a variety of financial instruments are used to manage or hedge interest rate risk. The Company has implemented ASC 815, Derivatives and Hedging (“ASC 815”), which establishes accounting and reporting standards requiring that all derivatives, including certain derivative instruments embedded in other contracts, be recorded as either an asset or a liability measured at their fair value unless they qualify for a normal purchase or normal sales exception. When specific hedge accounting criteria are not met, ASC 815 requires that changes in a derivative’s fair value be recognized currently in earnings. Changes in the fair market values of the Company’s derivative instruments are recorded in the consolidated statements of income if such derivatives do not qualify for, or the Company does not elect to apply for, hedge accounting. As a result of the Company’s adoption of ASU 2017-12 as of January 1, 2019, the entire change in the fair value of its derivatives designated and qualified as cash flow hedges are recorded in accumulated other comprehensive income on the consolidated balance sheets and are subsequently reclassified into earnings in the period in which the hedged forecasted transaction affects earnings. To manage interest rate risk for certain of its variable-rate debt, the Company uses interest rate swaps as part of its risk management strategy. These derivatives are designed to mitigate the risk of future interest rate increases by providing a fixed interest rate for a limited, pre-determined period of time. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of September 30, 2022, the Company had one outstanding interest rate swap contract designated as a cash flow hedge of interest rate risk. See Note 2 (Summary of Significant Accounting Policies) of the 2021 Annual Report for a further discussion of our derivatives. In addition, the Company recognizes its share of other comprehensive income (loss) related to derivative instruments held by unconsolidated entities. The following table summarizes the location and aggregate fair value of the interest rate swaps on the Company’s consolidated balance sheets (in thousands):
(1)1.43% effective swap rate plus 1.90% spread per hedging agreement.
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Accrued Expenses and Other Liabilities |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses and Other Liabilities | Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands):
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Stock-based Compensation |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based Compensation | Stock-based Compensation The Company 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. Any common shares issued pursuant to the Company's incentive equity compensation and employee stock purchase plans will result in the Operating Partnership issuing OP Units to the Trust on a one-for-one basis, with the Operating Partnership receiving the net cash proceeds of such issuances. Certain of the Company’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 Company’s determination of the amount of stock compensation expense requires judgment in estimating the probability of achievement of these performance targets. Subsequent changes in actual experience are monitored and estimates are updated as information is available. In connection with the IPO, the Trust adopted the 2013 Equity Incentive Plan, which made shares available for awards for participants. On April 30, 2019, at the Annual Meeting of Shareholders of Physicians Realty Trust, the Trust’s shareholders approved the Amended and Restated Physicians Realty Trust 2013 Equity Incentive Plan (“2013 Plan”). The amendment increased the number of common shares authorized for issuance under the 2013 Plan to a total of 7,000,000 common shares authorized for issuance. The 2013 Plan term was also extended to 2029. Restricted Common Shares Restricted common shares granted under the 2013 Plan are eligible for dividends as well as the right to vote. In the nine month period ended September 30, 2022, the Trust granted a total of 247,579 restricted common shares with a total value of $4.1 million to its officers and certain of its employees. These awards have a vesting period of to three years. A summary of the status of the Trust’s non-vested restricted common shares as of September 30, 2022 and changes during the nine month period then ended follow:
For all service awards, the Company records compensation expense for the entire award on a straight-line basis over the requisite service period. For the three months ended September 30, 2022 and 2021, the Company recognized non-cash share compensation of $1.0 million. For the nine months ended September 30, 2022 and 2021, the Company recognized non-cash share compensation of $2.9 million and $2.8 million, respectively. Unrecognized compensation expense at September 30, 2022 was $2.5 million. Restricted Share Units In January 2022, under the 2013 Plan, the Company granted 7,800 restricted share units to certain of its trustees in lieu of all or a portion of such trustee’s 2022 cash retainer. These units are subject to certain timing conditions and a one-year service period. Each restricted share unit contains one dividend equivalent. Each 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. With respect to the performance and timing conditions of the January 2022 grants, the grant date fair value of $18.83 per unit was based on the share price at the date of grant. In March 2022, under the 2013 Plan, the Company granted restricted share units at a target level of 299,019 to its officers and certain of its employees and 56,204 to its trustees. Units granted to officers and certain employees under the Company’s 2013 Plan are subject to certain performance and market conditions and a three-year service period. Units granted to trustees are subject to certain timing conditions and a two-year service period for full vesting. Each restricted share unit contains one dividend equivalent. Each 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 30% of the restricted share units issued to officers and certain employees under the Company’s 2013 Plan in 2022 vest based on a certain market condition. The awards containing the market condition were valued with the assistance of independent valuation specialists. The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $30.17 per unit for the March 2022 grant using the following assumptions:
The remaining 70% of the restricted share units issued to officers and certain employees under the Company’s 2013 Plan, and 100% of other restricted share units issued to trustees vest based upon certain performance or timing conditions. With respect to the performance and timing conditions of the March 2022 grants, the grant date fair value of $16.37 per unit was based on the share price at the date of grant. The combined weighted average grant date fair value of the March 2022 restricted share units issued to officers and certain employees is $20.51 per unit. The following is a summary of the activity in the Trust’s restricted share units during the nine months ended September 30, 2022:
(1)Restricted units vested by Company executives in 2022 resulted in the issuance of 361,679 common shares, less 160,573 common shares withheld to cover minimum withholding tax obligations. For the three months ended September 30, 2022 and 2021, the Company recognized non-cash share compensation of $3.3 million and $2.7 million, respectively. For the nine months ended September 30, 2022 and 2021, the Company recognized non-cash share compensation of $9.4 million and $8.0 million, respectively. Unrecognized compensation expense at September 30, 2022 was $14.1 million.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | 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 Company 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. As part of the Company’s acquisition process, Level 3 inputs are used to measure the fair value of the assets acquired and liabilities assumed. The Company’s derivative instruments as of September 30, 2022 consist of one interest rate swap, as detailed in the Derivative Instruments section of Note 7 (Derivatives) of this report and Note 2 (Summary of Significant Accounting Policies) of Part II, Item 8 (Financial Statements and Supplementary Data) of our 2021 Annual Report. The interest rate swap is not traded on an exchange. The Company’s derivative assets and 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 Company measures its derivatives at fair value on a recurring basis. The fair values are based on Level 2 inputs described above. The Company considers its own credit risk, as well as the credit risk of its counterparties, when evaluating the fair value of its derivatives. The Company 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 September 30, 2022. 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 primarily on Level 2 inputs. The following table presents the fair value of the Company’s financial instruments (in thousands):
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Tenant Operating Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Tenant Operating Leases | Tenant Operating Leases The Company is a lessor of medical office buildings and other health care facilities. Leases have expirations from 2022 through 2042. As of September 30, 2022, the future minimum rental payments on non-cancelable leases, exclusive of expense recoveries and minimum rental payments for assets classified as held for sale, if applicable, were as follows (in thousands):
For the three months ended September 30, 2022 and 2021, the Company recognized $127.4 million and $110.3 million, respectively, of rental and other lease-related income related to our operating leases, of which $36.6 million and $29.2 million, respectively, were variable lease payments. For the nine months ended September 30, 2022 and 2021, the Company recognized $381.8 million and $326.0 million, respectively, of rental and other lease-related income related to our operating leases, of which $107.5 million and $84.0 million, respectively, were variable lease payments.
