Delaware | 80-0941870 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
309 N. Water Street Suite 500 Milwaukee, Wisconsin | 53202 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer o | Accelerated filer o | |
Non-accelerated filer x (Do not check if a smaller reporting company) | Smaller reporting company o |
Page | |
• | general economic conditions; |
• | adverse economic or real estate developments, either nationally or in the markets in which our properties are located; |
• | our failure to generate sufficient cash flows to service our outstanding indebtedness; |
• | fluctuations in interest rates and increased operating costs; |
• | the availability, terms and deployment of debt and equity capital, including our unsecured revolving credit facility; |
• | our ability to make distributions to our OP Unit holders; |
• | our limited operating history; |
• | our increased vulnerability economically due to the concentration of our investments in healthcare properties; |
• | our geographic concentrations in Texas and metro Atlanta, Georgia causes us to be particularly exposed to downturns in these local economies or other changes in local real estate market conditions; |
• | changes in our business or strategy; |
• | our dependence upon our general partner's key personnel whose continued service is not guaranteed; |
• | our general partner's ability to identify, hire and retain highly qualified personnel in the future; |
• | the degree and nature of our competition; |
• | changes in governmental regulations, tax rates and similar matters; |
• | defaults on or non-renewal of leases by tenants; |
• | decreased rental rates or increased vacancy rates; |
• | difficulties in identifying healthcare properties to acquire and complete acquisitions; |
• | competition for investment opportunities; |
• | our failure to successfully develop, integrate and operate acquired properties and operations; |
• | the impact of our investment in joint ventures; |
• | the financial condition and liquidity of, or disputes with, any joint venture and development partners with whom we may make co-investments in the future; |
• | cybersecurity incidents could disrupt our business and result in the compromise of confidential information; |
• | changes in accounting principles generally accepted in the United States (or GAAP); |
• | lack of or insufficient amounts of insurance; |
• | other factors affecting the real estate industry generally; |
• | limitations imposed on our business as a result of our general partner's compliance with complex rules in order for it to qualify as a REIT for U.S. federal income tax purposes; |
• | changes in governmental regulations or interpretations thereof, such as real estate and zoning laws and increases in real property tax rates and taxation of REITs; and |
• | various other factors may materially adversely affect us, such as: |
Year | Portfolio Lease Expirations | |
2015 | 2.8% | |
2016 | 3.6% | |
2017 | 2.2% | |
2018 | 6.6% | |
2019 | 6.5% | |
2020 | 1.6% | |
2021 | 2.4% | |
2022 | 3.4% | |
2023 | 5.7% | |
2024 | 16.9% | |
Thereafter | 42.8% |
• | whether the property is anchored by a financially-sound healthcare delivery system or whether tenants have strong affiliation to a healthcare delivery system; |
• | demand for medical office buildings and healthcare related facilities, current and future supply of competing properties, and occupancy and rental rates in the market; |
• | ability to achieve economies of scale with our existing medical office buildings and healthcare related facilities or anticipated investment opportunities; and |
Consolidated Leverage Ratio | Adjusted LIBOR Rate Loans and Letter of Credit Fee | Base Rate Loans | |||
<35% | LIBOR + 1.50% | 0.50 | % | ||
>35% and <45% | LIBOR + 1.65% | 0.65 | % | ||
>45% and <45% | LIBOR + 1.75% | 0.75 | % | ||
>45% and <50% | LIBOR + 1.85% | 0.85 | % | ||
>50% and <55% | LIBOR + 2.00% | 1.00 | % | ||
>55% | LIBOR + 2.20% | 1.20 | % |
• | we may encounter delays in obtaining or fail to obtain all necessary zoning, land use, building, occupancy, environmental and other governmental permits and authorizations, or underestimate the costs necessary to develop the property to market standards; |
• | development or construction delays may provide tenants the right to terminate preconstruction leases or cause us to incur additional costs; |
• | hospitals or health systems may maintain significant decision-making authority with respect to the development schedule; |
• | demand for our development project may decrease prior to completion, including due to competition from other developments; and |
• | lease rates and rents at newly developed properties may fluctuate based on factors beyond our control, including market and economic conditions. |
• | our joint venture partners may make management, financial and operating decisions with which we disagree or that are not in our best interest; |
• | our joint venture partners might become bankrupt or fail to fund their share of required capital contributions which may delay construction or development of a healthcare related facility or increase our financial commitment to the joint venture; |
• | our joint venture partners may have business interests or goals with respect to the healthcare related facility that conflict with our business interests and goals which could increase the likelihood of disputes regarding the ownership, management or disposition of the healthcare related facility; |
• | disputes may develop with our joint venture partners over decisions affecting the healthcare related facility or the joint venture which may result in litigation or arbitration that would increase our expenses and distract our officers and/or trustees from focusing their time and effort on our business and possibly disrupt the daily operations of the healthcare related facility; and |
• | we may suffer losses as a result of the actions of our joint venture partners with respect to our joint venture investments. |
• | acts of war or terrorism, including the consequences of terrorist attacks, such as those that occurred on September 11, 2001; |
• | an oversupply of (or a reduction in demand for) space in the areas where particular properties are located and the attractiveness of particular properties to prospective tenants; |
• | changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance therewith and the potential for liability under applicable laws; |
• | costs of remediation and liabilities associated with environmental conditions affecting properties; and the potential for uninsured or underinsured property losses. |
• | consolidation and pressure to integrate within the healthcare industry through acquisitions and joint ventures; and |
• | the Federal Anti-Kickback Statute, which prohibits, among other things, the offer, payment, solicitation or receipt of any form of remuneration in return for, or to induce, the referral of any federal or state healthcare program patients; |
• | the Federal Physician Self-Referral Prohibition (commonly called the “Stark Law”), which, subject to specific exceptions, restricts physicians who have financial relationships with healthcare providers from making referrals for designated health services for which payment may be made under Medicare or Medicaid programs to an entity with which the physician, or an immediate family member, has a financial relationship; |
• | the False Claims Act, which prohibits any person from knowingly presenting false or fraudulent claims for payment to the federal government, including under the Medicare and Medicaid programs; |
• | the Civil Monetary Penalties Law, which authorizes the Department of Health and Human Services to impose monetary penalties for certain fraudulent acts; and |
• | state anti-kickback, anti-inducement, anti-referral and insurance fraud laws which may be generally similar to, and potentially more expansive than, the federal laws set forth above. |
• | vacancies or our inability to rent space on favorable terms, including possible market pressures to offer tenants rent abatements, tenant improvements, early termination rights or tenant-favorable renewal options; |
• | competition from other real estate investors with significant capital, including other real estate operating companies, REITs and institutional investment funds; |
• | reductions in the level of demand for healthcare properties and changes in the demand for certain healthcare-related properties; |
• | increases in expenses associated with our real estate operations, including, but not limited to, insurance costs, third party management fees, energy prices, real estate assessments and other taxes and costs of compliance with laws, regulations and governmental policies, and restrictions on our ability to pass such expenses on to our tenants; and |
• | changes in, and changes in enforcement of, laws, regulations and governmental policies associated with real estate, including, without limitation, health, safety, environmental, zoning and tax laws, governmental fiscal policies and the ADA. |
• | we may be unable to borrow additional funds as needed or on favorable terms, including to make acquisitions; |
• | we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness; |
• | because a portion of our debt bears, or is expected to bear, interest at variable rates, an increase in interest rates could materially increase our interest expense; |
• | we may be forced to dispose of one or more of our properties, possibly on disadvantageous terms if we are able to do so at all; |
• | we may experience increased vulnerability to economic and industry downturns, reducing our ability to respond to changing business and economic conditions; |
• | we may default on our obligations and the lenders or mortgagees may foreclose on our properties that secure their loans and receive an assignment of rents and leases; |
• | we may violate financial covenants contained in our various loan documents which would cause a default on our obligations, giving lenders various remedies, including increased interest rates, foreclosure and liability for additional expenses; |
• | we may inadvertently violate non-financial restrictive covenants in our loan documents, such as covenants that require us to maintain the existence of entities, maintain insurance policies and provide financial statements, which would entitle the lenders to accelerate our debt obligations; and |
• | our default under any of our mortgage loans with cross-default or cross-collateralization provisions could result in default on other indebtedness and result in the foreclosures of other properties. |
• | our general partner's ability to satisfy the distribution requirements applicable to REITs; |
• | the general reputation of REITs and the attractiveness of their equity securities in comparison to other equity securities, including securities issued by other real estate-based companies; |
• | general stock and bond market conditions, including changes in interest rates on fixed income securities, which may lead prospective purchasers of our general partner's common shares to demand a higher annual yield from future distributions; |
• | a failure to maintain or increase our dividends to our OP Unit holders, which is dependent in part upon increased revenue from additional acquisitions and rental increases; and |
• | provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404; |
• | comply with any new or revised financial accounting standards applicable to public companies until such standards are also applicable to private companies; |
• | comply with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer; |
• | comply with any new audit rules adopted by the PCAOB after April 5, 2012 unless the SEC determines otherwise; |
• | a requirement that the Trust may not be removed as our general partner without its consent; |
• | the Trust's ability, as our general partner, in some cases, to amend our partnership agreement and to cause us to issue units with terms that could delay, defer or prevent a merger or other change of control of us without the consent of our limited partners; and |
• | the right of our limited partners to consent to direct or indirect transfers of the general partnership interest, including as a result of a merger or a sale of all or substantially all of our assets, in the event that such transfer requires approval by the Trust's shareholders. |
PROPERTY | PROPERTY TYPE | PROPERTY LOCATION | YEAR BUILT | % OWNED | NET LEASABLE SQUARE FOOTAGE | % LEASED | ANNUALIZED BASE RENT(1) (thousands) | ANNUALIZED BASE RENT PER LEASED SQUARE FOOT | HEALTHCARE DELIVERY SYSTEM AFFILIATION | PRINCIPAL TENANTS | |||||||||||||||||
INITIAL PROPERTIES (2) | |||||||||||||||||||||||||||
Arrowhead Commons | Medical Office Building | Phoenix, AZ | 2,004,000 | 100.0 | % | 12,800 | 85.0 | % | $ | 261 | $ | 24.00 | N/A | Paseo Family Physicians | |||||||||||||
Aurora Medical Office Building | Medical Office Building | Green Bay, WI | 2,010,000 | 100.0 | % | 9,112 | 100.0 | % | $ | 191 | $ | 20.96 | Aurora Health Care | Aurora Health Care | |||||||||||||
Austell Medical Office Building | Medical Office Building | Atlanta, GA | 1,971,000 | 100.0 | % | 14,598 | 78.5 | % | $ | 183 | $ | 15.97 | Northside Hospital | Northside Hospital | |||||||||||||
Canton Medical Office Building | Medical Office Building | Atlanta, GA | 1,994,000 | 51.0 | % | 38,098 | 100.0 | % | $ | 817 | $ | 21.44 | Northside Hospital | Northside Hospital | |||||||||||||
Decatur Medical Office Building | Medical Office Building | Atlanta, GA | 1,974,000 | 100.0 | % | 13,300 | 100.0 | % | $ | 357 | $ | 26.84 | N/A | Georgia Urology, P.A. | |||||||||||||
El Paso Medical Office Building | Medical Office Building | El Paso, TX | 1,987,000 | 100.0 | % | 21,777 | 100.0 | % | $ | 374 | $ | 17.17 | HCA | HCA—Del Sol Medical Center | |||||||||||||
Farmington Professional Pavilion | Medical Office Building | Detroit, MI | 1,972,000 | 100.0 | % | 21,338 | 57.5 | % | $ | 189 | $ | 15.40 | Botsford Hospital | Botsford Hospital, Farmington Dermatology | |||||||||||||
Firehouse Square | Medical Office Building | Milwaukee, WI | 2,002,000 | 100.0 | % | 17,265 | 100.0 | % | $ | 393 | $ | 22.76 | Aurora Health Care | Aurora Health Care | |||||||||||||
Hackley Medical Center | Medical Office Building | Grand Rapids, MI | 1,968,000 | 100.0 | % | 44,089 | 85.9 | % | $ | 682 | $ | 18.00 | Trinity Health | Hackley Hospital, Port City Pediatrics | |||||||||||||
Ingham Regional Medical Center | Medical Office Building | Lansing, MI | 1,994,000 | 100.0 | % | 26,783 | — | % | — | $ | — | N/A | N/A | ||||||||||||||
MeadowView Professional Center | Medical Office Building | Kingsport, TN | 2,005,000 | 100.0 | % | 64,200 | 100.0 | % | $ | 1,539 | $ | 23.97 | Holston Medical Group | Holston Medical Group | |||||||||||||
Mid Coast Hospital Medical Office Building | Medical Office Building | Portland, ME | 2,008,000 | 66.3 | % | 44,677 | 100.0 | % | $ | 1,205 | $ | 26.97 | Mid Coast Hospital | Mid Coast Hospital | |||||||||||||
New Albany Professional Building | Medical Office Building | Columbus, OH | 2,000,000 | 100.0 | % | 17,213 | 75.1 | % | $ | 177 | $ | 13.69 | N/A | Rainbow Pediatrics | |||||||||||||
Northpark Trail | Medical Office Building | Atlanta, GA | 2,001,000 | 100.0 | % | 14,223 | 37.4 | % | $ | 66 | $ | 12.39 | N/A | Georgia Urology, P.A. | |||||||||||||
Remington Medical Commons | Medical Office Building | Chicago, IL | 2,008,000 | 100.0 | % | 37,240 | 75.7 | % | $ | 704 | $ | 24.98 | Adventist | Fresenius Dialysis, Gateway Spine and Pain | |||||||||||||
Stonecreek Family Health Center | Medical Office Building | Columbus, OH | 1,996,000 | 100.0 | % | 20,329 | — | % | — | $ | — | N/A | N/A | ||||||||||||||
Summit Healthplex | Medical Office Building | Atlanta, GA | 2,002,000 | 100.0 | % | 67,333 | 100.0 | % | $ | 1,720 | $ | 25.54 | Piedmont | Georgia Bone and Joint, Piedmont Hospital | |||||||||||||
Valley West Hospital Medical Office Building | Medical Office Building | Chicago, IL | 2,007,000 | 100.0 | % | 38,717 | 96.1 | % | $ | 779 | $ | 20.93 | Kish Health System | Valley West Hospital, Midwest Orthopedics | |||||||||||||
INITIAL PROPERTIES TOTAL/WEIGHTED AVERAGE | 523,092 | 82.6 | % | $ | 9,637 | $ | 22.31 | ||||||||||||||||||||
Completed Acquisitions Since the IPO (3) | |||||||||||||||||||||||||||
21st Century Radiation Oncology Centers — Sarasota | Medical Office Building | Sarasota, FL | 1,975,000 | 100.0 | % | 21,400 | 100.0 | % | $ | 660 | $ | 30.84 | 21st Century Oncology | 21st Century Oncology | |||||||||||||
21st Century Radiation Oncology Centers - Venice | Medical Office Building | Venice, FL | 1,987,000 | 100.0 | % | 10,100 | 100.0 | % | $ | 345 | $ | 34.16 | 21st Century Oncology | 21st Century Oncology | |||||||||||||
21st Century Radiation Oncology Centers - Engelwood | Medical Office Building | Engelwood, FL | 1,992,000 | 100.0 | % | 7,000 | 100.0 | % | $ | 213 | $ | 30.43 | 21st Century Oncology | 21st Century Oncology |
21st Century Radiation Oncology Centers — Port Charlotte | Medical Office Building | Port Charlotte, FL | 1,996,000 | 100.0 | % | 8,395 | 100.0 | % | $ | 255 | $ | 30.38 | 21st Century Oncology | 21st Century Oncology | |||||||||||||
Central Ohio Neurosurgical Surgeons Medical Office | Medical Office Building | Columbus, OH | 2,007,000 | 100.0 | % | 38,891 | 100.0 | % | $ | 818 | $ | 21.03 | N/A | CONS | |||||||||||||
Crescent City Surgical Centre | Hospital | New Orleans, LA | 2,010,000 | 100.0 | % | 60,000 | 100.0 | % | $ | 3,090 | $ | 51.50 | Crescent City Surgical Centre | Crescent City Surgical Centre | |||||||||||||
Eagles Landing Family Practice Medical Office Building | Medical Office Building | McDonough, GA | 2,007,000 | 100.0 | % | 17,733 | 100.0 | % | $ | 403 | $ | 22.73 | N/A | Eagles Landing Family Practice | |||||||||||||
Eagles Landing Family Practice Medical Office Building | Medical Office Building | Jackson, GA | 2,006,000 | 100.0 | % | 14,269 | 100.0 | % | $ | 324 | $ | 22.71 | N/A | Eagles Landing Family Practice | |||||||||||||
Eagles Landing Family Practice Medical Office Building | Medical Office Building | Conyers, GA | 2,008,000 | 100.0 | % | 18,014 | 100.0 | % | $ | 409 | $ | 22.70 | N/A | Eagles Landing Family Practice | |||||||||||||
Eagles Landing Family Practice Medical Office Building | Medical Office Building | McDonough, GA | 2,010,000 | 100.0 | % | 18,695 | 100.0 | % | $ | 424 | $ | 22.68 | N/A | Eagles Landing Family Practice | |||||||||||||
East El Paso Medical Office Building | Medical Office Building | El Paso, TX | 2,004,000 | 99.0 | % | 41,007 | 100.0 | % | $ | 591 | $ | 14.41 | Foundation Healthcare Inc. | EEPPMC Partners, LLC | |||||||||||||
East El Paso Surgical Hospital | Hospital | El Paso, TX | 2,004,000 | 99.0 | % | 77,000 | 100.0 | % | $ | 3,381 | $ | 43.91 | Foundation Healthcare Inc. | East El Paso Physicians Medical Center, LLC | |||||||||||||
Foundation San Antonio Surgical Hospital | Hospital | San Antonio, TX | 2,007,000 | 100.0 | % | 45,954 | 100.0 | % | $ | 2,300 | $ | 50.05 | Foundation Healthcare Inc. | Foundation Bariatric Hospital of San Antonio, L.L.C | |||||||||||||
Foundation San Antonio Healthplex | Medical Office Building | San Antonio, TX | 2,007,000 | 100.0 | % | 22,832 | 100.0 | % | $ | 602 | $ | 26.37 | Foundation Healthcare Inc. | Foundation Healthcare Inc. | |||||||||||||
Foundation Surgical Affiliates Medical Office Building | Medical Office Building | Oklahoma City, OK | 2,004,000 | 99.0 | % | 52,000 | 100.0 | % | $ | 1,273 | $ | 24.48 | Foundation Healthcare Inc. | Foundation Surgical Affiliates | |||||||||||||
Great Falls Ambulatory Surgery Center | Medical Office Building | Great Falls, MT | 1,999,000 | 100.0 | % | 12,636 | 100.0 | % | $ | 346 | $ | 27.38 | N/A | Great Falls Clinic Surgery Center LLC | |||||||||||||
LifeCare LTACH — Fort Worth | Post-Acute Hospital | Fort Worth, TX | 1,985,000 | 100.0 | % | 80,000 | 100.0 | % | $ | 2,200 | $ | 27.50 | LifeCare Hospitals | LifeCare Holdings, LLC | |||||||||||||
LifeCare LTACH — Pittsburgh | Post-Acute Hospital | Pittsburgh, PA | 1,987,000 | 100.0 | % | 154,910 | 100.0 | % | $ | 1,040 | $ | 6.71 | LifeCare Hospitals | LifeCare Holdings, LLC | |||||||||||||
LifeCare Plano LTACH | Post-Acute Hospital | Plano, TX | 1,987,000 | 100.0 | % | 75,442 | 100.0 | % | $ | 1,457 | $ | 19.31 | LifeCare Hospitals | LifeCare Holdings, LLC | |||||||||||||
Peachtree Dunwoody Medical Center | Medical Office Building | Atlanta, GA | 1,987,000 | 100.0 | % | 131,368 | 94.7 | % | $ | 3,651 | $ | 29.34 | Northside | Northside Hospital | |||||||||||||
Pensacola Medical Office Building | Medical Office Building | Pensacola, FL | 2,012,000 | 100.0 | % | 20,319 | 100.0 | % | $ | 609 | $ | 29.97 | N/A | N/A | |||||||||||||
South Bend Orthopaedics Medical Office Building | Medical Office Building | Mishawaka, IN | 2,007,000 | 100.0 | % | 45,198 | 100.0 | % | $ | 1,195 | $ | 26.44 | N/A | South Bend Orthopaedics | |||||||||||||
PinnacleHealth Medical Office Building | Medical Office Building | Harrisburg, PA | 1,990,000 | 100.0 | % | 27,601 | 100.0 | % | $ | 614 | $ | 22.25 | Pinnacle Health Hospitals | Pinnacle Health Hospitals | |||||||||||||
Pinnacle Health Medical Office Building | Medical Office Building | Carlisle, PA | 2,002,000 | 100.0 | % | 10,485 | 100.0 | % | $ | 265 | $ | 25.27 | Pinnacle Health Hospitals | Pinnacle Health Hospitals | |||||||||||||
Grenada Medical Complex | Medical Office Building | Grenada, MS | 1,975,000 | 100.0 | % | 52,941 | 94.7 | % | $ | 1,071 | $ | 21.36 | N/A | N/A | |||||||||||||
Mississippi Ortho Medical Office Building | Medical Office Building | Jackson, MS | 1,987,000 | 100.0 | % | 44,269 | 100.0 | % | $ | 1,319 | $ | 29.80 | N/A | N/A | |||||||||||||
Carmel Medical Pavilion | Medical Office Building | Carmel, IN | 1,993,000 | 100.0 | % | 28,572 | 100.0 | % | $ | 350 | $ | 12.25 | St. Vincent’s | St. Vincent’s | |||||||||||||
Renaissance Ambulatory Surgery Center | Medical Office Building | Oshkosh, WI | 2,007,000 | 100.0 | % | 24,622 | 100.0 | % | $ | 703 | $ | 28.55 | ThedaCare | ThedaCare | |||||||||||||
Presbyterian Medical Plaza | Medical Office Building | Monroe, NC | 2,008,000 | 100.0 | % | 29,422 | 100.0 | % | $ | 611 | $ | 20.77 | Novant | Novant | |||||||||||||
Summit Urology | Medical Office Building | Bloomington, IN | 1,996,000 | 100.0 | % | 15,946 | 100.0 | % | $ | 386 | $ | 24.21 | N/A | Surgicare, LLC | |||||||||||||
500 Landmark | Medical Office Building | Bloomington, IN | 2,000,000 | 100.0 | % | 65,000 | 100.0 | % | $ | 1,319 | $ | 20.29 | N/A | Premier Healthcare | |||||||||||||
550 Landmark | Medical Office Building | Bloomington, IN | 2,000,000 | 100.0 | % | 15,000 | 100.0 | % | $ | 282 | $ | 18.80 | N/A | Premier Healthcare | |||||||||||||
574 Landmark | Medical Office Building | Bloomington, IN | 2,004,000 | 100.0 | % | 10,000 | 100.0 | % | $ | 187 | $ | 18.70 | N/A | Premier Healthcare |
Carlisle II MOB | Medical Office Building | Carlisle, PA | 1,996,000 | 100.0 | % | 13,245 | 100.0 | % | $ | 251 | $ | 18.95 | Carlisle Regional Medical Center | Carlisle Regional Medical Center | |||||||||||||
Surgical Institute of Monroe | Medical Office Building | Monroe, MI | 2,010,000 | 100.0 | % | 24,500 | 100.0 | % | $ | 480 | $ | 19.59 | ProMedica | The Surgical Institute of Monroe Ambulatory Surgery Center | |||||||||||||
The Oaks @ Lady Lake | Medical Office Building | Lady Lake, FL | 2,011,000 | 100.0 | % | 27,992 | 100.0 | % | $ | 739 | $ | 26.40 | Munroe Regional Health System | Munroe Regional Health System | |||||||||||||
Mansfield ASC | Medical Office Building | Mansfield, TX | 2,010,000 | 100.0 | % | 15,662 | 100.0 | % | $ | 633 | $ | 40.42 | N/A | Baylor Surgicare | |||||||||||||
Eye Center of Southern Indiana | Medical Office Building | Bloomington, IN | 1,995,000 | 100.0 | % | 32,096 | 100.0 | % | $ | 883 | $ | 27.51 | N/A | Eye Center of Southern Indiana | |||||||||||||
Wayne State | Medical Office Building | Troy, MI | 1,986,000 | 100.0 | % | 176,000 | 100.0 | % | $ | 3,168 | $ | 18.00 | Wayne State University Physician Group | Wayne State University Physician Group | |||||||||||||
Zangmeister | Medical Office Building | Columbus, OH | 2,007,000 | 100.0 | % | 109,667 | 100.0 | % | $ | 2,555 | $ | 23.30 | Mid Ohio Oncology | ||||||||||||||
Ortho One - Columbus | Medical Office Building | Columbus, OH | 2,009,000 | 100.0 | % | 75,873 | 100.0 | % | $ | 1,463 | $ | 19.28 | N/A | Orthopedic One | |||||||||||||
Ortho One - Westerville | Medical Office Building | Columbus, OH | 2,007,000 | 100.0 | % | 19,876 | 100.0 | % | $ | 382 | $ | 19.22 | N/A | Orthopedic One | |||||||||||||
Berger Medical Center | Medical Office Building | Columbus, OH | 2,007,000 | 100.0 | % | 31,528 | 77.7 | % | $ | 509 | $ | 20.78 | Berger Hospital | Berger Hospital | |||||||||||||
