ý | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended: December 31, 2016 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period to |
Maryland | 62-1507028 | |
(State or other jurisdiction of Incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of Each Class | Name of Each Exchange on Which Registered | |
Common stock, $0.01 par value per share | New York Stock Exchange |
Large accelerated filer | ý | Accelerated filer | o | ||||
Non-accelerated filer | o | Smaller reporting company | o | ||||
(Do not check if a smaller reporting company) |
Page | ||
Number of Properties | Gross Investment | Square Feet | Percentage of Square Feet | Occupancy (1) | ||||||||||||||
(Dollars and square feet in thousands) | December 31, 2016 | December 31, 2015 | ||||||||||||||||
Medical office/outpatient | 182 | $ | 3,165,868 | 13,245 | 90.8 | % | 87.4 | % | 86.7 | % | ||||||||
Inpatient | 10 | 344,051 | 818 | 5.6 | % | 100.0 | % | 100.0 | % | |||||||||
Other | 10 | 80,941 | 518 | 3.6 | % | 83.1 | % | 85.9 | % | |||||||||
Sub-Total | 202 | $ | 3,590,860 | 14,581 | 100.0 | % | 87.9 | % | 87.6 | % | ||||||||
Construction in progress | — | 11,655 | ||||||||||||||||
Land held for development | — | 20,123 | ||||||||||||||||
Corporate property | — | 5,583 | ||||||||||||||||
Total | 202 | $ | 3,628,221 |
(1) | The occupancy columns represent the percentage of total rentable square feet leased (including month-to-month and holdover leases), excluding properties classified as held for sale (two properties as of December 31, 2016 and one property as of December 31, 2015). Properties under property operating or single-tenant net lease agreements are included at 100% occupancy. Upon expiration of these agreements, occupancy reflects underlying tenant leases in the building. |
Expiration Year | Number of Leases | Square Feet | Percentage of Square Feet | ||||||
2017 (1) | 604 | 2,325,443 | 18.2 | % | |||||
2018 | 387 | 1,400,606 | 11.0 | % | |||||
2019 | 463 | 2,344,770 | 18.3 | % | |||||
2020 | 289 | 1,374,086 | 10.7 | % | |||||
2021 | 278 | 1,089,943 | 8.5 | % | |||||
2022 | 107 | 727,731 | 5.7 | % | |||||
2023 | 128 | 738,186 | 5.8 | % | |||||
2024 | 105 | 663,874 | 5.2 | % | |||||
2025 | 60 | 552,119 | 4.3 | % | |||||
2026 | 55 | 198,128 | 1.6 | % | |||||
Thereafter | 60 | 1,373,607 | 10.7 | % |
(1) | Includes 50 leases totaling 186,441 square feet that expired prior to December 31, 2016 and are currently on month-to-month terms. |
• | the repeal of the Affordable Care Act and related actions concerning the expansion of Medicaid benefits and the implementation of health insurance exchanges, whether run by the state or by the federal government, whereby individuals and small businesses purchase health insurance, including government-funded plans, many assisted by federal subsidies that are subject to ongoing legal and legislative challenges; |
• | quality control, cost containment, and payment system reforms for Medicaid and Medicare, such as expansion of pay-for-performance criteria, bundled provider payments, accountable care organizations, increased patient cost-sharing, geographic payment variations, comparative effectiveness research, and lower payments for hospital readmissions; |
• | implementation of the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”), which, if not amended in future legislation, will eventually replace the traditional fee-for-service payment model for physicians with a new value-based payment initiative in which physicians can participate in one of two reimbursement tracks - a merit-based incentive payment system or an advanced alternative payment model; in its final rule for 2017 physician Medicare reimbursement rates, the Center for Medicare and Medicaid Services exempted approximately one-third of physician practices from MACRA compliance in 2017; |
• | equalization of Medicare payment rates across different facility-type settings; Section 603 of the Bipartisan Budget Act of 2015 lowered Medicare payment rates, effective January 1, 2017 for services provided in off-campus, provider-based outpatient departments to the same level of rates for physician-office settings for those facilities not grandfathered under the current Medicare rates as of the law’s date of enactment, November 2, 2015; |
• | the continued adoption by providers of federal standards for the meaningful-use of electronic health records; |
• | anti-trust scrutiny of health insurance company mergers; and |
• | consideration of significant cost-saving overhauls of Medicare and Medicaid, including capped federal Medicaid payments to states, premium-support models to provide for a fixed amount of Medicare benefits per enrollee, and an increase in the eligibility age for Medicare. |
• | The construction of properties generally requires various government and other approvals that may not be received when expected, or at all, which could delay or preclude commencement of construction; |
• | Opportunities that the Company pursued but later abandoned could result in the expensing of pursuit costs, which could impact the Company’s consolidated results of operations; |
• | Construction costs could exceed original estimates, which could impact the building’s profitability to the Company; |
• | Operating expenses could be higher than forecasted; |
• | Time required to initiate and complete the construction of a property and to lease up a completed property may be greater than originally anticipated, thereby adversely affecting the Company’s cash flow and liquidity; |
• | Occupancy rates and rents of a completed development property may not be sufficient to make the property profitable to the Company; and |
• | Favorable capital sources to fund the Company’s development and redevelopment activities may not be available when needed. |
• | The Company’s purchase price for acquired facilities may be based upon a series of market or building-specific judgments which may be incorrect; |
• | The costs of any maintenance or improvements for properties might exceed estimated costs; |
• | The Company may incur unexpected costs in the acquisition, construction or maintenance of real estate assets that could impact its expected returns on such assets; and |
• | Leasing may not occur at all, within expected time frames or at expected rental rates. |
• | future results could be adversely affected due to the theft, destruction, loss, misappropriation or release of confidential data or intellectual property; |
• | operational or business delays resulting from the disruption of IT systems and subsequent clean-up and mitigation activities; and/or |
• | negative publicity resulting in reputation or brand damage with the Company's tenants, health systems or other operators. |
• | limit the Company’s ability to adjust rapidly to changing market conditions in the event of a downturn in general economic conditions or in the real estate and/or healthcare industries; |
• | impair the Company’s ability to obtain additional debt financing or require potentially dilutive equity to fund obligations and carry out its business strategy; and |
• | result in a downgrade of the rating of the Company’s debt securities by one or more rating agencies, which would increase the costs of borrowing under the Unsecured Credit Facility and the cost of issuance of new debt securities, among other things. |
• | trends in the method of delivery of healthcare services; |
• | competition among healthcare providers; |
• | consolidation of large health insurers; |
• | lower reimbursement rates from government and commercial payors, high uncompensated care expense, investment losses and limited admissions growth pressuring operating profit margins for healthcare providers; |
• | availability of capital; |
• | credit downgrades; |
• | liability insurance expense; |
• | regulatory and government reimbursement uncertainty resulting from the Affordable Care Act and other healthcare reform laws; |
• | efforts to repeal, replace or modify the Affordable Care Act in whole or in part; |
• | health reform initiatives to address healthcare costs through expanded value-based purchasing programs, bundled provider payments, health insurance exchanges, increased patient cost-sharing, geographic payment variations, comparative effectiveness research, lower payments for hospital readmissions, and shared risk-and-reward payment models such as accountable care organizations; |
• | federal court decisions on cases challenging the legality of certain aspects of the Affordable Care Act; |
• | federal and state government plans to reduce budget deficits and address debt ceiling limits by lowering healthcare provider Medicare and Medicaid payment rates, while requiring increased patient access to care; |
• | equalizing Medicare payment rates across different settings; |
• | heightened health information technology security standards and the meaningful use of electronic health records by healthcare providers; and |
• | potential tax law changes affecting non-profit providers. |
High | Low | Dividends Declared and Paid per Share | |||||||||
2016 | |||||||||||
First Quarter | $ | 31.09 | $ | 27.50 | $ | 0.30 | |||||
Second Quarter | 35.00 | 29.42 | 0.30 | ||||||||
Third Quarter | 36.60 | 32.80 | 0.30 | ||||||||
Fourth Quarter (Dividend payable on February 28, 2017) | 34.28 | 26.66 | 0.30 | ||||||||
2015 | |||||||||||
First Quarter | $ | 31.20 | $ | 26.03 | $ | 0.30 | |||||
Second Quarter | 28.39 | 23.10 | 0.30 | ||||||||
Third Quarter | 25.24 | 22.01 | 0.30 | ||||||||
Fourth Quarter | 28.51 | 24.64 | 0.30 |
Plan Category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (1) | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (1) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the First Column) | ||||||
Equity compensation plans approved by security holders | 316,321 | — | 2,538,951 | ||||||
Equity compensation plans not approved by security holders | — | — | — | ||||||
Total | 316,321 | — | 2,538,951 |
(1) | The outstanding rights relate only to the 2000 Employee Stock Purchase Plan. The Company is unable to ascertain with specificity the number of securities to be issued upon exercise of outstanding rights under the 2000 Employee Stock Purchase Plan or the weighted average exercise price of outstanding rights under that plan. The 2000 Employee Stock Purchase Plan provides that shares of common stock may be purchased at a per share price equal to 85% of the fair market value of the common stock at the beginning of the offering period or a purchase date applicable to such offering period, whichever is lower. |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | |||||
January 1 - January 31 | 13,838 | $ | 28.32 | — | — | ||||
February 1 - February 29 | 40 | 28.71 | — | — | |||||
March 1 - March 31 | — | — | — | — | |||||
April 1 - April 30 | 564 | 30.28 | — | — | |||||
May 1 - May 31 | — | — | — | — | |||||
June 1 - June 30 | — | — | — | — | |||||
July 1 - July 31 | — | — | — | — | |||||
August 1 - August 31 | — | — | — | — | |||||
September 1 - September 30 | — | — | — | — | |||||
October 1 - October 31 | 12,817 | 31.89 | — | — | |||||
November 1 - November 30 | 1,634 | 30.05 | — | — | |||||
December 1 - December 31 | 19,535 | 30.32 | — | — | |||||
Total | 48,428 |
Year Ended December 31, | |||||||||||||||||||
(Amounts in thousands except per share data) | 2016 | 2015 | 2014 | 2013 (1) | 2012 (1) | ||||||||||||||
Statement of Income Data: | |||||||||||||||||||
Total revenues | $ | 411,630 | $ | 388,471 | $ | 370,855 | $ | 330,949 | $ | 297,682 | |||||||||
Total expenses | 309,932 | 283,541 | 267,100 | 243,331 | 224,592 | ||||||||||||||
Other income (expense) | (15,942 | ) | (46,094 | ) | (69,776 | ) | (100,710 | ) | (73,982 | ) | |||||||||
Income (loss) from continuing operations | $ | 85,756 | $ | 58,836 | $ | 33,979 | $ | (13,092 | ) | $ | (892 | ) | |||||||
Income (loss) from discontinued operations | (185 | ) | 10,600 | (1,779 | ) | 20,075 | 6,427 | ||||||||||||
Net income attributable to common | |||||||||||||||||||
stockholders | $ | 85,571 | $ | 69,436 | $ | 31,887 | $ | 6,946 | $ | 5,465 | |||||||||
Diluted earnings per common share: | |||||||||||||||||||
Income (loss) from continuing operations | $ | 0.78 | $ | 0.59 | $ | 0.35 | $ | (0.14 | ) | $ | (0.01 | ) | |||||||
Income (loss) from discontinued operations | 0.00 | 0.11 | (0.02 | ) | 0.22 | 0.08 | |||||||||||||
Net income attributable to common | |||||||||||||||||||
stockholders | $ | 0.78 | $ | 0.70 | $ | 0.33 | $ | 0.08 | $ | 0.07 | |||||||||
Weighted average common shares outstanding - | |||||||||||||||||||
Diluted | 109,387 | 99,880 | 96,759 | 90,941 | 78,845 | ||||||||||||||
Balance Sheet Data (as of the end of the period): | |||||||||||||||||||
Real estate properties, gross | $ | 3,628,221 | $ | 3,380,908 | $ | 3,258,279 | $ | 3,067,187 | $ | 2,821,323 | |||||||||
Real estate properties, net | $ | 2,787,382 | $ | 2,618,982 | $ | 2,557,608 | $ | 2,435,078 | $ | 2,240,706 | |||||||||
Mortgage notes receivable | $ | — | $ | — | $ | 1,900 | $ | 125,547 | $ | 162,191 | |||||||||
Assets held for sale and discontinued | |||||||||||||||||||
operations, net | $ | 3,092 | $ | 724 | $ | 9,146 | $ | 6,852 | $ | 3,337 | |||||||||
Total assets (2) | $ | 3,040,647 | $ | 2,810,224 | $ | 2,757,510 | $ | 2,729,662 | $ | 2,539,972 | |||||||||
Notes and bonds payable (2) | $ | 1,264,370 | $ | 1,424,992 | $ | 1,403,692 | $ | 1,348,459 | $ | 1,293,044 | |||||||||
Total stockholders' equity | $ | 1,653,414 | $ | 1,242,747 | $ | 1,221,054 | $ | 1,245,286 | $ | 1,120,944 | |||||||||
Other Data: | |||||||||||||||||||
Funds from operations - Diluted (3) | $ | 174,420 | $ | 124,571 | $ | 146,493 | $ | 92,166 | $ | 105,955 | |||||||||
Funds from operations per common share - Diluted (3) | $ | 1.59 | $ | 1.25 | $ | 1.51 | $ | 1.00 | $ | 1.32 | |||||||||
Cash flows from operations | $ | 151,272 | $ | 160,375 | $ | 125,370 | $ | 120,797 | $ | 116,397 | |||||||||
Dividends paid | $ | 131,759 | $ | 120,266 | $ | 116,371 | $ | 111,571 | $ | 96,356 | |||||||||
Dividends declared and paid per common share | $ | 1.20 | $ | 1.20 | $ | 1.20 | $ | 1.20 | $ | 1.20 |
(1) | The Company did not have any dispositions that met the criteria for presentation as discontinued operations in 2015 or 2016. However, the years ended December 31, 2013 and 2012 were restated to conform to the discontinued operations presentation for 2014. See Note 5 to the Consolidated Financial Statements for more information on the Company’s discontinued operations as of December 31, 2016. |
(2) | The Company adopted ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs" and ASU No. 2015-15 "Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of -Credit Arrangements", as of January 1, 2016. Balance Sheet data for the years ending December 31, 2016 and 2015 shown above reflect this reclassification. Balance Sheet data for the years ending December 31, 2014, 2013, and 2012 have not been restated. See Note 1 to the Consolidated Financial Statements for more information. |
(3) | See "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for a discussion of funds from operations (“FFO”), including why the Company presents FFO and a reconciliation of net income attributable to common stockholders to FFO. |
• | The Company's expected results may not be achieved; |
• | The Company’s revenues depend on the ability of its tenants under its leases to generate sufficient income from their operations to make rent, loan and lease guaranty payments to the Company; |
• | The Company may decide or may be required under purchase options to sell certain properties. The Company may not be able to reinvest the proceeds from sale at rates of return equal to the return received on the properties sold. Uncertain market conditions could result in the Company selling properties at unfavorable rates or at losses in the future; |
• | Owning real estate and indirect interests in real estate is subject to inherent risks; |
• | The Company may incur impairment charges on its real estate properties or other assets; |
• | If the Company is unable to promptly re-let its properties, if the rates upon such re-letting are significantly lower than the previous rates or if the Company is required to undertake significant expenditures to attract new tenants, then the Company’s business, financial condition and results of operations would be adversely affected; |
• | Certain of the Company’s properties are special purpose healthcare facilities and may not be easily adaptable to other uses; |
• | The Company has, and may have more in the future, exposure to fixed rent escalators, which could lag behind inflation; |
• | The Company’s real estate investments are illiquid and the Company may not be able to sell properties strategically targeted for disposition; |
• | The Company is subject to risks associated with the development and redevelopment of properties; |
• | The Company may make material acquisitions and undertake developments that may involve the expenditure of significant funds and may not perform in accordance with management’s expectations; |
• | The Company is exposed to risks associated with geographic concentration; |
• | Many of the Company’s leases are dependent on the viability of associated health systems. Revenue concentrations relating to these leases expose the Company to risks related to the financial condition of the associated health systems; |
• | Many of the Company’s properties are held under ground leases. These ground leases contain provisions that may limit the Company’s ability to lease, sell, or finance these properties; |
• | The Company may experience uninsured or underinsured losses related to casualty or liability; |