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Rent Expense |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rent Expense | Rent Expense The Company leases the rights to parking structures at two of its properties, the air space above one property, and the land upon which 97 of its properties are located from third party land owners pursuant to separate leases. In addition, the Company has nine corporate leases, primarily for office space. The Company’s leases include both fixed and variable rental payments and may also include escalation clauses and renewal options. These leases have terms of up to 92 years remaining, excluding extension options, with a weighted average remaining term of 44 years. At the inception of a new lease, the Company establishes an operating or finance lease asset and operating or finance lease liability calculated as the present value of future minimum lease payments. As our leases do not provide an implicit rate, we calculate a discount rate that approximates our incremental borrowing rate available at lease commencement to determine the present value of future minimum lease payments. The approximated weighted average discount rate was 4.4% as of September 30, 2022. There are no operating or finance leases that have not yet commenced that would have a significant impact on the Company’s consolidated balance sheets. As of September 30, 2022, the future minimum lease obligations under non-cancelable parking, air, ground, and corporate leases were as follows (in thousands):
Lease costs consisted of the following for the nine months ended September 30, 2022 (in thousands):
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Credit Concentration |
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Credit Concentration | Credit Concentration The Company uses gross leasable area (“GLA”) as its credit concentration metric. The following table summarizes certain information about the Company’s top five tenant credit concentrations as of September 30, 2022:
GLA from the Company’s top five tenant relationships comprises 20.4% of its total leased GLA as of September 30, 2022. Total GLA from CommonSpirit Health affiliated tenants totals 18.8%, including the affiliates disclosed above. The following table summarizes certain information about the Company’s top five geographic concentrations as of September 30, 2022:
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | 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):
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |
Noncontrolling Interests | Noncontrolling Interests As of September 30, 2022, the Trust held a 95.1% interest in the Operating Partnership. As the sole general partner and the majority interest holder, the Trust consolidates the financial position and results of operations of the Operating Partnership.
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Tax Status of Dividends and Distributions | Tax Status of Dividends and Distributions The Company’s distributions of current and accumulated earnings and profits for U.S. federal income tax purposes generally are taxable to shareholders as ordinary income. Distributions in excess of these earnings and profits generally are treated as a non-taxable reduction of the shareholders’ basis in the shares to the extent thereof (non-dividend distributions) and thereafter as taxable gain. Any cash distributions received by an OP Unit holder in respect of its OP Units generally will not be taxable to such OP Unit holder for U.S. federal income tax purposes, to the extent that such distribution does not exceed the OP Unit holder’s basis in its OP Units. Any such distribution will instead reduce the OP Unit holder’s basis in its OP Units (and OP Unit holders will be subject to tax on the taxable income allocated to them by the Operating Partnership in respect of their OP Units when such income is earned by the Operating Partnership, with such income allocation increasing the OP Unit holders’ basis in their OP Units). The Company has elected taxable REIT subsidiary (“TRS”) status for certain of its corporate subsidiaries and, as a result, these entities will incur both federal and state income taxes on any taxable income of such entities after consideration of any net operating losses. To date, these income taxes have been de minimis.
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Impairment of Intangible and Long-Lived Assets | Impairment of Intangible and Long-Lived AssetsThe Company 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. |
Assets Held for Sale | Assets Held for SaleThe Company may sell properties from time to time for various reasons, including favorable market conditions. The Company classifies certain long-lived assets as held for sale once the criteria, as defined by GAAP, have been met. The Company classifies a real estate property as held for sale when: (i) management has approved the disposition of the property, (ii) the property is available for sale in its present condition, (iii) an active program to locate a buyer has been initiated, (iv) it is probable that the property will be disposed of within one year, (v) the property is being marketed at a reasonable price relative to its fair value, and (vi) it is unlikely that the disposition plan will significantly change or be withdrawn. Following the classification of a property as “held for sale,” no further depreciation or amortization is recorded for the asset and the book value of the asset is written down to the lower of carrying value or fair market value, less cost to sell. |
Real Estate Loans Receivable, Net | Real Estate Loans Receivable, Net |
Rental and Related Revenues | Rental and Related Revenues Rental revenue is recognized on a straight-line basis over the terms of the related leases when collectability is probable. 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, excluding assets classified as held for sale, are included in other assets and were approximately $99.5 million and $95.4 million as of September 30, 2022 and December 31, 2021, respectively. If the Company determines that collectability of straight-line rents is not probable, income recognition is limited to the lesser of cash collected, or lease income reflected on a straight-line basis, plus variable rent when it becomes accruable. In accordance with ASC 842, Leases, Topic 842, if the collectability of a lease changes after the commencement date, any difference between lease income that would have been recognized and the lease payments shall be recognized as an adjustment to lease income. Bad debt recognized as an adjustment to rental and related revenues was $0.2 million for the nine months ended September 30, 2022 and insignificant for the nine months ended September 30, 2021. Rental revenue is adjusted by the amortization of lease inducements and above-market or below-market rents on certain leases. Lease inducements and above-market or below-market rents are amortized on a straight-line basis over the remaining lease term. Rental and related revenues also include expense recoveries, which relate to tenant reimbursement of real estate taxes, insurance, and other operating expenses that are recognized in the period the applicable expenses are incurred. The reimbursements are recorded gross, as these costs are incurred by the Company and reimbursed by the tenants. We have certain tenants with absolute net leases. Under these lease agreements, the tenant is responsible for operating and building expenses and we do not recognize expense recoveries.