El Paso - Lee Trevino | Medical Office Building | El Paso, TX | 1,983,000 | 100.0 | % | 75,484 | 92.8 | % | $ | 1,092 | $ | 15.59 | N/A | EPOSG Clinic | |||||||||||||
El Paso - Murchison | Hospital | El Paso, TX | 1,970,000 | 100.0 | % | 86,971 | 100.0 | % | $ | 2,310 | $ | 26.56 | N/A | El Paso Specialty Hospital, EPOSG Clinic | |||||||||||||
El Paso - Kenworthy | Medical Office Building | El Paso, TX | 1,983,000 | 100.0 | % | 16,245 | 73.6 | % | $ | 457 | $ | 38.23 | N/A | EPOSG Clinic | |||||||||||||
Pinnacle - 32 Northeast | Medical Office Building | Harrisburg, PA | 1,994,000 | 100.0 | % | 19,110 | 100.0 | % | $ | 364 | $ | 19.05 | Pinnacle Health Systems | Pinnacle Health Systems | |||||||||||||
Pinnacle - 4518 Union Deposit | Medical Office Building | Harrisburg, PA | 2,000,000 | 100.0 | % | 39,009 | 89.5 | % | $ | 651 | $ | 18.65 | Pinnacle Health Systems | Pinnacle Health Systems | |||||||||||||
Pinnacle - 4520 Union Deposit | Medical Office Building | Harrisburg, PA | 1,997,000 | 100.0 | % | 10,200 | 100.0 | % | $ | 162 | $ | 15.88 | Pinnacle Health Systems | Tristan Associates | |||||||||||||
Pinnacle - 240 Grandview | Medical Office Building | Harrisburg, PA | 1,980,000 | 100.0 | % | 19,446 | 100.0 | % | $ | 370 | $ | 19.03 | Pinnacle Health Systems | Pinnacle Health Systems | |||||||||||||
Pinnacle - Market Place Way | Medical Office Building | Harrisburg, PA | 2,004,000 | 100.0 | % | 30,000 | 100.0 | % | $ | 332 | $ | 11.07 | Pinnacle Health Systems | Pinnacle Health Systems | |||||||||||||
CRHS - 2000 10th Avenue | Medical Office Building | Columbus, GA | 1,989,000 | 100.0 | % | 40,341 | 83.2 | % | $ | 471 | $ | 14.04 | Columbus Regional Health System | Columbus Regional Health System | |||||||||||||
CRHS - 1942 North Avenue | Medical Office Building | Columbus, GA | 1,971,000 | 100.0 | % | 6,808 | 100.0 | % | $ | 94 | $ | 13.81 | Columbus Regional Health System | Columbus Regional Health System | |||||||||||||
CRHS - 920 18th Street | Medical Office Building | Columbus, GA | 1,982,000 | 100.0 | % | 6,055 | 100.0 | % | $ | 89 | $ | 14.70 | Columbus Regional Health System | Columbus Regional Health System | |||||||||||||
CRHS - 1900 10th Avenue | Medical Office Building | Columbus, GA | 1,976,000 | 100.0 | % | 50,930 | 94.2 | % | $ | 740 | $ | 15.43 | Columbus Regional Health System | Columbus Regional Health System | |||||||||||||
CRHS - 1800 10th Avenue | Medical Office Building | Columbus, GA | 1,980,000 | 100.0 | % | 38,650 | 100.0 | % | $ | 626 | $ | 16.20 | Columbus Regional Health System | Columbus Regional Health System | |||||||||||||
CRHS - 705 17th Street | Medical Office Building | Columbus, GA | 1,994,000 | 100.0 | % | 44,995 | 82.8 | % | $ | 646 | $ | 17.35 | Columbus Regional Health System | Columbus Regional Health System | |||||||||||||
CRHS - 615 19th Street | Medical Office Building | Columbus, GA | 1,976,000 | 100.0 | % | 9,048 | 100.0 | % | $ | 95 | $ | 10.50 | Columbus Regional Health System | Columbus Regional Health System | |||||||||||||
CRHS - 1968 North Avenue | Medical Office Building | Columbus, GA | 1,966,000 | 100.0 | % | 3,952 | 100.0 | % | $ | — | $ | — | N/A | N/A | |||||||||||||
CRHS - 633 19th Street | Medical Office Building | Columbus, GA | 1,972,000 | 100.0 | % | 11,315 | 71.2 | % | $ | 112 | $ | 13.90 | Columbus Regional Health System | Columbus Regional Health System | |||||||||||||
CRHS - 500 18th Street | Medical Office Building | Columbus, GA | 1,982,000 | 100.0 | % | 15,877 | 71.8 | % | $ | 143 | $ | 12.54 | Columbus Regional Health System | Columbus Regional Health System |
CRHS - 2200 Hamilton Road | Medical Office Building | Columbus, GA | 1,992,000 | 100.0 | % | 17,805 | 84.9 | % | $ | 254 | $ | 16.81 | Columbus Regional Health System | Columbus Regional Health System | |||||||||||||
CRHS - 1810 Stadium Drive | Medical Office Building | Columbus, GA | 1,999,000 | 100.0 | % | 27,620 | 65.2 | % | $ | 255 | $ | 14.15 | Columbus Regional Health System | Columbus Regional Health System | |||||||||||||
Carle Danville MOB | Medical Office Building | Danville, IL | 2,007,000 | 100.0 | % | 46,663 | 100.0 | % | $ | 622 | $ | 13.33 | N/A | Carle Foundation | |||||||||||||
Middletown Medical - 111 Maltese | Medical Office Building | Middletown, NY | 1,988,000 | 100.0 | % | 27,264 | 100.0 | % | $ | 710 | $ | 26.04 | N/A | Middletown Medical | |||||||||||||
Middletown Medical - 2 Edgewater | Medical Office Building | Middletown, NY | 1,992,000 | 100.0 | % | 8,162 | 100.0 | % | $ | 212 | $ | 25.97 | N/A | Middletown Medical | |||||||||||||
Napoleon Medical Office Building | Medical Office Building | New Orleans, LA | 1,974,000 | 100.0 | % | 65,775 | 88.9 | % | $ | 1,251 | $ | 21.40 | Oschner Health System | N/A | |||||||||||||
West TN Bone & Joint - Physicians Drive | Medical Office Building | Jackson, TN | 1,991,000 | 100.0 | % | 23,900 | 100.0 | % | $ | 454 | $ | 19.00 | N/A | West TN Bone & Joint Clinic | |||||||||||||
West TN Bone & Joint | Medical Office Building | Jackson, TN | 1,996,000 | 100.0 | % | 12,524 | 100.0 | % | $ | 257 | $ | 20.52 | N/A | Jackson Ophthalmology ASC | |||||||||||||
COMPLETED PROPERTIES TOTAL WEIGHTED AVERAGE | 2,577,609 | 97.1 | % | $ | 56,525 | $ | 22.59 | ||||||||||||||||||||
Portfolio Total/Weighted Average | 3,100,701 | 94.6 | % | $ | 66,162 | $ | 22.55 |
NUMBER OF LEASES EXPIRING | NET RENTABLE SQUARE FEET | PERCENTAGE OF NET RENTABLE SQUARE FEET | ANNUALIZED RENT(1) (thousands) | PERCENTAGE OF ANNUALIZED RENT | ANNUALIZED RENT LEASED SQUARE FOOT(2) | ||||||||||||||
2015 | 29 | 86,971 | 2.8 | % | $ | 1,795 | 2.7 | % | $ | 20.64 | |||||||||
2016 | 28 | 110,075 | 3.6 | % | 2,425 | 3.7 | % | $ | 22.03 | ||||||||||
2017 | 21 | 68,298 | 2.2 | % | 1,647 | 2.5 | % | $ | 24.11 | ||||||||||
2018 | 27 | 203,922 | 6.6 | % | 4,306 | 6.5 | % | $ | 21.12 | ||||||||||
2019 | 25 | 202,606 | 6.5 | % | 4,057 | 6.1 | % | $ | 20.02 | ||||||||||
2020 | 13 | 49,028 | 1.6 | % | 969 | 1.5 | % | $ | 19.76 | ||||||||||
2021 | 11 | 73,855 | 2.4 | % | 1,784 | 2.7 | % | $ | 24.16 | ||||||||||
2022 | 11 | 106,611 | 3.4 | % | 2,669 | 4.0 | % | $ | 25.03 | ||||||||||
2023 | 17 | 178,001 | 5.7 | % | 3,941 | 6.0 | % | $ | 22.14 | ||||||||||
2024 | 45 | 523,238 | 16.9 | % | 10,017 | 15.1 | % | $ | 19.14 | ||||||||||
Thereafter | 58 | 1,328,091 | 42.8 | % | 32,517 | 49.1 | % | $ | 24.48 | ||||||||||
Month to month | 2 | 3,323 | 0.1 | % | 35 | 0.1 | % | $ | 10.53 | ||||||||||
Vacant | — | 166,682 | 5.4 | % | — | — | — | ||||||||||||
Total/ Weighted average | 287 | 3,100,701 | 100.0 | % | $ | 66,162 | 100.0 | % | $ | 21.34 |
Tenant | # of Properties | Property Location | Leased SF | % Leased GLA | Annualized Base Rent(1) (thousands) | % of Portfolio Annualized Rent(2) | |||||||||||
LifeCare | 3 | TX, PA | 310,352 | 10.0 | % | $ | 4,697 | 7.1 | % | ||||||||
East El Paso Physicians Medical Center | 1 | TX | 77,000 | 2.5 | % | $ | 3,381 | 5.1 | % | ||||||||
Wayne State University Physician Group | 1 | MI | 176,000 | 5.7 | % | $ | 3,168 | 4.8 | % | ||||||||
Crescent City Surgical Centre | 1 | LA | 60,000 | 1.9 | % | $ | 3,090 | 4.7 | % | ||||||||
Foundation Hospital of San Antonio, LLC | 2 | TX | 68,786 | 2.2 | % | $ | 2,902 | 4.4 | % | ||||||||
Northside Hospital | 3 | GA | 88,003 | 2.8 | % | $ | 2,242 | 3.4 | % | ||||||||
Mid Ohio Oncology | 1 | OH | 98,325 | 3.2 | % | $ | 2,233 | 3.4 | % | ||||||||
Pinnacle Health | 6 | PA | 105,199 | 3.4 | % | $ | 2,011 | 3.0 | % | ||||||||
Columbus Regional Health System | 9 | GA | 125,189 | 4.0 | % | $ | 1,909 | 2.9 | % | ||||||||
Premier Healthcare | 3 | IN | 90,000 | 2.9 | % | $ | 1,788 | 2.7 | % |
2013 | Dividends (1) | ||||
Third quarter (commencing July 19, 2013 to September 30, 2013) | $ | 0.18 | (2) | ||
Fourth quarter | $ | 0.225 | (3) |
2014 | Dividends (1) | ||||
First quarter | $ | 0.225 | (4) | ||
Second quarter | $ | 0.225 | (5) | ||
Third quarter | $ | 0.225 | (6) | ||
Fourth quarter | $ | 0.225 | (7) |
Year Ended December 31, | |||||||||||
2014 | 2013 (1) | Predecessor 2012 | |||||||||
Statement of Operations Data: | |||||||||||
Revenues: | |||||||||||
Rental revenues | $ | 46,397 | $ | 13,565 | $ | 9,821 | |||||
Expense recoveries | 5,871 | 3,234 | 3,111 | ||||||||
Interest income on real estate loans and other | 1,066 | 246 | 137 | ||||||||
Total revenues | 53,334 | 17,045 | 13,069 | ||||||||
Expenses: | |||||||||||
Interest expense | 6,907 | 4,295 | 4,538 | ||||||||
General and administrative | 11,440 | 3,214 | 362 | ||||||||
Operating expenses | 10,154 | 4,650 | 4,758 | ||||||||
Depreciation and amortization | 16,731 | 5,107 | 4,150 | ||||||||
Impairment losses | 1,750 | — | 937 | ||||||||
Acquisition expenses | 10,897 | 1,938 | — | ||||||||
Management fees | — | 475 | 951 | ||||||||
Total expenses | 57,879 | 19,679 | 15,696 | ||||||||
Loss before equity in income of unconsolidated entity, gain (loss) on sale of investment properties, discontinued operations, and noncontrolling interests: | (4,545 | ) | (2,634 | ) | (2,627 | ) | |||||
Equity in income of unconsolidated entity | 95 | — | — | ||||||||
Gain (loss) on sale of investment properties | 32 | (2 | ) | (228 | ) | ||||||
Net loss from continuing operations | (4,418 | ) | (2,636 | ) | (2,855 | ) | |||||
Discontinued Operations | |||||||||||
Loss from discontinued operations | — | — | (198 | ) | |||||||
Gain on sale of discontinued investment properties | — | — | 1,519 | ||||||||
Income from discontinued operations | — | — | 1,321 | ||||||||
Net loss | (4,418 | ) | $ | (2,636 | ) | $ | (1,534 | ) | |||
Less: net loss attributable to Predecessor | — | 576 | |||||||||
Less: net income attributable to noncontrolling interest — partially owned properties | (314 | ) | (71 | ) | |||||||
Net loss attributable to common unitholders | $ | (4,732 | ) | $ | (2,131 | ) | |||||
Balance Sheet Data (as of end of period): | |||||||||||
Assets: | |||||||||||
Net real estate investments | $ | 773,650 | $ | 227,539 | $ | 99,897 | |||||
Cash and cash equivalents | 15,923 | 56,478 | 2,614 | ||||||||
Tenant receivables, net | 1,324 | 837 | 682 | ||||||||
Other assets | 15,806 | 5,901 | 3,292 | ||||||||
Total assets | $ | 806,703 | $ | 290,755 | $ | 106,485 | |||||
Liabilities and Equity | |||||||||||
Credit Facility | $ | 134,144 | $ | — | $ | — | |||||
Mortgage debt | 77,091 | 40,716 | 83,382 | ||||||||
Accounts payable to related parties | — | — | 1,530 | ||||||||
Accounts payable | 700 | 836 | 802 | ||||||||
Distributions payable | 16,548 | 5,681 | — | ||||||||
Accrued expenses and other liabilities | 6,140 | 2,685 | 1,674 | ||||||||
Acquired lease intangible, net | 2,871 | — | — | ||||||||
Total liabilities | 237,494 | 49,918 | 87,388 | ||||||||
Total unitholders’ capital and predecessor equity | 568,457 | 240,214 | 19,068 | ||||||||
Noncontrolling interest | 752 | 623 | 29 | ||||||||
Total liabilities and capital/equity | $ | 806,703 | $ | 290,755 | $ | 106,485 |
Year | Portfolio Lease Expirations | |
2015 | 2.8% | |
2016 | 3.6% | |
2017 | 2.2% | |
2018 | 6.6% | |
2019 | 6.5% | |
2020 | 1.6% | |
2021 | 2.4% | |
2022 | 3.4% | |
2023 | 5.7% | |
2024 | 16.9% | |
Thereafter | 42.8% |
• | Existing shareholders may purchase additional common shares by reinvesting all or a portion of the dividends paid on their common shares and by making optional cash payments of not less than $50 and up to a maximum of $10,000 per month. |
• | New investors may join the DRIP by making an initial investment of not less than $1,000 and up to a maximum of $10,000. |
• | Once enrolled in the DRIP, participants may authorize electronic deductions from their bank account for optional cash payments to purchase additional shares. |
Property(1) | Location | Acquisition Date | Purchase Price (in thousands) | |||||
Foundation San Antonio Surgical Hospital(2) | San Antonio, TX | February 19, 2014 | $ | 25,556 | ||||
Eagles Landing Family Practice 4 MOBs(2) | Atlanta, GA | February 19, 2014 | 20,800 | |||||
21st Century Oncology 4 MOBs(3) | Sarasota, FL | February 26, 2014 | 17,486 | |||||
Foundation San Antonio MOB(3) | San Antonio, TX | February 28, 2014 | 6,800 | |||||
Peachtree Dunwoody MOB(3) | Atlanta, GA | February 28, 2014 | 36,726 | |||||
LifeCare LTACH(2) | Fort Worth, TX | March 28, 2014 | 27,160 | |||||
LifeCare LTACH(2) | Pittsburgh, PA | March 28, 2014 | 12,840 | |||||
Pinnacle Health Cardiology Portfolio 2 MOBs (3) | Carlisle & Wormleyburg, PA | April 22, 2014 | 9,208 | |||||
South Bend Orthopedic MOB (3) | South Bend, IN | April 30, 2014 | 14,900 | |||||
Grenada Medical Complex MOB (3) | Grenada, MS | April 30,2014 | 7,100 | |||||
Mississippi Sports Medicine and Orthopaedics Center MOB (2)(4) | Jackson, MS | May 23, 2014 | 16,700 | |||||
Carmel Medical Pavilion MOB (3)(5) | Carmel, IN | May 28, 2014 | 4,664 | |||||
Summit Urology MOB (2) | Bloomington, IN | June 30, 2014 | 4,783 | |||||
Renaissance Center (3) | Oshkosh, WI | June 30, 2014 | 8,500 | |||||
Presbyterian Medical Plaza MOB (3) | Monroe, NC | June 30, 2014 | 7,750 | |||||
Landmark Medical Portfolio (Premier) 3 MOBs (2)(6) | Bloomington, IN | July 1, 2014 | 23,837 | |||||
Carlisle II MOB (3) | Carlisle, PA | July 25, 2014 | 4,500 | |||||
Surgical Institute of Monroe ASC (2) | Monroe, MI | July 28, 2014 | 6,000 | |||||
The Oaks Medical Building MOB (3) | Lady Lake, FL | July 31, 2014 | 10,600 | |||||
Baylor Surgicare ASC — Mansfield (3) | Mansfield, TX | September 2, 2014 | 8,500 | |||||
Eye Center of Southern Indiana (2)(7) | Bloomington, IN | September 5, 2014 | 12,174 | |||||
Wayne State Medical Center and MOB (2) | Troy, MI | September 10, 2014 | 46,500 | |||||
El Paso Portfolio (specialty surgical hospital and 2 MOBs) (3)(8) | El Paso, TX | September 30, 2014 | 46,235 | |||||
The Mark H. Zangmeister Center (3) | Columbus, OH | September 30, 2014 | 36,600 | |||||
Berger Medical Center (3) | Orient, OH | September 30, 2014 | 6,785 | |||||
Orthopedic One 2 MOBs (3) | Columbus & Westerville, OH | September 30, 2014 | 24,500 | |||||
Pinnacle Health Portfolio 5 MOBs (3) | Harrisburg, PA | October 29, 2014 | 23,100 | |||||
Columbus Regional Health Portfolio 12 MOBs (3) Columbus Regional Health Portfolio 1 MOB (3) | Columbus, GA & Phenix City, AL | November 20, 2014 | 27,997 | |||||
Middletown Medical 2 MOBs (2) | Middletown, NY | November 26, 2014 | 14,399 | |||||
Carle Danville Clinic MOB (3) | Danville, IL | November 26, 2014 | 10,300 | |||||
Napoleon Medical Building MOB (3) | New Orleans, LA | December 18, 2014 | 10,500 | |||||
West Tennessee Bone & Joint 1 MOB 1 ASC (2) | Jackson, TN | December 30, 2014 | 9,936 | |||||
Total | $ | 543,436 |
• | We entered into and closed a contribution agreement (the “Contribution Agreement”) with Minnetonka Medical Building, LLC, an affiliate of The Davis Group (“MMB”), and another investor also associated with The Davis Group (together with MMB, the “Contributors”), to acquire a medical office building in Minnetonka, Minnesota (the “Minnetonka MOB”) in exchange for approximately $16.3 million in cash and approximately $9.7 million payable in newly designated Series A Participating Redeemable Preferred Units of our Operating Partnership (the “Series A Preferred Units”). Pursuant to the Contribution Agreement, Mark Davis acquired a less than 1% minority interest in the property holding entity that we acquired. The Minnetonka MOB has approximately 63,500 square feet, and is 100% occupied by North Memorial Healthcare, a comprehensive health care system, on a long-term triple-net lease. Holders of the Series A Preferred Units issued in connection with the acquisition of the Minnetonka MOB are entitled to certain redemption rights under our partnership agreement which allow them to cause us to redeem the Series A Preferred Units in exchange for cash, or at the Trust's option, for the Trust's common shares, pursuant to a formula provided in our partnership agreement and currently on an approximately one-for-12.65 basis. Approximately 44,685 Series A Preferred Units were issued in the transaction to acquire the Minnetonka MOB. The investors in the Series A Preferred Units have agreed not cause us to redeem their Series A Preferred Units prior to February 5, 2016. |
• | We entered into and closed purchase and sale or contribution agreements with other affiliates of The Davis Group and investors associated with The Davis Group to acquire six medical office facilities located in the Minneapolis-St. Paul Metropolitan area and one additional medical office facility located in Jamestown, North Dakota. The Davis Group acquired or retained a less than 1% minority interest in five property holding entities that otherwise were wholly acquired by us. |
2014 | 2013 | Change | % | |||||||||||
Revenues: | ||||||||||||||
Rental revenues | $ | 46,397 | $ | 13,565 | $ | 32,832 | 242.0 | |||||||
Expense recoveries | 5,871 | 3,234 | 2,637 | 81.5 | ||||||||||
Interest income on real estate loans and other | 1,066 | 246 | 820 | 333.3 | ||||||||||
Total revenues | 53,334 | 17,045 | 36,289 | 212.9 | ||||||||||
Expenses: | ||||||||||||||
Interest expense | 6,907 | 4,295 | 2,612 | 60.8 | ||||||||||
General and administrative | 11,440 | 3,214 | 8,226 | 255.9 | ||||||||||
Operating expenses | 10,154 | 4,650 | 5,504 | 118.4 | ||||||||||
Depreciation and amortization | 16,731 | 5,107 | 11,624 | 227.6 | ||||||||||
Acquisition expenses | 10,897 | 1,938 | 8,959 | 462.3 | ||||||||||
Management fee | — | 475 | (475 | ) | (100.0 | ) | ||||||||
Impairment loss | 1,750 | — | 1,750 | NM | ||||||||||
Total expenses | 57,879 | 19,679 | 38,200 | 194.1 | ||||||||||
Loss before equity in income of unconsolidated entity and gain (loss) on sale of investment properties: | (4,545 | ) | (2,634 | ) | (1,911 | ) | 72.6 | |||||||
Equity in income of unconsolidated entity | 95 | — | 95 | NM | ||||||||||
Gain (loss) on sale of investment properties | 32 | (2 | ) | 34 | NM | |||||||||
Net loss | $ | (4,418 | ) | $ | (2,636 | ) | $ | (1,782 | ) | 67.6 |
2013 | 2012 | Change | % | |||||||||||
Revenues: | ||||||||||||||
Rental revenues | $ | 13,565 | $ | 9,821 | $ | 3,744 | 38.1 | |||||||
Expense recoveries | 3,234 | 3,111 | 123 | 4.0 | ||||||||||
Interest income on real estate loans and other | 246 | 137 | 109 | 79.6 | ||||||||||
Total revenues | 17,045 | 13,069 | 3,976 | 30.4 | ||||||||||
Expenses: | ||||||||||||||
Interest expense | 4,295 | 4,538 | (243 | ) | (5.4 | ) | ||||||||
General and administrative | 3,214 | 362 | 2,852 | 787.8 | ||||||||||
Operating expenses | 4,650 | 4,758 | (108 | ) | (2.3 | ) | ||||||||
Depreciation and amortization | 5,107 | 4,150 | 957 | 23.1 | ||||||||||
Acquisition expenses | 1,938 | — | 1,938 | NM | ||||||||||
Management fee | 475 | 951 | (476 | ) | (50.1 | ) | ||||||||
Impairment loss | — | 937 | (937 | ) | (100.0 | ) | ||||||||
Total expenses | 19,679 | 15,696 | 3,983 | 25.4 | ||||||||||
Loss before loss on the sale of investment properties and discontinued operations: | (2,634 | ) | (2,627 | ) | (7 | ) | (0.3 | ) | ||||||
Loss on the sale of investment properties | (2 | ) | (228 | ) | 226 | (99.1 | ) | |||||||
Discontinued operations: | ||||||||||||||
Loss from operations | — | (198 | ) | 198 | (100.0 | ) | ||||||||
Gain on sale of investment properties | — | 1,519 | (1,519 | ) | (100.0 | ) | ||||||||
Income from discontinued operations | — | 1,321 | (1,321 | ) | (100.0 | ) | ||||||||
Net loss | $ | (2,636 | ) | $ | (1,534 | ) | $ | (1,102 | ) | 71.8 |
2014 | 2013 | ||||||
Net cash provided by operating activities | $ | 13,295 | $ | 1,168 | |||
Net cash used in investing activities | (518,810 | ) | (126,443 | ) | |||
Net cash provided by financing activities | 464,960 | 179,139 | |||||
(Decrease) increase in cash and cash equivalents | $ | (40,555 | ) | $ | 53,864 |
2013 | 2012 | ||||||
Cash provided by operating activities | $ | 1,168 | $ | 3,513 | |||
Cash (used in)/provided by investing activities | (126,443 | ) | 13,527 | ||||
Cash provided by/(used in) financing activities | 179,139 | (16,358 | ) | ||||
Increase in cash and cash equivalents | $ | 53,864 | $ | 682 |
Consolidated Leverage Ratio | Adjusted LIBOR Rate Loans and Letter of Credit Fee | Base Rate Loans | |||
<35% | LIBOR + 1.50% | 0.50 | % | ||
>35% and <45% | LIBOR + 1.65% | 0.65 | % | ||
>45% and <45% | LIBOR + 1.75% | 0.75 | % | ||
>45% and <50% | LIBOR + 1.85% | 0.85 | % | ||
>50% and <55% | LIBOR + 2.00% | 1.00 | % | ||
>55% | LIBOR + 2.20% | 1.20 | % |
Payments by Period (in thousands) | |||||||||||||||||||
Total | Less than 1 Year | 2016 - 2017 | 2018 - 2019 | 2020 and Thereafter | |||||||||||||||
Principal payments(1) | $ | 216,105 | $ | 1,864 | $ | 38,171 | $ | 159,006 | $ | 17,064 | |||||||||
Interest payments—fixed rate debt(1) | 13,700 | 3,832 | 5,972 | 2,770 | 1,126 | ||||||||||||||
Interest payments—variable rate debt(1) | 9,061 | 2,471 | 4,868 | 1,722 | — | ||||||||||||||
Ground lease payments | 30,750 | 1,426 | 2,922 | 3,085 | 23,317 | ||||||||||||||
Total | $ | 269,616 | $ | 9,593 | $ | 51,933 | $ | 166,583 | $ | 41,507 |
(in thousands) | Principal | Fixed/Floating Rate | Rate | Maturity | |||||||
Unsecured Revolving Credit Facility | $ | 138,000 | Floating | LIBOR + 1.50% | 9/18/2018 | ||||||
Canton Medical Office Building(1) | 6,207 | Fixed | 5.94 | % | 6/6/2017 | ||||||
Firehouse Square | 2,765 | Fixed | 6.58 | % | 9/6/2017 | ||||||
Hackley Medical Center | 5,397 | Fixed | 5.93 | % | 1/6/2017 | ||||||
MeadowView Professional Center | 10,409 | Fixed | 5.81 | % | 6/6/2017 | ||||||
Mid Coast Hospital Medical Office Building(2) | 7,869 | Fixed | 4.82 | % | (3) | 5/16/2016 | |||||
Remington Medical Commons | 4,399 | Floating | LIBOR + 2.75% | 9/28/2017 | |||||||
Valley West Hospital Medical Office Building | 4,879 | Fixed | 4.83 | % | 12/1/2020 | ||||||
Oklahoma City, OK Medical Office Building | 7,647 | Fixed | 4.71 | % | 1/10/2021 | ||||||
Crescent City Surgical Center | 18,750 | Fixed | 5.00 | % | 1/23/2019 | ||||||
San Antonio, TX Hospital | 9,783 | Fixed | 5.00 | % | (4) | 6/26/2022 | |||||
Total | $ | 216,105 |
Physicians Realty L.P. and Predecessor | ||
December 31, 2014 | December 31, 2013 | ||||||
ASSETS | |||||||
Investment properties: | |||||||
Land and improvements | $ | 79,334 | $ | 26,088 | |||
Building and improvements | 644,086 | 193,184 | |||||
Tenant improvements | 5,614 | 5,458 | |||||
Acquired lease intangibles | 72,985 | 31,236 | |||||
802,019 | 255,966 | ||||||
Accumulated depreciation | (45,569 | ) | (28,427 | ) | |||
Net real estate property | 756,450 | 227,539 | |||||
Real estate loans receivable | 15,876 | — | |||||
Investment in unconsolidated entity | 1,324 | — | |||||
Net real estate investments | 773,650 | 227,539 | |||||
Cash and cash equivalents | 15,923 | 56,478 | |||||
Tenant receivables, net | 1,324 | 837 | |||||
Other assets | 15,806 | 5,901 | |||||
Total assets | $ | 806,703 | $ | 290,755 | |||
LIABILITIES AND CAPITAL | |||||||
Liabilities: | |||||||
Credit facility | $ | 134,144 | $ | — | |||
Mortgage debt | 77,091 | 40,716 | |||||
Accounts payable | 700 | 836 | |||||
Distributions payable | 16,548 | 5,681 | |||||
Accrued expenses and other liabilities | 6,140 | 2,685 | |||||
Acquired lease intangibles, net | 2,871 | — | |||||
Total liabilities | 237,494 | 49,918 | |||||
Capital: | |||||||
Partners' capital: | |||||||
General partner's capital, 50,640,863 and 21,548,597 units issued and outstanding as of December 31, 2014 and 2013, respectively | 534,730 | 204,904 | |||||
Limited partners' capital, 3,190,339 and 3,698,877 units issued and outstanding as of December 31, 2014 and 2013, respectively. | 33,727 | 35,310 | |||||
Total partners' capital | 568,457 | 240,214 | |||||
Noncontrolling interests - partially owned properties | 752 | 623 | |||||
Total capital | 569,209 | 240,837 | |||||
Total liabilities and capital | $ | 806,703 | $ | 290,755 |
December 31, | |||||||||||
2014 | 2013 | Predecessor 2012 | |||||||||
Revenues: | |||||||||||
Rental revenues | $ | 46,397 | $ | 13,565 | $ | 9,821 | |||||
Expense recoveries | 5,871 | 3,234 | 3,111 | ||||||||
Interest income on real estate loans and other | 1,066 | 246 | 137 | ||||||||
Total revenues | 53,334 | 17,045 | 13,069 | ||||||||
Expenses: | |||||||||||
Interest expense | 6,907 | 4,295 | 4,538 | ||||||||
General and administrative | 11,440 | 3,214 | 362 | ||||||||
Operating expenses | 10,154 | 4,650 | 4,758 | ||||||||
Depreciation and amortization | 16,731 | 5,107 | 4,150 | ||||||||
Acquisition expenses | 10,897 | 1,938 | — | ||||||||
Management fees | — | 475 | 951 | ||||||||
Impairment loss | 1,750 | — | 937 | ||||||||
Total expenses | 57,879 | 19,679 | 15,696 | ||||||||
Loss before equity in income of unconsolidated entity, gain (loss) on sale of investment properties and discontinued operations | (4,545 | ) | (2,634 | ) | (2,627 | ) | |||||
Equity in income of unconsolidated entity | 95 | — | — | ||||||||