• | The Company is subject to cyber security risks; |
• | The Company has incurred significant debt obligations and may incur additional debt and increase leverage in the future; |
• | Covenants in the Company’s debt instruments limit its operational flexibility, and a breach of these covenants could materially affect the Company’s consolidated financial condition and results of operations; |
• | A change to the Company’s current dividend payment may have an adverse effect on the market price of the Company’s common stock; |
• | If lenders under the Unsecured Credit Facility fail to meet their funding commitments, the Company’s operations and consolidated financial position would be negatively impacted; |
• | The unavailability of equity and debt capital, volatility in the credit markets, increases in interest rates, or changes in the Company’s debt ratings could have an adverse effect on the Company’s ability to meet its debt payments, make dividend payments to stockholders or engage in acquisition and development activity; |
• | The Company is exposed to increases in interest rates, which could adversely impact its ability to refinance existing debt, sell assets or engage in acquisition and development activity; |
• | The Company may enter into swap agreements from time to time that may not effectively reduce its exposure to changes in interest rates; |
• | If a healthcare tenant loses its licensure or certification, becomes unable to provide healthcare services, cannot meet its financial obligations to the Company or otherwise vacates a facility, the Company would have to obtain another tenant for the affected facility; |
• | Adverse trends in the healthcare service industry may negatively affect the Company’s lease revenues and the values of its investments; |
• | If the Company fails to remain qualified as a REIT, the Company will be subject to significant adverse consequences, including adversely affecting the value of its common stock; |
• | The Company's Articles of Incorporation contain limits and restrictions on transferability of the Company's common stock which may have adverse effects on the value of the Company's common stock; |
• | Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends; |
• | Complying with the REIT requirements may cause the Company to forego otherwise attractive opportunities; |
• | Qualifying as a REIT involves highly technical and complex provisions of the Internal Revenue Code; and |
• | New legislation or administrative or judicial action, in each instance potentially with retroactive effect, could make it more difficult or impossible for the Company to qualify as a REIT. |
• | Overview |
• | Liquidity and Capital Resources |
• | Trends and Matters Impacting Operating Results |
• | Results of Operations |
• | Non-GAAP Financial Measures and Key Performance Indicators |
• | Off-balance Sheet Arrangements |
• | Contractual Obligations |
• | Application of Critical Accounting Policies to Accounting Estimates |
(Dollars in millions) | Health System Affiliation | Date Acquired | Purchase Price | Mortgage Notes Payable Assumed | Square Footage | Hospital Campus Location | |||||||||||
Seattle, Washington | UW Medicine | 3/31/16 | $ | 38.3 | $ | — | 69,712 | Adjacent | |||||||||
Seattle, Washington | UW Medicine | 4/29/16 | 21.6 | — | 46,637 | On | |||||||||||
Los Angeles, California | HCA | 5/13/16 | 20.0 | (13.2 | ) | 63,012 | On | ||||||||||
Seattle, Washington | UW Medicine | 9/12/16 | 53.1 | — | 87,462 | On | |||||||||||
Washington, D.C. | Inova Health System | 9/26/16 | 45.2 | — | 103,783 | On | |||||||||||
Baltimore, Maryland (1) | University of Maryland | 10/11/16 | 36.2 | — | 113,631 | On | |||||||||||
Seattle, Washington | Providence Health | 10/17/16 | 9.8 | — | 29,753 | On | |||||||||||
Seattle, Washington | Providence Health | 12/21/16 | 5.1 | — | 20,740 | On | |||||||||||
St. Paul, Minnesota | HealthEast Care System | 12/21/16 | 12.6 | — | 48,281 | On | |||||||||||
$ | 241.9 | $ | (13.2 | ) | 583,011 |
(Dollars in millions) | 2016 | |||
1st generation tenant improvements & planned capital expenditures for acquisitions | $ | 16.1 | ||
2nd generation tenant improvements | 23.7 | |||
Capital expenditures | 17.1 | |||
Total capital funding | $ | 56.9 |
(Dollars in millions) | Date Disposed | Sales Price | Square Footage | Property Type (1) | |||||||
Kansas City, Kansas | 10/14/16 | $ | 15.1 | 70,908 | MOB | ||||||
Nashville, Tennessee | 10/28/16 | 8.8 | 45,274 | MOB | |||||||
Altoona, Pennsylvania | 12/20/16 | 21.5 | 64,032 | IRF | |||||||
Harrisburg, Pennsylvania | 12/20/16 | 24.2 | 79,836 | IRF | |||||||
Phoenix, Arizona | 12/20/16 | 22.3 | 51,903 | IRF | |||||||
Atlanta, Georgia | 12/22/16 | 2.8 | 8,749 | MOB | |||||||
Total dispositions | $ | 94.7 | 320,702 |
(1) | MOB = medical office building, IRF = inpatient rehabilitation hospital |
Balance as of December 31, 2016 | Weighted Years to Maturity | Effective Interest Rate | ||||||
Senior Notes due 2021, net of discount | $397,147 | 4.0 | 5.97 | % | ||||
Senior Notes due 2023, net of discount | 247,296 | 6.3 | 3.95 | % | ||||
Senior Notes due 2025, net of discount | 247,819 | 8.3 | 4.08 | % | ||||
Total Senior Notes Outstanding | $892,262 | 5.9 | 4.89 | % | ||||
Unsecured credit facility due 2020 | 107,000 | 3.6 | 1.82 | % | ||||
Unsecured term loan due 2019 | 149,491 | 2.2 | 1.77 | % | ||||
Mortgage notes payable, net | 115,617 | 6.8 | 5.14 | % | ||||
Total Outstanding Notes and Bonds Payable | $1,264,370 | 5.3 | 4.28 | % |
(Dollars in millions) | Transaction Date | Borrowing (Repayment) | Encumbered Square Footage | Contractual Interest Rate | ||||||||
Borrowings: | ||||||||||||
Los Angeles, California | 01/05/16 | $ | 11.5 | 90,607 | 3.6 | % | ||||||
Los Angeles, California (1) | 05/13/16 | 13.2 | 63,012 | 4.8 | % | |||||||
Total borrowings | $ | 24.7 | 153,619 | |||||||||
Repayments: | ||||||||||||
Charlotte, North Carolina | 2/11/16 | $ | (10.2 | ) | 90,633 | 5.9 | % | |||||
Richmond, Virginia | 4/29/16 | (7.3 | ) | 42,957 | 6.0 | % | ||||||
Seattle, Washington | 9/1/16 | ` | (15.7 | ) | 70,623 | 6.0 | % | |||||
Nashville, Tennessee | 10/18/16 | (0.1 | ) | 45,274 | 7.6 | % | ||||||
Total repayments | $ | (33.3 | ) | 249,487 |
(1) | Assumed upon acquisition. |
Quarter | Quarterly Dividend | Date of Declaration | Date of Record | Date Paid/*Payable | ||||||
4th Quarter 2015 | $ | 0.30 | February 2, 2016 | February 18, 2016 | February 29, 2016 | |||||
1st Quarter 2016 | $ | 0.30 | May 3, 2016 | May 16, 2016 | May 31, 2016 | |||||
2nd Quarter 2016 | $ | 0.30 | August 2, 2016 | August 17, 2016 | August 31, 2016 | |||||
3rd Quarter 2016 | $ | 0.30 | November 1, 2016 | November 16, 2016 | November 30, 2016 | |||||
4th Quarter 2016 | $ | 0.30 | January 31, 2017 | February 14, 2017 | * February 28, 2017 |
Gross Real Estate Investment as of December 31, 2016 | |||||||||||||||
Year Exercisable | Number of Properties | Fair Market Value Method (1) | Non Fair Market Value Method (2) | Total | |||||||||||
Current | 6 | $ | 124,668 | $ | — | $ | 124,668 | ||||||||
2017 | 6 | — | 49,039 | 49,039 | |||||||||||
2018 | — | — | — | — | |||||||||||
2019 | 2 | 41,521 | — | 41,521 | |||||||||||
2020 | — | — | — | — | |||||||||||
2021 | 1 | — | 14,984 | 14,984 | |||||||||||
2022 | 1 | 19,356 | — | 19,356 | |||||||||||
2023 | — | — | — | — | |||||||||||
2024 | — | — | — | — | |||||||||||
2025 | 5 | 18,883 | 221,929 | 240,812 | |||||||||||
2026 | — | — | — | ||||||||||||
2027 and thereafter | 3 | 92,649 | — | 92,649 | |||||||||||
Total | 24 | $ | 297,077 | $ | 285,952 | $ | 583,029 |
As of December 31, 2016 | ||
Annual increase | ||
CPI | 11.6 | % |
Fixed | 74.5 | % |
Non-annual increase | ||
CPI | 2.5 | % |
Fixed | 5.4 | % |
No increase | ||
Term < 1 year | 3.6 | % |
Term > 1 year | 2.5 | % |
Change | ||||||||||||||
(Dollars in thousands) | 2016 | 2015 | $ | % | ||||||||||
Property operating | $ | 336,409 | $ | 306,550 | $ | 29,859 | 9.7 | % | ||||||
Single-tenant net lease | 63,871 | 67,238 | (3,367 | ) | (5.0 | )% | ||||||||
Straight-line rent | 7,201 | 9,545 | (2,344 | ) | (24.6 | )% | ||||||||
Total Rental income | $ | 407,481 | $ | 383,333 | $ | 24,148 | 6.3 | % |
• | Acquisitions in 2015 and 2016 contributed $19.3 million. |
• | Net leasing activity including contractual rent increases and renewals contributed $13.4 million. |
• | Dispositions in 2015 accounted for a decrease of $2.9 million. |
• | Contractual rent increases contributed $0.6 million. |
• | Reduction in lease revenue of $0.6 million upon expiration and execution of new leases and reserves (see Trends and Matters Impacting Operating Results for additional information). |
• | Dispositions in 2015 and 2016 accounted for a decrease of $3.3 million. |
• | Acquisitions in 2015 and 2016 contributed $1.1 million. |
• | Dispositions in 2015 and 2016 caused a decrease of $0.4 million. |
• | The effect of prior year rent abatements that expired and net leasing activity caused a decrease of $3.0 million. |
• | Acquisitions in 2015 and 2016 accounted for an increase of $7.5 million. |
• | Dispositions in 2015 and 2016 accounted for a decrease of $2.3 million. |
• | The Company experienced overall increases in the following: |
◦ | maintenance and repair expense of $0.4 million; |
◦ | portfolio property taxes of $0.4 million; |
◦ | leasing commission and legal fee expense of $0.2 million; |
◦ | compensation-related expense of $0.7 million; and |
◦ | janitorial expense of $0.2 million. |
• | The Company experienced an overall decrease in utility expense of $0.8 million. |
• | Increase in performance-based compensation expense totaling $5.1 million, including $1.5 million of non-cash stock-based award amortization. |
• | Increase in expenses related to potential acquisitions and developments of $2.2 million. |
• | Other net increases, including telecommunication expense and compensation-related expense, of $1.6 million. |
• | Properties acquired in 2015 and 2016 and developments completed and commencing operations contributed a combined increase of $6.6 million. |
• | Various building and tenant improvement expenditures caused an increases of $6.9 million. |
• | Dispositions in 2015 caused a decrease of $2.6 million. |
• | Assets that became fully depreciated resulted in a decrease of $0.9 million. |
(Dollars in thousands) | 2016 | 2015 | Change | Percentage Change | ||||||||||
Contractual interest | $ | 55,666 | $ | 62,215 | $ | (6,549 | ) | (10.5 | )% | |||||
Net discount/premium accretion | (45 | ) | 376 | (421 | ) | (112.0 | %) | |||||||
Deferred financing costs amortization | 2,820 | 3,067 | (247 | ) | (8.1 | %) | ||||||||
Amortization of interest rate swap settlement | 168 | 115 | 53 | 46.1 | % | |||||||||
Interest cost capitalization | (1,258 | ) | (239 | ) | (1,019 | ) | 426.4 | % | ||||||
Total interest expense | $ | 57,351 | $ | 65,534 | $ | (8,183 | ) | (12.5 | )% |
• | The Unsecured Credit Facility and Unsecured Term Loan due 2019 accounted for a net decrease of $1.0 million. |
• | Unsecured senior notes due 2025 in an aggregate amount of $250.0 million (the "Senior Notes due 2025") were issued in the second quarter of 2015 and accounted for an increase of $3.0 million. |
• | The unsecured senior notes due 2017 (the "Senior Notes due 2017") were repaid in the second quarter of 2015 and accounted for a decrease of $7.3 million. |
• | Mortgage notes assumed upon acquisition of real properties and mortgage notes refinanced accounted for an increase of $1.7 million, and mortgage notes repayments accounted for a decrease of $3.1 million. |
• | Scheduled monthly interest payments related to the Company's mortgage notes payable increased $0.2 million. |
Change | ||||||||||||||
(Dollars in thousands) | 2015 | 2014 | $ | % | ||||||||||
Property operating | $ | 306,550 | $ | 285,304 | $ | 21,246 | 7.4 | % | ||||||
Single-tenant net lease | 67,238 | 65,252 | 1,986 | 3.0 | % | |||||||||
Straight-line rent | 9,545 | 10,969 | (1,424 | ) | (13.0 | )% | ||||||||
Total Rental income | $ | 383,333 | $ | 361,525 | $ | 21,808 | 6.0 | % |
• | Acquisitions in 2014 and 2015 contributed $13.6 million. |
• | Net leasing activity including contractual rent increases and renewals contributed $9.4 million. |
• | Conversion from single-tenant net lease caused an increase of $0.9 million. |
• | Conversion to single-tenant net lease caused a decrease of $1.3 million. |
• | Dispositions in 2015 and 2016 caused a decrease of $1.4 million. |
• | Acquisitions in 2014 and 2015 contributed $2.8 million. |
• | New leasing activity including contractual rent increases contributed $1.8 million. |
• | Conversion from property operating income caused an increase of $1.8 million. |
• | Conversion to property operating income caused a decrease of $1.3 million. |
• | Dispositions in 2015 accounted for a decrease of $3.1 million. |
• | Acquisitions in 2014 and 2015 contributed $0.7 million. |
• | New leasing activity including contractual rent increases and the effects of current year rent abatements contributed $0.3 million. |
• | The effects of prior year rent abatements that expired caused a decrease of $2.4 million. |
• | Acquisition in 2014 of a property in Oklahoma affiliated with Mercy Health previously funded under a construction mortgage note receivable resulted in a decrease of $2.4 million. |
• | The Company's 2014 receipt of a deed in lieu of foreclosure related to a mortgage note receivable on a property in Iowa resulted in a decrease of $1.0 million. |
• | Acquisitions in 2014 and 2015 accounted for an increase of $4.9 million. |
• | Dispositions in 2015 accounted for a decrease of $0.7 million. |
• | The Company experienced an overall increase in portfolio property taxes of $2.5 million, leasing commission and legal fee expense of $0.7 million and janitorial expense of $0.2 million. |
• | The Company experienced an overall decrease in maintenance and repair of approximately $0.7 million and utilities expense of $0.8 million. |
• | Increase in performance-based compensation expense totaling $3.4 million, including $1.7 million of non-cash stock-based award amortization. |
• | Increase in pension expense of $0.4 million. |
• | Increase in expenses related to potential acquisitions and developments of $0.5 million. |
• | Decrease in expenses related to state income taxes of $0.2 million. |
(Dollars in thousands) | 2015 | 2014 | Change | Percentage Change | ||||||||||
Contractual interest | $ | 62,215 | $ | 68,327 | $ | (6,112 | ) | (8.9 | )% | |||||
Net discount/premium accretion | 376 | 954 | (578 | ) | (60.6 | )% | ||||||||
Deferred financing costs amortization | 3,067 | 3,132 | (65 | ) | (2.1 | )% | ||||||||
Amortization of interest rate swap settlement | 115 | — | 115 | — | % | |||||||||
Interest cost capitalization | (239 | ) | — | (239 | ) | — | % | |||||||
Total interest expense | $ | 65,534 | $ | 72,413 | $ | (6,879 | ) | (9.5 | )% |
• | The Unsecured Credit Facility and Unsecured Term Loan due 2019 accounted for a net increase of $0.9 million. |
• | Senior Notes due 2025 were issued in the second quarter of 2015 and accounted for an increase of $6.6 million. |
• | Senior Notes due 2017 were repaid in the second quarter of 2015 and accounted for a decrease of $12.2 million. |
• | Mortgage notes assumed upon acquisition of real properties accounted for an increase of $1.2 million, and mortgage notes repayments accounted for a decrease of $2.4 million. |
• | Scheduled monthly interest payments related to the Company's mortgage notes payable decreased $0.2 million. |
Year Ended December 31, | |||||||||||
(Amounts in thousands, except per share data) | 2016 | 2015 | 2014 | ||||||||
Net income attributable to common stockholders | $ | 85,571 | $ | 69,436 | $ | 31,887 | |||||
Gain on sales of real estate properties | (41,044 | ) | (67,172 | ) | (9,283 | ) | |||||
Impairments | 121 | 4,325 | 12,029 | ||||||||
Real estate depreciation and amortization | 129,772 | 117,982 | 111,860 | ||||||||
Total adjustments | 88,849 | 55,135 | 114,606 | ||||||||
Funds from Operations Attributable to Common Stockholders | $ | 174,420 | $ | 124,571 | $ | 146,493 | |||||
Acquisition costs | 3,414 | 1,394 | 708 | ||||||||
Write-off of deferred financing costs upon amendment of line of credit facility | 81 | — | — | ||||||||
Pension termination | 4 | 5,260 | — | ||||||||
Loss on extinguishment of debt | — | 27,998 | — | ||||||||
Impairment of internally-developed software | — | 654 | — | ||||||||
Severance expense | — | 141 | — | ||||||||
Security deposit recognized upon sale | — | — | (407 | ) | |||||||
Reversal of restricted stock amortization upon director / officer resignation | — | (40 | ) | (560 | ) | ||||||
Revaluation of awards upon retirement | 89 | — | — | ||||||||
Refund of prior year overpayment of certain operating expenses | — | — | (1,919 | ) | |||||||
Normalized Funds from Operations Attributable to Common Stockholders | $ | 178,008 | $ | 159,978 | $ | 144,315 | |||||
Non-real estate depreciation and amortization | 5,475 | 5,830 | 4,190 | ||||||||
Provision for bad debt, net | (21 | ) | (194 | ) | 34 | ||||||
Straight-line rent receivable, net | (7,134 | ) | (8,829 | ) | (10,329 | ) | |||||
Stock-based compensation | 7,509 | 6,069 | 5,011 | ||||||||
Provision for deferred post-retirement benefits | — | 385 | 30 | ||||||||
Non-cash items included in cash flows from operating activities | 5,829 | 3,261 | (1,064 | ) | |||||||
2nd Generation TI | (23,692 | ) | (12,068 | ) | (18,551 | ) | |||||
Leasing commissions paid | (5,210 | ) | (7,504 | ) | (7,001 | ) | |||||
Capital additions | (17,122 | ) | (16,242 | ) | (12,591 | ) | |||||