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New Accounting Pronouncements | New Accounting Pronouncements In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting, that provides optional relief to applying reference rate reform to changing reference rates, contracts, hedging relationships, and other transactions that reference LIBOR, which has been discontinued at the end of 2021. The amendments in this update are effective immediately and may be applied through December 31, 2022, though in October 2022, the FASB extended this date through December 31, 2024. The Company will continue to use published LIBOR rates through June of 2023 at which time the Company does not expect the replacement benchmark to have a material impact on the Company’s consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted. The Company adopted ASU 2020-06 on January 1, 2022, with no material effect on its consolidated financial statements.
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Derivatives | In the normal course of business, a variety of financial instruments are used to manage or hedge interest rate risk. The Company has implemented ASC 815, Derivatives and Hedging (“ASC 815”), which establishes accounting and reporting standards requiring that all derivatives, including certain derivative instruments embedded in other contracts, be recorded as either an asset or a liability measured at their fair value unless they qualify for a normal purchase or normal sales exception. When specific hedge accounting criteria are not met, ASC 815 requires that changes in a derivative’s fair value be recognized currently in earnings. Changes in the fair market values of the Company’s derivative instruments are recorded in the consolidated statements of income if such derivatives do not qualify for, or the Company does not elect to apply for, hedge accounting. As a result of the Company’s adoption of ASU 2017-12 as of January 1, 2019, the entire change in the fair value of its derivatives designated and qualified as cash flow hedges are recorded in accumulated other comprehensive income on the consolidated balance sheets and are subsequently reclassified into earnings in the period in which the hedged forecasted transaction affects earnings. To manage interest rate risk for certain of its variable-rate debt, the Company uses interest rate swaps as part of its risk management strategy. These derivatives are designed to mitigate the risk of future interest rate increases by providing a fixed interest rate for a limited, pre-determined period of time. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of September 30, 2022, the Company had one outstanding interest rate swap contract designated as a cash flow hedge of interest rate risk. See Note 2 (Summary of Significant Accounting Policies) of the 2021 Annual Report for a further discussion of our derivatives. In addition, the Company recognizes its share of other comprehensive income (loss) related to derivative instruments held by unconsolidated entities.
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Fair Value Measurements | The Company’s derivative instruments as of September 30, 2022 consist of one interest rate swap, as detailed in the Derivative Instruments section of Note 7 (Derivatives) of this report and Note 2 (Summary of Significant Accounting Policies) of Part II, Item 8 (Financial Statements and Supplementary Data) of our 2021 Annual Report. The interest rate swap is not traded on an exchange. The Company’s derivative assets and 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 Company measures its derivatives at fair value on a recurring basis. The fair values are based on Level 2 inputs described above. The Company considers its own credit risk, as well as the credit risk of its counterparties, when evaluating the fair value of its derivatives. The Company 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 September 30, 2022. 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 primarily on Level 2 inputs.
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Stock-based Compensation | The Company 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. Any common shares issued pursuant to the Company's incentive equity compensation and employee stock purchase plans will result in the Operating Partnership issuing OP Units to the Trust on a one-for-one basis, with the Operating Partnership receiving the net cash proceeds of such issuances. Certain of the Company’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 Company’s determination of the amount of stock compensation expense requires judgment in estimating the probability of achievement of these performance targets. Subsequent changes in actual experience are monitored and estimates are updated as information is available.