Gain (loss) on sale of investment properties | 32 | (2 | ) | (228 | ) | ||||||
Loss from continuing operations | (4,418 | ) | (2,636 | ) | (2,855 | ) | |||||
Discontinued operations: | |||||||||||
Loss from operations on discontinued investment properties | — | — | (198 | ) | |||||||
Gain on sale of discontinued investment properties | — | — | 1,519 | ||||||||
Income from discontinued operations | — | — | 1,321 | ||||||||
Net loss | $ | (4,418 | ) | $ | (2,636 | ) | $ | (1,534 | ) | ||
Less: Net loss attributable to Predecessor | — | 576 | |||||||||
Less: Net income attributable to noncontrolling interests — partially owned properties | (314 | ) | (71 | ) | |||||||
Net loss attributable to common unitholders | $ | (4,732 | ) | $ | (2,131 | ) | |||||
Net loss per unit: | |||||||||||
Basic and diluted | $ | (0.12 | ) | $ | (0.13 | ) | |||||
Weighted average common units: | |||||||||||
Basic and diluted | 36,881,712 | 16,179,492 | |||||||||
Distributions declared per common unit | $ | 0.90 | $ | 0.41 |
Predecessor Equity | General Partner | Limited Partner | Total Partners' Capital | Partially Owned Properties Noncontrolling Interest | Total Capital | ||||||||||||||||||
Predecessor Balance | |||||||||||||||||||||||
Balance at December 31, 2011 | $ | 22,503 | $ | — | $ | — | $ | 22,503 | $ | 112 | $ | 22,615 | |||||||||||
Net (loss) income | (1,659 | ) | — | — | $ | (1,659 | ) | 125 | (1,534 | ) | |||||||||||||
Transfer | (105 | ) | — | — | $ | (105 | ) | 105 | — | ||||||||||||||
Distributions | (1,671 | ) | — | — | (1,671 | ) | (313 | ) | (1,984 | ) | |||||||||||||
Balance at December 31, 2012 | 19,068 | — | — | 19,068 | 29 | 19,097 | |||||||||||||||||
Net (loss) income | (712 | ) | — | — | (712 | ) | 136 | (576 | ) | ||||||||||||||
Transfer | 36 | — | — | 36 | (36 | ) | — | ||||||||||||||||
Distributions | (211 | ) | — | — | (211 | ) | (209 | ) | (420 | ) | |||||||||||||
Balance at July 24, 2013 | 18,181 | — | — | 18,181 | (80 | ) | 18,101 | ||||||||||||||||
Physicians Realty L.P. | |||||||||||||||||||||||
Net proceeds from sale of Trust common shares and issuance of common units | — | 225,920 | — | 225,920 | — | 225,920 | |||||||||||||||||
Formation transactions | (18,181 | ) | 35 | 18,181 | 35 | (389 | ) | (354 | ) | ||||||||||||||
Restricted share award grants | — | 433 | — | 433 | — | 433 | |||||||||||||||||
OP Units - distributions | — | (7,009 | ) | (1,326 | ) | (8,335 | ) | — | (8,335 | ) | |||||||||||||
Adjustments for Limited Partners ownership in Operating Partnership | — | (7,391 | ) | 7,391 | — | — | — | ||||||||||||||||
Contributions | — | (5,423 | ) | 11,534 | 6,111 | 1,276 | 7,387 | ||||||||||||||||
Distributions | — | — | — | — | (255 | ) | (255 | ) | |||||||||||||||
Net (loss) income | — | (1,661 | ) | (470 | ) | (2,131 | ) | 71 | (2,060 | ) | |||||||||||||
Balance at December 31, 2013 | — | 204,904 | 35,310 | 240,214 | 623 | 240,837 | |||||||||||||||||
Net proceeds from sale of Trust common shares and issuance of common units | — | 350,385 | — | 350,385 | — | 350,385 | |||||||||||||||||
Trust restricted share award grants, net | — | 2,060 | — | 2,060 | — | 2,060 | |||||||||||||||||
Issuance of Trust common shares and common units in connection with the Ziegler shared service amendment payment | — | 1,800 | — | 1,800 | — | 1,800 | |||||||||||||||||
Purchase of OP Units | — | — | (7,546 | ) | (7,546 | ) | — | (7,546 | ) | ||||||||||||||
Conversion of OP Units | — | 13,286 | (13,286 | ) | — | — | — | ||||||||||||||||
OP Units - distributions | — | (39,048 | ) | (3,265 | ) | (42,313 | ) | — | (42,313 | ) | |||||||||||||
Adjustments for Limited Partners ownership in Operating Partnership | — | 5,380 | (5,380 | ) | — | — | — | ||||||||||||||||
Issuance of OP Units in connection with acquisitions | — | — | 28,589 | 28,589 | — | 28,589 | |||||||||||||||||
Distributions | — | — | — | — | (185 | ) | (185 | ) | |||||||||||||||
Net (loss) income | — | (4,037 | ) | (695 | ) | (4,732 | ) | 314 | (4,418 | ) | |||||||||||||
Balance at December 31, 2014 | $ | — | $ | 534,730 | $ | 33,727 | $ | 568,457 | $ | 752 | $ | 569,209 |
Year Ended December 31, | |||||||||||
Predecessor | |||||||||||
2014 | 2013 | 2012 | |||||||||
Cash Flows from Operating Activities: | |||||||||||
Net loss | $ | (4,418 | ) | $ | (2,636 | ) | $ | (1,534 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities | |||||||||||
Depreciation and amortization | 16,731 | 5,107 | 4,150 | ||||||||
Amortization of deferred financing costs | 1,097 | 510 | 268 | ||||||||
Amortization of lease inducements and above/below market lease intangibles | 571 | 141 | 70 | ||||||||
Straight-line rental revenue/expense | (4,366 | ) | (675 | ) | (100 | ) | |||||
(Gain) loss on sale of investment properties | (32 | ) | 2 | (1,291 | ) | ||||||
Equity in income of unconsolidated entity | (95 | ) | — | — | |||||||
Distribution from unconsolidated entity | 71 | — | — | ||||||||
Change in fair value of derivatives | (161 | ) | (246 | ) | (122 | ) | |||||
Provision for bad debts | 9 | 30 | 320 | ||||||||
Non-cash share compensation | 2,422 | 433 | — | ||||||||
Ziegler shared service amendment payment | 1,800 | — | — | ||||||||
Impairment on investment properties | 1,750 | — | 937 | ||||||||
Change in operating assets and liabilities: | |||||||||||
Tenant receivables | (986 | ) | (184 | ) | 33 | ||||||
Other assets | (3,518 | ) | (1,074 | ) | 379 | ||||||
Accounts payable to related parties | — | (1,530 | ) | 255 | |||||||
Accounts payable | (136 | ) | 34 | 204 | |||||||
Accrued expenses and other liabilities | 2,556 | 1,256 | (56 | ) | |||||||
Net cash provided by operating activities | 13,295 | 1,168 | 3,513 | ||||||||
Cash Flows from Investing Activities: | |||||||||||
Proceeds on sales of investment properties | 235 | 448 | 14,525 | ||||||||
Acquisition of investment properties, net | (501,127 | ) | (125,728 | ) | — | ||||||
Capital expenditures on existing investment properties | (900 | ) | — | (845 | ) | ||||||
Real estate loans receivable | (15,386 | ) | — | — | |||||||
Leasing commissions | (100 | ) | (163 | ) | (153 | ) | |||||
Lease inducements | (1,532 | ) | (1,000 | ) | — | ||||||
Net cash (used in) provided by investing activities | (518,810 | ) | (126,443 | ) | 13,527 | ||||||
Cash Flows from Financing Activities: | |||||||||||
Net proceeds from sale of Trust common shares and common units | 350,384 | 225,920 | — | ||||||||
Formation transactions | — | (354 | ) | — | |||||||
Proceeds from credit facility borrowings | 395,200 | 52,350 | — | ||||||||
Payment on credit facility borrowings | (257,200 | ) | (52,350 | ) | — | ||||||
Proceeds from issuance of mortgage debt | 26,550 | 162 | 45 | ||||||||
Principal payments on mortgage debt | (6,549 | ) | (41,832 | ) | (14,149 | ) | |||||
Debt issuance costs | (3,887 | ) | (1,428 | ) | (270 | ) | |||||
OP Units distributions - General Partner | (28,104 | ) | (2,161 | ) | — | ||||||
OP Units distributions - Limited Partner | (3,382 | ) | (704 | ) | — | ||||||
Distributions to members and partners | — | — | (1,671 | ) | |||||||
Distributions to noncontrolling interest — partially owned properties | (185 | ) | (464 | ) | (313 | ) | |||||
Purchase of Limited Partner Units | (7,546 | ) | — | — | |||||||
Trust Common shares repurchased and retired | (321 | ) | — | — | |||||||
Net cash provided by (used in) financing activities | 464,960 | 179,139 | (16,358 | ) | |||||||
Net (decrease) increase in cash and cash equivalents | (40,555 | ) | 53,864 | 682 | |||||||
Cash and cash equivalents, beginning of year | 56,478 | 2,614 | 1,932 | ||||||||
Cash and cash equivalents, end of year | $ | 15,923 | $ | 56,478 | $ | 2,614 | |||||
Supplemental disclosure of cash flow information — interest paid during the period | $ | 5,606 | $ | 3,942 | $ | 5,126 | |||||
Supplemental disclosure of noncash activity — assumed debt | $ | 15,283 | $ | — | $ | — | |||||
Supplemental disclosure of noncash activity — issuance of OP Units in connection with acquisitions | $ | 28,589 | $ | 11,535 | $ | — | |||||
Supplemental disclosure of noncash activity — contingent consideration | $ | 840 | $ | — | $ | — |
Declaration Date | Record Date | Payment Date | Cash Distributions per OP Unit | ||||||
December 30, 2014 | January 23, 2015 | February 6, 2015 | $ | 0.225 | |||||
September 26, 2014 | October 17, 2014 | October 30, 2014 | $ | 0.225 | |||||
June 26, 2014 | July 18, 2014 | August 1, 2014 | $ | 0.225 | |||||
March 27, 2014 | April 11, 2014 | April 25, 2014 | $ | 0.225 | |||||
December 30, 2013 | January 24, 2014 | February 7, 2014 | $ | 0.225 | |||||
September 30, 2013 | October 18, 2013 | November 1, 2013 | $ | 0.18 | (1) |
(1) | Prorated cash distribution of $0.18 per OP Unit for the quarterly period from July 19, 2013 (the date of the IPO) through September 30, 2013, which was equivalent to a full quarterly distribution of $0.225 per OP Unit. The distribution was paid on November 1, 2013 to OP Unit holders of record on October 18, 2013, with the exception of the OP Units issued in the acquisition of Crescent City Surgical Centre. |
Property(1) | Location | Acquisition Date | Purchase Price (in thousands) | |||||
Foundation San Antonio Surgical Hospital(2) | San Antonio, TX | February 19, 2014 | $ | 25,556 | ||||
Eagles Landing Family Practice 4 MOBs(2) | Atlanta, GA | February 19, 2014 | 20,800 | |||||
21st Century Oncology 4 MOBs(3) | Sarasota, FL | February 26, 2014 | 17,486 | |||||
Foundation San Antonio MOB(3) | San Antonio, TX | February 28, 2014 | 6,800 | |||||
Peachtree Dunwoody MOB(3) | Atlanta, GA | February 28, 2014 | 36,726 | |||||
LifeCare LTACH(2) | Fort Worth, TX | March 28, 2014 | 27,160 | |||||
LifeCare LTACH(2) | Pittsburgh, PA | March 28, 2014 | 12,840 | |||||
Pinnacle Health Cardiology Portfolio 2 MOBs (3) | Carlisle & Wormleyburg, PA | April 22, 2014 | 9,208 | |||||
South Bend Orthopedic MOB (3) | South Bend, IN | April 30, 2014 | 14,900 | |||||
Grenada Medical Complex MOB (3) | Grenada, MS | April 30,2014 | 7,100 | |||||
Mississippi Sports Medicine and Orthopaedics Center MOB (2)(4) | Jackson, MS | May 23, 2014 | 16,700 | |||||
Carmel Medical Pavilion MOB (3)(5) | Carmel, IN | May 28, 2014 | 4,664 | |||||
Summit Urology MOB (2) | Bloomington, IN | June 30, 2014 | 4,783 | |||||
Renaissance Center (3) | Oshkosh, WI | June 30, 2014 | 8,500 | |||||
Presbyterian Medical Plaza MOB (3) | Monroe, NC | June 30, 2014 | 7,750 | |||||
Landmark Medical Portfolio (Premier) 3 MOBs (2)(6) | Bloomington, IN | July 1, 2014 | 23,837 | |||||
Carlisle II MOB (3) | Carlisle, PA | July 25, 2014 | 4,500 | |||||
Surgical Institute of Monroe ASC (2) | Monroe, MI | July 28, 2014 | 6,000 | |||||
The Oaks Medical Building MOB (3) | Lady Lake, FL | July 31, 2014 | 10,600 | |||||
Baylor Surgicare ASC — Mansfield (3) | Mansfield, TX | September 2, 2014 | 8,500 | |||||
Eye Center of Southern Indiana (2)(7) | Bloomington, IN | September 5, 2014 | 12,174 | |||||
Wayne State Medical Center and MOB (2) | Troy, MI | September 10, 2014 | 46,500 | |||||
El Paso Portfolio (specialty surgical hospital and 2 MOBs) (3)(8) | El Paso, TX | September 30, 2014 | 46,235 | |||||
The Mark H. Zangmeister Center (3) | Columbus, OH | September 30, 2014 | 36,600 | |||||
Berger Medical Center (3) | Orient, OH | September 30, 2014 | 6,785 | |||||
Orthopedic One 2 MOBs (3) | Columbus, OH Westerville, OH | September 30, 2014 | 24,500 | |||||
Pinnacle Health Portfolio 5 MOBs (3) | Harrisburg, PA | October 29, 2014 | 23,100 | |||||
Columbus Regional Health Portfolio 12 MOBs (3) Columbus Regional Health Portfolio 1 MOB (3) | Columbus, GA Phenix City, AL | November 20, 2014 | 27,997 | |||||
Middletown Medical 2 MOBs (2) | Middletown, NY | November 26. 2014 | 14,399 | |||||
Carle Danville Clinic MOB(3) | Danville, IL | November 26, 2014 | 10,300 | |||||
Napoleon Medical Building MOB (3) | New Orleans, LA | December 18, 2014 | 10,500 | |||||
West Tennessee Bone & Joint 1 MOB 1 ASC (2) | Jackson, TN | December 30, 2014 | 9,936 | |||||
Total | $ | 543,436 |
Land | $ | 53,687 | |
Building and improvements | 451,691 | ||
In-place lease intangibles | 35,720 | ||
Above market in-place lease intangibles | 5,270 | ||
Below market in-place lease intangibles | (2,330 | ) | |
Above market in-place ground lease | (701 | ) | |
Investment in unconsolidated entity | 1,300 | ||
Issuance of OP units | (28,589 | ) | |
Mortgage debt assumed | (15,283 | ) | |
Lease inducement | 1,532 | ||
Derivative liability assumed | (197 | ) | |
Contingent consideration | (840 | ) | |
Leasehold interest | 759 | ||
Receivable | 640 | ||
Net assets acquired | $ | 502,659 |
Year Ended December 31, | |||||||
2014 | 2013 | ||||||
Revenue | $ | 81,507 | $ | 71,183 | |||
Net income | 16,883 | 11,461 | |||||
Net income available to common shareholders | 16,883 | 11,461 | |||||
Earnings per unit - basic and diluted | $ | 0.31 | $ | 0.21 | |||
Common units issued and outstanding | 53,831,202 | 53,831,202 |
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||
Cost | Accumulated Amortization | Net | Cost | Accumulated Amortization | Net | ||||||||||||||||||
Assets | |||||||||||||||||||||||
In-place leases | $ | 64,777 | $ | (12,213 | ) | $ | 52,564 | $ | 29,056 | $ | (8,080 | ) | $ | 20,976 | |||||||||
Above market leases | 7,449 | (578 | ) | 6,871 | 2,180 | (48 | ) | 2,132 | |||||||||||||||
Leasehold interest | 759 | (5 | ) | 754 | — | — | — | ||||||||||||||||
Total | $ | 72,985 | $ | (12,796 | ) | $ | 60,189 | $ | 31,236 | $ | (8,128 | ) | $ | 23,108 | |||||||||
Liability | |||||||||||||||||||||||
Below market lease | $ | 2,330 | $ | (156 | ) | $ | 2,174 | — | — | — | |||||||||||||
Above market ground lease | 701 | (4 | ) | 697 | — | — | — | ||||||||||||||||
Total | $ | 3,031 | $ | (160 | ) | $ | 2,871 | $ | — | $ | — | $ | — |
December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Amortization expense related to in-place leases | $ | 4,133 | $ | 1,252 | $ | 900 | |||||
Decrease of rental income related to above-market leases | 530 | 48 | — | ||||||||
Decrease of rental income related to leasehold interest | 5 | — | — | ||||||||
Increase of rental income related to below-market leases | 156 | — | — | ||||||||
Decrease of operating expense related to above market ground leases | 4 | — | — |
Net Decrease in Revenue | Net Increase in Expenses | ||||||
2015 | $ | (667 | ) | $ | 7,446 | ||
2016 | (689 | ) | 7,384 | ||||
2017 | (567 | ) | 7,165 | ||||
2018 | (560 | ) | 6,628 | ||||
2019 | (458 | ) | 4,625 | ||||
Thereafter | (2,511 | ) | 18,618 | ||||
Total | $ | (5,452 | ) | $ | 51,866 |
December 31, | |||||||
2014 | 2013 | ||||||
Straight line rent receivable | $ | 6,431 | $ | 2,018 | |||
Lease inducements, net | 2,845 | 1,509 | |||||
Escrows | 1,906 | 1,552 | |||||
Earnest deposits | 2,343 | — | |||||
Prepaid expenses and other | 2,281 | 822 | |||||
Total | $ | 15,806 | $ | 5,901 |
December 31, | |||||||
2014 | 2013 | ||||||
Mortgage notes, bearing fixed interest from 4.71% to 6.58%, with a weighted average interest rate of 5.26%, and due in 2016, 2017, 2018, 2019, 2021 and 2022 collateralized by nine properties with a net book value of $118,247 | $ | 73,706 | $ | 38,288 | |||
Mortgage note, bearing variable interest of LIBOR plus 2.75% and due in 2017, collateralized by one property with a net book value of $6,249 | 4,399 | 4,533 | |||||
Total mortgage debt | 78,105 | 42,821 | |||||
$400 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.50%, due September 2018 | 138,000 | — | |||||
Total Debt | $ | 216,105 | $ | 42,821 | |||
Unamortized deferred financing cost | (4,870 | ) | (2,105 | ) | |||
Total debt | $ | 211,235 | $ | 40,716 |
Consolidated Leverage Ratio | Adjusted LIBOR Rate Loans and Letter of Credit Fee | Base Rate Loans | |||
<35% | LIBOR + 1.50% | 0.50 | % | ||
>35% and <45% | LIBOR + 1.65% | 0.65 | % | ||
>45% and <45% | LIBOR + 1.75% | 0.75 | % | ||
>45% and <50% | LIBOR + 1.85% | 0.85 | % | ||
>50% and <55% | LIBOR + 2.00% | 1.00 | % | ||
>55% | LIBOR + 2.20% | 1.20 | % |
2015 | $ | 1,864 | |
2016 | 9,421 | ||
2017 | 28,750 | ||
2018 | 139,100 | ||
2019 | 19,906 | ||
Thereafter | 17,064 | ||
Total Payments | $ | 216,105 |
Shares | Weighted Average Grant Date Fair Value | |||||
Non-vested at December 31, 2013 | 250,000 | $ | 11.50 | |||
Granted | 152,987 | 13.79 | ||||
Vested | (61,179 | ) | 11.50 | |||
Share repurchase | (22,154 | ) | 14.49 | |||
Non-vested at December 31, 2014 | 319,654 | $ | 12.60 |
Volatility | 18.8% - 34.2% | |
Dividend assumption | reinvested | |
Expected term in years | 2.83 | |
Risk-free rate | 0.65 | % |
Stock price (per share) | 13.47 |
Restricted Share Units | Weighted Average Grant Date Fair Value | |||||
Non-vested at December 31, 2013 | — | $ | — | |||
Granted | 55,680 | 16.94 | ||||
Vested | — | — | ||||
Forfeited | — | — | ||||
Non-vested at December 31, 2014 | 55,680 | $ | 16.94 |
Non-recurring Fair Value Measurements At Report Date using: | |||||||||||||||||||
Carrying Value as of December 31, 2013 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Losses for Year Ended December 31, 2014 | |||||||||||||||
Investment properties | $ | 4,551 | $ | 1,529 | $ | — | $ | 1,272 | $ | (1,750 | ) |
Asset Category | Fair Value at December 31, 2014 | Valuation Technique | Unobservable Inputs | Rate | |||||||
Investment properties | $ | 1,272 | Market comparable/ | Discount rate | 11.00 | % | |||||
Discounted cash flow | Capitalization rate | 8.00 | % |
December 31, 2014 | December 31, 2013 | ||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
Real estate loans receivable | $ | 15,876 | $ | 15,876 | $ | — | $ | — | |||||||
Credit facility | $ | (138,000 | ) | $ | (138,000 | ) | — | — | |||||||
Mortgage debt | $ | (78,105 | ) | $ | (78,642 | ) | $ | (42,821 | ) | $ | (44,130 | ) | |||
Derivative liabilities | $ | (233 | ) | $ | (233 | ) | $ | (397 | ) | $ | (397 | ) |
2015 | $ | 65,905 | |
2016 | 65,323 | ||
2017 | 65,179 | ||
2018 | 62,637 | ||
2019 | 59,464 | ||
Thereafter | 418,400 | ||
Total | $ | 736,908 |
2015 | $ | 1,426 | |
2016 | 1,442 | ||
2017 | 1,480 | ||
2018 | 1,521 | ||
2019 | 1,564 | ||
Thereafter | 23,317 | ||
Total | $ | 30,750 |
Year Ended December 31, | |||||||
2014 | 2013 | ||||||
Numerator for earnings per unit — basic and diluted: | |||||||
Net loss | $ | (4,418 | ) | $ | (2,636 | ) | |
Less: Net loss attributable to Predecessor | — | 576 | |||||
Less: Net income attributable to noncontrolling interests — partially owned properties | (314 | ) | (71 | ) | |||
Numerator for earnings per unit — basic and diluted | $ | (4,732 | ) | $ | (2,131 | ) | |
Denominator for earnings per unit - basic and diluted units: | 36,881,712 | 16,179,492 | |||||
Basic and diluted earnings per unit | $ | (0.12 | ) | $ | (0.13 | ) |
Property(1) | Location | Acquisition Date | Purchase Price (in thousands) | |||||
Edina MOB | Edina, MN | January 22, 2015 | $ | 14,190 | ||||
Savage MOB | Savage, MN | January 22, 2015 | 12,800 | |||||
Crystal MOB | Crystal, MN | January 22, 2015 | 14,782 | |||||
Dell Rd MOB | Chanhassen, MN | January 22, 2015 | 6,410 | |||||
Columbus MOB | Columbus, GA | January 23, 2015 | 6,540 | |||||
Methodist Sports MOB (2) | Greenwood, IN | January 28, 2015 | 10,000 | |||||
Vadnais Heights MOB | Vadnais Heights, MN | January 29, 2015 | 18,422 | |||||
Minnetonka MOB (3) | Minnetonka, MN | February 5, 2015 | 26,000 | |||||
Jamestown MOB | Jamestown, ND | February 5, 2015 | 12,819 | |||||
Indianapolis South 4 MOBs | Greenwood, IN | February 13, 2015 | 17,183 | |||||
Minnesota Eye MOB | Minnetonka, MN | February 17, 2015 | 10,882 | |||||
Bridgeport Medical Center | Lakewood, WA | February 27, 2015 | 13,750 | |||||
Baylor Cancer Center | Dallas, TX | February 27, 2015 | 8,200 | |||||
$ | 171,978 |
Quarter Ended | ||||||||||||||||
2014 | March 31 | June 30 | September 30 | December 31 | ||||||||||||
Total revenues | $ | 8,032 | $ | 11,447 | $ | 14,161 | $ | 19,694 | ||||||||
Operating (loss) income | (3,575 | ) | (626 | ) | (2,311 | ) | 1,967 | |||||||||
Net (loss) income | (3,558 | ) | (600 | ) | (2,251 | ) | 1,991 | |||||||||
Net (loss) income attributable to common unitholders | (3,624 | ) | (684 | ) | (2,327 | ) | 1,903 | |||||||||
Earnings per unit — basic: | ||||||||||||||||
Net (loss) income available to common unitholder | $ | (0.15 | ) | $ | (0.02 | ) | $ | (0.06 | ) | $ | 0.04 | |||||
Weighted average common units outstanding | 24,997,474 | 29,962,046 | 40,898,015 | 51,335,748 | ||||||||||||
Earnings per unit — diluted: | ||||||||||||||||
Net (loss) income available to common unitholder | $ | (0.15 | ) | $ | (0.02 | ) | $ | (0.06 | ) | $ | 0.04 | |||||
Weighted average common units outstanding | 24,997,474 | 29,962,046 | 40,898,015 | 51,544,832 |
Quarter Ended | ||||||||||||||||
2013 | March 31 (1) | June 30 (1) | September 30 | December 31 | ||||||||||||
Total revenues | $ | 3,390 | $ | 3,437 | $ | 3,729 | $ | 6,488 | ||||||||
Operating loss | (301 | ) | (283 | ) | (1,414 | ) | (638 | ) | ||||||||
Net loss | (301 | ) | (283 | ) | (1,416 | ) | (638 | ) | ||||||||
Net loss available to common unitholder | — | — | (1,483 | ) | (648 | ) | ||||||||||
Earnings per unit — basic and diluted: | ||||||||||||||||
Net income available to common unitsholder | $ | — | $ | — | $ | (0.10 | ) | $ | (0.04 | ) | ||||||
Weighted average common units outstanding | — | — | 14,243,850 | 17,631,224 |
Initial Cost to Company | Gross Amount at Which Carried as of Close of Period | |||||||||||||||||||||||||||||||||||||
Description | Location | Encumbrances | Land | Buildings and Improvements | Cost Capitalized Subsequent to Acquisitions | Land | Buildings and Improvements | Total | Accumulated Depreciation | Date of Construction | Date Acquired | Life on Which Building Depreciation in Income Statement is Computed | ||||||||||||||||||||||||||
Arrowhead Commons | Phoenix, AZ | — | $ | 740 | $ | 2,551 | $ | 1 | $ | 740 | $ | 2,552 | $ | 3,292 | (366 | ) | 2004 | 5/31/2008 | 46 | |||||||||||||||||||
Aurora Medical Office Building | Green Bay, WI | — | 500 | 1,566 | — | 500 | 1,566 | 2,066 | (149 | ) | 2010 | 4/15/2010 | 50 | |||||||||||||||||||||||||
Austell Medical Office Building | Atlanta, GA | — | 289 | 1,992 | 313 | 289 | 2,305 | 2,594 | (397 | ) | 1971 | 6/30/2008 | 36 | |||||||||||||||||||||||||
Canton Medical Office Building | Atlanta, GA | 6,207 | 710 | 7,225 | 97 | 710 | 7,322 | 8,032 | (1,851 | ) | 1994 | 5/25/2007 | 30 | |||||||||||||||||||||||||
Decatur Medical Office Building | Atlanta, GA | — | 740 | 2,604 | 45 | 740 | 2,649 | 3,389 | (679 | ) | 1974 | 10/12/2007 | 28 | |||||||||||||||||||||||||
El Paso Medical Office Building | El Paso, TX | — | 860 | 2,866 | 357 | 860 | 3,223 | 4,083 | (1,293 | ) | 1987 | 8/24/2006 | 21 | |||||||||||||||||||||||||
Farmington Professional Pavillion | Detroit, MI | — | 580 | 1,793 | 87 | 580 | 1,880 | 2,460 | (1,081 | ) | 1972 | 1/5/2006 | 15 | |||||||||||||||||||||||||
Firehouse Square | Milwaukee, WI | 2,765 | 1,120 | 2,768 | — | 1,120 | 2,768 | 3,888 | (684 | ) | 2002 | 8/15/2007 | 30 | |||||||||||||||||||||||||
Hackley Medical Center | Grand Rapids, MI | 5,397 | 1,840 | 6,402 | 24 | 1,840 | 6,426 | 8,266 | (1,674 | ) | 1968 | 12/22/2006 | 30 | |||||||||||||||||||||||||
Ingham Regional Medical Center | Lansing, MI | — | 310 | 2,893 | (1,134 | ) | 310 | 1,759 | 2,069 | (800 | ) | 1994 | 7/26/2006 | 39 | ||||||||||||||||||||||||
Meadow View Professional Center | Kingsport, TN | 10,410 | 2,270 | 11,344 | — | 2,270 | 11,344 | 13,614 | (2,923 | ) | 2005 | 5/10/2007 | 30 | |||||||||||||||||||||||||
Mid Coast Hospital Office Building | Portland, ME | 7,869 | — | 11,247 | 8 | — | 11,255 | 11,255 | (2,477 | ) | 2008 | 5/1/2008 | 30 | |||||||||||||||||||||||||
New Albany Professional Building | Columbus, OH | — | 237 | 2,767 | 20 | 237 | 2,787 | 3,024 | (472 | ) | 2000 | 1/4/2008 | 42 | |||||||||||||||||||||||||
Northpark Trail | Atlanta, GA | — | 839 | 1,245 | 235 | 839 | 1,480 | 2,319 | (539 | ) | 2001 | 12/28/2005 | 35 | |||||||||||||||||||||||||
Remington Medical Commons | Chicago, IL | 4,399 | 895 | 6,499 | 319 | 895 | 6,818 | 7,713 | (1,464 | ) | 2008 | 6/1/2008 | 30 | |||||||||||||||||||||||||
Stonecreek Family Health Center | Columbus, OH | — | 459 | 1,898 | (153 | ) | 459 | 1,745 | 2,204 | (687 | ) | 1996 | 9/15/2006 | 23 | ||||||||||||||||||||||||
Summit Healthplex | Atlanta, GA | — | 2,633 | 15,576 | 4,412 | 2,633 | 19,988 | 22,621 | (3,735 | ) | 2002 | 7/3/2008 | 44 | |||||||||||||||||||||||||
Valley West Hospital Medical Office Building | Chicago, IL | 4,878 | — | 6,275 | 611 | — | 6,886 | 6,886 | (1,588 | ) | 2007 | 11/1/2007 | 30 | |||||||||||||||||||||||||
East El Paso MOB | El Paso, TX | — | 710 | 4,500 | — | 710 | 4,500 | 5,210 | (171 | ) | 2004 | 8/30/2013 | 35 | |||||||||||||||||||||||||
East El Paso Surgery Center | El Paso, TX | — | 3,070 | 23,627 | — | 3,070 | 23,627 | 26,697 | (875 | ) | 2004 | 8/30/2013 | 36 | |||||||||||||||||||||||||