Funds Available for Distribution | $ | 137,813 | $ | 127,425 | $ | 105,108 | |||||
Funds from Operations per Common Share - Diluted | $ | 1.59 | $ | 1.25 | $ | 1.51 | |||||
Normalized Funds from Operations per Common Share - Diluted | $ | 1.63 | $ | 1.60 | $ | 1.49 | |||||
Weighted average common shares outstanding - Diluted | 109,387 | 99,880 | 96,759 |
Same Store NOI for the | ||||||||||||||
Year Ended December 31, | ||||||||||||||
(Dollars in thousands) | Number of Properties (1) | Gross Investment at December 31, 2016 | 2016 | 2015 | ||||||||||
Multi-tenant Properties | 139 | $ | 2,438,564 | $ | 173,905 | $ | 162,736 | |||||||
Single-tenant Net Lease Properties | 30 | 617,908 | 58,582 | 58,741 | ||||||||||
Total | 169 | $ | 3,056,472 | $ | 232,487 | $ | 221,477 |
(1) | Properties are based on the same store definition included below and exclude assets classified as held for sale. |
• | Properties having less than 60% occupancy that is expected to last at least two quarters; |
• | Properties that experience a loss of occupancy over 30% in a single quarter; |
• | Properties with negative net operating income that is expected to last at least two quarters; or |
• | Condemnation. |
Reconciliation of Same Store NOI: | |||||||
Year Ended December 31, | |||||||
(Dollars in thousands) | 2016 | 2015 | |||||
Net income | $ | 85,571 | $ | 69,436 | |||
Loss (income) from discontinued operations | 185 | (10,600 | ) | ||||
Income from continuing operations | 85,756 | 58,836 | |||||
General and administrative | 35,805 | 26,925 | |||||
Depreciation | 116,483 | 106,530 | |||||
Amortization | 11,207 | 10,084 | |||||
Bad debts, net of recoveries | (21 | ) | (193 | ) | |||
Gain on sales of real estate properties | (41,038 | ) | (56,602 | ) | |||
Interest expense | 57,351 | 65,534 | |||||
Loss on extinguishment of debt | — | 27,998 | |||||
Pension termination | 4 | 5,260 | |||||
Impairment of real estate assets | — | 3,639 | |||||
Impairment of internally-developed software | — | 654 | |||||
Interest and other income, net | (375 | ) | (389 | ) | |||
Mortgage interest | — | (91 | ) | ||||
Straight-line rent (component of Rental income) | (7,201 | ) | (9,545 | ) | |||
Interest and other income (a) | (1,091 | ) | (1,157 | ) | |||
NOI | 256,880 | 237,483 | |||||
NOI not included in same store | (24,393 | ) | (16,006 | ) | |||
Same store NOI | $ | 232,487 | $ | 221,477 | |||
(a) Other operating income reconciliation | |||||||
Other operating | $ | 4,149 | $ | 5,047 | |||
Less: Rental lease guaranty | (3,058 | ) | (3,890 | ) | |||
Interest and other income | $ | 1,091 | $ | 1,157 |
Reconciliation of Same Store Property Count: | ||
Property Count as of December 31, 2016 | ||
Same store properties | 169 | |
Acquisitions | 18 | |
Development Completions | 1 | |
Reposition | 14 | |
Total owned real estate properties | 202 |
Payments Due by Period | |||||||||||||||||||
(Dollars in thousands) | Total | Less than 1 Year | 1 -3 Years | 3 - 5 Years | More than 5 Years | ||||||||||||||
Long-term debt obligations, including interest (1) | $ | 1,554,775 | $ | 52,690 | $ | 276,293 | $ | 619,815 | $ | 605,977 | |||||||||
Operating lease commitments (2) | 390,065 | 5,719 | 11,778 | 10,902 | 361,666 | ||||||||||||||
Construction in progress (3) | 16,130 | 12,885 | 3,245 | — | — | ||||||||||||||
Tenant improvements (4) | 19,088 | 19,088 | — | — | — | ||||||||||||||
Total contractual obligations | $ | 1,980,058 | $ | 90,382 | $ | 291,316 | $ | 630,717 | $ | 967,643 |
(1) | The amounts shown include estimated interest on total debt other than the Unsecured Credit Facility and Unsecured Term Loan due 2019, whose balance and interest rate may fluctuate from day to day. Excluded from the table above are the discounts on the Company's outstanding senior notes of approximately $3.1 million, net premiums totaling approximately $1.1 million on 14 mortgage notes payable, and deferred financing costs totaling approximately $5.1 million which are included in notes and bonds payable on the Company’s Consolidated Balance Sheet as of December 31, 2016. The Company’s long-term debt principal obligations are presented in more detail in the table below. |
(In millions) | Principal Balance at Dec. 31, 2016 | Principal Balance at Dec. 31, 2015 | Maturity Date | Contractual Interest Rates at December 31, 2016 | Principal Payments | Interest Payments | ||||||||||
Unsecured Credit Facility | $ | 107.0 | $ | 206.0 | 7/20 | LIBOR + 1.00% | At maturity | Quarterly | ||||||||
Unsecured Term Loan due 2019 | 150.0 | 200.0 | 2/19 | LIBOR + 1.20% | At maturity | Quarterly | ||||||||||
Senior Notes due 2021 | 400.0 | 400.0 | 1/21 | 5.75 | % | At maturity | Semi-Annual | |||||||||
Senior Notes due 2023 | 250.0 | 250.0 | 4/23 | 3.75 | % | At maturity | Semi-Annual | |||||||||
Senior Notes due 2025 | 250.0 | 250.0 | 5/25 | 3.88 | % | At maturity | Semi-Annual | |||||||||
Mortgage notes payable | 114.9 | 128.2 | 5/17-5/40 | 3.60%-6.88% | Monthly | Monthly | ||||||||||
$ | 1,271.9 | $ | 1,434.2 |
(2) | Includes primarily the corporate office and ground leases, with expiration dates through 2115, related to various real estate investments for which the Company is currently making payments. |
(3) | Includes cash flow projections related to the construction of one building. This amount includes $1.3 million of invoices that were accrued and included in construction in progress on the Company's Consolidated Balance Sheet as of December 31, 2016. |
(4) | The Company has remaining tenant improvement allowances of approximately $19.1 million. The Company expects to fund these improvements in 2017. |
• | Management, having the authority to approve the action, commits to a plan to sell the property or disposal group; |
• | The property or disposal group is available for immediate sale (i.e., a seller currently has the intent and ability to transfer the property or disposal group to a buyer) in its present condition, subject only to conditions that are usual and customary for sales of such properties or disposal groups; |
• | An active program to locate a buyer and other actions required to complete the plan to sell have been initiated; |
• | The sale of the property or disposal group is probable (i.e., likely to occur) and the transfer is expected to qualify for recognition as a completed sale within one year, with certain exceptions; |
• | The property or disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and |
• | Actions necessary to complete the plan indicate that it is unlikely significant changes to the plan will be made or that the plan will be withdrawn. |
• | type of contractual arrangement under which the receivable was recorded, e.g., a mortgage note, a triple net lease, a gross lease, a property operating agreement or some other type of agreement; |
• | tenant’s or debtor’s reason for slow payment; |
• | industry influences and healthcare segment under which the tenant or debtor operates; |
• | evidence of willingness and ability of the tenant or debtor to pay the receivable; |
• | credit-worthiness of the tenant or debtor; |
• | collateral, security deposit, letters of credit or other monies held as security; |
• | tenant’s or debtor’s historical payment pattern; |
• | other contractual agreements between the tenant or debtor and the Company; |
• | relationship between the tenant or debtor and the Company; |
• | state in which the tenant or debtor operates; and |
• | existence of a guarantor and the willingness and ability of the guarantor to pay the receivable. |
Impact on Earnings and Cash Flows | |||||||||||||||
(Dollars in thousands) | Outstanding Principal Balance as of December 31, 2016 | Calculated Annual Interest | Assuming 10% Increase in Market Interest Rates | Assuming 10% Decrease in Market Interest Rates | |||||||||||
Variable Rate Debt: | |||||||||||||||
Unsecured Credit Facility | $ | 107,000 | $ | 1,896 | $ | (83 | ) | $ | 83 | ||||||
Unsecured Term Loan due 2019 | 150,000 | 2,958 | (116 | ) | 116 | ||||||||||
$ | 257,000 | $ | 4,854 | $ | (199 | ) | $ | 199 |
Fair Value | |||||||||||||||||||
(Dollars in thousands) | Carrying Value as of December 31, 2016 | December 31, 2016 | Assuming 10% Increase in Market Interest Rates | Assuming 10% Decrease in Market Interest Rates | December 31, 2015 (1) | ||||||||||||||
Fixed Rate Debt: | |||||||||||||||||||
Senior Notes due 2021, net of discount (2) | 397,147 | 414,837 | 408,115 | 421,617 | 422,287 | ||||||||||||||
Senior Notes due 2023, net of discount (2) | 247,296 | 238,150 | 232,337 | 244,178 | 239,835 | ||||||||||||||
Senior Notes due 2025, net of discount (2) | 247,819 | 239,563 | 232,343 | 247,124 | 242,536 | ||||||||||||||
Mortgage Notes Payable (2) | 115,617 | 115,504 | 113,706 | 117,356 | 129,124 | ||||||||||||||
$ | 1,007,879 | $ | 1,008,054 | $ | 986,501 | $ | 1,030,275 | $ | 1,033,782 |
(1) | Fair values as of December 31, 2015 represent fair values of obligations or receivables that were outstanding as of that date, and do not reflect the effect of any subsequent changes in principal balances and/or additions or extinguishments of instruments. |
(2) | Level 3 - Fair value derived from valuation techniques in which one or more significant inputs or significant drivers are unobservable. |
December 31, | |||||||
2016 | 2015 | ||||||
ASSETS | |||||||
Real estate properties: | |||||||
Land | $ | 199,672 | $ | 198,585 | |||
Buildings, improvements and lease intangibles | 3,386,480 | 3,135,893 | |||||
Personal property | 10,291 | 9,954 | |||||
Construction in progress | 11,655 | 19,024 | |||||
Land held for development | 20,123 | 17,452 | |||||
3,628,221 | 3,380,908 | ||||||
Less accumulated depreciation | (840,839 | ) | (761,926 | ) | |||
Total real estate properties, net | 2,787,382 | 2,618,982 | |||||
Cash and cash equivalents | 5,409 | 4,102 | |||||
Restricted cash | 49,098 | — | |||||
Assets held for sale and discontinued operations, net | 3,092 | 724 | |||||
Other assets, net | 195,666 | 186,416 | |||||
Total assets | $ | 3,040,647 | $ | 2,810,224 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Liabilities: | |||||||
Notes and bonds payable | $ | 1,264,370 | $ | 1,424,992 | |||
Accounts payable and accrued liabilities | 78,266 | 75,489 | |||||
Liabilities of discontinued operations | 614 | 33 | |||||
Other liabilities | 43,983 | 66,963 | |||||
Total liabilities | 1,387,233 | 1,567,477 | |||||
Commitments and contingencies | |||||||
Stockholders' Equity: | |||||||
Preferred stock, $.01 par value; 50,000 shares authorized; none issued and outstanding | — | — | |||||
Common stock, $.01 par value; 150,000 shares authorized; 116,417 and 101,517 shares issued and outstanding at December 31, 2016 and 2015, respectively. | 1,164 | 1,015 | |||||
Additional paid-in capital | 2,917,914 | 2,461,376 | |||||
Accumulated other comprehensive loss | (1,401 | ) | (1,569 | ) | |||
Cumulative net income attributable to common stockholders | 995,256 | 909,685 | |||||
Cumulative dividends | (2,259,519 | ) | (2,127,760 | ) | |||
Total stockholders’ equity | 1,653,414 | 1,242,747 | |||||
Total liabilities and stockholders' equity | $ | 3,040,647 | $ | 2,810,224 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
REVENUES | |||||||||||
Rental income | $ | 407,481 | $ | 383,333 | $ | 361,525 | |||||
Mortgage interest | — | 91 | 3,665 | ||||||||
Other operating | 4,149 | 5,047 | 5,665 | ||||||||
411,630 | 388,471 | 370,855 | |||||||||
EXPENSES | |||||||||||
Property operating | 146,458 | 140,195 | 134,057 | ||||||||
General and administrative | 35,805 | 26,925 | 22,808 | ||||||||
Depreciation | 116,483 | 106,530 | 99,384 | ||||||||
Amortization | 11,207 | 10,084 | 10,820 | ||||||||
Bad debt, net of recoveries | (21 | ) | (193 | ) | 31 | ||||||
309,932 | 283,541 | 267,100 | |||||||||
OTHER INCOME (EXPENSE) | |||||||||||
Gain on sales of real estate assets | 41,038 | 56,602 | — | ||||||||
Interest expense | (57,351 | ) | (65,534 | ) | (72,413 | ) | |||||
Loss on extinguishment of debt | — | (27,998 | ) | — | |||||||
Pension termination | (4 | ) | (5,260 | ) | — | ||||||
Impairment of real estate assets | — | (3,639 | ) | — | |||||||
Impairment of internally-developed software | — | (654 | ) | — | |||||||
Interest and other income, net | 375 | 389 | 2,637 | ||||||||
(15,942 | ) | (46,094 | ) | (69,776 | ) | ||||||
INCOME FROM CONTINUING OPERATIONS | 85,756 | 58,836 | 33,979 | ||||||||
DISCONTINUED OPERATIONS | |||||||||||
Income (loss) from discontinued operations | (71 | ) | 715 | 967 | |||||||
Impairments of real estate assets | (121 | ) | (686 | ) | (12,029 | ) | |||||
Gain on sales of real estate properties | 7 | 10,571 | 9,283 | ||||||||
INCOME (LOSS) FROM DISCONTINUED OPERATIONS | (185 | ) | 10,600 | (1,779 | ) | ||||||
NET INCOME | 85,571 | 69,436 | 32,200 | ||||||||
Less: Net income attributable to noncontrolling interests | — | — | (313 | ) | |||||||
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | 85,571 | $ | 69,436 | $ | 31,887 | |||||
BASIC EARNINGS (LOSS) PER COMMON SHARE: | |||||||||||
Income from continuing operations | $ | 0.79 | $ | 0.59 | $ | 0.35 | |||||
Discontinued operations | 0.00 | 0.11 | (0.02 | ) | |||||||
Net income attributable to common stockholders | $ | 0.79 | $ | 0.70 | $ | 0.33 | |||||
DILUTED EARNINGS (LOSS) PER COMMON SHARE: | |||||||||||
Income from continuing operations | $ | 0.78 | $ | 0.59 | $ | 0.35 | |||||
Discontinued operations | 0.00 | 0.11 | (0.02 | ) | |||||||
Net income attributable to common stockholders | $ | 0.78 | $ | 0.70 | $ | 0.33 | |||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC | 108,572 | 99,171 | 95,279 | ||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED | 109,387 | 99,880 | 96,759 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
NET INCOME | $ | 85,571 | $ | 69,436 | $ | 32,200 | |||||
Other comprehensive income (loss): | |||||||||||
Defined benefit plans: | |||||||||||
Reclassification adjustment for losses included in net income (Pension termination) | — | 2,519 | — | ||||||||
Net loss arising during the period | — | — | (2,570 | ) | |||||||
Forward starting interest rate swaps: | |||||||||||
Reclassification adjustment for losses included in net income (Interest expense) | 168 | 115 | — | ||||||||
Losses on settlement of swaps arising during the period | — | (1,684 | ) | — | |||||||
Other comprehensive income (loss) | 168 | 950 | (2,570 | ) | |||||||
COMPREHENSIVE INCOME | 85,739 | 70,386 | 29,630 | ||||||||
Less: Comprehensive income attributable to noncontrolling interests | — | — | (313 | ) | |||||||
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | 85,739 | $ | 70,386 | $ | 29,317 |
Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Cumulative Net Income | Cumulative Dividends | Total Stockholders’ Equity | Non- controlling Interests | Total Equity | |||||||||||||||||||||||||||
Balance at December 31, 2013 | $ | — | $ | 959 | $ | 2,325,228 | $ | 51 | $ | 808,362 | $ | (1,891,123 | ) | $ | 1,243,477 | $ | 1,809 | $ | 1,245,286 | ||||||||||||||||
Issuance of stock, net of costs | — | 31 | 76,800 | — | — | — | 76,831 | — | 76,831 | ||||||||||||||||||||||||||
Common stock redemption | — | (4 | ) | (10,070 | ) | — | — | — | (10,074 | ) | — | (10,074 | ) | ||||||||||||||||||||||
Stock-based compensation | — | 2 | 4,449 | — | — | — | 4,451 | — | 4,451 | ||||||||||||||||||||||||||
Net income | — | — | — | — | 31,887 | — | 31,887 | 313 | 32,200 | ||||||||||||||||||||||||||
Defined benefit pension plan net gain | — | — | — | (2,570 | ) | — | — | (2,570 | ) | — | (2,570 | ) | |||||||||||||||||||||||
Dividends to common stockholders ($1.20 per share) | — | — | — | — | — | (116,371 | ) | (116,371 | ) | — | (116,371 | ) | |||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | — | (510 | ) | (510 | ) | ||||||||||||||||||||||||
Purchase of noncontrolling interest in consolidated joint ventures | — | — | (6,577 | ) | — | — | — | (6,577 | ) | (1,612 | ) | (8,189 | ) | ||||||||||||||||||||||
Balance at December 31, 2014 | — | 988 | 2,389,830 | (2,519 | ) | 840,249 | (2,007,494 | ) | 1,221,054 | — | 1,221,054 | ||||||||||||||||||||||||
Issuance of stock, net of costs | — | 25 | 66,886 | — | — | — | 66,911 | — | 66,911 | ||||||||||||||||||||||||||
Common stock redemption | — | — | (1,367 | ) | — | — | — | (1,367 | ) | — | (1,367 | ) | |||||||||||||||||||||||
Stock-based compensation | — | 2 | 6,027 | — | — | — | 6,029 | — | 6,029 | ||||||||||||||||||||||||||
Net income | — | — | — | — | 69,436 | — | 69,436 | — | 69,436 | ||||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss arising from loss on defined benefit pension plan | — | — | — | 2,519 | — | — | 2,519 | — | 2,519 | ||||||||||||||||||||||||||
Loss on forward starting interest rate swaps | — | — | — | (1,569 | ) | — | — | (1,569 | ) | — | (1,569 | ) | |||||||||||||||||||||||
Dividends to common stockholders ($1.20 per share) | — | — | — | — | — | (120,266 | ) | (120,266 | ) | — | (120,266 | ) | |||||||||||||||||||||||
Balance at December 31, 2015 | — | 1,015 | 2,461,376 | (1,569 | ) | 909,685 | (2,127,760 | ) | 1,242,747 | — | 1,242,747 | ||||||||||||||||||||||||
Issuance of stock, net of costs | — | 140 | 450,409 | — | — | — | 450,549 | — | 450,549 | ||||||||||||||||||||||||||
Common stock redemption | — | — | (1,460 | ) | — | — | — | (1,460 | ) | — | (1,460 | ) | |||||||||||||||||||||||
Stock-based compensation | — | 9 | 7,589 | — | — | — | 7,598 | — | 7,598 | ||||||||||||||||||||||||||
Net income | — | — | — | — | 85,571 | — | 85,571 | — | 85,571 | ||||||||||||||||||||||||||
Loss on forward starting interest rate swaps | — | — | — | 168 | — | — | 168 | — | 168 | ||||||||||||||||||||||||||