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Organization and Business (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Sale Or Issuance Of Common Stock | During the quarters ended March 31, 2022, June 30, 2022 and September 30, 2022, the Trust issued and sold common shares through the ATM Program as follows (net proceeds in thousands):
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Investment and Disposition Activity (Tables) |
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the acquisition date fair values of the assets acquired and the liabilities assumed in connection with the acquisition of the two medical office facilities, as well as follow-on capitalized costs during the nine months ended September 30, 2022, which the Company determined using Level 2 and Level 3 inputs (in thousands):
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Intangibles (Tables) |
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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, excluding assets classified as held for sale if applicable, as of September 30, 2022 and December 31, 2021 (in thousands):
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Summary of the carrying amount of acquired lease intangibles | The following is a summary of acquired lease intangible amortization for the three and nine month periods ended September 30, 2022 and 2021 (in thousands):
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Schedule of future amortization of the acquired lease intangibles | Future aggregate net amortization of acquired lease intangibles as of September 30, 2022, is as follows (in thousands):
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Other Assets (Tables) |
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Other Assets, Unclassified [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other assets | Other assets consisted of the following, excluding assets classified as held for sale, if applicable, as of September 30, 2022 and December 31, 2021 (in thousands):
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt | The following is a summary of debt as of September 30, 2022 and December 31, 2021 (in thousands):
(1)As of September 30, 2022, fixed interest mortgage notes bear interest from 3.33% to 4.63%, due in 2024, with a weighted average interest rate of 3.85%. As of December 31, 2021, fixed interest mortgage notes bear interest from 3.33% to 4.83%, due in 2022 and 2024, with a weighted average interest rate of 4.05%. The notes are collateralized by two properties with a net book value of $95.7 million as of September 30, 2022 and three properties with a net book value of $151.9 million as of December 31, 2021. One mortgage bears interest at LIBOR + 1.90% and the Trust entered into a pay-fixed receive-variable interest rate swap, fixing the LIBOR component of this rate at 1.43%. (2)Variable interest mortgage notes bear variable interest of LIBOR + 2.75% and SOFR + 1.85% for a weighted average interest rate of 4.87% and 1.95% as of September 30, 2022 and December 31, 2021, respectively. The notes are due in 2026 and 2028 and collateralized by four properties with a net book value of $297.7 million as of September 30, 2022 and $307.2 million as of December 31, 2021.
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Schedule of adjusted LIBOR rate loans and interest rates based on credit rating | 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:
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Schedule of principal payments due on debt | Scheduled principal payments due on consolidated debt as of September 30, 2022 are as follows (in thousands):
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Derivatives (Tables) |
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Derivative Instrument Detail [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of interest rate derivatives | The following table summarizes the location and aggregate fair value of the interest rate swaps on the Company’s consolidated balance sheets (in thousands):
(1)1.43% effective swap rate plus 1.90% spread per hedging agreement.
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Accrued Expenses and Other Liabilities (Tables) |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accrued expenses and other liabilities | Accrued expenses and other liabilities consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands):
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Stock-based Compensation (Tables) |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of non-vested restricted common shares | A summary of the status of the Trust’s non-vested restricted common shares as of September 30, 2022 and changes during the nine month period then ended follow:
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Schedule of weighted average grant date fair value assumptions | The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $30.17 per unit for the March 2022 grant using the following assumptions:
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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 the nine months ended September 30, 2022:
(1)Restricted units vested by Company executives in 2022 resulted in the issuance of 361,679 common shares, less 160,573 common shares withheld to cover minimum withholding tax obligations.