LifeCare Plano LTACH | Plano, TX | — | 3,370 | 11,689 | 455 | 3,370 | 12,144 | 15,514 | (613 | ) | 1987 | 9/18/2013 | 25 | |||||||||||||||||||||||||
Crescent City Surgical Centre | New Orleans, LA | 18,750 | — | 34,208 | — | — | 34,208 | 34,208 | (891 | ) | 2010 | 9/30/2013 | 48 | |||||||||||||||||||||||||
Foundation Surgical Affiliates MOB | Oklahoma City, OK | 7,647 | 1,300 | 12,724 | — | 1,300 | 12,724 | 14,024 | (370 | ) | 2004 | 9/30/2013 | 43 | |||||||||||||||||||||||||
Pensacola Medical Office Building | Pensacola, FL | — | 990 | 5,005 | 6 | 990 | 5,011 | 6,001 | (128 | ) | 2012 | 10/4/2013 | 49 | |||||||||||||||||||||||||
Central Ohio Neurosurgical Surgeons MOB (CONS) | Columbus, OH | — | 981 | 7,620 | — | 981 | 7,620 | 8,601 | (188 | ) | 2007 | 11/27/2013 | 44 | |||||||||||||||||||||||||
Great Falls Ambulatory Surgery Center | Great Falls, MT | — | 203 | 3,224 | — | 203 | 3,224 | 3,427 | (102 | ) | 1999 | 12/11/2013 | 33 |
Eagles Landing Family Practice Medical Office Building | Conyers, GA | — | 1,000 | 3,345 | — | 1,000 | 3,345 | 4,345 | (78 | ) | 2008 | 2/19/2014 | 37 | |||||||||||||||||||||||||
Eagles Landing Family Practice Medical Office Building | McDonough, GA | — | 800 | 4,893 | — | 800 | 4,893 | 5,693 | (116 | ) | 2007 | 2/19/2014 | 36 | |||||||||||||||||||||||||
Eagles Landing Family Practice Medical Office Building | McDonough, GA | — | 400 | 5,086 | — | 400 | 5,086 | 5,486 | (116 | ) | 2006 | 2/19/2014 | 37 | |||||||||||||||||||||||||
Eagles Landing Family Practice Medical Office Building | Jackson, GA | — | 800 | 4,600 | — | 800 | 4,600 | 5,400 | (103 | ) | 2010 | 2/19/2014 | 38 | |||||||||||||||||||||||||
Foundation Surgical Hospital of San Antonio | San Antonio, TX | 9,783 | 2,230 | 23,346 | — | 2,230 | 23,346 | 25,576 | (634 | ) | 2007 | 2/19/2014 | 35 | |||||||||||||||||||||||||
Foundation Healthplex of San Antonio | San Antonio, TX | — | 911 | 4,189 | — | 911 | 4,189 | 5,100 | (104 | ) | 2007 | 2/16/2014 | 35 | |||||||||||||||||||||||||
21st Century Radiation Oncology — Sarasota | Sarasota, FL | — | 633 | 6,557 | — | 633 | 6,557 | 7,190 | (211 | ) | 1975 | 2/26/2014 | 27 | |||||||||||||||||||||||||
21st Century Radiation Oncology — Venice | Venice, FL | — | 814 | 2,952 | — | 814 | 2,952 | 3,766 | (79 | ) | 1987 | 2/26/2014 | 35 | |||||||||||||||||||||||||
21st Century Radiation Oncology — Englewood | Englewood, FL | — | 350 | 1,878 | — | 350 | 1,878 | 2,228 | (45 | ) | 1992 | 2/26/2014 | 38 | |||||||||||||||||||||||||
21st Century Radiation Oncology — Port Charlotte | Port Charlotte, FL | — | 269 | 2,326 | — | 269 | 2,326 | 2,595 | (57 | ) | 1996 | 2/26/2014 | 36 | |||||||||||||||||||||||||
Peachtree Dunwoody Medical Office Building Center | Atlanta, GA | — | 6,046 | 27,435 | 7 | 6,046 | 27,442 | 33,488 | (936 | ) | 1987 | 2/28/2014 | 25 | |||||||||||||||||||||||||
Lifecare LTACH — Pittsburgh | Pittsburgh, PA | — | 1,142 | 11,737 | — | 1,142 | 11,737 | 12,879 | (315 | ) | 1987 | 3/28/2014 | 30 | |||||||||||||||||||||||||
Lifecare LTACH — Ft Worth | Ft. Worth, TX | — | 2,730 | 24,639 | — | 2,730 | 24,639 | 27,369 | (632 | ) | 1987 | 3/28/2014 | 30 | |||||||||||||||||||||||||
Pinnacle Health Medical Office Building | Carlisle, PA | — | 424 | 2,232 | — | 424 | 2,232 | 2,656 | (46 | ) | 2002 | 4/22/2014 | 35 | |||||||||||||||||||||||||
Pinnacle Health Medical Office Building | Harrisburg, PA | — | 795 | 4,601 | — | 795 | 4,601 | 5,396 | (133 | ) | 1990 | 4/22/2014 | 25 | |||||||||||||||||||||||||
South Bend Orthopaedics Medical Office Building | South Bend, IN | — | 2,418 | 11,355 | — | 2,418 | 11,355 | 13,773 | (217 | ) | 2007 | 4/30/2014 | 40 | |||||||||||||||||||||||||
Grenada Medical Complex | Grenada, MS | — | 185 | 5,820 | — | 185 | 5,820 | 6,005 | (151 | ) | 1975 | 4/30/2014 | 30 | |||||||||||||||||||||||||
Mississippi Ortho Medical Office Building | Jackson, MS | — | 1,272 | 14,177 | — | 1,272 | 14,177 | 15,449 | (248 | ) | 1987 | 5/23/2014 | 35 | |||||||||||||||||||||||||
Carmel Medical Pavilion | Carmel, IN | — | — | 3,917 | — | — | 3,917 | 3,917 | (97 | ) | 1993 | 5/28/2014 | 25 | |||||||||||||||||||||||||
Presbyterian Medical Plaza | Monroe, NC | — | 1,195 | 5,681 | — | 1,195 | 5,681 | 6,876 | (67 | ) | 2008 | 6/30/2014 | 45 | |||||||||||||||||||||||||
Renaissance Ambulatory Surgery Center | Oshkosh, WI | — | 228 | 7,658 | — | 228 | 7,658 | 7,886 | (99 | ) | 2007 | 6/30/2014 | 40 | |||||||||||||||||||||||||
Summit Urology | Bloomington, IN | — | 125 | 4,792 | — | 125 | 4,792 | 4,917 | (82 | ) | 1996 | 6/30/2014 | 30 | |||||||||||||||||||||||||
500 Landmark | Bloomington, IN | — | 627 | 3,549 | — | 627 | 3,549 | 4,176 | (53 | ) | 2000 | 7/1/2014 | 35 | |||||||||||||||||||||||||
550 Landmark | Bloomington, IN | — | 2,717 | 15,224 | — | 2,717 | 15,224 | 17,941 | (227 | ) | 2000 | 7/1/2014 | 35 | |||||||||||||||||||||||||
574 Landmark | Bloomington, IN | — | 418 | 1,493 | — | 418 | 1,493 | 1,911 | (23 | ) | 2004 | 7/1/2014 | 35 | |||||||||||||||||||||||||
Carlisle II MOB | Carlisle, PA | — | 412 | 3,962 | — | 412 | 3,962 | 4,374 | (39 | ) | 1996 | 7/25/2014 | 45 | |||||||||||||||||||||||||
Surgical Institute of Monroe | Monroe, MI | — | 410 | 5,743 | — | 410 | 5,743 | 6,153 | (80 | ) | 2010 | 7/28/2014 | 35 | |||||||||||||||||||||||||
The Oaks at Lady Lake | Lady Lake, FL | — | 1,065 | 8,642 | — | 1,065 | 8,642 | 9,707 | (87 | ) | 2011 | 7/31/2014 | 42 | |||||||||||||||||||||||||
Mansfield ASC | Mansfield, TX | — | 1,491 | 6,471 | — | 1,491 | 6,471 | 7,962 | (52 | ) | 2010 | 9/2/2014 | 46 | |||||||||||||||||||||||||
Eye Center of Southern Indiana | Bloomington, IN | — | 910 | 11,477 | — | 910 | 11,477 | 12,387 | (113 | ) | 1995 | 9/5/2014 | 35 |
Wayne State | Troy, MI | — | 3,560 | 43,052 | — | 3,560 | 43,052 | 46,612 | (392 | ) | 1986 | 9/10/2014 | 38 | |||||||||||||||||||||||||
Zangmesiter | Columbus, OH | — | 1,610 | 31,120 | — | 1,610 | 31,120 | 32,730 | (203 | ) | 2007 | 9/30/2014 | 40 | |||||||||||||||||||||||||
El Paso — Lee Trevino | El Paso, TX | — | 2,294 | 11,316 | 183 | 2,294 | 11,499 | 13,793 | (101 | ) | 1983 | 9/30/2014 | 30 | |||||||||||||||||||||||||
El Paso — Kenworthy | El Paso, TX | — | 728 | 2,178 | — | 728 | 2,178 | 2,906 | (17 | ) | 1983 | 9/30/2014 | 35 | |||||||||||||||||||||||||
El Paso — Murchison | El Paso, TX | — | 2,283 | 24,543 | — | 2,283 | 24,543 | 26,826 | (211 | ) | 1970 | 9/30/2014 | 30 | |||||||||||||||||||||||||
Berger Medical Center | Columbus, OH | — | — | 5,950 | — | — | 5,950 | 5,950 | (43 | ) | 2007 | 9/30/2014 | 38 | |||||||||||||||||||||||||
Ortho One — Columbus | Columbus, OH | — | — | 16,234 | — | — | 16,234 | 16,234 | (100 | ) | 2009 | 9/30/2014 | 45 | |||||||||||||||||||||||||
Ortho One — Westerville | Westerville, OH | — | 362 | 3,944 | — | 362 | 3,944 | 4,306 | (25 | ) | 2007 | 9/30/2014 | 43 | |||||||||||||||||||||||||
Pinnacle — 32 Northeast | Hershey, PA | — | 408 | 3,232 | — | 408 | 3,232 | 3,640 | (18 | ) | 1994 | 10/29/2014 | 33 | |||||||||||||||||||||||||
Pinnacle — 240 Grandview | Camp Hill, PA | — | 321 | 4,242 | — | 321 | 4,242 | 4,563 | (22 | ) | 1980 | 10/29/2014 | 35 | |||||||||||||||||||||||||
Pinnacle — 4518 Union Deposit | Harrisburg, PA | — | 617 | 7,305 | — | 617 | 7,305 | 7,922 | (42 | ) | 2004 | 10/29/2014 | 31 | |||||||||||||||||||||||||
Pinnacle — 4520 Union Deposit | Harrisburg, PA | — | 169 | 2,055 | — | 169 | 2,055 | 2,224 | (13 | ) | 1997 | 10/29/2014 | 28 | |||||||||||||||||||||||||
Pinnacle — Market Place Way | Harrisburg, PA | — | 808 | 2,383 | — | 808 | 2,383 | 3,191 | (11 | ) | 2004 | 10/29/2014 | 35 | |||||||||||||||||||||||||
Columbus — 2000 10th Avenue | Columbus, GA | — | 380 | 2,737 | — | 380 | 2,737 | 3,117 | (12 | ) | 1989 | 11/20/2014 | 22 | |||||||||||||||||||||||||
Columbus — 1942 North Avenue | Columbus, GA | — | 91 | 273 | — | 91 | 273 | 364 | (2 | ) | 1971 | 11/20/2014 | 12 | |||||||||||||||||||||||||
Columbus — 920 18th Street | Columbus, GA | — | 110 | 281 | — | 110 | 281 | 391 | (3 | ) | 1982 | 11/20/2014 | 8 | |||||||||||||||||||||||||
Columbus — 1900 10th Ave | Columbus, GA | — | 474 | 5,580 | — | 474 | 5,580 | 6,054 | (19 | ) | 1976 | 11/20/2014 | 26 | |||||||||||||||||||||||||
Columbus — 1800 10th Ave | Columbus, GA | — | 539 | 5,238 | — | 539 | 5,238 | 5,777 | (17 | ) | 1976 | 11/20/2014 | 28 | |||||||||||||||||||||||||
Columbus — 705 17th Street | Columbus, GA | — | 372 | 2,346 | — | 372 | 2,346 | 2,718 | (14 | ) | 1994 | 11/20/2014 | 15 | |||||||||||||||||||||||||
Columbus — 615 19th Street | Columbus, GA | — | 75 | 113 | — | 75 | 113 | 188 | (3 | ) | 1976 | 11/20/2014 | 3 | |||||||||||||||||||||||||
Columbus — 1968 North Avenue | Columbus, GA | — | 89 | 32 | — | 89 | 32 | 121 | (1 | ) | 1966 | 11/20/2014 | 4 | |||||||||||||||||||||||||
Columbus — 633 19th Street | Columbus, GA | — | 99 | 255 | — | 99 | 255 | 354 | (3 | ) | 1972 | 11/20/2014 | 9 | |||||||||||||||||||||||||
Columbus — 500 18th Street | Columbus, GA | — | 430 | 170 | — | 430 | 170 | 600 | (3 | ) | 1982 | 11/20/2014 | 8 | |||||||||||||||||||||||||
Columbus — 2200 Hamilton Rd | Columbus, GA | — | 267 | 1,579 | — | 267 | 1,579 | 1,846 | (7 | ) | 1992 | 11/20/2014 | 22 | |||||||||||||||||||||||||
Columbus — 1810 Stadium Drive | Phenix City, AL | — | 202 | 149 | — | 202 | 149 | 351 | (2 | ) | 1999 | 11/20/2014 | 30 | |||||||||||||||||||||||||
Middletown Medical — 111 Maltese | Wallkill, NY | — | 670 | 9,921 | — | 670 | 9,921 | 10,591 | (24 | ) | 1988 | 11/26/2014 | 35 | |||||||||||||||||||||||||
Middletown Medical — 2 Edgewater | Wallkill, NY | — | 200 | 2,966 | — | 200 | 2,966 | 3,166 | (7 | ) | 1992 | 11/26/2014 | 35 | |||||||||||||||||||||||||
Carle Danville MOB | Danville, IL | — | 607 | 7,136 | — | 607 | 7,136 | 7,743 | (20 | ) | 2007 | 11/26/2014 | 33 | |||||||||||||||||||||||||
Napoleon MOB | New Orleans, LA | — | 1,202 | 7,412 | 5 | 1,202 | 7,417 | 8,619 | — | 1974 | 12/18/2014 | 25 | ||||||||||||||||||||||||||
West TN Bone & Joint — Physicians Drive | Jackson, TN | — | 650 | 2,960 | — | 650 | 2,960 | 3,610 | — | 1996 | 12/30/2014 | 35 | ||||||||||||||||||||||||||
West TN Bone & Joint | Jackson, TN | — | 1,254 | 5,215 | — | 1,254 | 5,215 | 6,469 | — | 1991 | 12/30/2014 | 31 | ||||||||||||||||||||||||||
78,105 | 79,334 | 643,802 | 5,898 | 79,334 | 649,700 | 729,034 | (32,772 | ) |
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Balance as of the beginning of the year | $ | 224,730 | $ | 111,149 | $ | 124,333 | |||||
Acquisitions | 505,379 | 113,225 | — | ||||||||
Additions | 900 | 806 | 786 | ||||||||
Impairment | (1,750 | ) | — | (937 | ) | ||||||
Dispositions | (225 | ) | (450 | ) | (13,033 | ) | |||||
Balance as of the end of the year | $ | 729,034 | $ | 224,730 | $ | 111,149 |
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Balance as of the beginning of the year | $ | 20,299 | $ | 16,495 | $ | 14,484 | |||||
Acquisitions | 6,575 | 694 | — | ||||||||
Additions | 5,898 | 3,110 | 3,024 | ||||||||
Dispositions | — | — | (1,013 | ) | |||||||
Balance as of the end of the year | $ | 32,772 | $ | 20,299 | $ | 16,495 |
Plan category | Number of securities to be issued upon exercise of outstanding options warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | ||||||
Equity compensation plans approved by security holders | 55,680 | (1) | — | 1,991,333 | |||||
Equity compensation plans not approved by security holders | — | — | — | ||||||
Physicians Realty Trust and Predecessor | |
PHYSICIANS REALTY L.P. by: Physicians Realty Trust, its general partner | |
Dated: February 24, 2017 | /s/ JOHN T. THOMAS |
John T. Thomas | |
Chief Executive Officer and President | |
(Principal Executive Officer) |
Signature | Title | Date | ||
/s/ JOHN T. THOMAS | Chief Executive Officer and | February 24, 2017 | ||
John T. Thomas | President and Trustee (Principal Executive Officer) of Physicians Realty Trust, the general partner of Physicians Realty L.P. | |||
/s/ JEFFREY N. THEILER | Executive Vice President and | February 24, 2017 | ||
Jeffrey N. Theiler | Chief Financial Officer (Principal Financial Officer) of Physicians Realty Trust, the general partner of Physicians Realty L.P. | |||
/s/ JOHN W. LUCEY | Senior Vice President - Chief Accounting and | February 24, 2017 | ||
John W. Lucey | Administrative Officer (Principal Accounting Officer) of Physicians Realty Trust, the general partner of Physicians Realty L.P. | |||
/s/ STANTON D. ANDERSON | Trustee of Physicians Realty Trust, the general partner of Physicians Realty L.P. | February 24, 2017 | ||
Stanton D. Anderson | ||||
/s/ MARK A. BAUMGARTNER | Trustee of Physicians Realty Trust, the general partner of Physicians Realty L.P. | February 24, 2017 | ||
Mark A. Baumgartner | ||||
/s/ ALBERT C. BLACK, JR. | Trustee of Physicians Realty Trust, the general partner of Physicians Realty L.P. | February 24, 2017 | ||
Albert C. Black, Jr. | ||||
/s/ WILLIAM A. EBINGER, M.D. | Trustee of Physicians Realty Trust, the general partner of Physicians Realty L.P. | February 24, 2017 | ||
William A. Ebinger, M.D. | ||||
/s/ TOMMY G. THOMPSON | Chairman of the Board of Trustees of Physicians Realty Trust, the general partner of Physicians Realty L.P. | February 24, 2017 | ||
Tommy G. Thompson | ||||
/s/ RICHARD A. WEISS | Trustee of Physicians Realty Trust, the general partner of Physicians Realty L.P. | February 24, 2017 | ||
Richard A. Weiss |
Exhibit No. | Title | |
3.1 | (1) | Second Amended and Restated Agreement of Limited Partnership of Physicians Realty L.P., dated February 5, 2015 |
10.1 | (2) | Form of Restricted Shares Award Agreement (Time Vesting) of Physicians Realty Trust |
10.2 | (3) | Form of Indemnification Agreement between Physicians Realty Trust and its trustees and officers |
10.3 | (2) | Contribution Agreement by and among Physicians Realty L.P., Physicians Realty Trust and Ziegler Healthcare Real Estate Fund I, dated as of June 19, 2013 |
10.4 | (2) | Contribution Agreement by and among Physicians Realty L.P., Physicians Realty Trust and Ziegler Healthcare Real Estate Fund II, dated as of June 19, 2013 |
10.5 | (2) | Contribution Agreement by and among Physicians Realty L.P., Physicians Realty Trust and Ziegler Healthcare Real Estate Fund III, dated as of June 19, 2013 |
10.6 | (2) | Contribution Agreement by and among Physicians Realty L.P., Physicians Realty Trust and Ziegler Healthcare Real Estate Fund IV, LP, dated as of June 19, 2013 |
10.7 | (4) | Form of Shared Services Agreement by and among Physicians Realty Trust, Physicians Realty L.P. and B.C. Ziegler and Company |
10.8 | (4) | Membership Interest Purchase Agreement for the Arrowhead Commons property by and among Physicians Realty L.P., Birdie Zone, L.L.C., Ziegler Healthcare Real Estate Fund I and Ziegler-Arizona 23, LLC dated as of June 24, 2013 |
10.9 | (5) | Agreement of Sale and Purchase, by and between Physicians Realty L.P. and 6800 Preston Limited dated August 21, 2013 |
10.10 | (6) | Assignment and Assumption Agreement of Sale and Purchase by and between Foundation Surgical Hospital Affiliates, L.L.C. and DOC-FSH El Paso Medical Center, LLC, as of August 30, 2013 |
10.11 | (6) | Agreement of Sale and Purchase by and between HCRI Texas Properties, Ltd., Health Care REIT, Inc., and Foundation Surgical Hospital Affiliates, L.L.C., as of August 30, 2013 |
10.12 | (6) | Membership Interest Contribution Agreement by and among DOC-CCSC Crescent City Surgical Centre, LLC, Crescent City Surgical Centre Facility, LLC, Physicians Realty L.P. and the Members of Crescent City Surgical Centre Facility, LLC, dated as of September 30, 2013 |
10.13 | (7) | Assignment and Assumption of Agreement of Sale and Purchase by and between Graymark Healthcare, Inc. and DOC-Greymark HQ OKC MOB, LLC, dated September 30, 2013 |
10.14 | (7) | Agreement of Sale and Purchase, dated as of November 7, 2013, by and among Steele Properties I, LLC, Collyn Williams and Physicians Realty L.P. |
10.15 | (8) | Agreement of Sale and Purchase, dated as of January 29, 2014, by and between Octopods, LLC and Physicians Realty L.P. |
10.16 | (8) | Amendment to Agreement of Sale and Purchase, dated as of February 28, 2014, by and between Octopods, LLC and Physicians Realty L.P. |
10.17 | (8) | Second Amendment to Agreement of Sale and Purchase, dated as of April 30, 2014, by and between Octopods, LLC and Physicians Realty L.P. |
10.18 | (8) | Agreement of Sale and Purchase, dated as of February 10, 2014, by and between those Sellers set forth on Exhibit A thereto and Physicians Realty L.P. |
10.19 | (8) | Agreement of Sale and Purchase, dated as of February 19, 2014, by and between Foundation Bariatric Real Estate of San Antonio, LLLP, and DOC-FSH San Antonio Hospital, LLC |
10.20 | (8) | Agreement of Sale and Purchase, dated as of February 28, 2014, by and between North American Property Corporation, and DOC-PDMC Atlanta, LLC |
10.21 | (8) | Agreement of Sale and Purchase, dated as of March 28, 2014, by and between New LifeCare Hospitals of Pittsburgh, LLC, New LifeCare Hospitals of North Texas, LLC, DOC-LifeCare Ft. Worth Ltach, LLC, and DOC-LifeCare Pittsburgh Ltach, LLC |
10.22 | (9) | Amended and Restated Employment Agreement dated as of May 6, 2014, between Physicians Realty Trust and John T. Thomas** |
10.23 | (9) | Amended and Restated Employment Agreement dated as of May 6, 2014, between Physicians Realty Trust and John W. Lucey** |
10.24 | (9) | Amended and Restated Employment Agreement dated as of May 6, 2014, between Physicians Realty Trust and Mark D. Theine** |
10.25 | (9) | Physicians Realty Trust Incentive Bonus Plan** |
10.26 | (9) | Form of Restricted Share Award Agreement of Physicians Realty Trust- Executive (Time Vesting)** |
10.27 | (9) | Form of Restricted Share Award Agreement of Physicians Realty Trust - Trustees (Time Vesting)** |
10.28 | (9) | Form of Restricted Share Unit Award Agreement (Performance Units) of Physicians Realty Trust** |
10.29 | (10) | Employment Agreement dated as of May 13, 2014, between Physicians Realty Trust and Jeffrey Theiler** |
10.30 | (11) | First Amendment to Shared Services Agreement dated July 31, 2014, among B.C. Ziegler and Company, Physicians Realty Trust, and Physicians Realty L.P. |
10.31 | (12) | Physicians Realty Trust 2013 Equity Incentive Plan, as amended effective August 7, 2014** |
10.32 | (13) | Credit Agreement, dated September 18, 2014, among Physicians Realty L.P., Physicians Realty Trust and certain subsidiaries and other affiliates party thereto, KeyBank National Association, KeyBanc Capital Markets Inc., Regions Capital Markets, BMO Capital Markets, and the lenders party thereto |
10.33 | (14) | Agreement of Sale and Purchase, dated as of September 8, 2014, by and between Cassady Gateway Partners, LLC and DOC-3100 Plaza Properties Boulevard MOB, LLC |
10.34 | (14) | Contribution Agreement, dated as of September 8, 2014, by and between Curie Building, LLC, as successor by conversion to Cure Building, Ltd., and DOC-1755 Curie Drive MOB, LLC |
10.35 | (14) | Agreement of Sale and Purchase, dated as of September 8, 2014, by and between University Physician Group, d/b/a Wayne State University Physician Group and DOC-WSUPG Troy MOB, LLC |
10.36 | (15) | Agreement of Sale and Purchase, dated as of November 18, 2014, by and between Kennewick Trios 2014 LLC and Physicians Realty L.P. |
10.37 | (15) | Contribution Agreement, dated as of February 5, 2015, by and among United Properties Investment, LLC, Minnetonka Medical Building, LLC, and DOC-15450 State Highway 7 MOB, LLC |
10.38 | (15) | Employment Agreement dated January 8, 2015, between Physicians Realty Trust and Bradley D. Page** |
10.39 | (16) | Amended and Restated Employment Agreement dated as of February 19, 2015, between Physicians Realty Trust and John Sweet** |
10.40 | (15) | Form of Restricted Share Award Agreement of Physicians Realty Trust - Executive (Time Vesting)** |
10.41 | (15) | Form of Restricted Share Unit Award Agreement of Physicians Realty Trust- Executive (Performance Vesting)** |
10.42 | (15) | Form of Restricted Share Unit Award Agreement of Physicians Realty Trust - Trustees (Time Vesting)** |
16.1 | (17) | Letter from Plante & Moran, PLLC to the Securities and Exchange Commission, dated April 4, 2014 |
21.1 | List of Subsidiaries of Physicians Realty L.P.* | |
23.1 | Consent of Plante & Moran, PLLC* | |
23.2 | Consent of Ernst & Young LLP* | |
24.1 | Power of Attorney (included on signature page)* | |
31.1 | Certification of John T. Thomas, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | |
31.2 | Certification of Jeffrey N. Theiler, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | |
32.1 | Certification of John T. Thomas and Jeffrey N. Theiler, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)* | |
101.INS | XBRL Instance Document(+) | |
101.SCH | XBRL Extension Schema Document(+) | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document(+) | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document(+) | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document(+) | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document(+) |
ENTITY | STATE OF ORIGIN | |
Ziegler-Florida 4, LLC | Wisconsin | |
Ziegler-Michigan 5, LLC | Wisconsin | |
Ziegler-Georgia 6, LLC | Wisconsin | |
Ziegler-Michigan 6, LLC | Wisconsin | |
Ziegler-Georgia 7, LLC | Wisconsin | |
Ziegler-Texas 8, LLC | Wisconsin | |
Ziegler-El Paso 8 Limited Partnership | Wisconsin | |
Ziegler-Ohio 9, LLC | Wisconsin | |
Ziegler-Illinois 12, LLC | Wisconsin | |
Ziegler-Michigan 12, LLC | Wisconsin | |
Ziegler-Tennessee 14, LLC | Wisconsin | |
Ziegler-Maine 15, LLC | Wisconsin | |
Ziegler-Wisconsin 16, LLC | Wisconsin | |
Ziegler-Georgia 17, LLC | Wisconsin | |
Ziegler-Illinois 18, LLC | Wisconsin | |
Ziegler-Ohio 19, LLC | Wisconsin | |
Ziegler-Georgia 20, LLC | Wisconsin | |
Ziegler-Georgia 21, LLC | Wisconsin | |
Ziegler-Arizona 23, LLC | Wisconsin | |
Ziegler-Wisconsin 24, LLC | Wisconsin | |
Sandwich Development Partners, LLC | Illinois | |
Remington Development Partners, LLC | Illinois | |
DOC-FSH El Paso Medical Center, LLC | Wisconsin | |
DOC-FSH El Paso Medical Center Partners, LLC | Wisconsin | |
DOC-LifeCare Plano LTACH | Wisconsin | |
DOC-ELFP Atlanta MOBs, LLC | Wisconsin | |
DOC-CCSC Crescent City Surgical Centre, LLC | Wisconsin | |
Crescent City Surgical Centre Facility, L.L.C. | Louisiana | |
DOC-MP TXAZ, LLC | Wisconsin | |
DOC-Greymark HQ OKC MOB, LLC | Wisconsin | |
DOC-SSH Slidell Surgical Center, LLC | Wisconsin | |
DOC-Cornerstone Pensacola MOB, LLC | Wisconsin | |
DOC-CONS Columbus MOB, LLC | Wisconsin | |
Eastwind MOB, LLC | Ohio | |
DOC-CCSC Crescent City Land, LLC | Wisconsin | |
DOC-Great Falls MT ASC, LLC | Wisconsin | |
DOC-FSH San Antonio Hospital, LLC | Wisconsin | |
DOC-FSH San Antonio MOB, LLC | Wisconsin | |
DOC-PDMC Atlanta, LLC | Wisconsin | |
DOC-21st Century Sarasota, LLC | Wisconsin | |
DOC-LifeCare Pittsburgh LTACH, LLC | Wisconsin | |
DOC-LifeCare Ft. Worth LTACH, LLC | Wisconsin | |
DOC-Pinnacle Harrisburg MOBs, LLC | Wisconsin | |
DOC-SBO MOB, LLC | Wisconsin | |
DOC-Grenada MOB, LLC | Wisconsin | |
DOC-Carmel MOB, LLC | Wisconsin |
ENTITY | STATE OF ORIGIN | |
DOC-MSMOC Jackson MOB, LLC | Wisconsin | |
DOC-Premier Landmark MOBs, LLC | Wisconsin | |
DOC-PMP Monroe MOB, LLC | Wisconsin | |
DOC-Summit Bloomington MOB, LLC | Wisconsin | |
DOC-Renaissance Oshkosh MOB, LLC | Wisconsin | |
DOC-Baylor Mansfield ASC, LLC | Wisconsin | |
DOC-SIM Monroe ASC, LLC | Wisconsin | |
DOC-Oaks Lady Lake MOB, LLC | Wisconsin | |
DOC-CRMC Carlisle, MOB LLC | Wisconsin | |
DOC-WSUPG Troy MOB, LLC | Wisconsin | |
DOC-6138 Kennerly Road MOB, LLC | Delaware | |
DOC-Indiana 7 MOB, LLC | Wisconsin | |
DOC-2625 Market Place MOB, LLC | Wisconsin | |
DOC-4518 Union Deposit MOB, LLC | Wisconsin | |
DOC-4520 Union Deposit MOB, LLC | Wisconsin | |
DOC-240 Grandview Avenue MOB, LLC | Wisconsin | |
DOC-32 Northeast Drive MOB, LLC | Wisconsin | |
DOC-1755 Curie Drive MOB, LLC | Wisconsin | |
DOC-3100 Lee Trevino Drive MOB, LLC | Wisconsin | |
DOC-9999 Kenworthy Street MOB, LLC | Wisconsin | |
DOC-9085 Southern Street MOB, LLC | Wisconsin | |
Southern Point LLC | Delaware | |
DOC-3100 Plaza Properties Boulevard MOB, LLC | Wisconsin | |
Zangmeister Center LLC | Delaware | |
DOC-170 Taylor Station Road MOB, LLC | Wisconsin | |
COG Real Estate Partners II, LLC | Ohio | |
DOC-560 North Cleveland Avenue MOB, LLC | Wisconsin | |
Cardinal Westerville II LLC | Ohio | |
DOC-1810 Stadium Drive MOB, LLC | Wisconsin | |
DOC-500 18th Street MOB, LLC | Wisconsin | |
DOC-633 19th Street MOB, LLC | Wisconsin | |
DOC-920 18th Street MOB, LLC | Wisconsin | |
DOC-705 17th Street MOB, LLC | Wisconsin | |
DOC-615 19th Street MOB, LLC | Wisconsin | |
DOC-1800 10th Avenue MOB, LLC | Wisconsin | |
DOC-2000 10th Avenue MOB, LLC | Wisconsin | |
DOC-1942 North Avenue MOB, LLC | Wisconsin | |