Dividends to common stockholders ($1.20 per share) | — | — | — | — | — | (131,759 | ) | (131,759 | ) | — | (131,759 | ) | |||||||||||||||||||||||
Balance at December 31, 2016 | $ | — | $ | 1,164 | $ | 2,917,914 | $ | (1,401 | ) | $ | 995,256 | $ | (2,259,519 | ) | $ | 1,653,414 | $ | — | $ | 1,653,414 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
OPERATING ACTIVITIES | |||||||||||
Net income | $ | 85,571 | $ | 69,436 | $ | 32,200 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 131,041 | 120,363 | 116,049 | ||||||||
Stock-based compensation | 7,598 | 6,029 | 4,451 | ||||||||
Amortization of straight-line rent receivable | (7,201 | ) | (9,600 | ) | (11,050 | ) | |||||
Amortization of straight-line rent liability | 67 | 771 | 721 | ||||||||
Gain on sales of real estate assets | (41,044 | ) | (67,229 | ) | (9,283 | ) | |||||
Loss on extinguishment of debt | — | 27,998 | — | ||||||||
Impairment of real estate assets | 121 | 4,325 | 12,029 | ||||||||
Pension termination | — | 5,260 | — | ||||||||
Impairment of internally-developed software | — | 654 | — | ||||||||
Provision for bad debts, net | (21 | ) | (194 | ) | 34 | ||||||
Changes in operating assets and liabilities: | |||||||||||
Other assets | (1,332 | ) | (2,932 | ) | (16,842 | ) | |||||
Accounts payable and accrued liabilities | 449 | 4,190 | (1,914 | ) | |||||||
Other liabilities | (23,977 | ) | 1,304 | (1,025 | ) | ||||||
Net cash provided by operating activities | 151,272 | 160,375 | 125,370 | ||||||||
INVESTING ACTIVITIES | |||||||||||
Acquisitions of real estate | (224,944 | ) | (154,858 | ) | (71,899 | ) | |||||
Development of real estate | (34,719 | ) | (17,354 | ) | — | ||||||
Additional long-lived assets | (71,433 | ) | (48,769 | ) | (70,670 | ) | |||||
Funding of mortgages and notes receivable | — | — | (1,244 | ) | |||||||
Proceeds from acquisition of real estate upon mortgage note receivable default | — | — | 204 | ||||||||
Proceeds from sales of real estate | 93,253 | 153,281 | 32,398 | ||||||||
Proceeds from mortgages and notes receivable repayments | 19 | 1,918 | 5,623 | ||||||||
Net cash used in investing activities | (237,824 | ) | (65,782 | ) | (105,588 | ) | |||||
FINANCING ACTIVITIES | |||||||||||
Net (repayments) borrowings on unsecured credit facility | (99,000 | ) | 121,000 | (153,000 | ) | ||||||
Borrowings (repayments) on term loan | (50,000 | ) | — | 200,000 | |||||||
Borrowings of mortgage notes and bonds payable | 11,500 | 249,793 | — | ||||||||
Repayments on notes and bonds payable | (37,910 | ) | (72,724 | ) | (12,357 | ) | |||||
Redemption of notes and bonds payable | — | (333,222 | ) | — | |||||||
Dividends paid | (131,759 | ) | (120,266 | ) | (116,371 | ) | |||||
Net proceeds from issuance of common stock | 450,503 | 66,942 | 76,856 | ||||||||
Common stock redemptions | (1,756 | ) | (1,367 | ) | (10,074 | ) | |||||
Settlement of swaps | — | (1,684 | ) | — | |||||||
Distributions to noncontrolling interest holders | — | — | (541 | ) | |||||||
Purchase of noncontrolling interest | — | — | (8,189 | ) | |||||||
Debt issuance and assumption costs | (4,621 | ) | (2,482 | ) | (1,258 | ) | |||||
Net cash provided by (used in) financing activities | 136,957 | (94,010 | ) | (24,934 | ) | ||||||
Increase (decrease) in cash, cash equivalents and restricted cash | 50,405 | 583 | (5,152 | ) | |||||||
Cash, cash equivalents and restricted cash at beginning of period | 4,102 | 3,519 | 8,671 | ||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 54,507 | $ | 4,102 | $ | 3,519 | |||||
Supplemental Cash Flow Information: | |||||||||||
Interest paid | $ | 55,878 | $ | 69,773 | $ | 68,173 | |||||
Mortgage notes payable assumed upon acquisition (adjusted to fair value) | $ | 13,951 | $ | 28,783 | $ | 19,636 | |||||
Invoices accrued for construction, tenant improvements and other capitalized costs | $ | 11,734 | $ | 10,431 | $ | 5,594 | |||||
Capitalized interest | $ | 1,258 | $ | 239 | $ | — | |||||
Elimination of construction mortgage note receivable upon acquisition real estate property | $ | — | $ | — | $ | 81,213 | |||||
Mortgage note receivable eliminated upon acquisition | $ | — | $ | — | $ | 39,973 | |||||
Company-financed real estate property sales | $ | — | $ | — | $ | 1,900 |
Land improvements | 15.0 to 38.1 years |
Buildings and improvements | 3.3 to 39.0 years |
Lease intangibles (including ground lease intangibles) | 1.9 to 99.0 years |
Personal property | 2.8 to 17.3 years |
• | Level 1 – quoted prices for identical instruments in active markets; |
• | Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and |
• | Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
(Dollars in thousands) | 12/31/2016 | 12/31/2015 | 12/31/2014 | |||||||||
Cash and cash equivalents | $ | 5,409 | $ | 4,102 | $ | 3,519 | ||||||
Restricted cash | 49,098 | — | — | |||||||||
Total cash, cash equivalents and restricted cash | $ | 54,507 | $ | 4,102 | $ | 3,519 |
Year Ended December 31, | |||||||||||
(Dollars in thousands) | 2016 | 2015 | 2014 | ||||||||
Property operating income | $ | 336,409 | $ | 306,550 | $ | 285,304 | |||||
Single-tenant net lease | 63,871 | 67,238 | 65,252 | ||||||||
Straight-line rent | 7,201 | 9,545 | 10,969 | ||||||||
Rental income | $ | 407,481 | $ | 383,333 | $ | 361,525 |
Year Ended December 31, | |||||||||||
(Dollars in thousands) | 2016 | 2015 | 2014 | ||||||||
Property lease guaranty revenue | $ | 3,058 | $ | 3,890 | $ | 4,430 | |||||
Interest income | 473 | 579 | 731 | ||||||||
Management fee income | 369 | 370 | 289 | ||||||||
Other | 249 | 208 | 215 | ||||||||
$ | 4,149 | $ | 5,047 | $ | 5,665 |
December 31, 2015 | ||||||||
(in thousands) | As Previously Reported | As Reclassified | ||||||
Other assets, net | $ | 192,918 | $ | 186,416 | ||||
Total assets | $ | 2,816,726 | $ | 2,810,224 | ||||
Notes and bonds payable | $ | 1,431,494 | $ | 1,424,992 | ||||
Total liabilities | $ | 1,573,979 | $ | 1,567,477 | ||||
Total liabilities and stockholders' equity | $ | 2,816,726 | $ | 2,810,224 |
• | Forfeitures - an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. |
• | Minimum statutory tax withholding requirements - the threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the applicable jurisdiction. |
• | Classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes - cash paid by an employer when directly withholding shares for tax-withholding purposes should be classified as a financing activity. |
(Dollars in thousands) | Number of Facilities | Land | Buildings, Improvements,and Lease Intangibles | Personal Property | Total | Accumulated Depreciation | ||||||||||||||||
Medical office/outpatient: | ||||||||||||||||||||||
Alabama | 4 | $ | 650 | $ | 43,912 | $ | 20 | $ | 44,582 | $ | (19,771 | ) | ||||||||||
Arizona | 7 | 1,330 | 62,289 | 443 | 64,062 | (16,082 | ) | |||||||||||||||
California | 12 | 37,072 | 201,860 | 325 | 239,257 | (71,152 | ) | |||||||||||||||
Colorado | 10 | 8,257 | 198,119 | 239 | 206,615 | (31,357 | ) | |||||||||||||||
District of Columbia | 2 | — | 31,564 | — | 31,564 | (11,293 | ) | |||||||||||||||
Florida | 7 | 6,873 | 71,558 | 112 | 78,543 | (37,988 | ) | |||||||||||||||
Hawaii | 3 | 8,327 | 131,207 | 160 | 139,694 | (25,869 | ) | |||||||||||||||
Illinois | 3 | 6,142 | 51,620 | 151 | 57,913 | (14,669 | ) | |||||||||||||||
Indiana | 4 | 3,299 | 118,219 | 40 | 121,558 | (24,216 | ) | |||||||||||||||
Iowa | 6 | 12,665 | 80,742 | 94 | 93,501 | (17,784 | ) | |||||||||||||||
Minnesota | 3 | 2,090 | 46,243 | — | 48,333 | (2,528 | ) | |||||||||||||||
Missouri | 3 | 3,797 | 28,796 | 7 | 32,600 | (16,810 | ) | |||||||||||||||
North Carolina | 16 | 5,096 | 158,488 | 95 | 163,679 | (49,158 | ) | |||||||||||||||
Oklahoma | 2 | 7,673 | 101,416 | — | 109,089 | (7,747 | ) | |||||||||||||||
Tennessee | 13 | 11,750 | 223,425 | 303 | 235,478 | (67,614 | ) | |||||||||||||||
Texas | 43 | 45,117 | 643,386 | 1,262 | 689,765 | (190,829 | ) | |||||||||||||||
Virginia | 14 | 3,334 | 227,296 | 139 | 230,769 | (47,309 | ) | |||||||||||||||
Washington | 17 | 17,437 | 406,980 | 314 | 424,731 | (42,848 | ) | |||||||||||||||
Other (8 states) | 13 | 2,357 | 151,672 | 106 | 154,135 | (40,028 | ) | |||||||||||||||
182 | 183,266 | 2,978,792 | 3,810 | 3,165,868 | (735,052 | ) | ||||||||||||||||
Inpatient: | ||||||||||||||||||||||
California | 1 | — | 12,688 | — | 12,688 | (7,281 | ) | |||||||||||||||
Colorado | 1 | 623 | 10,788 | — | 11,411 | (1,308 | ) | |||||||||||||||
Missouri | 1 | 1,989 | 109,304 | — | 111,293 | (9,198 | ) | |||||||||||||||
Pennsylvania | 2 | 1,126 | 39,585 | — | 40,711 | (22,826 | ) | |||||||||||||||
Texas | 5 | 9,507 | 158,176 | 265 | 167,948 | (34,905 | ) | |||||||||||||||
10 | 13,245 | 330,541 | 265 | 344,051 | (75,518 | ) | ||||||||||||||||
Other: | ||||||||||||||||||||||
Indiana | 1 | 96 | 3,662 | 32 | 3,790 | (2,708 | ) | |||||||||||||||
Iowa | 1 | — | 40,339 | 5 | 40,344 | (5,642 | ) | |||||||||||||||
Michigan | 5 | 193 | 12,728 | 183 | 13,104 | (9,173 | ) | |||||||||||||||
Tennessee | 1 | 253 | 7,213 | 409 | 7,875 | (2,625 | ) | |||||||||||||||
Texas | 1 | 1,480 | 3,872 | 2 | 5,354 | (64 | ) | |||||||||||||||
Virginia | 1 | 1,139 | 9,333 | 2 | 10,474 | (5,724 | ) | |||||||||||||||
10 | 3,161 | 77,147 | 633 | 80,941 | (25,936 | ) | ||||||||||||||||
Land Held for Development | — | 20,123 | — | — | 20,123 | (166 | ) | |||||||||||||||
Construction in Progress | — | — | 11,655 | — | 11,655 | — | ||||||||||||||||
Corporate Property | — | — | — | 5,583 | 5,583 | (4,167 | ) | |||||||||||||||
— | 20,123 | 11,655 | 5,583 | 37,361 | (4,333 | ) | ||||||||||||||||
Total real estate investments | 202 | $ | 219,795 | $ | 3,398,135 | $ | 10,291 | $ | 3,628,221 | $ | (840,839 | ) |
2017 | $ | 315,366 | |
2018 | 276,321 | ||
2019 | 231,077 | ||
2020 | 188,518 | ||
2021 | 154,470 | ||
2022 and thereafter | 603,045 | ||
$ | 1,768,797 |
(Dollars in millions) | Type (1) | Date Acquired | Purchase Price | Purchase Price Credits (2) | Mortgage Notes Payable Assumed (3) | Cash Consideration(4) | Real Estate | Other (5) | Square Footage (Unaudited) | |||||||||||||||||||||
Real estate acquisitions | ||||||||||||||||||||||||||||||
Seattle, Washington | MOB | 3/31/16 | $ | 38.3 | $ | (0.6 | ) | $ | — | $ | 37.7 | $ | 37.7 | $ | — | 69,712 | ||||||||||||||
Seattle, Washington | MOB | 4/29/16 | 21.6 | (2.8 | ) | — | 18.8 | 20.1 | (1.3 | ) | 46,637 | |||||||||||||||||||
Los Angeles, California | MOB | 5/13/16 | 20.0 | (0.3 | ) | (13.2 | ) | 6.5 | 20.4 | (0.7 | ) | 63,012 | ||||||||||||||||||
Seattle, Washington | MOB | 9/12/16 | 53.1 | (0.1 | ) | — | 53.0 | 54.6 | (1.6 | ) | 87,462 | |||||||||||||||||||
Washington, D.C. (6) | MOB | 9/26/16 | 45.2 | (0.1 | ) | — | 45.1 | 43.7 | 1.4 | 103,783 | ||||||||||||||||||||
Baltimore, Maryland (7) | MOB | 10/11/16 | 36.2 | 0.2 | — | 36.4 | 36.4 | — | 113,631 | |||||||||||||||||||||
Seattle, Washington | MOB | 10/17/16 | 9.8 | — | — | 9.8 | 9.9 | (0.1 | ) | 29,753 | ||||||||||||||||||||
Seattle, Washington | MOB | 12/21/16 | 5.1 | — | — | 5.1 | 5.2 | (0.1 | ) | 20,740 | ||||||||||||||||||||
St. Paul, Minnesota | MOB | 12/21/16 | 12.6 | (0.1 | ) | — | 12.5 | 11.3 | 1.2 | 48,281 | ||||||||||||||||||||
$ | 241.9 | $ | (3.8 | ) | $ | (13.2 | ) | $ | 224.9 | $ | 239.3 | $ | (1.2 | ) | 583,011 |
(1) | MOB = medical office building |
(2) | Includes tenant improvement and capital expenditure obligations assumed upon acquisition. |
(3) | The mortgage note payable assumed in the acquisition does not reflect the fair value adjustments totaling $0.8 million recorded by the Company upon acquisition (included in Other). |
(4) | Excludes prorations of revenue and expense due to/from seller at the time of the acquisition. |
(5) | Includes assets acquired, liabilities assumed, intangibles recognized at acquisition and fair value adjustments on debt assumed. |
(6) | A director of the Company serves as the President and Chief Executive Officer of the Inova Health System. As part of this transaction, the Company assumed a ground lease and tenant leases with Loudoun Hospital Center, an affiliate of Inova Health System. |
(7) | Includes two properties. |
Estimated Fair Value | Estimated Useful Life | |||||
(In millions) | (In years) | |||||
Building | $ | 216.8 | 20.0-35.0 | |||
Land | 9.7 | — | ||||
Intangibles: | ||||||
At-market lease intangibles | 12.8 | 2.7-10.3 | ||||
Above-market lease intangibles | 0.9 | 0.7-3.8 | ||||
Below-market lease intangibles | (0.4 | ) | 1.4-9.4 | |||
Above-market ground lease intangibles | (1.6 | ) | 99.0 | |||
Below-market ground lease intangibles | 2.0 | 36.8-99.0 | ||||
Total intangibles | 13.7 | |||||
Mortgage notes payable assumed, including fair value adjustments | (14.0 | ) | ||||
Other assets acquired | 0.5 | |||||
Accounts payable, accrued liabilities and other liabilities assumed | (1.8 | ) | ||||
Total cash paid | $ | 224.9 |
(Dollars in millions) | Type (1) | Date Acquired | Purchase Price | Purchase Price Adjustments/ (Credits) (2) | Mortgage Notes Payable Assumed (3) | Cash Consideration (4) | Real Estate | Other (5) | Square Footage | |||||||||||||||||||||
Real estate acquisitions | ||||||||||||||||||||||||||||||
San Jose, California | MOB | 1/15/15 | $ | 39.3 | $ | (0.2 | ) | $ | — | $ | 39.1 | $ | 39.2 | $ | (0.1 | ) | 110,679 | |||||||||||||
Seattle, Washington | MOB | 6/26/15 | 14.0 | (0.1 | ) | (9.5 | ) | 4.4 | 13.8 | 0.1 | 35,558 | |||||||||||||||||||
Seattle, Washington | MOB | 9/1/15 | 28.0 | (0.2 | ) | (9.4 | ) | 18.4 | 27.8 | — | 52,813 | |||||||||||||||||||
Denver, Colorado | MOB | 9/14/15 | 6.5 | (0.3 | ) | — | 6.2 | 6.3 | (0.1 | ) | 47,508 | |||||||||||||||||||
Tacoma, Washington | MOB | 10/23/15 | 8.8 | (1.3 | ) | — | 7.5 | 8.6 | (1.1 | ) | 33,169 | |||||||||||||||||||
Oakland, California | MOB | 11/3/15 | 47.0 | (3.4 | ) | — | 43.6 | 44.2 | (0.6 | ) | 99,942 | |||||||||||||||||||
Seattle, Washington | MOB | 11/18/15 | 27.6 | 0.1 | — | 27.7 | 27.6 | 0.1 | 60,437 | |||||||||||||||||||||
Minneapolis, Minnesota | MOB | 12/18/15 | 16.0 | 0.1 | (9.5 | ) | 6.6 | 16.0 | 0.1 | 64,143 | ||||||||||||||||||||
Total real estate acquisitions | $ | 187.2 | $ | (5.3 | ) | $ | (28.4 | ) | $ | 153.5 | $ | 183.5 | $ | (1.6 | ) | 504,249 | ||||||||||||||
Land acquisitions | 2.9 | — | — | 2.9 | 2.9 | — | — | |||||||||||||||||||||||
$ | 190.1 | $ | (5.3 | ) | $ | (28.4 | ) | $ | 156.4 | $ | 186.4 | $ | (1.6 | ) | 504,249 |
(1) | MOB = medical office building |
(2) | Includes tenant improvement and capital expenditure obligations assumed upon acquisition. |
(3) | The mortgage notes payable assumed in the acquisitions do not reflect the fair value adjustments totaling $0.4 million recorded by the Company upon acquisition (included in Other). |
(4) | Excludes prorations of revenue and expense due to/from seller at the time of the acquisition. |
(5) | Includes assets acquired, liabilities assumed, intangibles recognized at acquisition and fair value adjustments on debt assumed. |
Estimated Fair Value | Estimated Useful Life | |||||
(In millions) | (In years) | |||||
Building | $ | 153.1 | 25.0-35.0 | |||
Land | 23.2 | — | ||||
Intangibles: | ||||||
At-market lease intangibles | 10.1 | 1.9-7.9 | ||||
Above-market lease intangibles | 0.1 | 0.9-4.9 | ||||
Below-market lease intangibles | (0.5 | ) | 1.3-8.3 | |||
Below-market ground lease intangibles | 0.9 | 46.3-78.5 | ||||
Total intangibles | 10.6 | |||||
Mortgage notes payable assumed, including fair value adjustments | (28.8 | ) | ||||
Other assets acquired | 0.5 | |||||
Accounts payable, accrued liabilities and other liabilities assumed | (2.2 | ) | ||||
Total cash paid | $ | 156.4 |
(Dollars in millions) | Type (1) | Date Disposed | Sales Price | Closing Adjustments | Net Proceeds | Net Real Estate Investment | Other (including receivables) | Gain | Square Footage (Unaudited) | |||||||||||||||||||||
Real estate dispositions | ||||||||||||||||||||||||||||||
Kansas City, Kansas | MOB | 10/14/16 | $ | 15.1 | $ | — | $ | 15.1 | $ | 7.2 | $ | 0.3 | $ | 7.6 | 70,908 | |||||||||||||||
Nashville, Tennessee | MOB | 10/28/16 | 8.8 | (0.2 | ) | 8.6 | 6.3 | 0.2 | 2.1 | 45,274 | ||||||||||||||||||||
Altoona, Pennsylvania | IRF | 12/20/16 | 21.5 | (0.4 | ) | 21.1 | 12.4 | 0.6 | 8.1 | 64,032 | ||||||||||||||||||||
Harrisburg, Pennsylvania | IRF | 12/20/16 | 24.2 | (0.6 | ) | 23.6 | 8.2 | 0.4 | 15.0 | 79,836 | ||||||||||||||||||||
Phoenix, Arizona | IRF | 12/20/16 | 22.3 | — | 22.3 | 13.5 | 1.4 | 7.4 | 51,903 | |||||||||||||||||||||
Atlanta, Georgia | MOB | 12/22/16 | 2.8 | (0.2 | ) | 2.6 | 1.8 | — | 0.8 | 8,749 | ||||||||||||||||||||
Total dispositions | $ | 94.7 | $ | (1.4 | ) | $ | 93.3 | $ | 49.4 | $ | 2.9 | $ | 41.0 | 320,702 |
(1) | MOB = medical office building; IRF = inpatient rehabilitation facility |
(Dollars in millions) | Type (1) | Date Disposed | Sales Price | Closing Adjustments | Net Proceeds | Net Real Estate Investment | Other (including receivables) | Gain/ (Impairment) | Square Footage (Unaudited) | |||||||||||||||||||||
Real estate dispositions | ||||||||||||||||||||||||||||||
Roanoke, Virginia | MOB | 05/21/15 | $ | 1.0 | $ | — | $ | 1.0 | $ | 0.3 | $ | — | $ | 0.7 | 5,323 | |||||||||||||||
Indianapolis, Indiana (2) | MOB/SF | 06/30/15 | 97.0 | (3.7 | ) | 93.3 | 50.5 | 1.9 | 40.9 | 175,999 | ||||||||||||||||||||
Lancaster, Pennsylvania (3) | MOB | 07/17/15 | 18.4 | — | 18.4 | 7.4 | 0.4 | 10.6 | 63,914 | |||||||||||||||||||||
Sarasota, Florida | MOB | 09/16/15 | 16.3 | (0.5 | ) | 15.8 | 10.5 | 0.2 | 5.1 | 119,903 | ||||||||||||||||||||
Tuscon, Arizona | MOB | 09/25/15 | 3.0 | — | 3.0 | 2.0 | 0.2 | 0.8 | 40,782 | |||||||||||||||||||||
St. Louis, Missouri | MOB | 09/30/15 | 3.0 | (0.2 | ) | 2.8 | 2.9 | 0.2 | (0.3 | ) | 13,478 | |||||||||||||||||||
Phoenix, Arizona | MOB | 11/05/15 | 5.3 | (0.3 | ) | 5.0 | 4.9 | — | 0.1 | 56,645 | ||||||||||||||||||||