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Fair Value Measurements (Tables) |
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value of other financial instruments | The following table presents the fair value of the Company’s financial instruments (in thousands):
|
Tenant Operating Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Lessor, operating lease, payments to be received, maturity | As of September 30, 2022, the future minimum rental payments on non-cancelable leases, exclusive of expense recoveries and minimum rental payments for assets classified as held for sale, if applicable, were as follows (in thousands):
|
Rent Expense (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future minimum lease obligations under non-cancelable ground leases | As of September 30, 2022, the future minimum lease obligations under non-cancelable parking, air, ground, and corporate leases were as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease cost | Lease costs consisted of the following for the nine months ended September 30, 2022 (in thousands):
|
Credit Concentration (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentration Risks, Types, No Concentration Percentage [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedules of concentration of risk, by risk factor | The following table summarizes certain information about the Company’s top five tenant credit concentrations as of September 30, 2022:
The following table summarizes certain information about the Company’s top five geographic concentrations as of September 30, 2022:
|
Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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):
|
Organization and Business - Additional Information (Details) - $ / shares |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Organization and Business - ATM Program (Details) - Private Placement - ATM Program - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
May 31, 2021 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Sep. 30, 2022 |
|
Maximum | |||||
Class of Stock [Line Items] | |||||
Aggregate offering price of common stock | $ 500,000,000 | ||||
Operating Partnership | |||||
Class of Stock [Line Items] | |||||
Common shares sold (in shares) | 440,400 | 977,800 | 259,977 | 1,678,177 | |
Weighted average price (in dollars per share) | $ 18.15 | $ 18.61 | $ 18.93 | $ 18.54 | |
Proceeds from issuance of common stock | $ 7,913,000 | $ 18,020,000 | $ 4,871,000 | $ 30,804,000 | |
Sale of stock, remaining authorized amount | $ 300,100,000 | $ 300,100,000 |
Summary of Significant Accounting Policies - Noncontrolling Interests and Redeemable Noncontrolling Interests (Details) - facility |
9 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Jul. 14, 2022 |
|
Disposal Group, Held-for-sale, Not Discontinued Operations | ||
Business Acquisition [Line Items] | ||
Number of real estate properties | 3 | |
Physicians Realty Trust | ||
Business Acquisition [Line Items] | ||
Percentage of interest held | 95.10% |
Summary of Significant Accounting Policies - Dividends and Distributions (Details) - $ / shares |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 23, 2022 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Accounting Policies [Abstract] | |||||
Dividends and distributions declared per common share and OP Unit (in dollars per share) | $ 0.23 | $ 0.23 | $ 0.23 | $ 0.69 | $ 0.69 |
Summary of Significant Accounting Policies - Impairment of Intangible and Long-Lived Assets (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Accounting Policies [Abstract] | ||||
Impairment loss | $ 0 | $ 340,000 | $ 0 | $ 340,000 |
Summary of Significant Accounting Policies - Assets Held for Sale (Details) |
Sep. 30, 2022
property
|
---|---|
Accounting Policies [Abstract] | |
Number of real estate properties held for sale | 0 |
Summary of Significant Accounting Policies - Real Estate Loans Receivable, Net (Details) $ in Millions |
Sep. 30, 2022
USD ($)
loan
|
---|---|
Property, Plant and Equipment [Line Items] | |
Financing receivable, allowance for credit loss | $ | $ 0.3 |
Mezzanine Loan Receivable | |
Property, Plant and Equipment [Line Items] | |
Number of mezzanine loans collateralized | 9 |
Term Loan Receivable | |
Property, Plant and Equipment [Line Items] | |