DOC-1900 10th Avenue MOB, LLC | Wisconsin | |
DOC-1968 North Avenue MOB, LLC | Wisconsin | |
DOC-2200 Hamilton Road MOB, LLC | Wisconsin | |
DOC-610 19th Street MOB, LLC | Wisconsin | |
DOC-Middletown Medical MOBs, LLC | Wisconsin | |
DOC-311 West Fairchild Street MOB, LLC | Wisconsin | |
DOC-2633 Napoleon Avenue MOB, LLC | Wisconsin | |
DOC-8550 Naab Street MOB, LLC* | Wisconsin | |
DOC-24 Physicians Drive MOB, LLC | Wisconsin | |
DOC-207 Stonebridge Boulevard ASC, LLC | Wisconsin |
/s/ Ernst & Young LLP | |
Ernst & Young LLP |
1. | I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2014, of Physicians Realty L.P.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 24, 2017 | /s/ John T. Thomas |
John T. Thomas | |
Chief Executive Officer and President of Physicians Realty Trust, the general partner of the registrant |
1. | I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2014, of Physicians Realty L.P.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 24, 2017 | /s/ Jeffrey N. Theiler |
Jeffrey N. Theiler | |
Executive Vice President and Chief Financial Officer of Physicians Realty Trust, the general partner of the registrant |
a. | the Annual Report on Form 10-K of the Operating Partnership for the fiscal year ended December 31, 2014, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and |
b. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership. |
/s/ John T. Thomas | |
John T. Thomas | |
Chief Executive Officer and President of Physicians Realty Trust, the general partner of the registrant | |
/s/ Jeffrey N. Theiler | |
Jeffrey N. Theiler | |
Executive Vice President and Chief Financial Officer of Physicians Realty Trust, the general partner of the registrant |
Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2014 |
Mar. 09, 2015 |
Jun. 30, 2014 |
|
Document And Entity Information | |||
Entity Registrant Name | Physicians Realty L.P. | ||
Entity Central Index Key | 0001583994 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2014 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 3,640,900 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets (Parenthetical) - shares |
Dec. 31, 2014 |
Dec. 31, 2013 |
---|---|---|
Statement of Financial Position [Abstract] | ||
General partners' capital, units issued | 50,640,863 | 21,548,597 |
General partners' capital, units outstanding | 50,640,863 | 21,548,597 |
Limited partners' capital, units issued | 3,190,339 | 3,698,877 |
Limited partners' capital, units outstanding | 3,190,339 | 3,698,877 |
Organization and Business |
12 Months Ended |
---|---|
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | Organization and Business Physicians Realty Trust (the "Trust" or the "General Partner"), a Maryland real estate investment trust and general partner of Physicians Realty L.P. (the "Operating Partnership", the "OP", or the "Company"), a Delaware limited partnership, was organized on April 9, 2013 primarily to acquire, selectively develop, own and manage healthcare properties that are leased to physicians, hospitals and healthcare delivery systems. As of December 31, 2014, the Trust was authorized to issue up to 500,000,000 common shares of beneficial interest, par value $0.01 per share (“common shares”). The Trust filed a Registration Statement on Form S-11 with the Securities and Exchange Commission (the “Commission”) with respect to a proposed underwritten initial public offering (the “IPO”) and completed the IPO of its common shares and commenced operations on July 24, 2013. The Trust contributed the net proceeds from its IPO to 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. Initial Public Offering and Formation Transactions Pursuant to the IPO, the Trust issued an aggregate of 11,753,597 common shares, including common shares issued upon exercise of the underwriters’ overallotment option, and received approximately $123.8 million of net proceeds (after deducting the underwriting discount and expenses of the IPO and the formation transactions payable by the Trust). The Trust contributed the net proceeds of the IPO to the Operating Partnership in exchange for 11,753,597 common units of partnership interest (“OP Units”) on July 24, 2013. Concurrently with the completion of the IPO, the Company acquired, through a series of contribution transactions, the entities that own the 19 properties that comprised the Company's initial properties from four healthcare real estate funds (the “Ziegler Funds”), as well as certain operating assets and liabilities, including the assumption of approximately $84.3 million of debt related to such properties. The Company determined that the Ziegler Funds constitute the Company's accounting predecessor (the “Predecessor”). The Predecessor, which is not a legal entity, is comprised of the four Ziegler Funds that owned directly or indirectly interests in entities that owned the initial 19 properties in the Company's portfolio. The combined historical data for the Predecessor is not necessarily indicative of the Company's future financial position or results of operations. In addition, at the completion of the IPO, the Trust entered into a shared services agreement with B.C. Ziegler & Company (“Ziegler”) pursuant to which Ziegler provides office space, IT support, accounting support and other services to the Trust and the Operating Partnership in exchange for an annual fee. To acquire the ownership interests in the entities that own the 19 properties included in the Company's initial properties, and certain other operating assets and liabilities, from the Ziegler Funds, the Operating Partnership issued to the Ziegler Funds an aggregate of 2,744,000 OP Units, having an aggregate value of approximately $31.6 million based on the price per share to the public in the IPO. These formation transactions were effected concurrently with the completion of the IPO. Upon closing of the IPO, the Trust owned a 79.6% interest in the Operating Partnership. The Operating Partnership used a portion of the IPO proceeds received from the Trust to purchase the 50% interest in the Arrowhead Commons property not owned by the Ziegler Funds for approximately $850,000, after which the Operating Partnership became the 100% owner of the property, and to pay certain expenses related to debt assumptions and the Trust’s former senior secured revolving credit facility. The balance of the net proceeds was subsequently invested in healthcare properties. Because the IPO and the formation transactions were completed on July 24, 2013, the Company had no operations prior to that date. References in these notes to the consolidated and combined financial statements of Physicians Realty L.P. signify the Company for the period from July 24, 2013, the date of completion of the IPO and the formation transactions, and of the Predecessor for all prior periods. Follow-On Public Offerings On December 11, 2013, the Trust completed a public offering of 9,545,000 common shares, including 1,245,000 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to the Trust of approximately $103.1 million. The Trust contributed the net proceeds of this offering to the Operating Partnership in exchange for 9,545,000 OP Units, and the Operating Partnership used the net proceeds of the public offering to repay borrowings under the Trust’s former senior secured revolving credit facility and for general corporate and working capital purposes and funding acquisitions. On May 27, 2014, the Trust completed a public offering of 12,650,000 common shares, including 1,650,000 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to the Trust of approximately $149.9 million. The Trust contributed the net proceeds of this offering to the Operating Partnership in exchange for 12,650,000 OP Units, and the Operating Partnership used the net proceeds of the public offering to repay borrowings under the former senior secured revolving credit facility and for general corporate and working capital purposes and funding acquisitions. On August 19, 2014, the Trust’s Registration Statement on Form S-3 (File No. 333-197842) (the “Shelf Registration Statement”), filed with the Commission on August 4, 2014, was declared effective by the Commission. The Shelf Registration Statement covers the offering, from time to time, of various securities with an aggregate value of up to $900 million and the secondary offering of common shares by certain selling shareholders. On August 19, 2014, the Trust and the Operating Partnership entered into separate At Market Issuance Sales Agreements (the “Sales Agreements”) with each of MLV & Co. LLC, KeyBanc Capital Markets Inc., JMP Securities LLC, and RBC Capital Markets, LLC (the “Agents”), pursuant to which the Trust may issue and sell common shares having an aggregate offering price of up to $150 million, from time to time, through the Agents pursuant to the Shelf Registration Statement (the “ATM Program”). In accordance with the Sales Agreements, the Trust may offer and sell its common shares through any of the Agents, from time to time, by any method deemed to be an “at-the-market offering” as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), which includes sales made directly on the New York Stock Exchange (the “NYSE”), or other existing trading market, or sales made to or through a market maker. With the Trust’s express written consent, sales also may be made in negotiated transactions or any other method permitted by law. During 2014, the Trust sold 3,576,010 common shares pursuant to the ATM Program, at a weighted average price of $15.54 per share resulting in total proceeds of approximately $55.6 million, before $0.8 million in commissions and contributed proceeds to the OP for common units. On September 12, 2014, the Trust completed a public offering of 10,925,000 common shares, including 1,425,000 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to the Trust of approximately $145.7 million. The Trust contributed the net proceeds of this offering to the Operating Partnership in exchange for 10,925,000 OP Units, and the Operating Partnership used the net proceeds of the public offering to repay borrowings under the Trust’s former senior secured revolving credit facility and for general corporate and working capital purposes and funding acquisitions. |
Summary of Significant Accounting Policies |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2014 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Consolidation Property holding entities and other subsidiaries of which the Operating Partnership owns 100% of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest are consolidated. All inter-company balances and transactions are eliminated in consolidation. For entities in which the OP owns less than 100% of the equity interest, the OP consolidates the property if it has the direct or indirect ability to control the entities’ activities based upon the terms of the respective entities’ ownership agreements. For these entities, the OP records a non-controlling interest representing equity held by non-controlling interests. GAAP requires the OP to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). ASC 810 broadly defines a VIE as an entity in which either (i) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. The OP identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity. The OP consolidates investments in a VIE when it determines that the OP is the VIE’s primary beneficiary. The OP may change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary. The OP performs this analysis on an ongoing basis. Noncontrolling Interests The OP presents the portion of any equity it does not own in entities that it controls (and thus consolidates) as noncontrolling interests and classifies such interests as a component of consolidated equity, separate from the OP’s total limited partners’ capital, on the consolidated balance sheets. In connection with the closing of the IPO, the Trust and the Operating Partnership completed related formation transactions pursuant to which the Operating Partnership acquired from the Ziegler Funds, the Ziegler Funds’ ownership interests in 19 medical office buildings located in ten states in exchange for an aggregate of 2,744,000 OP Units and the payment of approximately $36.9 million of debt related to such properties. In connection with the acquisition of a surgical center hospital in the New Orleans, Louisiana metropolitan area for approximately $37.5 million, on September 30, 2013, the Operating Partnership partially funded the purchase price by issuing 954,877 OP Units valued at approximately $11.5 million on the date of issuance. During the year ended December 31, 2014, the Operating Partnership partially funded five property acquisitions by issuing an aggregate of 2,042,313 OP Units valued at approximately $28.6 million on the date of issuance. The five acquisitions had a total purchase price of approximately $103.6 million. Limited partners' capital represents OP Units held by the Predecessor’s prior investors and other investors. As of December 31, 2014, the General Partner held a 94.1% interest in the Operating Partnership. Holders of OP Units may not transfer their units without the General Partners' prior written consent. Beginning on the first anniversary of the issuance of OP Units, OP Unit holders may tender their units for redemption by the Operating Partnership in exchange for cash equal to the market price of the Trust’s common shares at the time of redemption or, for unregistered common shares on a one-for-one basis. Such selection to pay cash or issue common shares to satisfy an OP Unit holder’s redemption request is solely within the control of the General Partner. Partially Owned Properties: The OP reflects noncontrolling interests in partially owned properties on the balance sheet for the portion of properties consolidated by the OP that are not wholly owned by the OP. The earnings or losses from those properties attributable to the noncontrolling interests are reflected as noncontrolling interests in partially owned properties in the consolidated and combined statement of operations. Distributions
Purchase of Investment Properties A property acquired not subject to an existing lease is treated as an asset acquisition and recorded at its purchase price, inclusive of acquisition costs, allocated between the acquired tangible assets and assumed liabilities based upon their relative fair values at the date of acquisition. A property acquired with an existing lease is accounted for as a business combination pursuant to the acquisition method in accordance with ASC Topic 805, Business Combinations (“ASC 805”), and assets acquired and liabilities assumed, including identified intangible assets and liabilities, are recorded at fair value. The determination of fair value involves the use of significant judgment and estimation. The OP makes estimates of the fair value of the tangible and intangible acquired assets and assumed liabilities using information obtained from multiple sources as a result of pre-acquisition due diligence and may include the assistance of a third party appraiser. The OP estimates the fair value of buildings acquired on an as-if-vacant basis and depreciates the building value over the estimated remaining life of the building. The OP determines the allocated value of other fixed assets, such as site improvements, based upon the replacement cost and depreciates such value over the assets’ estimated remaining useful lives as determined at the applicable acquisition date. The fair value of land is determined either by considering the sales prices of similar properties in recent transactions or based on internal analyses of recently acquired and existing comparable properties within the OP’s portfolio. In recognizing identified intangible assets and liabilities in connection with a business combination, the value of above-or-below market leases is estimated based on the present value (using an interest rate which reflected the risks associated with the leases acquired) of the difference between contractual amounts to be received pursuant to the leases and management’s estimate of market lease rates measured over a period equal to the estimated remaining term of the lease. The capitalized above-market or below-market lease intangibles are amortized as a reduction or addition to rental income over the estimated remaining term of the respective leases. In determining the value of in-place leases and tenant relationships, management considers current market conditions and costs to execute similar leases in arriving at an estimate of the carrying costs during the expected lease-up period from vacant to existing occupancy. In estimating carrying costs, management includes real estate taxes, insurance, other operating expenses, estimates of lost rental revenue during the expected lease-up periods, and costs to execute similar leases, including leasing commissions, tenant improvements, legal, and other related costs based on current market demand. The values assigned to in-place leases and tenant relationships are amortized over the estimated remaining term of the lease. The values assigned to all lease intangible assets and liabilities are amortized over the estimated remaining term of the lease. If a lease terminates prior to its scheduled expiration, all unamortized costs related to that lease are written off. The OP calculates the fair value of any long-term debt assumed by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings, which the OP approximates based on the rate at which it would expect to incur on a replacement instrument on the date of acquisition, and recognize any fair value adjustments related to long-term debt as effective yield adjustments over the remaining term of the instrument. Based on these estimates, the OP recognizes the acquired assets and assumed liabilities at their estimated fair values, which are generally determined using Level 3 inputs, such as market rental rates, capitalization rates, discount rates, or other available market data. Initial valuations are subject to change until the information is finalized, no later than 12 months from the acquisition date. The OP expenses transaction costs associated with acquisitions accounted for as business combinations in the period incurred. Impairment of Intangible and Long-Lived Assets The OP periodically evaluates its long-lived assets, primarily consisting of investments in real estate, for impairment indicators or whenever events or changes in circumstances indicate that the recorded amount of an asset may not be fully recoverable. If indicators of impairment are present, the OP evaluates the carrying value of the related real estate properties in relation to the undiscounted expected future cash flows of the underlying operations. In performing this evaluation, management considers market conditions and current intentions with respect to holding or disposing of the real estate property. The OP adjusts the net book value of real estate properties to fair value if the sum of the expected future undiscounted cash flows, including sales proceeds, is less than book value. The OP recognizes an impairment loss at the time it makes any such determination. If the OP determines that an asset is impaired, the impairment to be recognized is measured as the amount by which the recorded amount of the asset exceeds its fair value. Fair value is typically determined using a discounted future cash flow analysis or other acceptable valuation techniques, which are based, in turn, upon Level 3 inputs, such as revenue and expense growth rates, capitalization rates, discount rates or other available market data. The OP recorded real estate impairment charges of $1.8 million and $0 for the years ended December 31, 2014 and 2013, respectively. The Predecessor recognized impairments totaling $0.9 million for the year ended December 31, 2012. Assets Held for Sale and Discontinued Operations The OP may sell properties from time to time for various reasons, including favorable market conditions. The OP classifies certain long-lived assets as held for sale once the criteria, as defined by GAAP, has been met. Long-lived assets to be disposed of are reported at the lower of their carrying amount or fair value minus cost to sell and are no longer depreciated. In 2014, the FASB issued Accounting Standards Update 2014-8, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-8”), which raises the threshold for disposals to qualify as discontinued operations. A discontinued operation is defined as: (1) a component of an entity or group of components that has been disposed of or classified as held for sale and represents a strategic shift that has or will have a major effect on an entity’s operations and financial results; or (2) an acquired business that is classified as held for sale on the acquisition date. ASU 2014-8 also requires additional disclosures regarding discontinued operations, as well as material disposals that do not meet the definition of discontinued operations. The application of this guidance is prospective from the date of adoption and applies only to disposals (or new classifications to held for sale) that have not been reported as discontinued operations in the Trust’s previously issued financial statements. The OP early adopted ASU 2014-8 for the quarter ended March 31, 2014. Such adoption has had no impact on the OP’s financial statements as no dispositions have occurred during the year ended December 31, 2014. Prior to the adoption of ASU 2014-8, the results of operations for assets meeting the definition of discontinued operations are reflected in the consolidated and combined statements of operations as discontinued operations for all periods presented. The OP allocates estimated interest expense to discontinued operations based on property values and either the weighted average interest rate of the OP or the property’s actual mortgage interest. Investments in Unconsolidated Entities The OP reports investments in unconsolidated entities over whose operating and financial policies it has the ability to exercise significant influence under the equity method of accounting. Under this method of accounting, the OP's share of the investee’s earnings or losses is included in its consolidated and combined statements of operations. The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the equity interest. During 2014, the Operating Partnership completed the acquisition of a 40% limited liability company membership interest in Jeff-Orleans Medical Development Real Estate, L.L.C, the entity that owns and leases to us the land on which the Crescent City Surgical Centre is situated, for $1.3 million. Real Estate Loans Receivable Real estate loans receivable consists of a mezzanine loan and a term loan which are collateralized by an equity interest in a two medical office building developments. Interest income on the loans are recognized as earned based on the terms of the loans subject to evaluation of collectability risks and are included in the Operating Partnership's consolidated and combined statement of operations. On January 2, 2014, the OP completed a $6.9 million mezzanine loan to affiliates controlled by MedProperties Holdings, LLC, a Dallas, Texas based private investor in medical facilities (“MedProperties”). The mezzanine loan is secured by MedProperties’ ownership interest in two special purpose entities that own a surgical hospital located in San Antonio, Texas and an inpatient rehabilitation facility located in Scottsdale, Arizona. The mezzanine loan has a five year, interest-only term and bears interest at a rate of 9.0% per annum. As part of the consideration for providing the mezzanine loan, the OP has an option to acquire the property at a formula purchase price during year four of the mezzanine loan based on a fixed capitalization rate. On November 26, 2014, the OP made an $8.6 million term loan to fund the renovations and additions of two re-purposed buildings in Jacksonville, Florida. Upon completion of the expansion and renovations, the properties will be approximately 40,000 square feet in the aggregate. Upon completion of the construction of the buildings and them becoming fully occupied, the Trust has the option to purchase the buildings. The term loan bears interest at a rate of 9.0%. Cash and cash equivalents Cash and cash equivalents consist of cash on hand and short-term investments with maturities of three months or less from the date of purchase. The OP is subject to concentrations of credit risk as a result of its temporary cash investments. The OP places its temporary cash investments with high credit quality financial institutions in order to mitigate that risk. Escrow reserves The OP is required to maintain