Atlanta, Georgia | MOB | 12/14/15 | 14.0 | (0.2 | ) | 13.8 | 4.4 | 0.4 | 9.0 | 58,030 | ||||||||||||||||||||
Total dispositions | $ | 158.0 | $ | (4.9 | ) | $ | 153.1 | $ | 82.9 | $ | 3.3 | $ | 66.9 | 534,074 |
(1) | MOB = medical office building; SF = surgical facility |
(2) | Includes two properties |
(3) | Previously included in assets held for sale. |
December 31, | |||||||
(Dollars in thousands) | 2016 | 2015 | |||||
Balance Sheet data | |||||||
Land | $ | 1,362 | $ | 422 | |||
Buildings, improvements and lease intangibles | 4,410 | 1,350 | |||||
5,772 | 1,772 | ||||||
Accumulated depreciation | (2,977 | ) | (1,070 | ) | |||
Assets held for sale, net | 2,795 | 702 | |||||
Other assets, net (including receivables) | 297 | 22 | |||||
Assets of discontinued operations, net | 297 | 22 | |||||
Assets held for sale and discontinued operations, net | $ | 3,092 | $ | 724 | |||
Accounts payable and accrued liabilities | $ | 22 | $ | 28 | |||
Other liabilities | 592 | 5 | |||||
Liabilities of assets held for sale and discontinued operations | $ | 614 | $ | 33 |
Year Ended December 31, | |||||||||||
(Dollars in thousands, except per share data) | 2016 | 2015 | 2014 | ||||||||
Statements of Income data: | |||||||||||
Revenues (1) | |||||||||||
Rental income | $ | — | $ | 752 | $ | 5,660 | |||||
Other operating | — | — | 4 | ||||||||
— | 752 | 5,664 | |||||||||
Expenses (2) | |||||||||||
Property operating | 71 | 58 | 3,126 | ||||||||
General and administrative | — | — | 19 | ||||||||
Depreciation | — | — | 1,551 | ||||||||
Bad debt, net of recoveries | — | (1 | ) | 3 | |||||||
71 | 57 | 4,699 | |||||||||
Other Income (Expense) (3) | |||||||||||
Interest and other income, net | — | 20 | 2 | ||||||||
— | 20 | 2 | |||||||||
Income (Loss) from Discontinued Operations | (71 | ) | 715 | 967 | |||||||
Impairments (4) | (121 | ) | (686 | ) | (12,029 | ) | |||||
Gain on sales of real estate properties (5) | 7 | 10,571 | 9,283 | ||||||||
Income (Loss) from Discontinued Operations | $ | (185 | ) | $ | 10,600 | $ | (1,779 | ) | |||
Income (Loss) from Discontinued Operations per Common Share - Basic | $ | 0.00 | $ | 0.11 | $ | (0.02 | ) | ||||
Income (Loss) from Discontinued Operations per Common Share - Diluted | $ | 0.00 | $ | 0.11 | $ | (0.02 | ) |
(1) | Total revenues for the years ended December 31, 2015 and 2014 included $0.8 million and $5.7 million, respectively, related to properties sold. |
(2) | Total expenses for the year ended December 31, 2016 included $0.1 million related to a property that is held for sale. Total expenses for the year ended December 31, 2015, and 2014 included $0.1 million and $4.7 million related to properties sold. |
(3) | Other income (expense) for the years ended December 31, 2015, and 2014 included income (expense) related to properties sold. |
(4) | Impairments for the years ended December 31, 2016 and 2015 included $0.1 million and $0.7 million, respectively, related to one property held for sale. Impairments for the year ended December 31, 2014 included $3.7 million related to the sale of three properties and $8.3 million on four properties, classified as held for sale and subsequently sold in 2015. |
(5) | Gain on sales of real estate properties for the year ended December 31, 2016 included a gain on the sale of one property sold in 2015. Gains on the sales of real estate properties for the years ended December 31, 2015 and 2014 included gains on the sale of one and three properties, respectively. |
December 31, | |||||||
(Dollars in millions) | 2016 | 2015 (1) | |||||
Prepaid assets | $ | 64.8 | $ | 63.6 | |||
Straight-line rent receivables | 64.6 | 60.4 | |||||
Above-market intangible assets, net | 19.1 | 17.3 | |||||
Additional long-lived assets, net | 14.5 | 14.8 | |||||
Ground lease modification, net | 10.8 | 11.2 | |||||
Accounts receivable | 8.1 | 8.8 | |||||
Allowance for uncollectible accounts | (0.1 | ) | (0.2 | ) | |||
Credit facility deferred financing costs | 4.9 | 2.2 | |||||
Goodwill | 3.5 | 3.5 | |||||
Customer relationship intangible assets, net | 1.8 | 1.9 | |||||
Other | 3.7 | 2.9 | |||||
$ | 195.7 | $ | 186.4 |
Gross Balance at December 31, | Accumulated Amortization at December 31, | Weighted Avg. Remaining Life (Years) | Balance Sheet Classification | ||||||||||||||||
(Dollars in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||||||
Goodwill | $ | 3.5 | $ | 3.5 | $ | — | $ | — | N/A | Other assets | |||||||||
Credit facility deferred financing costs | 5.4 | 7.3 | 0.5 | 5.1 | 3.6 | Other assets | |||||||||||||
Above-market lease intangibles | 24.5 | 21.8 | 5.4 | 4.5 | 54.8 | Other assets | |||||||||||||
Customer relationship intangibles | 2.6 | 2.6 | 0.8 | 0.7 | 26.6 | Other assets | |||||||||||||
Below-market lease intangibles | (8.8 | ) | (7.9 | ) | (3.2 | ) | (3.7 | ) | 38.0 | Other liabilities | |||||||||
Deferred financing costs | 9.4 | 9.8 | 4.0 | 3.3 | 6.0 | Notes & bonds payable | |||||||||||||
At-market lease intangibles | 84.1 | 78.9 | 39.0 | 35.0 | 5.9 | Real estate properties | |||||||||||||
$ | 120.7 | $ | 116.0 | $ | 46.5 | $ | 44.9 | 18.5 |
(Dollars in millions) | Future Amortization of Intangibles, net | ||
2017 | $ | 14.1 | |
2018 | $ | 12.1 | |
2019 | $ | 10.2 | |
2020 | $ | 7.3 | |
2021 | $ | 3.3 |
December 31, | Maturity Dates | Contractual Interest Rates | Principal Payments | Interest Payments | |||||||||||
(Dollars in thousands) | 2016 | 2015 | |||||||||||||
Unsecured Credit Facility | $ | 107,000 | $ | 206,000 | 7/20 | LIBOR + 1.00% | At maturity | Quarterly | |||||||
Unsecured Term Loan due 2019, net of issuance costs | 149,491 | 199,257 | 2/19 | LIBOR + 1.20% | At maturity | Quarterly | |||||||||
Senior Notes due 2021, net of discount and issuance costs | 397,147 | 396,489 | 1/21 | 5.75 | % | At maturity | Semi-Annual | ||||||||
Senior Notes due 2023, net of discount and issuance costs | 247,296 | 246,897 | 4/23 | 3.75 | % | At maturity | Semi-Annual | ||||||||
Senior Notes due 2025, net of discount and issuance costs | 247,819 | 247,602 | 5/25 | 3.88 | % | At maturity | Semi-Annual | ||||||||
Mortgage notes payable, net of discounts and issuance costs and including premiums | 115,617 | 128,747 | 5/17-5/40 | 3.60%-6.88% | Monthly | Monthly | |||||||||
$ | 1,264,370 | $ | 1,424,992 |
December 31, | |||||||
(Dollars in thousands) | 2016 | 2015 | |||||
Senior Notes due 2021 face value | $ | 400,000 | $ | 400,000 | |||
Unaccreted discount | (1,510 | ) | (1,832 | ) | |||
Issuance costs | (1,343 | ) | (1,679 | ) | |||
Senior Notes due 2021 carrying amount | $ | 397,147 | $ | 396,489 |
December 31, | |||||||
(Dollars in thousands) | 2016 | 2015 | |||||
Senior Notes due 2023 face value | $ | 250,000 | $ | 250,000 | |||
Unaccreted discount | (1,375 | ) | (1,565 | ) | |||
Issuance costs | (1,329 | ) | (1,538 | ) | |||
Senior Notes due 2023 carrying amount | $ | 247,296 | $ | 246,897 |
December 31, | |||||||
(Dollars in thousands) | 2016 | 2015 | |||||
Senior Notes due 2025 face value | $ | 250,000 | $ | 250,000 | |||
Unaccreted discount | (178 | ) | (196 | ) | |||
Issuance costs | (2,003 | ) | (2,202 | ) | |||
Senior Notes due 2025 carrying amount | $ | 247,819 | $ | 247,602 |
December 31, | |||||||
(Dollars in thousands) | 2016 | 2015 | |||||
Mortgage notes payable principal balance | $ | 114,934 | $ | 128,161 | |||
Unamortized premium | 2,569 | 2,704 | |||||
Unaccreted discount | (1,450 | ) | (1,779 | ) | |||
Issuance costs | (436 | ) | (339 | ) | |||
Mortgage notes payable carrying amount | $ | 115,617 | $ | 128,747 |
Original Balance | Effective Interest Rate (20) | Maturity Date | Collateral (21) | Principal and Interest Payments (19) | Investment in Collateral at December 31, | Balance at December 31, | |||||||||||||||||||
(Dollars in millions) | 2016 | 2016 | 2015 | ||||||||||||||||||||||
Commercial Bank (1) | $ | 13.1 | 5.00 | % | 4/16 | MOB | Monthly/25-yr amort. | $ | — | $ | — | $ | 10.2 | ||||||||||||
Commercial Bank (2) | 8.1 | 4.54 | % | 8/16 | MOB | Monthly/10-yr amort. | — | — | 7.4 | ||||||||||||||||
Commercial Bank (3) | 18.3 | 5.40 | % | 12/16 | MOB | Monthly/30-yr amort. | — | — | 16.0 | ||||||||||||||||
Life Insurance Co. (4) | 4.7 | 7.77 | % | 1/17 | MOB | Monthly/20-yr amort. | — | — | 0.4 | ||||||||||||||||
Life Insurance Co. | 7.0 | 5.53 | % | 1/18 | MOB | Monthly/15-yr amort. | 14.3 | 0.7 | 1.4 | ||||||||||||||||
Insurance Co. (5) | 7.3 | 5.54 | % | 12/18 | MOB | Monthly/25-yr amort. | 14.2 | 6.2 | 6.5 | ||||||||||||||||
Commercial Bank (6) | 9.5 | 5.07 | % | 3/19 | MOB | Monthly/5-yr amort. | 13.9 | 9.5 | 9.7 | ||||||||||||||||
Commercial Bank (7) | 9.4 | 4.55 | % | 7/19 | MOB | Monthly/8-yr amort | 27.8 | 9.3 | 9.5 | ||||||||||||||||
Commercial Bank (8) | 15.2 | 7.65 | % | 7/20 | MOB | (18 | ) | 20.2 | 12.7 | 12.7 | |||||||||||||||
Life Insurance Co. (9) | 7.9 | 4.00 | % | 8/20 | MOB | Monthly/15-yr amort. | 20.7 | 2.7 | 3.3 | ||||||||||||||||
Life Insurance Co. (10) | 7.3 | 5.25 | % | 8/20 | MOB | Monthly/27-yr amort. | 17.9 | 6.7 | 6.9 | ||||||||||||||||
Commercial Bank (11) | 12.9 | 6.43 | % | 2/21 | MOB | Monthly/12-yr amort. | 19.9 | 10.7 | 10.8 | ||||||||||||||||
Life Insurance Co. (12) | 13.3 | 4.13 | % | 1/24 | MOB | Monthly/10-yr amort. | 20.5 | 13.6 | — | ||||||||||||||||
Financial Services (13) | 9.7 | 4.32 | % | 9/24 | MOB | Monthly/10-yr amort. | 16.1 | 9.1 | 9.3 | ||||||||||||||||
First Tennessee Bank | 11.5 | 3.71 | % | 1/26 | MOB | Monthly/10-yr amort. | 37.3 | 11.0 | — | ||||||||||||||||
Commercial Bank (14) | 15.0 | 5.25 | % | 4/27 | MOB | Monthly/20-yr amort. | 33.4 | 10.4 | 11.1 | ||||||||||||||||
Commercial Bank | 1.8 | 5.55 | % | 10/30 | OTH | Monthly/27-yr amort. | 7.9 | 1.3 | 1.4 | ||||||||||||||||
Municipal Government (15) (16) | 11.9 | 4.79 | % | (17) | MOB | Semi-Annual (17) | 20.9 | 11.7 | 12.1 | ||||||||||||||||
$ | 285.0 | $ | 115.6 | $ | 128.7 |
(1) | The Company repaid this mortgage note in February 2016. |
(2) | The Company repaid this mortgage note in April 2016. |
(3) | The Company repaid this mortgage note in September 2016. |
(4) | The Company repaid this mortgage note in October 2016. |
(5) | The unamortized portion of the $0.6 million premium recorded on this note upon acquisition is included in the balance above. |
(6) | The unamortized portion of the $0.2 million premium recorded on this note upon acquisition is included in the balance above. |
(7) | The unamortized portion of the $0.3 million premium recorded on this note upon acquisition is included in the balance above. |
(8) | The unaccreted portion of the $2.4 million discount recorded on this note upon acquisition is included in the balance above. |
(9) | The unamortized portion of the $0.3 million premium recorded on this note upon acquisition is included in the balance above. |
(10) | The unamortized portion of the $0.4 million premium recorded on this note upon acquisition is included in the balance above. |
(11) | The unaccreted portion of a $1.0 million discount recorded on this note upon acquisition is included in the balance above. |
(12) | The unamortized portion of the $0.8 million premium recorded on this note upon acquisition is included in the balance above. |
(13) | The unaccreted portion of the $0.1 million premium recorded on this note upon acquisition is included in the balance above. |
(14) | The unamortized portion of a $0.7 million premium recorded on this note upon acquisition is included in the balance above. |
(15) | Balance consists of four notes secured by the same building. |
(16) | The unamortized portion of the $1.0 million premium recorded on the four notes upon acquisition is included in the balance above. |
(17) | These four mortgage notes payable are series municipal bonds that have maturity dates ranging from from May 2017 to May 2040. The note payable with the earliest maturity date will require principal and interest payments while the remaining notes payable will require interest only payments. One of the notes payable matures in May 2017 and the remaining three have future maturity dates but allow repayment after May 2020 without penalty. The Company intends on repaying all three notes payable at that time. |
(18) | Payable in monthly installments of interest only for 24 months and then installments of principal and interest based on an 11-year amortization with the final payment due at maturity. |
(19) | Payable in monthly installments of principal and interest with the final payment due at maturity (unless otherwise noted). |
(20) | The contractual interest rates for the 17 outstanding mortgage notes ranged from 3.6% to 6.9% as of December 31, 2016. |
(21) | MOB-Medical office building; OTH-Other. |
(Dollars in thousands) | Principal Maturities | Net Accretion/ Amortization (1) | Debt Issuance Costs | Notes and Bonds Payable | % | |||||||||||
2017 | $ | 4,374 | $ | (233 | ) | $ | (1,086 | ) | 3,055 | 0.2 | % | |||||
2018 | 9,649 | (295 | ) | (1,089 | ) | 8,265 | 0.7 | % | ||||||||
2019 | 171,643 | (514 | ) | (876 | ) | 170,253 | 13.5 | % | ||||||||
2020 | 128,692 | (683 | ) | (825 | ) | 127,184 | 10.1 | % | ||||||||
2021 | 412,149 | (144 | ) | (490 | ) | 411,515 | 32.5 | % | ||||||||
2022 and thereafter | 545,427 | (75 | ) | (1,254 | ) | 544,098 | 43.0 | % | ||||||||
$ | 1,271,934 | $ | (1,944 | ) | $ | (5,620 | ) | 1,264,370 | 100.0 | % |
(1) | Includes discount accretion and premium amortization related to the Company’s Senior Notes due 2021, Senior Notes due 2023, Senior Notes due 2025, and 14 mortgage notes payable. |
(Dollars in thousands) | Location | December 31, 2016 | December 31, 2015 | |||||||
Loss on forward starting interest rate swap agreements recognized in OCI | OCI | $ | — | $ | (1,684 | ) | ||||
Amount of loss reclassified from accumulated OCI into Income (effective portion) | Interest Expense | $ | (168 | ) | $ | (115 | ) | |||
Amount of gain (loss) recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing) | Interest Expense | $ | — | $ | — |
Year Ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Balance, beginning of year | 101,517,009 | 98,828,098 | 95,924,339 | |||||
Issuance of common stock | 14,063,100 | 2,493,171 | 3,073,445 | |||||
Non-vested stock-based awards, net of withheld shares and forfeitures | 836,791 | 195,740 | (169,686 | ) | ||||
Balance, end of year | 116,416,900 | 101,517,009 | 98,828,098 |
Shares Sold | Sales Price Per Share | Net Proceeds (in millions) | |||||||
2016 | 4,795,601 | $28.31 - $33.66 | $ | 144.6 | |||||
2015 | 2,434,239 | $25.00 - $29.15 | $ | 65.8 | |||||
2014 | 3,009,761 | $24.35 - $27.53 | $ | 75.7 |
Year Ended December 31, | ||||||||||||
(Dollars in thousands) | 2016 | 2015 | 2014 | |||||||||
Net income attributable to common stockholders | $ | 85,571 | $ | 69,436 | $ | 31,887 | ||||||
Transfers to noncontrolling interest: | ||||||||||||
Net decrease in the Company's additional paid-in capital for purchase of subsidiary partnership interest | — | — | (6,577 | ) | ||||||||
Net transfers to the noncontrolling interest | — | — | (6,577 | ) | ||||||||
Change to the Company's total stockholders' equity from net income attributable to common stockholders and transfers to noncontrolling interest | $ | 85,571 | $ | 69,436 | $ | 25,310 |
(Dollars in thousands) | Forward Starting Swaps | Defined Benefit Pension Plan | Total | |||||||||
Beginning balance | $ | (1,569 | ) | $ | — | $ | (1,569 | ) | ||||
Other comprehensive loss before reclassifications | — | — | — | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | 168 | — | 168 | |||||||||
Net current-period other comprehensive income | 168 | — | 168 | |||||||||
Ending balance | $ | (1,401 | ) | $ | — | $ | (1,401 | ) |
Details about accumulated other comprehensive income (loss) components | Amount reclassified from accumulated other comprehensive income (loss) | Affected line item in the statement where net income is presented | ||||
(Dollars in thousands) | ||||||
Amounts reclassified from accumulated other comprehensive income (loss) related to forward starting swaps | $ | 168 | Interest Expense | |||
$ | 168 |
Year Ended December 31, | |||||||||||
(Dollars in thousands) | 2016 | 2015 | 2014 | ||||||||
Service cost | $ | — | $ | 29 | $ | 88 | |||||
Interest cost | — | 225 | 687 | ||||||||
Amortization of prior service cost (benefit) | — | (198 | ) | (1,189 | ) | ||||||
Amortization of net gain (loss) | — | 343 | 469 | ||||||||
— | 399 | 55 | |||||||||
Net loss recognized in Accumulated other comprehensive income (loss) | — | — | 2,570 | ||||||||
Total recognized in net periodic benefit gain and Accumulated other comprehensive income (loss) (1) | $ | — | $ | 399 | $ | 2,625 |
(1) | 2015 is a partial year due to the termination of the Executive Retirement Plan during the year. |
Year Ended December 31, | |||||||
(Dollars in thousands) | 2016 | 2015 | |||||
Benefit obligation at beginning of year | $ | 19,571 | $ | 16,473 | |||
Service cost | — | 29 | |||||
Interest cost | — | 225 | |||||
Benefits paid | (19,575 | ) | (42 | ) | |||
Amortization of net gain/loss and prior service cost | — | 145 | |||||
Actuarial loss, net | — | — | |||||
Settlement loss | 4 | 5,260 | |||||
Amounts reclassified from accumulated other comprehensive loss arising from settlement on defined benefit pension plan | — | (2,519 | ) | ||||
Benefit obligation at end of year | $ | — | $ | 19,571 |
Year Ended December 31, | |||||||
(Dollars in thousands) | 2016 | 2015 | |||||
Net liabilities included in other liabilities | $ | — | $ | (19,571 | ) | ||
Amounts recognized in accumulated other comprehensive income (loss) | — | — |
2016 | 2015 | 2014 | ||||
Discount rates | — | % | — | % | 4.08 | % |
Compensation increases | — | % | — | % | 2.7 | % |