Number of mezzanine loans collateralized | 5 |
Construction Loans | |
Property, Plant and Equipment [Line Items] | |
Number of mezzanine loans collateralized | 1 |
Summary of Significant Accounting Policies - Rental and Related Revenues (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 31, 2021 |
|
Accounting Policies [Abstract] | |||
Straight line rent receivable, net | $ 99,494 | $ 95,443 | |
Allowance for loan and lease loss, recovery of bad debts | $ 200 | $ 0 |
Intangibles - Summary of Carrying Amount of Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Liabilities | ||
Below-market leases, net | $ 24,970 | $ 21,569 |
In-place leases | ||
Assets: | ||
Cost | 445,583 | 441,072 |
Accumulated Amortization | (230,930) | (201,885) |
Net | 214,653 | 239,187 |
Above-market leases | ||
Assets: | ||
Cost | 59,752 | 57,149 |
Accumulated Amortization | (28,662) | (24,437) |
Net | 31,090 | 32,712 |
Below-market leases | ||
Liabilities | ||
Below-market leases, cost | 37,002 | 32,155 |
Below-market leases, accumulated amortization | (12,032) | (10,585) |
Below-market leases, net | $ 24,970 | $ 21,570 |
Intangibles - Summary of Acquired Amortization (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Amortization expense related to in-place leases | ||||
Intangibles | ||||
Amortization expense related to in-place leases | $ 10,629 | $ 8,103 | $ 32,814 | $ 24,590 |
Decrease in rental income related to above-market leases | ||||
Intangibles | ||||
Decrease of rental income | 1,384 | 897 | 4,390 | 2,744 |
Below market in-place lease intangibles | ||||
Intangibles | ||||
Increase in rental income related to below-market leases | $ 556 | $ 324 | $ 1,522 | $ 963 |
Intangibles - Additional Information (Details) |
9 Months Ended |
---|---|
Sep. 30, 2022
property
| |
Intangibles | |
Number of real estate properties held for sale | 0 |
In-place lease intangibles | |
Intangibles | |
Weighted average amortization period for lease intangibles | 7 years |
Above-market leases | |
Intangibles | |
Weighted average amortization period for lease intangibles | 7 years |
Leasehold Interest | |
Intangibles | |
Weighted average amortization period for lease intangibles | 7 years |
Below market in-place lease intangibles | |
Intangibles | |
Weighted average amortization period for lease intangibles | 16 years |
Intangibles - Future Aggregate Net Amortization of Acquired Lease Intangibles (Details) $ in Thousands |
Sep. 30, 2022
USD ($)
|
---|---|
Net Decrease in Revenue | |
2022 | $ 845 |
2023 | 3,191 |
2024 | 2,929 |
2025 | 2,357 |
2026 | 1,203 |
Thereafter | (4,405) |
Total | 6,120 |
Net Increase in Expenses | |
2022 | 10,712 |
2023 | 40,616 |
2024 | 34,718 |
2025 | 29,208 |
2026 | 23,095 |
Thereafter | 76,304 |
Total | $ 214,653 |
Other Assets - Schedule of Other Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Other Assets, Unclassified [Abstract] | ||
Straight line rent receivable, net | $ 99,494 | $ 95,443 |
Prepaid expenses | 13,866 | 8,910 |
Leasing commissions, net | 12,887 | 11,627 |
Lease inducements, net | 8,119 | 8,293 |
Interest rate swap | 2,071 | 0 |
Escrows | 1,434 | 1,780 |
Notes receivable, net | 1,326 | 1,097 |
Other | 4,372 | 4,434 |
Total | $ 143,569 | $ 131,584 |
Debt - Scheduled Principal Payments (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Debt Disclosure [Abstract] | ||
2022 | $ 248 | |
2023 | 16,008 | |
2024 | 59,719 | |
2025 | 287,476 | |
2026 | 170,476 | |
Thereafter | 1,368,251 | |
Total Payments | $ 1,902,178 | $ 1,930,024 |
Derivatives - Additional Information (Details) |
Sep. 30, 2022
instrument
|
---|---|
Derivative assets | |
Derivative [Line Items] | |
Outstanding interest rate swap contracts designated as cash flow hedges | 1 |
Accrued Expenses and Other Liabilities - Schedule of Accrued Expense and Other Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Real estate taxes payable | $ 29,173 | $ 23,487 |
Prepaid rent | 24,556 | 22,714 |
Accrued interest | 11,208 | 18,799 |
Accrued expenses | 8,694 | 5,960 |
Accrued incentive compensation | 5,166 | 1,784 |
Security deposits | 4,451 | 4,234 |
Tenant improvement allowances | 1,831 | 1,857 |
Interest rate swap | 0 | 452 |
Other | 7,415 | 6,967 |
Total | $ 92,494 | $ 86,254 |