various escrow reserves on certain notes payable to cover future property taxes and insurance and tenant improvements costs as defined in each loan agreement. The total reserves as of December 31, 2014 and 2013 are $1.9 million and $1.6 million, respectively, which are included in other assets in the consolidated balance sheets. Deferred costs Deferred costs consist primarily of fees paid to obtain financing and costs associated with the origination of long-term lease on real estate properties. After the purchase of a property, lease commissions incurred to extend in-place leases or generate new lease are added to deferred lease costs. Deferred lease costs are amortized on a straight-line basis over the terms of their respective agreements. The OP amortizes deferred financing costs as a component of interest expense over the terms of the related borrowings using a method that approximates a level yield. Derivatives Derivatives consist of an interest rate swap and is recognized as a liability on the consolidated balance sheets and is measured at fair value. Any change in the fair value is recognized immediately in earnings unless the derivative qualified as a hedge. No derivatives have been designated as hedges. The OP is exposed to certain risks in the normal course of its business operations. One risk relating to the variability of interest on variable rate debt is managed through the use of derivatives. All derivative financial instruments are measured and reported in the consolidated balance sheets at fair value. The OP has elected not to apply hedge accounting to its derivative financial instruments and as such, any changes in the fair values of its derivatives are recognized immediately in earnings. Generally, the OP enters into swap relationships such that changes in the fair value or cash flows of items and transactions being hedged are expected to be offset by corresponding changes in the values of the derivatives. The OP holds one swap to pay fixed/receive variable interest rates with a total notional amount of $7.7 million and $7.9 million as of December 31, 2014 and 2013, respectively. The interest rate swap liability is reported in accrued expenses and other liabilities on the consolidated balance sheet, as of December 31, 2014 and 2013, the interest rate swap liability was $0.2 million and $0.4 million, respectively. Gains recognized on the interest rate swaps of $(0.2) million, $(0.2) million and $(0.1) million were included in interest income on real estate loans and other in the consolidated and combined statements of operations for the years ended December 31, 2014, 2013 and 2012, respectively. Tenant receivables, net Tenant accounts receivable are stated net of the applicable allowance. Rental payments under these contracts are primarily due monthly. The OP assesses the collectability of tenant receivables, including straight-line rent receivables, and defers recognition of revenue if collectability is not reasonably assured. The OP bases its assessment of the collectability of rent receivables on several factors, including, among other things, payment history, the financial strength of the tenant and current economic conditions. If management’s evaluation of these factors indicates it is probable that the OP will be unable to recover the full value of the receivable, the OP provides a reserve against the portion of the receivable that it estimates may not be recovered. At December 31, 2014 and 2013, the allowance for doubtful accounts was $0.1 million. Rental Revenue Rental revenue is recognized on a straight-line basis over the terms of the related leases when collectability is reasonably assured. Recognizing rental revenue on a straight-line basis for leases may result in recognizing revenue for amounts more or less than amounts currently due from tenants. Amounts recognized in excess of amounts currently due from tenants are included in other assets and were approximately $6.4 million and $2.0 million as of December 31, 2014 and 2013, respectively. If the OP determines that collectability of straight-line rents is not reasonably assured, the OP limits future recognition to amounts contractually owed and, where appropriate, establishes an allowance for estimated losses. Rental revenue is adjusted by amortization of lease inducements and above or below market rents on certain leases. Lease inducements and above or below market rents are amortized over the average remaining life of the lease. Expense Recoveries Expense recoveries relate to tenant reimbursement of real estate taxes, insurance and other operating expenses that are recognized as expense recovery revenue in the period the applicable expenses are incurred. The reimbursements are recorded at gross, as the OP is generally the primary obligor with respect to real estate taxes and purchasing goods and services from third-party suppliers and has discretion in selecting the supplier and bears the credit risk of tenant reimbursement. The OP has certain tenants with absolute net leases. Under these lease agreements, the tenant is responsible for operating and building expenses. For absolute net leases, the OP does not recognize expense recoveries. Income Taxes As a partnership, the Operating Partnership generally is not liable for federal income taxes. The income and loss from the operations of the Operating Partnership is included in the tax returns of its limited partners, including the Trust, who are responsible for reporting their allocable share of the partnership income and loss. Accordingly, no provision for income taxes has been made on the accompanying consolidated financial statements. Management Estimates The preparation of consolidated and combined financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated and combined financial statements and the amounts of revenue and expenses reported in the period. Significant estimates are made for the fair value assessments with respect to purchase price allocations, impairment assessments, and the valuation of financial instruments. Actual results could differ from these estimates. Contingent Liability The OP records a liability for contingent consideration (included in accrued expenses and other liabilities on its consolidated balance sheets) at fair value as of the acquisition date and reassess the fair value at the end of each reporting period, with any changes being recognized in earnings. Increases or decreases in the fair value of contingent consideration can result from changes in discount periods, discount rates and probabilities that contingencies will be met. Reclassifications Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the previously reported consolidated financial position or consolidated and combined results of operations. Segment reporting Under the provision of Codification Topic 280, Segment Reporting, the OP has determined that it has one reportable segment with activities related to leasing and managing healthcare properties. New Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-9, Revenue from Contracts with Customers, which creates a new Topic Accounting Standards Codification (Topic 606). The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This standard is effective for interim or annual periods beginning after December 15, 2016 and allows for either full retrospective or modified retrospective adoption. Early adoption of this standard is not allowed. The OP is currently evaluating the impact the adoption of Topic 606 will have on its financial statements, if any. In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, to address financial reporting considerations about an entity’s ability to continue as a going concern. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and for interim periods within annual periods beginning after December 15, 2016. |
Acquisitions and Dispositions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions and Dispositions | Acquisitions and Dispositions During 2014, the OP completed acquisitions of 61 healthcare properties located in 15 states for an aggregate purchase price of approximately $543.4 million as summarized below:
(1) “MOB” means medical office building, “LTACH” means long-term acute care hospital and “ASC” means ambulatory surgical center. (2) The Operating Partnership accounted for these acquisitions as asset acquisitions and capitalized $1.7 million of total acquisition costs to the basis of the properties. (3) The Operating Partnership accounted for these acquisitions as business combinations pursuant to the acquisition method and expensed total acquisition costs of $10.9 million. (4) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 147,659 OP Units valued at approximately $1.9 million in the aggregate on the date of issuance. (5) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 96,099 OP Units valued at approximately $1.2 million in the aggregate on the date of issuance. (6) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 576,040 OP Units valued at approximately $8.3 million in the aggregate on the date of issuance. (7) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 272,191 OP Units valued at approximately $4.0 million in the aggregate on the date of issuance. (8) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 950,324 OP Units valued at approximately $13.2 million in the aggregate on the date of issuance. For 2014, the OP recorded revenues and net income of $26.0 million and $3.7 million, respectively, from its 2014 acquisitions. The following table summarizes the preliminary purchase price allocations of the assets acquired and the liabilities assumed, which the OP determined using Level 2 and Level 3 inputs (in thousands):
These preliminary allocations are subject to revision within the measurement period, not to exceed one year from the date of the acquisitions. Unaudited Pro Forma Financial Information Physicians Realty LP The following table illustrates the pro forma combined revenue, net income, and earnings per unit —basic and diluted as if Physicians Realty LP had acquired the above acquisitions as of January 1, 2013 (in thousands, except per share amounts):
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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 as of 2014 and 2013 (in thousands):
The following is a summary of the acquired lease intangible amortization for the years ended December 31, 2014, 2013 and 2012 (in thousands):
Future aggregate net amortization of the acquired lease intangibles as of December 31, 2014, is as follows (in thousands):
For the year ended December 31, 2014, the weighted average amortization period for asset lease intangibles and liability lease intangible is nine years and 17 years, respectively. |
Other Assets |
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Other Assets | Other Assets Other assets consisted of the following as of December 31, 2014 and 2013 (in thousands):
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Debt |
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Debt | Debt The following is a summary of debt as of December 31, 2014 and 2013 (in thousands):
Effective September 18, 2014, the Credit Agreement, dated as of August 29, 2013 (as amended, restated, increased, extended, supplemented or otherwise modified from time to time, the “Prior Credit Agreement”), among the Operating Partnership, as borrower, the Trust, certain subsidiaries and other affiliates of the Operating Partnership, as guarantors, Regions Bank, as administrative agent, Regions Capital Markets, as sole lead arranger and sole book runner, and the lenders party thereto, and all commitments provided thereunder, were terminated. All amounts due and outstanding under the Prior Credit Agreement were repaid on or prior to such date. On September 18, 2014, the Operating Partnership, as borrower, and the Trust and certain subsidiaries and other affiliates of the Trust, as guarantors, entered into a Credit Agreement with KeyBank National Association as administrative agent, KeyBanc Capital Markets Inc., Regions Capital Markets and BMO Capital Markets, as joint lead arrangers and joint bookrunners, Regions Capital Markets and BMO Capital Markets, as co-syndication agents, and the lenders party thereto in connection with an unsecured revolving credit facility in the maximum principal amount of $400 million (“Credit Agreement”). The Credit Agreement includes a swingline loan commitment for up to 10% of the maximum principal amount and provides an accordion feature allowing the OP to increase borrowing capacity by up to an additional $350 million, subject to customary terms and conditions, resulting in a maximum borrowing capacity of $750 million. The Credit Agreement replaced the OP’s senior secured revolving credit facility in the maximum principal amount of $200 million under the Prior Credit Agreement. The Credit Agreement has a maturity date of September 18, 2018 and includes a one year extension option. Borrowings under the Credit Agreement bear interest on the outstanding principal amount at a rate equal to LIBOR plus 1.50% to 2.20% depending on the OP’s consolidated leverage ratio. In addition, the Credit Agreement includes an unused fee equal to 0.15% or 0.25% per annum, which is determined by usage under the Credit Agreement. As of December 31, 2014, the weighted average interest rate on borrowings outstanding was 1.68%. 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 Operating Partnership’s ability to incur additional debt or make distributions. The OP may, at any time, voluntarily prepay any loan under the Credit Agreement in whole or in part without premium or penalty. As of December 31, 2014, the OP was in compliance with all financial covenants. The Credit Agreement includes customary representations and warranties by the Operating Partnership, the Trust and each other guarantor and imposes customary covenants on the Operating Partnership, the Trust and each other guarantor. The Credit Agreement also contains customary events of default, and if an event of default occurs and continues, the Operating Partnership is subject to certain actions by the administrative agent, including without limitation, the acceleration of repayment of all amounts outstanding under the Credit Agreement. The Credit Agreement provides for revolving credit loans to the Operating Partnership. Base Rate Loans, Adjusted LIBOR Rate Loans and Letters of Credit (each, as defined in the Credit Agreement) will be subject to interest rates, based upon the consolidated leverage ratio of the Operating Partnership and its subsidiaries as follows:
As of December 31, 2014, there were $138 million of borrowings outstanding under the unsecured revolving credit facility and $189 million available for us to borrow without adding additional properties to the unencumbered borrowing base of assets, as defined by the Credit Agreement. Certain properties have mortgage debt that contains financial covenants. As of December 31, 2014, the OP was in compliance with all mortgage debt financial covenants. Scheduled principal payments due on debt as of December 31, 2014, are as follows (in thousands):
For the years ended December 31, 2014 and 2013, the OP incurred interest expense on its debt of $5.8 million and $3.9 million, respectively. |
Stock-based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based Compensation | Stock-based Compensation The Trust follows ASC 718, Compensation — Stock Compensation (“ASC 718”), in accounting for its share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee’s requisite service period. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized when incurred. Share-based payments classified as liability awards are marked to fair value at each reporting period. Any common shares issued by the Trust pursuant to any incentive equity compensation or employee share purchase plan of the Trust results in the OP issuing OP Units to the Trust on a one-for-one basis with the OP receiving the net cash proceeds of such issuances. Certain of the Trust's employee stock awards vest only upon the achievement of performance targets. ASC 718 requires recognition of compensation cost only when achievement of performance conditions is considered probable. Consequently, the Trust's determination of the amount of stock compensation expense requires a significant level of judgment in estimating the probability of achievement of these performance targets. Additionally, the Trust must make estimates regarding employee forfeitures in determining compensation expense. Subsequent changes in actual experience are monitored and estimates are updated as information is available. In connection with the IPO, the Trust adopted the 2013 Equity Incentive Plan (“2013 Plan”), which made available 600,000 common shares to be administered by the Compensation and Nominating Governance Committee of the Board of Trustees. On August 7, 2014, at the Annual Meeting of Shareholders of Physicians Realty Trust, the Trust’s shareholders approved an amendment to the 2013 Plan to increase the number of common shares authorized for issuance under the 2013 Plan by 1,850,000 common shares, for a total of 2,450,000 common shares authorized for issuance. The committee has broad discretion in administering the terms of the 2013 Plan. Restricted shares granted under the 2013 Plan are eligible for dividends as well as the right to vote. The Trust granted to management and the Board of Trustees 250,000 restricted common shares upon completion of the IPO under the Trust’s 2013 Plan at a value per share of $11.50 and total value of $2.9 million with a vesting period of three years. During 2014, a total of 152,987 restricted common shares with a total value of $2.1 million were granted to Trust employees and the Board of Trustees. A summary of the status of the Trust’s nonvested restricted common shares as of December 31, 2014 and changes during the year then ended follow:
For all service awards, the OP records compensation expense for the entire award on a straight-line basis (or, if applicable, on the accelerated method) over the requisite service period. For the years ended December 31, 2014, and 2013, the OP recognized non-cash share compensation of $2.2 million, $0.4 million, respectively. Unrecognized compensation expense at December 31, 2014 and 2013 was $2.4 million and $2.5 million, respectively. The OP's compensation expense recorded in connection with grants of restricted stock reflects an initial estimated cumulative forfeiture rate of 0% over the requisite service period of the awards. That estimate will be revised if subsequent information indicates that the actual number of awards expected to vest is likely to differ from previous estimates. Restricted Share Units: In March 2014, under the Trust's 2013 Plan, the Trust granted 55,680 restricted share units at target level to management, which are subject to certain performance and market conditions and a three-year service period. In addition, each restricted share unit contains one dividend equivalent. The recipient will accrue dividend equivalents on awarded share units equal to the cash dividend that would have been paid on the awarded share unit had the awarded share unit been an issued and outstanding common share on the record date for the dividend. The market conditions were valued with the assistance of independent valuation specialists. The OP utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $19.25 per unit using the following assumptions:
With respect to the performance conditions, the grant date fair value of $13.47 per unit was calculated on the grant date. The restricted stock units’ combined weighted average grant date fair value is $16.94 per unit. The following is a summary of the activity in the Trust's restricted share units during 2014:
The OP recognized $0.3 million of non-cash share unit compensation expense for the year ended December 31, 2014. Unrecognized compensation expense at December 31, 2014 was $0.7 million. |
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 OP has the ability to access. Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset. These Level 3 fair value measurements are based primarily on management’s own estimates using pricing models, discounted cash flow methodologies, or similar techniques taking into account the characteristics of the asset or liability. In instances where inputs used to measure fair value fall into different levels of the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability. The derivative instrument consists solely of one interest rate swap that is not traded on an exchange and is 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 OP measures its interest rate swap at fair value on a recurring basis. The fair values are based on Level 2 inputs described above. The OP also has assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. The following table sets forth by level the fair value hierarchy of the OP’s assets that were accounted for on a non-recurring basis as of December 31, 2014.
The following table summarizes the quantitative inputs and assumptions used for items categorized in Level 3 for the fair value hierarchy as of December 31, 2014 (in thousands).
The carrying amounts of cash and cash equivalents, tenant receivables, payables, and accrued interest are reasonable estimates of fair value because of the short term maturities of these instruments. Fair values for real estate loans receivable and mortgage debt are estimated based on rates currently prevailing for similar instruments of similar maturities and are based on Level 2 inputs. The following table presents the fair value of the OP’s financial instruments (in thousands).
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Tenant Operating Leases |
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Tenant Operating Leases | |||||||||||||||||||||||||||||||||||||
Tenant Operating Leases | Tenant Operating Leases The Operating Partnership is lessor of medical office buildings and other healthcare facilities. Leases have expirations from 2015 through 2028. As of December 31, 2014, the future minimum rental payments on non-cancelable leases, exclusive of expense recoveries, were as follows (in thousands):
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Rent Expense |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||
Rent Expense | Rent Expense The Operating Partnership leases the rights to a parking structure at one of its properties and the land upon which seven of its properties are located from third party land owners pursuant to separate ground and parking leases. The parking and ground leases require fixed annual rental payments and may also include escalation clauses and renewal options. These leases have terms up to 67 years remaining, excluding extension options. As of December 31, 2014, the future minimum lease obligations under non-cancelable parking and ground leases were as follows (in thousands):
Rent expense for the parking and ground leases of $0.9 million, $0.02 million and $0.02 million for the years ended December 31, 2014, 2013 and 2012, respectively, are reported in operating expenses in the consolidated and combined statements of operations. |
Earnings Per Unit |
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Earnings Per Unit [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Unit | Earnings Per Unit The following table shows the amounts used in computing the Operating Partnership's basic and diluted earnings per OP Unit (in thousands, except unit and per unit data):
There were 375,334 and 250,000 restricted common shares and units outstanding related to the 2013 Plan during the years ended December 31, 2014 and 2013, respectively. However, these restricted common shares and units are not dilutive due to the net loss. |
Related Party Transactions |