(Dollars in millions) | Future Amortization of Non-Vested Shares | ||
2017 | $ | 8.8 | |
2018 | $ | 6.7 | |
2019 | $ | 4.6 | |
2020 | $ | 4.4 | |
2021 | $ | 3.4 | |
2022 and thereafter | $ | 4.3 | |
Total | $ | 32.2 |
• | On December 16, 2016, the Company granted non-vested stock awards for TSR performance to its five named executive officers and five senior vice presidents with a grant date fair value totaling $6.3 million, which were granted |
• | On February 16, 2016, the Company granted cash incentive and non-vested performance-based awards totaling $5.8 million to its five named executive officers and five senior vice presidents. The officers could elect cash based awards or non-vested stock awards. Cash awards totaled $1.1 million. The non-vested awards, which the officers elected to receive in lieu of cash, had a grant date fair value totaling $4.7 million, which were granted in the form of 163,788 non-vested shares, with either a three- or five-year vesting period, resulting in annual compensation expense of $1.1 million for the years ended 2017, 2018 and $0.7 million for the years ended 2019 and 2020, respectively. |
• | On December 18, 2015, the Company granted non-vested stock awards for TSR performance to its five named executive officers and five senior vice presidents with a grant date fair value totaling $3.9 million. The awards were granted in the form of 139,000 non-vested shares, with a three-year vesting period, which will result in annual compensation expense of $1.3 million for the years ended 2017 and 2018, respectively. |
• | On December 31, 2014, the Company granted non-vested stock awards for TSR performance to its five named executive officers and five senior vice presidents with a grant date fair value totaling $3.9 million, which were granted in the form of 140,930 non-vested shares, with a three-year vesting period, which will result in annual compensation expense of $1.3 million for the year ended 2017. |
• | On March 1, 2016, the Company issued 50,000 shares to the Chief Financial Officer with a 10-year vesting period, resulting in compensation expense of $0.2 million per year, beginning in 2017. |
• | On December 30, 2016, the Company issued 200,000 shares to the President and Chief Executive Officer with a 10-year vesting period, resulting in compensation expense of $0.6 million per year. |
• | On December 30, 2016, the Company issued 150,000 shares to the Executive Chairman with a 5-year vesting period, resulting in compensation expense of $0.9 million per year. |
Year Ended December 31, | |||||||||||
(Dollars in thousands, except per share data) | 2016 | 2015 | 2014 | ||||||||
Stock-based awards, beginning of year | 1,092,262 | 1,057,732 | 1,788,168 | ||||||||
Granted | 885,219 | 251,789 | 269,129 | ||||||||
Vested | (190,984 | ) | (210,955 | ) | (931,767 | ) | |||||
Forfeited | — | (6,304 | ) | (67,798 | ) | ||||||
Stock-based awards, end of year | 1,786,497 | 1,092,262 | 1,057,732 | ||||||||
Weighted-average grant date fair value of: | |||||||||||
Stock-based awards, beginning of year | $ | 24.72 | $ | 24.01 | $ | 23.81 | |||||
Stock-based awards granted during the year | $ | 29.60 | $ | 27.70 | $ | 25.27 | |||||
Stock-based awards vested during the year | $ | 24.34 | $ | 25.05 | $ | 24.13 | |||||
Stock-based awards forfeited during the year | $ | — | $ | 24.80 | $ | 22.01 | |||||
Stock-based awards, end of year | $ | 27.18 | $ | 24.72 | $ | 24.01 | |||||
Grant date fair value of shares granted during the year | $ | 26,204 | $ | 6,975 | $ | 6,800 |
Year Ended December 31, | |||||||||||
(Dollars in thousands, except per share data) | 2016 | 2015 | 2014 | ||||||||
Options outstanding, beginning of year | 340,958 | 393,902 | 391,108 | ||||||||
Granted | 198,450 | 197,640 | 275,655 | ||||||||
Exercised | (57,924 | ) | (44,462 | ) | (51,078 | ) | |||||
Forfeited | (22,081 | ) | (47,176 | ) | (63,908 | ) | |||||
Expired | (143,082 | ) | (158,946 | ) | (157,875 | ) | |||||
Options outstanding and exercisable, end of year | 316,321 | 340,958 | 393,902 | ||||||||
Weighted-average exercise price of: | |||||||||||
Options outstanding, beginning of year | $ | 20.70 | $ | 19.17 | $ | 17.05 | |||||
Options granted during the year | $ | 24.07 | $ | 23.22 | $ | 18.11 | |||||
Options exercised during the year | $ | 21.40 | $ | 19.41 | $ | 17.76 | |||||
Options forfeited during the year | $ | 23.16 | $ | 19.90 | $ | 18.58 | |||||
Options expired during the year | $ | 18.11 | $ | 20.41 | $ | 15.80 | |||||
Options outstanding, end of year | $ | 23.69 | $ | 20.70 | $ | 19.17 | |||||
Weighted-average fair value of options granted during the year (calculated as of the grant date) | $ | 5.37 | $ | 5.39 | $ | 4.35 | |||||
Intrinsic value of options exercised during the year | $ | 634 | $ | 381 | $ | 437 | |||||
Intrinsic value of options outstanding and exercisable (calculated as of December 31) | $ | 2,098 | $ | 2,597 | $ | 3,209 | |||||
Exercise prices of options outstanding (calculated as of December 31) | $ | 23.69 | $ | 20.70 | $ | 19.17 | |||||
Weighted-average contractual life of outstanding options (calculated as of December 31, in years) | 0.8 | 0.8 | 0.8 |
2016 | 2015 | 2014 | ||||||
Risk-free interest rates | 1.06 | % | 0.67 | % | 0.38 | % | ||
Expected dividend yields | 4.64 | % | 4.79 | % | 4.94 | % | ||
Expected life (in years) | 1.42 | 1.38 | 1.39 | |||||
Expected volatility | 17.6 | % | 21.0 | % | 23.0 | % | ||
Expected forfeiture rates | 85 | % | 80 | % | 75 | % |
Year Ended December 31, | |||||||||||
(Dollars in thousands, except per share data) | 2016 | 2015 | 2014 | ||||||||
Weighted Average Common Shares | |||||||||||
Weighted average Common Shares outstanding | 109,861,580 | 100,280,059 | 97,093,960 | ||||||||
Non-vested shares | (1,289,478 | ) | (1,108,707 | ) | (1,814,734 | ) | |||||
Weighted average Common Shares - Basic | 108,572,102 | 99,171,352 | 95,279,226 | ||||||||
Weighted average Common Shares - Basic | 108,572,102 | 99,171,352 | 95,279,226 | ||||||||
Dilutive effect of non-vested shares | 709,559 | 623,212 | 1,364,236 | ||||||||
Dilutive effect of employee stock purchase plan | 105,336 | 85,738 | 115,948 | ||||||||
Weighted average Common Shares - Diluted | 109,386,997 | 99,880,302 | 96,759,410 | ||||||||
Net Income | |||||||||||
Income from continuing operations | $ | 85,756 | $ | 58,836 | $ | 33,979 | |||||
Noncontrolling interests’ share in earnings | — | — | (313 | ) | |||||||
Income from continuing operations attributable to common stockholders | 85,756 | 58,836 | 33,666 | ||||||||
Income (loss) from discontinued operations | (185 | ) | 10,600 | (1,779 | ) | ||||||
Net income attributable to common stockholders | $ | 85,571 | $ | 69,436 | $ | 31,887 | |||||
Basic Earnings (loss) Per Common Share | |||||||||||
Income (loss) from continuing operations | $ | 0.79 | $ | 0.59 | $ | 0.35 | |||||
Income (loss) from discontinued operations | 0.00 | 0.11 | (0.02 | ) | |||||||
Net income attributable to common stockholders | $ | 0.79 | 0.70 | 0.33 | |||||||
Diluted Earnings (loss) Per Common Share | |||||||||||
Income (loss) from continuing operations | $ | 0.78 | $ | 0.59 | $ | 0.35 | |||||
Income (loss) from discontinued operations | 0.00 | 0.11 | (0.02 | ) | |||||||
Net income attributable to common stockholders | $ | 0.78 | $ | 0.70 | $ | 0.33 |
December 31, 2016 | |||||||||||||||||||||||||||
(Dollars in thousands) | Number of Properties | Estimated Completion Date | Construction in Progress Balance | Total Funded During the Year | Total Amount Funded | Estimated Remaining Fundings (unaudited) | Estimated Total Investment (unaudited) | Approximate Square Feet (unaudited) | |||||||||||||||||||
Construction Activity | |||||||||||||||||||||||||||
Nashville, TN | 2 | Q1 2017 | $ | — | $ | 28,794 | $ | 50,612 | 6,008 | $ | 56,620 | 294,000 | |||||||||||||||
Denver, CO | 1 | Q2 2017 | 11,655 | 11,426 | 11,655 | 14,845 | 26,500 | 98,000 | |||||||||||||||||||
Total | $ | 11,655 | $ | 40,220 | $ | 62,267 | $ | 20,853 | $ | 83,120 | 392,000 |
2016 | $ | 5,719 | |
2017 | 5,798 | ||
2018 | 5,980 | ||
2019 | 5,840 | ||
2020 | 5,062 | ||
2021 and thereafter | 361,666 | ||
$ | 390,065 |
Year Ended December 31, | |||||||||||
(Dollars in thousands) | 2016 | 2015 | 2014 | ||||||||
Net income attributable to common stockholders | $ | 85,571 | $ | 69,436 | $ | 31,887 | |||||
Reconciling items to taxable income: | |||||||||||
Depreciation and amortization | 38,260 | 30,457 | 28,332 | ||||||||
Gain or loss on disposition of depreciable assets | (32,103 | ) | 1,659 | (4,940 | ) | ||||||
Impairments | 121 | 687 | — | ||||||||
Straight-line rent | (7,101 | ) | (8,833 | ) | (12,203 | ) | |||||
Receivable allowances | 2,067 | 571 | 2,074 | ||||||||
Stock-based compensation | 1,301 | 7,518 | 2,020 | ||||||||
Other | 2,236 | 4,304 | 1,213 | ||||||||
4,781 | 36,363 | 16,496 | |||||||||
Taxable income (1) | $ | 90,352 | $ | 105,799 | $ | 48,383 | |||||
Dividends paid | $ | 131,759 | $ | 120,266 | $ | 116,371 |
2016 | 2015 | 2014 | ||||||||||||||||||
Per Share | % | Per Share | % | Per Share | % | |||||||||||||||
Common stock: | ||||||||||||||||||||
Ordinary income | $ | 0.78 | 65.0 | % | $ | 0.61 | 51.0 | % | $ | 0.50 | 42.0 | % | ||||||||
Return of capital | 0.35 | 29.5 | % | 0.08 | 6.7 | % | 0.70 | 58.0 | % | |||||||||||
Unrecaptured section 1250 gain | 0.07 | 5.5 | % | 0.51 | 42.3 | % | — | — | % | |||||||||||
Common stock distributions | $ | 1.20 | 100.0 | % | $ | 1.20 | 100.0 | % | $ | 1.20 | 100.0 | % |
Year Ended December 31, | |||||||||||
(Dollars in thousands) | 2016 | 2015 | 2014 | ||||||||
State income tax expense: | |||||||||||
Texas gross margins tax (1) | $ | 562 | $ | 528 | $ | 694 | |||||
Other | 2 | 37 | 58 | ||||||||
Total state income tax expense | $ | 564 | $ | 565 | $ | 752 | |||||
State income tax payments, net of refunds and collections | $ | 544 | $ | 758 | $ | 593 |
(1) | In the table above, income tax expense for 2015 includes approximately $50 thousand that was recorded to the gain on sale of real estate properties sold, which is included in discontinued operations rather than general and administrative expenses on the Company’s Consolidated Statements of Income. |
December 31, 2016 | December 31, 2015 | ||||||||||||||
(Dollars in millions) | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||
Notes and bonds payable (1) | $ | 1,264.4 | $ | 1,265.1 | $ | 1,425.0 | $ | 1,439.0 |
Quarter Ended | |||||||||||||||
(Dollars in thousands, except per share data) | March 31 | June 30 | September 30 | December 31 (1) | |||||||||||
2016 | |||||||||||||||
Revenues from continuing operations | $ | 100,021 | $ | 102,642 | $ | 103,659 | $ | 105,309 | |||||||
Income from continuing operations | 9,163 | 12,157 | 11,857 | 52,580 | |||||||||||
Loss from discontinued operations | (7 | ) | (12 | ) | (23 | ) | (143 | ) | |||||||
Net income | 9,156 | 12,145 | 11,834 | 52,437 | |||||||||||
Less: Income from noncontrolling interests | — | — | — | — | |||||||||||
Net income attributable to common stockholders | $ | 9,156 | $ | 12,145 | $ | 11,834 | $ | 52,437 | |||||||
Net income attributable to common stockholders per share: | |||||||||||||||
Basic earnings per common share | $ | 0.09 | $ | 0.12 | $ | 0.10 | $ | 0.46 | |||||||
Diluted earnings per common share | $ | 0.09 | $ | 0.12 | $ | 0.10 | $ | 0.45 |
Quarter Ended | |||||||||||||||
(Dollars in thousands, except per share data) | March 31 (1) | June 30 (2) | September 30 (3) | December 31 (4) | |||||||||||
2015 | |||||||||||||||
Revenues from continuing operations | $ | 96,456 | $ | 96,708 | $ | 96,725 | $ | 98,582 | |||||||
Income from continuing operations | 5,049 | 17,586 | 16,848 | 19,354 | |||||||||||
Income (loss) from discontinued operations | 333 | 330 | 10,632 | (696 | ) | ||||||||||
Net income | 5,382 | 17,916 | 27,480 | 18,658 | |||||||||||
Less: Income from noncontrolling interests | — | — | — | — | |||||||||||
Net income attributable to common stockholders | $ | 5,382 | $ | 17,916 | $ | 27,480 | $ | 18,658 | |||||||
Net income attributable to common stockholders per share: | |||||||||||||||
Basic earnings per common share | $ | 0.05 | $ | 0.18 | $ | 0.28 | $ | 0.19 | |||||||
Diluted earnings per common share | $ | 0.05 | $ | 0.18 | $ | 0.27 | $ | 0.19 |
Name | Age | Position | |||
David R. Emery | 72 | Executive Chairman of the Board | |||
Todd J. Meredith | 42 | President & Chief Executive Officer | |||
J. Christopher Douglas | 41 | Executive Vice President & Chief Financial Officer | |||
John M. Bryant, Jr. | 50 | Executive Vice President & General Counsel | |||
B. Douglas Whitman, II | 48 | Executive Vice President - Corporate Finance | |||
Robert E. Hull | 44 | Executive Vice President - Investments |
(a) | Index to Historical Financial Statements, Financial Statement Schedules and Exhibits |
(1) | Financial Statements: |
(3) | Exhibits: |
Exhibit Number | Description of Exhibits | ||||
1.1 | — | Sales Agreement, dated February 19, 2016, between the Company and Barclays Capital Inc. (1) | |||
1.2 | — | Equity Distribution Agreement, dated February 19, 2016, between the Company and BB&T Capital Markets, a division of BB&T Securities, LLC (1) | |||
1.3 | — | Sales Agreement, dated February 19, 2016, between the Company and BMO Capital Markets Corp. (1) | |||
1.4 | — | Controlled Equity Offering Sales Agreement, dated February 19, 2016, between the Company and Cantor Fitzgerald & Co. (1) | |||
1.5 | — | Sales Agreement, dated February 19, 2016, between the Company and Credit Agricole Securities (USA) Inc. (1) | |||
3.1 | — | Second Articles of Amendment and Restatement of the Company, as amended. (3) | |||
3.2 | — | Amended and Restated Bylaws of the Company, as amended. (3) | |||
4.1 | — | Specimen stock certificate. (4) | |||
4.2 | — | Indenture, dated as of May 15, 2001 by and between the Company and Regions Bank, or trustee (as successor to the trustee named therein). (5) | |||
4.3 | — | Third Supplemental Indenture, dated December 4, 2009, by and between the Company and Regions Bank as Trustee. (6) | |||
4.4 | — | Form of 6.50% Senior Note due 2017 (set forth in Exhibit B to the Third Supplemental Indenture filed as Exhibit 4.2 thereto). (6) | |||
4.5 | — | Fourth Supplemental Indenture, dated December 13, 2010, by and between the Company and Regions Bank as Trustee. (7) |
4.6 | — | Form of 5.750% Senior Note due 2021 (set forth in Exhibit B to the Fourth Supplemental Indenture filed as Exhibit 4.2 thereto). (7) | |||
4.7 | — | Fifth Supplemental Indenture, dated March 26, 2013, by and between the Company and Regions Bank, as Trustee. (8) | |||
4.8 | — | Form of 3.75% Senior Note due 2023 (set forth in Exhibit B to the Fifth Supplemental Indenture filed as Exhibit (4.8) hereto). (8) | |||
4.9 | __ | Sixth Supplemental Indenture, dated April 24, 2015, by and between the Company and Regions Bank, as Trustee. (9) | |||
4.10 | __ | Form of 3.875% Senior Notes due 2025 (set forth in Exhibit B to the Sixth Supplemental Indenture filed as Exhibit 4.9 thereto). (9) | |||
10.1 | — | Second Amended and Restated Executive Retirement Plan. (10) | |||
10.2 | — | Amendment to Second Amended and Restated Executive Retirement Plan, dated as of October 30, 2012. (11) | |||
10.3 | __ | Second Amendment to Second Amended and Restated Executive Retirement Plan, dated as of May 5, 2015. (12) | |||
10.4 | — | 2000 Employee Stock Purchase Plan. (13) | |||
10.5 | — | Dividend Reinvestment Plan, as Amended. (14) | |||
10.6 | — | Third Amended and Restated Employment Agreement, dated February 16, 2016, between David R. Emery and the Company. (15) | |||
10.7 | — | Third Amended and Restated Employment Agreement, dated February 16, 2016, between Todd J. Meredith and the Company. (15) | |||
10.8 | — | Third Amended and Restated Employment Agreement, dated February 15, 2017, between John M. Bryant, Jr. and the Company. (filed herewith) | |||
10.9 | — | Amended and Restated Employment Agreement, dated January 1, 2017, between Robert E. Hull and the Company. (filed herewith) | |||
10.10 | — | Third Amended and Restated Employment Agreement, dated February 15, 2017, between B. Douglas Whitman, II and the Company. (filed herewith) | |||
10.11 | — | Amended and Restated Employment Agreement, dated February 2, 2016, between J. Christopher Douglas and the Company. (16) | |||
10.12 | — | Healthcare Realty Trust Incorporated Amended and Restated Executive Incentive Plan. (15) | |||
10.13 | — | 2010 Restricted Stock Implementation for Non-Employee Directors, dated May 4, 2010. (17) | |||
10.14 | — | Amendment No. 1 to 2010 Restricted Stock Implementation for Non-Employee Directors, dated December 11, 2013. (18) | |||
10.15 | — | Amendment No. 2 to 2010 Restricted Stock Implementation for Non-Employee Directors, dated August 4, 2015. (19) | |||
10.16 | — | Healthcare Realty Trust Incorporated Form of Restricted Stock Agreement for Non-Employee Directors. (15) | |||
10.17 | — | Healthcare Realty Trust Incorporated Form of Restricted Stock Agreement for Officers. (15) | |||
10.18 | — | Healthcare Realty Trust Incorporated 2015 Stock Incentive Plan. (20) | |||
10.19 | — | Amendment No. 1 to Healthcare Realty Trust Incorporated 2015 Stock Incentive Plan. (19) | |||
10.20 | — | Credit Agreement, dated as of October 14, 2011, by and among the Company, as Borrower, Wells Fargo Bank National Association, as Administrative Agent, JP Morgan Chase Bank, N.A., as Syndication Agent, Barclays Bank PLC, Credit Agricole Corporate and Investment Bank and Bank of America, N.A., as Co-Documentation Agents, and the other Lenders named therein. (21) | |||