Stock-based Compensation - Additional Information (Details) - Restricted common shares - 2013 Plan - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Apr. 30, 2019 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Maximum number of shares authorized (in shares) | 7,000,000 | |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 1 year | |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years |
Stock-based Compensation - Summary of the Status of the Trust's Non-Vested Restricted Common Shares (Details) - 2013 Plan - Restricted common shares |
9 Months Ended |
---|---|
Sep. 30, 2022
$ / shares
shares
| |
Common Shares | |
Non-vested at the beginning of the period (in shares) | shares | 247,447 |
Granted (in shares) | shares | 247,579 |
Vested (in shares) | shares | (213,572) |
Forfeited (in shares) | shares | (5,356) |
Non-vested at the end of the period (in shares) | shares | 276,098 |
Weighted Average Grant Date Fair Value | |
Non-vested at beginning of period (in dollars per share) | $ / shares | $ 17.41 |
Granted (in dollars per share) | $ / shares | 16.53 |
Vested (in dollars per share) | $ / shares | 17.29 |
Forfeited (in dollars per share) | $ / shares | 18.01 |
Non-vested at end of period (in dollars per share) | $ / shares | $ 16.70 |
Stock-based Compensation - Restricted Share Assumptions (Details) - 2013 Plan - Restricted share units (RSUs) |
1 Months Ended |
---|---|
Mar. 31, 2022
$ / shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Volatility | 33.90% |
Expected term in years | 2 years 10 months 2 days |
Risk-free rate | 1.44% |
Share price (per share) | $ 16.37 |
Fair Value Measurements - Additional Information (Details) |
Sep. 30, 2022
asset
instrument
|
---|---|
Fair value, measurements, nonrecurring | |
Fair value of other financial instruments | |
Number of assets measured at fair value | asset | 0 |
Derivative assets | |
Fair value of other financial instruments | |
Outstanding interest rate swap contracts designated as cash flow hedges | instrument | 1 |
Tenant Operating Leases - Schedule of Future Minimum Rental Payments (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022
USD ($)
property
|
Sep. 30, 2021
USD ($)
|
Sep. 30, 2022
USD ($)
property
|
Sep. 30, 2021
USD ($)
|
|
Leases [Abstract] | ||||
Number of real estate properties held for sale | property | 0 | 0 | ||
2022 | $ 89,516 | $ 89,516 | ||
2023 | 356,202 | 356,202 | ||
2024 | 342,641 | 342,641 | ||
2025 | 321,991 | 321,991 | ||
2026 | 264,367 | 264,367 | ||
Thereafter | 896,326 | 896,326 | ||
Total | 2,271,043 | 2,271,043 | ||
Operating lease, lease income | 127,400 | $ 110,300 | 381,800 | $ 326,000 |
Operating lease, variable lease income | $ 36,600 | $ 29,200 | $ 107,500 | $ 84,000 |
Rent Expense - Additional Information (Details) |
9 Months Ended |
---|---|
Sep. 30, 2022
property
lease
| |
Leases [Abstract] | |
Number of properties subject to parking lease | 2 |
Number of properties subject to air space lease | 1 |
Number of properties subject to ground leases | 97 |
Number of office space leases | lease | 9 |
Maximum lease terms | 92 years |
Operating lease, weighted average remaining lease term | 44 years |
Operating lease, weighted average discount rate, percent | 4.40% |
Number of real estate properties held for sale | 0 |
Rent Expense - Schedule of Future Minimum Lease Obligations (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Leases [Abstract] | ||
2022 | $ 1,160 | |
2023 | 4,798 | |
2024 | 4,770 | |
2025 | 4,751 | |
2026 | 4,752 | |
Thereafter | 243,544 | |
Total undiscounted lease payments | 263,775 | |
Less: Interest | (158,870) | |
Present value of lease liabilities | $ 104,905 | $ 104,957 |
Rent Expense - Lease Cost (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2022
USD ($)
| |
Leases [Abstract] | |
Fixed lease cost | $ 2,476 |
Variable lease cost | 959 |
Total lease cost | $ 3,435 |
Credit Concentration - Additional Information (Details) - Sales Revenue, Services, Net - Customer Concentration Risk |
9 Months Ended |
---|---|
Sep. 30, 2022
Rate
| |
Concentration Risk [Line Items] | |
Percent of Leased GLA | 100.00% |
Top five tenant relationships | |
Concentration Risk [Line Items] | |
Percent of Leased GLA | 20.40% |
CHI Portfolio | |
Concentration Risk [Line Items] | |
Percent of Leased GLA | 18.80% |
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