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Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Trust and the OP entered into a shared services agreement with Ziegler pursuant to which Ziegler provides office space, IT support, accounting support and other services to the Operating Partnership in exchange for an annual fee. The shared service fee amounted to $0.4 million and $0.3 million for years ended December 31, 2014 and 2013, respectively, and is recorded in general and administrative expense in the consolidated and combined statements of operations. Ziegler charged the Predecessor an annual management fee equal to 2 percent of the total capital commitments. Total management fees charged to the Predecessor was $0.5 million and $1.0 million for the years ended December 31, 2013 and 2012, respectively. Total other fees charged to the Predecessor were $0.03 million for the year ended December 31, 2012. The other fees include fees for accounting expenses and other expenses owed to Ziegler. The Trust did not incur a management fee for the year ended December 31, 2014. The Trust and the Operating Partnership entered into the First Amendment to Shared Services Agreement, dated July 31, 2014 (the “First Amendment”), with Ziegler, which amended certain terms of the shared services agreement. Among other things, the First Amendment reduced the shared services to be provided by Ziegler, the term of the shared services agreement, and the monthly fee to be paid by the OP for the remainder of the term. In consideration of these changes, the OP was obligated to make a one-time payment to Ziegler in the amount of $1.8 million (the “Amendment Payment”), which could be paid in cash or in unrestricted common shares of the OP as determined by the Trust in its sole discretion. On August 19, 2014, the Trust made the Amendment Payment by issuing 124,913 common shares to Ziegler and the OP issued 124,913 units to the Trust. The $1.8 million one-time payment is included in general and administrative expense in the consolidated statement of operations for the year ended December 31, 2014. |
Subsequent Events |
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Subsequent Events [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subsequent Events | Subsequent Events The OP, through subsidiaries, closed on the below acquisitions:
(1) “MOB” means medical office building. (2) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 420,963 OP Units valued at approximately $7.3 million in the aggregate on the date of issuance. (3) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 44,685 Series A Preferred Units valued at approximately $9.7 million in the aggregate on the date of issuance. On February 5, 2015, the OP entered into a Second Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”) which provides for the designation and issuance of the newly designated Series A Participating Redeemable Preferred Units of the operating partnership (“Series A Preferred Units”). The Series A Preferred Units will have priority over all other partnership interests of the Operating Partnership with respect to distributions and liquidation. In addition, the Series A Preferred Units will be redeemable at the option of the holders on or after the one year anniversary of their issuance, which redemption obligation may be satisfied, at the OP’s option, in cash or shares of the Trust's common stock. On January 21, 2015, the OP repaid the outstanding balance of $138.0 million on the unsecured revolving credit facility. On January 21, 2015, the Trust completed a follow-on public offering of 18,975,000 common shares of beneficial interest, including 2,475,000 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to it of approximately $297.2 million. The Trust contributed the net proceeds of this offering to the Operating Partnership in exchange for 18,975,000 OP Units, and the Operating Partnership used the net proceeds of the public offering to repay borrowings under its unsecured revolving credit facility and for general corporate and working capital purposes and funding acquisitions. During 2015, the Trust sold 247,397 common shares pursuant to the ATM Program, at a weighted average price of $16.96 per share resulting in total proceeds of approximately $4.2 million, before $55,696 in commissions. In connection with these shares, the Trust contributed the proceeds to the OP in exchange for 247,397 OP Units. As of the date of this prospectus supplement, the Trust has $90.2 million remaining available under the ATM Program. See “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Recent Developments” for a further discussion of these acquisitions. |
Quarterly Data |
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Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Data | Quarterly Data The following unaudited quarterly data has been prepared on the basis of a December 31 year-end. Amounts are in thousands, except for common units and per unit amounts.
As a result of the acquisition activity and equity offerings throughout 2014, the quarterly periods are not comparable quarter over quarter.
(1) Because the IPO and the formation transactions were completed on July 24, 2013, the OP had no operations prior to that date. References in these notes to the consolidated and combined financial statements of Physicians Realty L.P. signify the Company for the period from July 24, 2013, the date of completion of the IPO and the formation transactions, and of the Predecessor for all prior periods. |
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION |
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SEC Schedule III, Real Estate and Accumulated Depreciation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION | PHYSICIANS REALTY L.P. SCHEDULE III — REAL ESTATE AND ACCUMULATED DEPRECIATION
The cost capitalized subsequent to acquisitions is net of dispositions. The changes in total real estate for the years ended December 31, 2014, 2013 and 2012 are as follows (in thousands):
The changes in accumulated depreciation for the years ended December 31, 2014, 2013 and 2012 are as follows (in thousands):
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation | Principles of Consolidation Property holding entities and other subsidiaries of which the Operating Partnership owns 100% of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest are consolidated. All inter-company balances and transactions are eliminated in consolidation. For entities in which the OP owns less than 100% of the equity interest, the OP consolidates the property if it has the direct or indirect ability to control the entities’ activities based upon the terms of the respective entities’ ownership agreements. For these entities, the OP records a non-controlling interest representing equity held by non-controlling interests. GAAP requires the OP to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). ASC 810 broadly defines a VIE as an entity in which either (i) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. The OP identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity. The OP consolidates investments in a VIE when it determines that the OP is the VIE’s primary beneficiary. The OP may change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary. The OP performs this analysis on an ongoing basis. |
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Noncontrolling Interests | Noncontrolling Interests The OP presents the portion of any equity it does not own in entities that it controls (and thus consolidates) as noncontrolling interests and classifies such interests as a component of consolidated equity, separate from the OP’s total limited partners’ capital, on the consolidated balance sheets. In connection with the closing of the IPO, the Trust and the Operating Partnership completed related formation transactions pursuant to which the Operating Partnership acquired from the Ziegler Funds, the Ziegler Funds’ ownership interests in 19 medical office buildings located in ten states in exchange for an aggregate of 2,744,000 OP Units and the payment of approximately $36.9 million of debt related to such properties. In connection with the acquisition of a surgical center hospital in the New Orleans, Louisiana metropolitan area for approximately $37.5 million, on September 30, 2013, the Operating Partnership partially funded the purchase price by issuing 954,877 OP Units valued at approximately $11.5 million on the date of issuance. During the year ended December 31, 2014, the Operating Partnership partially funded five property acquisitions by issuing an aggregate of 2,042,313 OP Units valued at approximately $28.6 million on the date of issuance. The five acquisitions had a total purchase price of approximately $103.6 million. Limited partners' capital represents OP Units held by the Predecessor’s prior investors and other investors. As of December 31, 2014, the General Partner held a 94.1% interest in the Operating Partnership. Holders of OP Units may not transfer their units without the General Partners' prior written consent. Beginning on the first anniversary of the issuance of OP Units, OP Unit holders may tender their units for redemption by the Operating Partnership in exchange for cash equal to the market price of the Trust’s common shares at the time of redemption or, for unregistered common shares on a one-for-one basis. Such selection to pay cash or issue common shares to satisfy an OP Unit holder’s redemption request is solely within the control of the General Partner. Partially Owned Properties: The OP reflects noncontrolling interests in partially owned properties on the balance sheet for the portion of properties consolidated by the OP that are not wholly owned by the OP. The earnings or losses from those properties attributable to the noncontrolling interests are reflected as noncontrolling interests in partially owned properties in the consolidated and combined statement of operations. |
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Dividends and Distributions | Distributions
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Purchase of Investment Properties | Purchase of Investment Properties A property acquired not subject to an existing lease is treated as an asset acquisition and recorded at its purchase price, inclusive of acquisition costs, allocated between the acquired tangible assets and assumed liabilities based upon their relative fair values at the date of acquisition. A property acquired with an existing lease is accounted for as a business combination pursuant to the acquisition method in accordance with ASC Topic 805, Business Combinations (“ASC 805”), and assets acquired and liabilities assumed, including identified intangible assets and liabilities, are recorded at fair value. The determination of fair value involves the use of significant judgment and estimation. The OP makes estimates of the fair value of the tangible and intangible acquired assets and assumed liabilities using information obtained from multiple sources as a result of pre-acquisition due diligence and may include the assistance of a third party appraiser. The OP estimates the fair value of buildings acquired on an as-if-vacant basis and depreciates the building value over the estimated remaining life of the building. The OP determines the allocated value of other fixed assets, such as site improvements, based upon the replacement cost and depreciates such value over the assets’ estimated remaining useful lives as determined at the applicable acquisition date. The fair value of land is determined either by considering the sales prices of similar properties in recent transactions or based on internal analyses of recently acquired and existing comparable properties within the OP’s portfolio. In recognizing identified intangible assets and liabilities in connection with a business combination, the value of above-or-below market leases is estimated based on the present value (using an interest rate which reflected the risks associated with the leases acquired) of the difference between contractual amounts to be received pursuant to the leases and management’s estimate of market lease rates measured over a period equal to the estimated remaining term of the lease. The capitalized above-market or below-market lease intangibles are amortized as a reduction or addition to rental income over the estimated remaining term of the respective leases. In determining the value of in-place leases and tenant relationships, management considers current market conditions and costs to execute similar leases in arriving at an estimate of the carrying costs during the expected lease-up period from vacant to existing occupancy. In estimating carrying costs, management includes real estate taxes, insurance, other operating expenses, estimates of lost rental revenue during the expected lease-up periods, and costs to execute similar leases, including leasing commissions, tenant improvements, legal, and other related costs based on current market demand. The values assigned to in-place leases and tenant relationships are amortized over the estimated remaining term of the lease. The values assigned to all lease intangible assets and liabilities are amortized over the estimated remaining term of the lease. If a lease terminates prior to its scheduled expiration, all unamortized costs related to that lease are written off. The OP calculates the fair value of any long-term debt assumed by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings, which the OP approximates based on the rate at which it would expect to incur on a replacement instrument on the date of acquisition, and recognize any fair value adjustments related to long-term debt as effective yield adjustments over the remaining term of the instrument. Based on these estimates, the OP recognizes the acquired assets and assumed liabilities at their estimated fair values, which are generally determined using Level 3 inputs, such as market rental rates, capitalization rates, discount rates, or other available market data. Initial valuations are subject to change until the information is finalized, no later than 12 months from the acquisition date. The OP expenses transaction costs associated with acquisitions accounted for as business combinations in the period incurred. |
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Impairment of Intangible and Long-Lived Assets | Impairment of Intangible and Long-Lived Assets The OP periodically evaluates its long-lived assets, primarily consisting of investments in real estate, for impairment indicators or whenever events or changes in circumstances indicate that the recorded amount of an asset may not be fully recoverable. If indicators of impairment are present, the OP evaluates the carrying value of the related real estate properties in relation to the undiscounted expected future cash flows of the underlying operations. In performing this evaluation, management considers market conditions and current intentions with respect to holding or disposing of the real estate property. The OP adjusts the net book value of real estate properties to fair value if the sum of the expected future undiscounted cash flows, including sales proceeds, is less than book value. The OP recognizes an impairment loss at the time it makes any such determination. If the OP determines that an asset is impaired, the impairment to be recognized is measured as the amount by which the recorded amount of the asset exceeds its fair value. Fair value is typically determined using a discounted future cash flow analysis or other acceptable valuation techniques, which are based, in turn, upon Level 3 inputs, such as revenue and expense growth rates, capitalization rates, discount rates or other available market data. The OP recorded real estate impairment charges of $1.8 million and $0 for the years ended December 31, 2014 and 2013, respectively. The Predecessor recognized impairments totaling $0.9 million for the year ended December 31, 2012. |
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Assets Held for Sale and Discontinued Operations | Assets Held for Sale and Discontinued Operations The OP may sell properties from time to time for various reasons, including favorable market conditions. The OP classifies certain long-lived assets as held for sale once the criteria, as defined by GAAP, has been met. Long-lived assets to be disposed of are reported at the lower of their carrying amount or fair value minus cost to sell and are no longer depreciated. In 2014, the FASB issued Accounting Standards Update 2014-8, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-8”), which raises the threshold for disposals to qualify as discontinued operations. A discontinued operation is defined as: (1) a component of an entity or group of components that has been disposed of or classified as held for sale and represents a strategic shift that has or will have a major effect on an entity’s operations and financial results; or (2) an acquired business that is classified as held for sale on the acquisition date. ASU 2014-8 also requires additional disclosures regarding discontinued operations, as well as material disposals that do not meet the definition of discontinued operations. The application of this guidance is prospective from the date of adoption and applies only to disposals (or new classifications to held for sale) that have not been reported as discontinued operations in the Trust’s previously issued financial statements. The OP early adopted ASU 2014-8 for the quarter ended March 31, 2014. Such adoption has had no impact on the OP’s financial statements as no dispositions have occurred during the year ended December 31, 2014. Prior to the adoption of ASU 2014-8, the results of operations for assets meeting the definition of discontinued operations are reflected in the consolidated and combined statements of operations as discontinued operations for all periods presented. The OP allocates estimated interest expense to discontinued operations based on property values and either the weighted average interest rate of the OP or the property’s actual mortgage interest. |
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Investments in Unconsolidated Entities | Investments in Unconsolidated Entities The OP reports investments in unconsolidated entities over whose operating and financial policies it has the ability to exercise significant influence under the equity method of accounting. Under this method of accounting, the OP's share of the investee’s earnings or losses is included in its consolidated and combined statements of operations. The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the equity interest. During 2014, the Operating Partnership completed the acquisition of a 40% limited liability company membership interest in Jeff-Orleans Medical Development Real Estate, L.L.C, the entity that owns and leases to us the land on which the Crescent City Surgical Centre is situated, for $1.3 million. |
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Real Estate Loans Receivable | Real Estate Loans Receivable Real estate loans receivable consists of a mezzanine loan and a term loan which are collateralized by an equity interest in a two medical office building developments. Interest income on the loans are recognized as earned based on the terms of the loans subject to evaluation of collectability risks and are included in the Operating Partnership's consolidated and combined statement of operations. On January 2, 2014, the OP completed a $6.9 million mezzanine loan to affiliates controlled by MedProperties Holdings, LLC, a Dallas, Texas based private investor in medical facilities (“MedProperties”). The mezzanine loan is secured by MedProperties’ ownership interest in two special purpose entities that own a surgical hospital located in San Antonio, Texas and an inpatient rehabilitation facility located in Scottsdale, Arizona. The mezzanine loan has a five year, interest-only term and bears interest at a rate of 9.0% per annum. As part of the consideration for providing the mezzanine loan, the OP has an option to acquire the property at a formula purchase price during year four of the mezzanine loan based on a fixed capitalization rate. On November 26, 2014, the OP made an $8.6 million term loan to fund the renovations and additions of two re-purposed buildings in Jacksonville, Florida. Upon completion of the expansion and renovations, the properties will be approximately 40,000 square feet in the aggregate. Upon completion of the construction of the buildings and them becoming fully occupied, the Trust has the option to purchase the buildings. The term loan bears interest at a rate of 9.0%. |
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Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents consist of cash on hand and short-term investments with maturities of three months or less from the date of purchase. The OP is subject to concentrations of credit risk as a result of its temporary cash investments. The OP places its temporary cash investments with high credit quality financial institutions in order to mitigate that risk. |
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Escrow reserves | Escrow reserves The OP is required to maintain various escrow reserves on certain notes payable to cover future property taxes and insurance and tenant improvements costs as defined in each loan agreement. The total reserves as of December 31, 2014 and 2013 are $1.9 million and $1.6 million, respectively, which are included in other assets in the consolidated balance sheets. |
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Deferred costs | Deferred costs Deferred costs consist primarily of fees paid to obtain financing and costs associated with the origination of long-term lease on real estate properties. After the purchase of a property, lease commissions incurred to extend in-place leases or generate new lease are added to deferred lease costs. Deferred lease costs are amortized on a straight-line basis over the terms of their respective agreements. The OP amortizes deferred financing costs as a component of interest expense over the terms of the related borrowings using a method that approximates a level yield. |
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Derivatives | Derivatives Derivatives consist of an interest rate swap and is recognized as a liability on the consolidated balance sheets and is measured at fair value. Any change in the fair value is recognized immediately in earnings unless the derivative qualified as a hedge. No derivatives have been designated as hedges. The OP is exposed to certain risks in the normal course of its business operations. One risk relating to the variability of interest on variable rate debt is managed through the use of derivatives. All derivative financial instruments are measured and reported in the consolidated balance sheets at fair value. The OP has elected not to apply hedge accounting to its derivative financial instruments and as such, any changes in the fair values of its derivatives are recognized immediately in earnings. Generally, the OP enters into swap relationships such that changes in the fair value or cash flows of items and transactions being hedged are expected to be offset by corresponding changes in the values of the derivatives. The OP holds one swap to pay fixed/receive variable interest rates with a total notional amount of $7.7 million and $7.9 million as of December 31, 2014 and 2013, respectively. The interest rate swap liability is reported in accrued expenses and other liabilities on the consolidated balance sheet, as of December 31, 2014 and 2013, the interest rate swap liability was $0.2 million and $0.4 million, respectively. Gains recognized on the interest rate swaps of $(0.2) million, $(0.2) million and $(0.1) million were included in interest income on real estate loans and other in the consolidated and combined statements of operations for the years ended December 31, 2014, 2013 and 2012, respectively. |
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Tenant receivables, net | Tenant receivables, net Tenant accounts receivable are stated net of the applicable allowance. Rental payments under these contracts are primarily due monthly. The OP assesses the collectability of tenant receivables, including straight-line rent receivables, and defers recognition of revenue if collectability is not reasonably assured. The OP bases its assessment of the collectability of rent receivables on several factors, including, among other things, payment history, the financial strength of the tenant and current economic conditions. If management’s evaluation of these factors indicates it is probable that the OP will be unable to recover the full value of the receivable, the OP provides a reserve against the portion of the receivable that it estimates may not be recovered. At December 31, 2014 and 2013, the allowance for doubtful accounts was $0.1 million. |
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Rental Revenue | Rental Revenue Rental revenue is recognized on a straight-line basis over the terms of the related leases when collectability is reasonably assured. Recognizing rental revenue on a straight-line basis for leases may result in recognizing revenue for amounts more or less than amounts currently due from tenants. Amounts recognized in excess of amounts currently due from tenants are included in other assets and were approximately $6.4 million and $2.0 million as of December 31, 2014 and 2013, respectively. If the OP determines that collectability of straight-line rents is not reasonably assured, the OP limits future recognition to amounts contractually owed and, where appropriate, establishes an allowance for estimated losses. Rental revenue is adjusted by amortization of lease inducements and above or below market rents on certain leases. Lease inducements and above or below market rents are amortized over the average remaining life of the lease. |