10.21 | — | Amendment to Credit Agreement, dated as of February 15, 2013, by and among the Company, as Borrower, Wells Fargo Bank National Association, as Administrative Agent, JP Morgan Chase Bank, N.A., as Syndication Agent, Barclays Bank PLC, Credit Agricole Corporate and Investment Bank and Bank of American, N.A., as Co-Documentation Agents, and the other Lenders named therein. (22) | |||
10.22 | — | Amendment No. 2 to Credit Agreement, dated as of February 27, 2014, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and the other lenders that are party thereto. (23) | |||
10.23 | — | Third Amendment to Credit Agreement, dated as of July 29, 2016, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and the other lenders that are party thereto. (24) | |||
10.24 | — | Term Loan Agreement, dated as of February 27, 2014, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and the other lenders that are party thereto. (23) |
10.25 | — | First Amendment to Term Loan, dated July 29, 2016, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and the other lenders that are party thereto. (24) | |||
11 | — | Statement re: computation of per share earnings (contained in Note 14 to the Notes to the Consolidated Financial Statements for the year ended December 31, 2013 in Item 8 to this Annual Report on Form 10-K). | |||
21 | — | Subsidiaries of the Registrant. (filed herewith) | |||
23 | — | Consent of BDO USA, LLP, independent registered public accounting firm. (filed herewith) | |||
31.1 | — | Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith) | |||
31.2 | — | Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith) | |||
32 | — | Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith) | |||
101.INS | — | XBRL Instance Document. (filed herewith) | |||
101.SCH | — | XBRL Taxonomy Extension Schema Document. (filed herewith) | |||
101.CAL | — | XBRL Taxonomy Extension Calculation Linkbase Document. (filed herewith) | |||
101.LAB | — | XBRL Taxonomy Extension Labels Linkbase Document. (filed herewith) | |||
101.DEF | — | XBRL Taxonomy Extension Definition Linkbase Document. (filed herewith) | |||
101.PRE | — | XBRL Taxonomy Extension Presentation Linkbase Document. (filed herewith) |
(1) | Filed as an exhibit to the Company’s Form 8-K filed February 19, 2106 and hereby incorporated by reference. |
(2) | Filed as an exhibit to the Company's Form 8-K filed December 23, 2015 and hereby incorporated by reference. |
(3) | Filed as an exhibit to the Company’s Form 10-Q for the quarter ended June 30, 2015 and hereby incorporated by reference. |
(4) | Filed as an exhibit to the Company's Registration Statement on Form S-11 (Registration No. 33-60506) previously filed pursuant to the Securities Act of 1933 and hereby incorporated by reference. |
(5) | Filed as an exhibit to the Company's Form 8-K filed May 17, 2001 and hereby incorporated by reference. |
(6) | Filed as an exhibit to the Company’s Form 8-K filed December 4, 2009 and hereby incorporated by reference. |
(7) | Filed as an exhibit to the Company’s Form 8-K filed December 13, 2010 and hereby incorporated by reference. |
(8) | Filed as an exhibit to the Company's Form 8-K filed March 26, 2013 and hereby incorporated by reference. |
(9) | Filed as an exhibit to the Company’s Form 8-K filed April 24, 2015 and hereby incorporated by reference. |
(10) | Filed as an exhibit to the Company’s Form 8-K filed December 31, 2008 and hereby incorporated by reference. |
(11) | Filed as an exhibit to the Company's Form 10-Q for the quarter ended September 30, 2012 and hereby incorporated by reference. |
(12) | Filed as an exhibit to the Company's Form 10-Q for the quarter ended March 31, 2015 and hereby incorporated by reference. |
(13) | Filed as an exhibit to the Company’s Form 10-K for the year ended December 31, 1999 and hereby incorporated by reference. |
(14) | Filed as an exhibit to the Company’s Registration Statement on Form S-3 (Registration No. 33-79452) previously filed on September 26, 2003 pursuant to the Securities Act of 1933 and hereby incorporated by reference. |
(15) | Filed as an exhibit to the Company's Form 10-K for the year ended December 31, 2015 and hereby incorporated by reference. |
(16) | Filed as an exhibit to the Company's Form 8-K filed February 3, 2016 and hereby incorporated by reference. |
(17) | Filed as an exhibit to the Company's Form 10-Q for the quarter ended March 31, 2010 and hereby incorporated by reference. |
(18) | Filed as an exhibit to the Company’s Form 10-K for the year ended December 31, 2013 and hereby incorporated by reference. |
(19) | Filed as an exhibit to the Company’s Form 10-Q for the quarter ended June 30, 2015 and hereby incorporated by reference. |
(20) | Filed as an exhibit to the Company's proxy statement filed March 30, 2015 and hereby incorporated by reference. |
(21) | Filed as an exhibit to the Company's Form 8-K filed October 19, 2011 and hereby incorporated by reference. |
(22) | Filed as an exhibit to the Company's Form 10-K for the year ended December 31, 2012 and hereby incorporated by reference. |
(23) | Filed as an exhibit to the Company's Form 8-K filed February 28, 2014 and hereby incorporated by reference. |
(24) | Filed as an exhibit to the Company's Form 10-Q for the quarter ended June 30, 2016 and hereby incorporated by reference. |
1. | Second Amended and Restated Executive Retirement Plan (filed as Exhibit 10.1) |
2. | Amendment to Second Amended and Restated Executive Retirement Plan, dated as of October 30, 2012 (filed as Exhibit 10.2) |
3. | Second Amendment to Second Amended and Restated Executive Retirement Plan, dated as of May 5, 2015 (filed as Exhibit 10.3) |
4. | 2000 Employee Stock Purchase Plan (filed as Exhibit 10.4) |
5. | Third Amended and Restated Employment Agreement, dated February 16, 2016, between David R. Emery and the Company (filed as Exhibit 10.6) |
6. | Third Amended and Restated Employment Agreement, dated February 16, 2016, between Todd J. Meredith and the Company (filed as Exhibit 10.7) |
7. | Third Amended and Restated Employment Agreement, dated February 15, 2017, between John M. Bryant, Jr. and the Company (filed as Exhibit 10.8) |
8. | Amended and Restated Employment Agreement, dated January 1, 2017, between Robert E. Hull and the Company (filed as Exhibit 10.9) |
9. | Third Amended and Restated Employment Agreement, dated February 15, 2017, between B. Douglas Whitman, II and the Company (filed as Exhibit 10.10) |
10. | Amended and Restated Employment Agreement, dated February 2, 2016, between J. Christopher Douglas and the Company (filed as Exhibit 10.11) |
11. | Healthcare Realty Trust Incorporated Amended and Restated Executive Incentive Plan (filed as Exhibit 10.12) |
12. | 2010 Restricted Stock Implementation for Non-Employee Directors, dated May 4, 2010 (filed as Exhibit 10.13) |
13. | Amendment No. 1 to Restricted Stock Implementation for Non-Employee Directors (filed as Exhibit 10.14) |
14. | Amendment No. 2 to Restricted Stock Implementation for Non-Employee Directors (filed as Exhibit 10.15) |
15. | Healthcare Realty Trust Incorporated Form of Restricted Stock Agreement for Non-Employee Directors (filed as Exhibit 10.16) |
16. | Healthcare Realty Trust Incorporated Form of Restricted Stock Agreement for Officers (filed as Exhibit 10.17) |
17. | Healthcare Realty Trust Incorporated 2015 Stock Incentive Plan (filed as Exhibit 10.18) |
18. | Amendment No. 1 to Healthcare Realty Trust Incorporated 2015 Stock Incentive Plan (filed as Exhibit 10.19) |
HEALTHCARE REALTY TRUST INCORPORATED | |||||
By: | /s/ TODD J. MEREDITH | ||||
Todd J. Meredith | |||||
President and Chief Executive Officer |
Signature | Title | Date | ||
/s/ Todd J. Meredith | President and Chief Executive Officer | February 15, 2017 | ||
Todd J. Meredith | (Principal Executive Officer) | |||
/s/ J. Christopher Douglas | Executive Vice President and Chief Financial | February 15, 2017 | ||
J. Christopher Douglas | Officer (Principal Financial Officer) | |||
/s/ Amanda L. Callaway | Senior Vice President and Chief Accounting | February 15, 2017 | ||
Amanda L. Callaway | Officer (Principal Accounting Officer) | |||
/s/ David R. Emery | Executive Chairman of the Board | February 15, 2017 | ||
David R. Emery | ||||
/s/ Nancy H. Agee | Director | February 15, 2017 | ||
Nancy H. Agee | ||||
/s/ Charles Raymond Fernandez, M.D. | Director | February 15, 2017 | ||
Charles Raymond Fernandez, M.D. | ||||
/s/ Peter F. Lyle | Director | February 15, 2017 | ||
Peter F. Lyle | ||||
/s/ Edwin B. Morris, III | Director | February 15, 2017 | ||
Edwin B. Morris, III | ||||
/s/ John Knox Singleton | Director | February 15, 2017 | ||
John Knox Singleton | ||||
/s/ Bruce D. Sullivan | Director | February 15, 2017 | ||
Bruce D. Sullivan | ||||
/s/ Christann M. Vasquez | Director | February 15, 2017 | ||
Christann M. Vasquez | ||||
/s/ Dan S. Wilford | Director | February 15, 2017 | ||
Dan S. Wilford |
Exhibit Number | Description of Exhibits | ||||
1.1 | — | Sales Agreement, dated February 19, 2016, between the Company and Barclays Capital Inc. (1) | |||
1.2 | — | Equity Distribution Agreement, dated February 19, 2016, between the Company and BB&T Capital Markets, a division of BB&T Securities, LLC (1) | |||
1.3 | — | Sales Agreement, dated February 19, 2016, between the Company and BMO Capital Markets Corp. (1) | |||
1.4 | — | Controlled Equity Offering Sales Agreement, dated February 19, 2016, between the Company and Cantor Fitzgerald & Co. (1) | |||
1.5 | — | Sales Agreement, dated February 19, 2016, between the Company and Credit Agricole Securities (USA) Inc. (1) | |||
3.1 | — | Second Articles of Amendment and Restatement of the Company, as amended. (3) | |||
3.2 | — | Amended and Restated Bylaws of the Company, as amended. (3) | |||
4.1 | — | Specimen stock certificate. (4) | |||
4.2 | — | Indenture, dated as of May 15, 2001 by and between the Company and Regions Bank, or trustee (as successor to the trustee named therein). (5) | |||
4.3 | — | Third Supplemental Indenture, dated December 4, 2009, by and between the Company and Regions Bank as Trustee. (6) | |||
4.4 | — | Form of 6.50% Senior Note due 2017 (set forth in Exhibit B to the Third Supplemental Indenture filed as Exhibit 4.2 thereto). (6) | |||
4.5 | — | Fourth Supplemental Indenture, dated December 13, 2010, by and between the Company and Regions Bank as Trustee. (7) | |||
4.6 | — | Form of 5.750% Senior Note due 2021 (set forth in Exhibit B to the Fourth Supplemental Indenture filed as Exhibit 4.2 thereto). (7) | |||
4.7 | — | Fifth Supplemental Indenture, dated March 26, 2013, by and between the Company and Regions Bank, as Trustee. (8) | |||
4.8 | — | Form of 3.75% Senior Note due 2023 (set forth in Exhibit B to the Fifth Supplemental Indenture filed as Exhibit (4.8) hereto). (8) | |||
4.9 | __ | Sixth Supplemental Indenture, dated April 24, 2015, by and between the Company and Regions Bank, as Trustee. (9) | |||
4.10 | __ | Form of 3.875% Senior Notes due 2025 (set forth in Exhibit B to the Sixth Supplemental Indenture filed as Exhibit 4.9 thereto). (9) | |||
10.1 | — | Second Amended and Restated Executive Retirement Plan. (10) | |||
10.2 | — | Amendment to Second Amended and Restated Executive Retirement Plan, dated as of October 30, 2012. (11) | |||
10.3 | __ | Second Amendment to Second Amended and Restated Executive Retirement Plan, dated as of May 5, 2015. (12) | |||
10.4 | — | 2000 Employee Stock Purchase Plan. (13) | |||
10.5 | — | Dividend Reinvestment Plan, as Amended. (14) | |||
10.6 | — | Third Amended and Restated Employment Agreement, dated February 16, 2016, between David R. Emery and the Company. (15) | |||
10.7 | — | Third Amended and Restated Employment Agreement, dated February 16, 2016, between Todd J. Meredith and the Company. (15) | |||
10.8 | — | Third Amended and Restated Employment Agreement, dated February 15, 2017, between John M. Bryant, Jr. and the Company. (filed herewith) | |||
10.9 | — | Amended and Restated Employment Agreement, dated January 1, 2017, between Robert E. Hull and the Company. (filed herewith) | |||
10.10 | — | Third Amended and Restated Employment Agreement, dated February 15, 2017, between B. Douglas Whitman, II and the Company. (filed herewith) | |||
10.11 | — | Amended and Restated Employment Agreement, dated February 2, 2016, between J. Christopher Douglas and the Company. (16) | |||
10.12 | — | Healthcare Realty Trust Incorporated Amended and Restated Executive Incentive Plan. (15) | |||
10.13 | — | 2010 Restricted Stock Implementation for Non-Employee Directors, dated May 4, 2010. (17) |
10.14 | — | Amendment No. 1 to 2010 Restricted Stock Implementation for Non-Employee Directors, dated December 11, 2013. (18) | |||
10.15 | — | Amendment No. 2 to 2010 Restricted Stock Implementation for Non-Employee Directors, dated August 4, 2015. (19) | |||
10.16 | — | Healthcare Realty Trust Incorporated Form of Restricted Stock Agreement for Non-Employee Directors. (15) | |||
10.17 | — | Healthcare Realty Trust Incorporated Form of Restricted Stock Agreement for Officers. (15) | |||
10.18 | — | Healthcare Realty Trust Incorporated 2015 Stock Incentive Plan. (20) | |||
10.19 | — | Amendment No. 1 to Healthcare Realty Trust Incorporated 2015 Stock Incentive Plan. (19) | |||
10.20 | — | Credit Agreement, dated as of October 14, 2011, by and among the Company, as Borrower, Wells Fargo Bank National Association, as Administrative Agent, JP Morgan Chase Bank, N.A., as Syndication Agent, Barclays Bank PLC, Credit Agricole Corporate and Investment Bank and Bank of America, N.A., as Co-Documentation Agents, and the other Lenders named therein. (21) | |||
10.21 | — | Amendment to Credit Agreement, dated as of February 15, 2013, by and among the Company, as Borrower, Wells Fargo Bank National Association, as Administrative Agent, JP Morgan Chase Bank, N.A., as Syndication Agent, Barclays Bank PLC, Credit Agricole Corporate and Investment Bank and Bank of American, N.A., as Co-Documentation Agents, and the other Lenders named therein. (22) | |||
10.22 | — | Amendment No. 2 to Credit Agreement, dated as of February 27, 2014, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and the other lenders that are party thereto. (23) | |||
10.23 | — | Third Amendment to Credit Agreement, dated as of July 29, 2016, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and the other lenders that are party thereto. (24) | |||
10.24 | — | Term Loan Agreement, dated as of February 27, 2014, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and the other lenders that are party thereto. (23) | |||
10.25 | — | First Amendment to Term Loan, dated July 29, 2016, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and the other lenders that are party thereto. (24) | |||
11 | — | Statement re: computation of per share earnings (contained in Note 14 to the Notes to the Consolidated Financial Statements for the year ended December 31, 2013 in Item 8 to this Annual Report on Form 10-K). | |||
21 | — | Subsidiaries of the Registrant. (filed herewith) | |||
23 | — | Consent of BDO USA, LLP, independent registered public accounting firm. (filed herewith) | |||
31.1 | — | Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith) | |||
31.2 | — | Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith) | |||
32 | — | Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith) | |||
101.INS | — | XBRL Instance Document. (filed herewith) | |||
101.SCH | — | XBRL Taxonomy Extension Schema Document. (filed herewith) | |||
101.CAL | — | XBRL Taxonomy Extension Calculation Linkbase Document. (filed herewith) | |||
101.LAB | — | XBRL Taxonomy Extension Labels Linkbase Document. (filed herewith) | |||
101.DEF | — | XBRL Taxonomy Extension Definition Linkbase Document. (filed herewith) | |||
101.PRE | — | XBRL Taxonomy Extension Presentation Linkbase Document. (filed herewith) |
(1) | Filed as an exhibit to the Company’s Form 8-K filed February 19, 2106 and hereby incorporated by reference. |
(2) | Filed as an exhibit to the Company's Form 8-K filed December 23, 2015 and hereby incorporated by reference. |
(3) | Filed as an exhibit to the Company’s Form 10-Q for the quarter ended June 30, 2015 and hereby incorporated by reference. |
(4) | Filed as an exhibit to the Company's Registration Statement on Form S-11 (Registration No. 33-60506) previously filed pursuant to the Securities Act of 1933 and hereby incorporated by reference. |
(5) | Filed as an exhibit to the Company's Form 8-K filed May 17, 2001 and hereby incorporated by reference. |
(6) | Filed as an exhibit to the Company’s Form 8-K filed December 4, 2009 and hereby incorporated by reference. |
(7) | Filed as an exhibit to the Company’s Form 8-K filed December 13, 2010 and hereby incorporated by reference. |
(8) | Filed as an exhibit to the Company's Form 8-K filed March 26, 2013 and hereby incorporated by reference. |
(9) | Filed as an exhibit to the Company’s Form 8-K filed April 24, 2015 and hereby incorporated by reference. |
(10) | Filed as an exhibit to the Company’s Form 8-K filed December 31, 2008 and hereby incorporated by reference. |
(11) | Filed as an exhibit to the Company's Form 10-Q for the quarter ended September 30, 2012 and hereby incorporated by reference. |
(12) | Filed as an exhibit to the Company's Form 10-Q for the quarter ended March 31, 2015 and hereby incorporated by reference. |
(13) | Filed as an exhibit to the Company’s Form 10-K for the year ended December 31, 1999 and hereby incorporated by reference. |
(14) | Filed as an exhibit to the Company’s Registration Statement on Form S-3 (Registration No. 33-79452) previously filed on September 26, 2003 pursuant to the Securities Act of 1933 and hereby incorporated by reference. |