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Expense Recoveries | Expense Recoveries Expense recoveries relate to tenant reimbursement of real estate taxes, insurance and other operating expenses that are recognized as expense recovery revenue in the period the applicable expenses are incurred. The reimbursements are recorded at gross, as the OP is generally the primary obligor with respect to real estate taxes and purchasing goods and services from third-party suppliers and has discretion in selecting the supplier and bears the credit risk of tenant reimbursement. The OP has certain tenants with absolute net leases. Under these lease agreements, the tenant is responsible for operating and building expenses. For absolute net leases, the OP does not recognize expense recoveries |
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Income Taxes | Income Taxes As a partnership, the Operating Partnership generally is not liable for federal income taxes. The income and loss from the operations of the Operating Partnership is included in the tax returns of its limited partners, including the Trust, who are responsible for reporting their allocable share of the partnership income and loss. Accordingly, no provision for income taxes has been made on the accompanying consolidated financial statements. |
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Management Estimates | Management Estimates The preparation of consolidated and combined financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated and combined financial statements and the amounts of revenue and expenses reported in the period. Significant estimates are made for the fair value assessments with respect to purchase price allocations, impairment assessments, and the valuation of financial instruments. Actual results could differ from these estimates. |
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Contingent Liability | Contingent Liability The OP records a liability for contingent consideration (included in accrued expenses and other liabilities on its consolidated balance sheets) at fair value as of the acquisition date and reassess the fair value at the end of each reporting period, with any changes being recognized in earnings. Increases or decreases in the fair value of contingent consideration can result from changes in discount periods, discount rates and probabilities that contingencies will be met. |
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Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the previously reported consolidated financial position or consolidated and combined results of operations. |
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Segment reporting | Segment reporting Under the provision of Codification Topic 280, Segment Reporting, the OP has determined that it has one reportable segment with activities related to leasing and managing healthcare properties. |
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New Accounting Pronouncements | New Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-9, Revenue from Contracts with Customers, which creates a new Topic Accounting Standards Codification (Topic 606). The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This standard is effective for interim or annual periods beginning after December 15, 2016 and allows for either full retrospective or modified retrospective adoption. Early adoption of this standard is not allowed. The OP is currently evaluating the impact the adoption of Topic 606 will have on its financial statements, if any. In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, to address financial reporting considerations about an entity’s ability to continue as a going concern. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and for interim periods within annual periods beginning after December 15, 2016. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. ASU 2015-03 is effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The new guidance has been applied retrospectively to each prior period presented. |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of dividend declared |
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Acquisitions and Dispositions (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of acquisitions and aggregate purchase price | During 2014, the OP completed acquisitions of 61 healthcare properties located in 15 states for an aggregate purchase price of approximately $543.4 million as summarized below:
(1) “MOB” means medical office building, “LTACH” means long-term acute care hospital and “ASC” means ambulatory surgical center. (2) The Operating Partnership accounted for these acquisitions as asset acquisitions and capitalized $1.7 million of total acquisition costs to the basis of the properties. (3) The Operating Partnership accounted for these acquisitions as business combinations pursuant to the acquisition method and expensed total acquisition costs of $10.9 million. (4) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 147,659 OP Units valued at approximately $1.9 million in the aggregate on the date of issuance. (5) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 96,099 OP Units valued at approximately $1.2 million in the aggregate on the date of issuance. (6) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 576,040 OP Units valued at approximately $8.3 million in the aggregate on the date of issuance. (7) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 272,191 OP Units valued at approximately $4.0 million in the aggregate on the date of issuance. (8) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 950,324 OP Units valued at approximately $13.2 million in the aggregate on the date of issuance. |
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Schedule of preliminary purchase price allocations of assets acquired and liabilities assumed | The following table summarizes the preliminary purchase price allocations of the assets acquired and the liabilities assumed, which the OP determined using Level 2 and Level 3 inputs (in thousands):
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Schedule of pro forma combined revenue, net income, and earnings per share-basic and diluted | The following table illustrates the pro forma combined revenue, net income, and earnings per unit —basic and diluted as if Physicians Realty LP had acquired the above acquisitions as of January 1, 2013 (in thousands, except per share amounts):
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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 as of 2014 and 2013 (in thousands):
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Summary of the acquired lease intangible amortization | The following is a summary of the acquired lease intangible amortization for the years ended December 31, 2014, 2013 and 2012 (in thousands):
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Schedule of future aggregate amortization of the acquired lease intangibles | Future aggregate net amortization of the acquired lease intangibles as of December 31, 2014, 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 as of December 31, 2014 and 2013 (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 December 31, 2014 and 2013 (in thousands):
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Schedule of consolidated leverage ratios | The Credit Agreement provides for revolving credit loans to the Operating Partnership. Base Rate Loans, Adjusted LIBOR Rate Loans and Letters of Credit (each, as defined in the Credit Agreement) will be subject to interest rates, based upon the consolidated leverage ratio of the Operating Partnership and its subsidiaries as follows:
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Schedule of principal payments due on debt | Scheduled principal payments due on debt as of December 31, 2014, are as follows (in thousands):
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Stock-based Compensation (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of non-vested restricted common shares | A summary of the status of the Trust’s nonvested restricted common shares as of December 31, 2014 and changes during the year then ended follow:
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Schedule of weighted average grant date fair value assumptions | The OP utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $19.25 per unit 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 2014:
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets and liabilities that were accounted for on a nonrecurring basis by level within the fair value hierarchy | The following table sets forth by level the fair value hierarchy of the OP’s assets that were accounted for on a non-recurring basis as of December 31, 2014.
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Summary of quantitative inputs and assumptions used for items categorized in Level 3 for the fair value hierarchy | The following table summarizes the quantitative inputs and assumptions used for items categorized in Level 3 for the fair value hierarchy as of December 31, 2014 (in thousands).
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Schedule of fair value of other financial instruments | The following table presents the fair value of the OP’s financial instruments (in thousands).
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Tenant Operating Leases (Tables) |
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Tenant Operating Leases | |||||||||||||||||||||||||||||||||||||
Schedule of future minimum rental payments on non-cancelable leases, exclusive of expense recoveries | As of December 31, 2014, the future minimum rental payments on non-cancelable leases, exclusive of expense recoveries, were as follows (in thousands):
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Rent Expense (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of future minimum lease obligations under non-cancelable ground leases | As of December 31, 2014, the future minimum lease obligations under non-cancelable parking and ground leases were as follows (in thousands):
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Earnings Per Unitt (Tables) |
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Earnings Per Unit [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of amounts used in computing basic and diluted earnings per share | The following table shows the amounts used in computing the Operating Partnership's basic and diluted earnings per OP Unit (in thousands, except unit and per unit data):
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Subsequent Events (Tables) |
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Schedule of acquisitions through subsidiaries of operating partnership | The OP, through subsidiaries, closed on the below acquisitions:
(1) “MOB” means medical office building. (2) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 420,963 OP Units valued at approximately $7.3 million in the aggregate on the date of issuance. (3) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 44,685 Series A Preferred Units valued at approximately $9.7 million in the aggregate on the date of issuance. |
Quarterly Data (Tables) |
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Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Information | The following unaudited quarterly data has been prepared on the basis of a December 31 year-end. Amounts are in thousands, except for common units and per unit amounts.
As a result of the acquisition activity and equity offerings throughout 2014, the quarterly periods are not comparable quarter over quarter.
(1) Because the IPO and the formation transactions were completed on July 24, 2013, the OP had no operations prior to that date. References in these notes to the consolidated and combined financial statements of Physicians Realty L.P. signify the Company for the period from July 24, 2013, the date of completion of the IPO and the formation transactions, and of the Predecessor for all prior periods. |
Summary of Significant Accounting Policies (Details) |
12 Months Ended |
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Dec. 31, 2014 | |
Principles of Consolidation | |
Ownership interest in consolidated subsidiaries (as a percent) | 100.00% |
Acquisitions and Dispositions (Detail 2) - USD ($) $ / shares in Units, $ in Thousands |
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Dec. 31, 2014 |
Dec. 31, 2013 |
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Unaudited Pro Forma Financial Information | ||
Revenue | $ 81,507 | $ 71,183 |
Net income | 16,883 | 11,461 |
Net income available to common shareholders | $ 16,883 | $ 11,461 |
Earnings per share - basic (in dollars per share) | $ 0.31 | $ 0.21 |
Earnings per share - diluter (in dollars per share) | $ 0.31 | $ 0.21 |
Common units issued and outstanding | 53,831,202 | 53,831,202 |
Intangibles (Details) - USD ($) $ in Thousands |
Dec. 31, 2014 |
Dec. 31, 2013 |
---|---|---|
Intangibles | ||
Cost | $ 72,985 | $ 31,236 |
Accumulated Amortization | (12,796) | (8,128) |
Total | 60,189 | 23,108 |
Liability | ||
Cost | 3,031 | |
Accumulated Amortization | (160) | |
Total | 2,871 | |
In-place leases | ||
Intangibles | ||
Cost | 64,777 | 29,056 |
Accumulated Amortization | (12,213) | (8,080) |
Total | 52,564 | 20,976 |
Above market leases | ||
Intangibles | ||
Cost | 7,449 | 2,180 |
Accumulated Amortization | (578) | (48) |
Total | 6,871 | $ 2,132 |
Leasehold interest | ||
Intangibles | ||
Cost | 759 | |
Accumulated Amortization | (5) | |
Total | 754 | |
Below market in-place lease | ||
Liability | ||
Below market lease, cost | 2,330 | |
Below market lease, accumulated amortization | (156) | |
Below Market Lease, Net | 2,174 | |
Above market ground lease | ||
Liability | ||
Cost | 701 | |
Accumulated Amortization | (4) | |
Total | $ 697 |
Intangibles (Details 2) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2014 |
Dec. 31, 2013 |
Dec. 31, 2012 |
|
In-place leases | |||
Intangibles | |||
Amortization expense | $ 4,133 | $ 1,252 | $ 900 |
Above market leases | |||
Intangibles | |||
Decrease of rental income | 530 | $ 48 | |
Leasehold interest | |||
Intangibles | |||
Decrease of rental income | 5 | ||
Below market in-place lease | |||
Intangibles | |||
Increase of rental income | 156 | ||
Above market ground lease | |||
Intangibles | |||
Decrease of operating expense | $ 4 |
Intangibles (Details 3) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2014
USD ($)
| |
Future aggregate net amortization of acquired lease intangibles (Net Decrease in Revenue) | |
2015 | $ (667) |
2016 | (689) |
2017 | (567) |
2018 | (560) |
2019 | (458) |
Thereafter | (2,511) |
Total | (5,452) |
Future aggregate net amortization of acquired lease intangibles (Net Increase in Expenses) | |
2015 | 7,446 |
2016 | 7,384 |
2017 | 7,165 |
2018 | 6,628 |
2019 | 4,625 |
Thereafter | 18,618 |
Total | $ 51,866 |
Weighted average amortization period for lease intangibles | 9 years |
Weighted average amortization period for lease intangible liability | 17 years |
Other Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2014 |
Dec. 31, 2013 |
---|---|---|
Other Assets, Unclassified [Abstract] | ||
Straight line rent receivable | $ 6,431 | $ 2,018 |
Lease inducements, net | 2,845 | 1,509 |
Escrows | 1,906 | 1,552 |
Earnest deposits | 2,343 | |
Prepaid expenses and other | 2,281 | 822 |
Total | $ 15,806 | $ 5,901 |
Debt (Details 3) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Debt Disclosure [Abstract] | ||
Interest expense | $ 5,800 | $ 3,900 |
Scheduled principal payments | ||
2015 | 1,864 | |
2016 | 9,421 | |
2017 | 28,750 | |
2018 | 139,100 | |
2019 | 19,906 | |
Thereafter | 17,064 | |
Total Payments | $ 216,105 |
Stock-based Compensation (Details 2) - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2014 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Stock-based compensation | |||
Non-cash share compensation | $ 2,422 | $ 433 | |
2013 Plan | Restricted Share Units | |||
Stock-based compensation | |||
Granted (in shares) | 55,680 | 55,680 | |
Non-vested at the end of the period | 55,680 | ||
Grant date value (in dollars per share) | $ 19.25 | $ 16.94 | |
Weighted average grant date fair value | $ 16.94 | ||
Vesting period | 3 years | ||
Number of dividend equivalent included in award | 1 | ||
Non-cash share compensation | $ 300 | ||
Unrecognized compensation expense | $ 700 | ||
Performance conditions grant date fair value (in dollars per share) | $ 13.47 | ||
Share based compensation fair value assumptions | |||
Volatility, minimum (as a percent) | 18.80% | ||
Volatility, maximum (as a percent) | 34.20% | ||
Expected term in years | 2 years 9 months 29 days | ||
Risk-free rate | 0.65% | ||
Stock price (per share) | $ 13.47 |
Fair Value Measurements (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2014
USD ($)
item
|
Dec. 31, 2013
USD ($)
|
|
Interest rates swaps | ||
Fair value measurements | ||
Number of swap agreement that are not traded on exchange | item | 1 | |
Nonrecurring basis | Investment properties | ||
Fair value measurements | ||
Total Gains (Losses) | $ (1,750) | |
Nonrecurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Investment properties | ||
Fair value measurements | ||
Assets fair value | 1,529 | |
Nonrecurring basis | Significant Unobservable Inputs (Level 3) | Investment properties | ||
Fair value measurements | ||
Assets fair value | $ 1,272 | |
Carrying Amount | Nonrecurring basis | Investment properties | ||
Fair value measurements | ||
Assets fair value | $ 4,551 |
Fair Value Measurements (Details 2) - Nonrecurring basis - Significant Unobservable Inputs (Level 3) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2014
USD ($)
| |
Investment properties | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Fair value | $ 1,272 |
Discounted cash flow | |
Unobservable Inputs | |
Discount rate (as a percent) | 11.00% |
Capitalization rate (as a percent) | 8.00% |
Fair Value Measurements (Details 3) - USD ($) $ in Thousands |
Dec. 31, 2014 |
Dec. 31, 2013 |
---|---|---|
Fair value of other financial instruments | ||
Real estate loans receivable | $ 15,876 | |
Credit facility | (134,144) | |
Carrying Amount | ||
Fair value of other financial instruments | ||
Real estate loans receivable | 15,876 | |
Credit facility | (138,000) | |
Mortgage debt | (78,105) | $ (42,821) |
Carrying Amount | Interest rates swaps | ||
Fair value of other financial instruments | ||
Derivative liabilities | (233) | (397) |
Fair Value | ||
Fair value of other financial instruments | ||
Real estate loans receivable | 15,876 | |
Credit facility | (138,000) | |
Mortgage debt | (78,642) | (44,130) |
Fair Value | Interest rates swaps | Recurring basis | ||
Fair value of other financial instruments | ||
Derivative liabilities | $ (233) | $ (397) |
Tenant Operating Leases (Details) $ in Thousands |
Dec. 31, 2014
USD ($)
|
---|---|
Future minimum rental payments on non-cancelable leases | |
2015 | $ 65,905 |
2016 | 65,323 |
2017 | 65,179 |
2018 | 62,637 |
2019 | 59,464 |
Thereafter | 418,400 |
Total | $ 736,908 |
Rent Expense (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2014
USD ($)
properties
|
Dec. 31, 2013
USD ($)
|
Dec. 31, 2012
USD ($)
|
|
Leases [Abstract] | |||
Number of properties on which rights to parking structure is leased | properties | 1 | ||
Number of properties pursuant to ground and parking leases | properties | 7 | ||
Maximum lease terms | 67 years | ||
Future minimum lease obligations under non-cancelable ground leases | |||
2015 | $ 1,426 | ||
2016 | 1,442 | ||
2017 | 1,480 | ||
2018 | 1,521 | ||
2019 | 1,564 | ||
Thereafter | 23,317 | ||
Total | 30,750 | ||
Rent expenses for parking and ground leases | $ 900 | $ 20 | $ 20 |
Earnings Per Unit (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 5 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2013 |
Sep. 30, 2013 |
Jun. 30, 2013 |
Mar. 31, 2013 |
Dec. 31, 2013 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Numerator for earnings per share - basic and diluted: | |||||||||||
Net loss | $ 1,991 | $ (2,251) | $ (600) | $ (3,558) | $ (638) | $ (1,416) | $ (283) | $ (301) | $ (2,060) | $ (4,418) | $ (2,636) |
Less: Net loss attributable to Predecessor | 0 | 576 | |||||||||
Less: Net income attributable to noncontrolling interests — partially owned properties | (314) | (71) | |||||||||
Numerator for earnings per unit — basic and diluted | $ 1,903 | $ (2,327) | $ (684) | $ (3,624) | $ (648) | $ (1,483) | $ (4,732) | $ (2,131) | |||
Denominator for earnings per unit - basic and diluted units: | 17,631,224 | 14,243,850 | 36,881,712 | 16,179,492 | |||||||
Basic and diluted (in dollars per share) | $ (0.04) | $ (0.10) | $ (0.12) | $ (0.13) | |||||||
2013 Plan | Restricted Stock And Restricted Stock Units [Member] | |||||||||||
Numerator for earnings per share - basic and diluted: | |||||||||||
Outstanding non-vested shares | 375,334 | 250,000 | 250,000 | 375,334 | 250,000 |
Related Party Transactions (Details) - Ziegler - USD ($) $ in Thousands |
12 Months Ended | ||||
---|---|---|---|---|---|
Aug. 19, 2014 |
Dec. 31, 2014 |
Dec. 31, 2013 |
Dec. 31, 2012 |
Jul. 31, 2014 |
|
Related Party Transactions | |||||
Shares issued to related party | 124,913 | ||||
Shared service fee | |||||
Related Party Transactions | |||||
Fees charged | $ 400 | $ 300 | |||
Predecessor | |||||
Related Party Transactions | |||||
Annual management fee as a percentage of total capital commitments | 2.00% | 2.00% | |||
Amount of one-time payment which may be paid in cash or in unrestricted shares | $ 1,800 | ||||
Amount of one-time payment which may be paid in cash or in Amount of one-time payment paid in unrestricted shares | $ 1,800 | ||||
Predecessor | Management fees | |||||
Related Party Transactions | |||||
Fees charged | $ 500 | $ 1,000 | |||
Predecessor | Other fees | |||||
Related Party Transactions | |||||
Fees charged | $ 30 |
Quarterly Data (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 5 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2013 |
Sep. 30, 2013 |
Jun. 30, 2013 |
Mar. 31, 2013 |
Dec. 31, 2013 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Total revenues | $ 19,694 | $ 14,161 | $ 11,447 | $ 8,032 | $ 6,488 | $ 3,729 | $ 3,437 | $ 3,390 | $ 53,334 | $ 17,045 | |
Operating (loss) income | 1,967 | (2,311) | (626) | (3,575) | (638) | (1,414) | (283) | (301) | (4,545) | (2,634) | |
Net (loss) income | 1,991 | (2,251) | (600) | (3,558) | (638) | (1,416) | $ (283) | $ (301) | $ (2,060) | (4,418) | (2,636) |
Net loss attributable to common shareholders | $ 1,903 | $ (2,327) | $ (684) | $ (3,624) | $ (648) | $ (1,483) | $ (4,732) | $ (2,131) | |||
Earnings per share - basic: | |||||||||||
Net (loss) income available to common shareholder (in dollars per share) | $ 0.04 | $ (0.06) | $ (0.02) | $ (0.15) | |||||||
Weighted average common shares outstanding | 51,335,748 | 40,898,015 | 29,962,046 | 24,997,474 | |||||||
Earnings per share - diluted: | |||||||||||
Net (loss) income available to common shareholder (in dollars per share) | $ 0.04 | $ (0.06) | $ (0.02) | $ (0.15) | |||||||
Weighted average common shares outstanding | 51,544,832 | 40,898,015 | 29,962,046 | 24,997,474 | |||||||
Earnings per share - basic and diluted: | |||||||||||
Net income available to common unitsholder (in dollars per share) | $ (0.04) | $ (0.10) | $ (0.12) | $ (0.13) | |||||||
Weighted average common shares outstanding - Basic and diluted | 17,631,224 | 14,243,850 | 36,881,712 | 16,179,492 |
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (Details 2) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2014 |
Dec. 31, 2013 |
Dec. 31, 2012 |
|
Changes in total real estate | |||
Balance as of the beginning of the year | $ 224,730 | $ 111,149 | $ 124,333 |
Acquisitions | 505,379 | 113,225 | |
Additions | 900 | 806 | 786 |
Impairment | (1,750) | (937) | |
Dispositions | (225) | (450) | (13,033) |
Balance as of the end of the year | 729,034 | 224,730 | 111,149 |
Changes in accumulated depreciation | |||
Balance as of the beginning of the year | 20,299 | 16,495 | 14,484 |
Acquisitions | 6,575 | 694 | |
Additions | 5,898 | 3,110 | 3,024 |
Dispositions | (1,013) | ||
Balance as of the end of the year | $ 32,772 | $ 20,299 | $ 16,495 |
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