(15) | Filed as an exhibit to the Company's Form 10-K for the year ended December 31, 2015 and hereby incorporated by reference. |
(16) | Filed as an exhibit to the Company's Form 8-K filed February 3, 2016 and hereby incorporated by reference. |
(17) | Filed as an exhibit to the Company's Form 10-Q for the quarter ended March 31, 2010 and hereby incorporated by reference. |
(18) | Filed as an exhibit to the Company’s Form 10-K for the year ended December 31, 2013 and hereby incorporated by reference. |
(19) | Filed as an exhibit to the Company’s Form 10-Q for the quarter ended June 30, 2015 and hereby incorporated by reference. |
(20) | Filed as an exhibit to the Company's proxy statement filed March 30, 2015 and hereby incorporated by reference. |
(21) | Filed as an exhibit to the Company's Form 8-K filed October 19, 2011 and hereby incorporated by reference. |
(22) | Filed as an exhibit to the Company's Form 10-K for the year ended December 31, 2012 and hereby incorporated by reference. |
(23) | Filed as an exhibit to the Company's Form 8-K filed February 28, 2014 and hereby incorporated by reference. |
(24) | Filed as an exhibit to the Company's Form 10-Q for the quarter ended June 30, 2016 and hereby incorporated by reference. |
Balance at Beginning of Period | Additions and Deductions | Uncollectible Accounts Written-off | Balance at End of Period | |||||||||||||||||||
Description | Charged /(Credited) to Costs and Expenses | Charged to Other Accounts | ||||||||||||||||||||
2016 | Accounts and notes receivable allowance | $ | 179 | $ | (21 | ) | $ | — | $ | 10 | $ | 148 | ||||||||||
2015 | Accounts and notes receivable allowance | $ | 465 | $ | (194 | ) | $ | — | $ | 92 | $ | 179 | ||||||||||
2014 | Accounts and notes receivable allowance | $ | 541 | $ | 34 | $ | — | $ | 110 | $ | 465 |
Land (1) | Buildings, Improvements, Lease Intangibles and CIP (1) | |||||||||||||||||||||||||||||||||||||||||||||
Property Type | Number of Properties | State | Initial Investment | Cost Capitalized Subsequent to Acquisition | Total | Initial Investment | Cost Capitalized Subsequent to Acquisition | Total | Personal Property | (2) (3) (5) Total Property | (1) (3) Accumulated Depreciation | (4) Encumbrances | Date Acquired | Date Constructed | ||||||||||||||||||||||||||||||||
Medical office/outpatient | 184 | AL, AZ, CA, CO, DC, FL, GA, HI, IA, IL, IN, LA, MD, MI, MN, MO, MS, NC, NV, OH, OK, OR, SC, SD, TN, TX, VA, WA | $ | 182,231 | $ | 2,397 | $ | 184,628 | $ | 2,536,076 | $ | 447,126 | $ | 2,983,202 | $ | 3,810 | $ | 3,171,640 | $ | 738,029 | $ | 114,269 | 1993-2016 | 1905 -2015 | ||||||||||||||||||||||
Inpatient | 10 | CA, CO, MO, PA, TX | 13,095 | 150 | 13,245 | 316,354 | 14,187 | 330,541 | 265 | 344,051 | 75,518 | — | 1998-2013 | 1983 -2013 | ||||||||||||||||||||||||||||||||
Other | 10 | IA, IN, MI, TN, TX, VA | 3,088 | 73 | 3,161 | 69,951 | 7,196 | 77,147 | 633 | 80,941 | 25,936 | 1,348 | 1993-2015 | 1964 - 2015 | ||||||||||||||||||||||||||||||||
Total Real Estate | 204 | 198,414 | 2,620 | 201,034 | 2,922,381 | 468,509 | 3,390,890 | 4,708 | 3,596,632 | 839,483 | 115,617 | |||||||||||||||||||||||||||||||||||
Land Held for Develop. | — | 20,123 | — | 20,123 | — | — | — | — | 20,123 | 166 | — | |||||||||||||||||||||||||||||||||||
Construction in Progress (5) | 11,655 | 11,655 | ||||||||||||||||||||||||||||||||||||||||||||
Corporate Property | — | — | — | — | — | — | — | 5,583 | 5,583 | 4,167 | — | |||||||||||||||||||||||||||||||||||
Total Properties | 204 | $ | 218,537 | $ | 2,620 | $ | 221,157 | $ | 2,922,381 | $ | 468,509 | $ | 3,402,545 | $ | 10,291 | $ | 3,633,993 | $ | 843,816 | $ | 115,617 |
(1) | Includes two assets held for sale as of December 31, 2016 of approximately $5.8 million (gross) and accumulated depreciation of $3.0 million, one asset held for sale as of December 31, 2015 of approximately $1.8 million (gross) and accumulated depreciation of $1.1 million; and two assets held for sale as of December 31, 2014 of approximately $13.3 million (gross) and accumulated depreciation of $4.5 million. |
(2) | Total assets as of December 31, 2016 have an estimated aggregate total cost of $3.7 billion for federal income tax purposes. |
(3) | Depreciation is provided for on a straight-line basis on buildings and improvements over 3.3 to 39.0 years, lease intangibles over to 1.9 to 99.0 years, personal property over to 2.8 to 17.3, and land improvements over 15.0 to 38.1 years. |
(4) | Includes unamortized premium of $2.6 million and unaccreted discount of $1.5 million and issuance costs of $0.4 million as of December 31, 2016. |
(5) | Reconciliation of Total Property and Accumulated Depreciation for the year ended December 31, 2016, 2015 and 2014 follows: |
Year Ended December 31, 2016 | Year Ended December 31, 2015 | Year Ended December 31, 2014 | |||||||||||||||||||||
(Dollars in thousands) | Total Property | Accumulated Depreciation | Total Property | Accumulated Depreciation | Total Property | Accumulated Depreciation | |||||||||||||||||
Beginning Balance | $ | 3,382,680 | $ | 762,996 | $ | 3,271,536 | $ | 705,135 | $ | 3,084,166 | $ | 642,320 | |||||||||||
Additions during the period: | |||||||||||||||||||||||
Real Estate acquired | 239,265 | 3,898 | 183,478 | 3,048 | 166,290 | 2,272 | |||||||||||||||||
Other improvements | 70,595 | 121,592 | 47,985 | 111,625 | 55,340 | 105,257 | |||||||||||||||||
Acquisition through Foreclosure | — | — | — | — | 40,247 | 1,536 | |||||||||||||||||
Land held for development | — | 26 | 500 | 26 | — | 26 | |||||||||||||||||
Construction in Progress | 35,596 | — | 19,024 | — | — | — | |||||||||||||||||
Retirement/dispositions: | |||||||||||||||||||||||
Real Estate | (94,143 | ) | (44,696 | ) | (139,741 | ) | (56,838 | ) | (74,507 | ) | (46,276 | ) | |||||||||||
Disposal of previously consolidated VIE | — | — | — | — | — | — | |||||||||||||||||
Land held for development | — | — | (102 | ) | — | — | — | ||||||||||||||||
Ending Balance | $ | 3,633,993 | $ | 843,816 | $ | 3,382,680 | $ | 762,996 | $ | 3,271,536 | $ | 705,135 |
Year Ended December 31, | |||||||||||
(Dollars in thousands) | 2016 | 2015 | 2014 | ||||||||
Balance at beginning of period | $ | — | $ | 1,900 | $ | 125,547 | |||||
Additions during period: | |||||||||||
New or acquired mortgages | — | — | 1,900 | ||||||||
Increased funding on existing mortgages | — | — | 1,244 | ||||||||
— | — | 3,144 | |||||||||
Deductions during period: | |||||||||||
Principal repayments and reductions (1) | — | (1,900 | ) | (5,605 | ) | ||||||
Principal reductions due to acquisitions (2) | — | — | (81,213 | ) | |||||||
Foreclosed mortgage note receivable (3) | — | — | (39,973 | ) | |||||||
— | (1,900 | ) | (126,791 | ) | |||||||
Balance at end of period | $ | — | $ | — | $ | 1,900 |
(1) | Principal repayments for the years ended December 31, 2015 and 2014 include unscheduled principal reductions on mortgage notes of $1.9 million and $5.6 million, respectively. |
(2) | In May 2014, the Company acquired a medical office building in Oklahoma for $85.4 million, including the elimination of the construction mortgage note receivable totaling $81.2 million and cash consideration of approximately $4.1 million. |
(3) | In March 2014, the Company acquired a medical office building in Iowa in satisfaction of a $40.0 million mortgage note receivable that matured on January 10, 2014. The cash flows from the operations of the property were sufficient to pay the Company interest from the maturity date through the date of the transfer of ownership to the Company at the 7.7% fixed interest rate plus an additional 3% of interest for the default interest rate. The Company did not recognize any of the $1.5 million exit fee receivable that was due upon maturity of the mortgage note receivable. |
Corporation: | |
Healthcare Realty Trust Incorporated | |
By: | /s/ Todd J. Meredith |
Name: | Todd J. Meredith |
Title: | President and Chief Executive Officer |
Officer: | |
By: | /s/ John M. Bryant, Jr. |
Name: | John M. Bryant, Jr. |
Dated: ____________________, 20__ | ||
John M. Bryant, Jr. |
Corporation: | |
Healthcare Realty Trust Incorporated | |
By: | /s/ John M. Bryant, Jr. |
Name: | John M. Bryant, Jr. |
Title: | Executive Vice President and General Counsel |
Officer: | |
By: | /s/ Robert E. Hull |
Name: | Robert E. Hull |
Dated: ____________________, 20__ | ||
Robert E. Hull |
Corporation: | |
Healthcare Realty Trust Incorporated | |
By: | /s/ Todd J. Meredith |
Name: | Todd J. Meredith |
Title: | President and Chief Executive Officer |
Officer: | |
By: | /s/ B. Douglas Whitman, II |
Name: | B. Douglas Whitman, II |
Dated: ____________________, 20__ | ||
B. Douglas Whitman II |
Subsidiary | State of Incorporation |
5901 Westown Parkway MOB, LLC | DE |
593HR, LLC | TN |
Allenmore C, LLC | DE |
Ankeny North MOB, LLC | DE |
Atrevis, LLC | TN |
Clive Wellness Campus Building Two, LLC | DE |
Clive Wellness Campus Building One, LLC | DE |
Clive Wellness Campus Building Five, LLC | DE |
Healthcare Acquisition of Texas, Inc. | AL |
Healthcare Realty Services Incorporated | TN |
HR 3705 Medical Parkway, LLC | DE |
HR 601 Broadway Unit A, LLC | TN |
HR 9191 Pinecroft Manager, LLC | DE |
HR 9191 Pinecroft SPE, LLC | DE |
HR-Pima, LLC | DE |
HR Acquisition I Corporation | MD |
HR Acquisition of Alabama, Inc. | AL |
HR Acquisition of Pennsylvania, Inc. | PA |
HR Acquisition of San Antonio, Ltd. | AL |
HR Assets, LLC | DE |
HR Bel Air, LLC | MD |
HR Briargate, LLC | DE |
HR Carolinas Holdings, LLC | DE |
HR Dakota, LLC | DE |
HR First Hill Holdings, LLC | DE |
HR First Hill Medical Building SPE, LLC | DE |
HR Fridley, LLC | MN |
HR HMP Unit 1 Manager, LLC | DE |
HR HMP Unit 1 SPE, LLC | |
HR Interests, Inc. | TX |
HR Ladco Holdings, LLC | DE |
HR Lowry Medical Center SPE, LLC | DE |
HR MAC II, LLC | DE |
HR McNaughten SPE, LLC | DE |
HR MRMC MOB II SPE, LLC | DE |
HR MRMC MOB III SPE, LLC | DE |
HR North Carolina, LLC | DE |
HR of Carolinas, LLC | DE |
HR of California, Inc. | AL |
HR of Indiana, LLC | DE |
HR of Iowa, LLC | DE |
HR of Kingsport, LLC | AL |
HR of Los Angeles, Inc. | AL |
HR of Los Angeles, Ltd. | AL |
HR of Sarasota, Ltd. | AL |
HR Oregon MOB Venture, LLC | DE |
HR Richmond Community SPE, LLC | DE |
HR Richmond Manager, LLC | DE |
HR Summit Crossing SPE, LLC | DE |
HR Springfield MO, LLC | DE |
HR St. Francis MOB I SPE, LLC | DE |
HR St. Mary’s MOB NW SPE, LLC | DE |
HR St. Mary’s MOB South SPE, LLC | DE |
HR St. Mary’s MOB West SPE, LLC | DE |
HR Three Tree, LLC | DE |
HR Unity, LLC | TN |
HR Valley North, LLC | DE |
HR Washington MOB Venture, LLC | DE |
HR West Hills Manager SPE, LLC | TN |
HR West Hills MOB SPE, LLC | TN |
HR West Des Moines SPE, LLC | DE |
HRP MAC III, LLC | DE |
HRT Holdings, Inc. | DE |
HRT of Alabama, Inc. | AL |
HRT of Delaware, Inc. | DE |
HRT of Illinois, Inc. | DE |
HRT of Louisiana, Inc. | LA |
HRT of Mississippi, Inc. | DE |
HRT of Roanoke, Inc. | VA |
HRT of Tennessee, LLC | TN |
HRT of Virginia, Inc. | VA |
HRT Properties of Texas, Ltd. | TX |
Lakewood MOB, LLC | DE |
Maplewood MOB, LLC | DE |
Oat Properties, LLC | TN |
Pasadena Medical Plaza SSJ Ltd. | FL |
Pennsylvania HRT, Inc. | PA |
Roseburg Surgery Center, LLC | DE |
Southwest General Medical Building (TX) SPE, LLC | DE |
Stevens Pavilion LLC | DE |
Stevens Pavilion Parent LLC | DE |
West Norman SPE, LLC | TN |
Yakima Valley Parent LLC | DE |
Yakima Valley Subsidiary LLC | DE |
1. | I have reviewed this annual report on Form 10-K of Healthcare Realty Trust Incorporated; |
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 15, 2017 | |
/s/ TODD J. MEREDITH | ||
Todd J. Meredith | ||
President and Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K of Healthcare Realty Trust Incorporated; |
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 15, 2017 | |
/s/ J. CHRISTOPHER DOUGLAS | ||
J. Christopher Douglas | ||
Executive Vice President and Chief Financial Officer |
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | February 15, 2017 | |
/s/ TODD J. MEREDITH | ||
Todd J. Meredith | ||
President and Chief Executive Officer | ||
/s/ J. CHRISTOPHER DOUGLAS | ||
J. Christopher Douglas | ||
Executive Vice President and Chief Financial Officer |
Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Jan. 27, 2017 |
Jun. 30, 2016 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | HEALTHCARE REALTY TRUST INC | ||
Entity Central Index Key | 0000899749 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2016 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Common Stock, Shares Outstanding | 116,440,289 | ||
Entity Public Float | $ 3,650,133,357 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized shares | 50,000,000 | 50,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares | 150,000,000 | 150,000,000 |
Common stock, issued shares | 116,417,000 | 101,517,000 |
Common stock, outstanding shares (shares) | 116,417,000 | 101,517,000 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Statement of Comprehensive Income [Abstract] | |||
NET INCOME | $ 85,571 | $ 69,436 | $ 32,200 |
Other comprehensive income (loss): | |||
Reclassification adjustment for losses included in net income (Pension termination) | 0 | 2,519 | 0 |
Net loss arising during the period | 0 | 0 | (2,570) |
Reclassification adjustment for losses included in net income (Interest expense) | 168 | 115 | 0 |
Losses on settlement of swaps arising during the period | 0 | (1,684) | 0 |
Other comprehensive income (loss) | 168 | 950 | (2,570) |
COMPREHENSIVE INCOME | 85,739 | 70,386 | 29,630 |
Less: Comprehensive income attributable to noncontrolling interests | (313) | ||
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ 85,739 | $ 70,386 | $ 29,317 |
Consolidated Statements of Equity (Parenthetical) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Dividend per share to common stockholders (in dollars per share) | $ 1.20 | $ 1.20 | $ 1.20 |
Cumulative Dividends | |||
Dividend per share to common stockholders (in dollars per share) | 1.20 | 1.20 | 1.20 |
Total Stockholders' Equity | |||
Dividend per share to common stockholders (in dollars per share) | $ 1.20 | $ 1.20 | $ 1.20 |
Summary of Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Business Overview Healthcare Realty Trust Incorporated (the “Company”) is a real estate investment trust ("REIT") that owns, leases, manages, acquires, finances, develops and redevelops income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States of America. The Company had gross investments of approximately $3.6 billion in 202 real estate properties, construction in progress, land held for development and corporate property as of December 31, 2016. The Company’s 202 owned real estate properties are located in 27 states and total approximately 14.6 million square feet. The Company provided property management services to approximately 10.3 million square feet nationwide. Square footage disclosures in this Annual Report on Form 10-K are unaudited. Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company, its wholly owned subsidiaries, joint ventures, partnerships and consolidated variable interest entities (“VIE”) where the Company controls the operating activities of the VIE. In accordance with the consolidation accounting standards, the Company must evaluate each contractual relationship it has with its lessees, borrowers, or others to determine whether or not the contractual arrangement creates a variable interest in those entities. If the Company determines that it has a variable interest and the entity is a VIE, then management must determine whether or not the Company is the primary beneficiary of the VIE, resulting in consolidation of the VIE if the Company is the primary beneficiary. A primary beneficiary has the power to direct those activities of the VIE that most significantly impact its economic performance and has the obligation to absorb the losses of, or receive the benefits from, the VIE. The Company had no VIEs as of December 31, 2016 and 2015. All significant intercompany accounts, transactions and balances have been eliminated upon consolidation in the Consolidated Financial Statements. Use of Estimates in the Consolidated Financial Statements Preparation of the Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates. Segment Reporting The Company owns, leases, acquires, manages, finances, develops and redevelops outpatient and other healthcare-related properties. The Company is managed as one reporting unit, rather than multiple reporting units, for internal reporting purposes and for internal decision-making. Therefore, the Company discloses its operating results in a single reportable segment. Real Estate Properties Real estate properties are recorded at cost or at fair value if acquired in a transaction that is a business combination under Accounting Standards Codification Topic 805, Business Combinations. Cost or fair value at the time of acquisition is allocated among land, buildings, tenant improvements, lease and other intangibles, and personal property as applicable. The Company’s gross real estate assets, on a financial reporting basis, totaled approximately $3.6 billion as of December 31, 2016 and $3.4 billion as of December 31, 2015. During 2016 and 2015, the Company eliminated against accumulated depreciation approximately $6.7 million and $6.8 million, respectively, of fully amortized real estate intangibles that were initially recorded as a component of certain real estate acquisitions. Also during 2016 and 2015, approximately $0.1 million and $1.3 million of fully depreciated tenant and capital improvements that were no longer in service were eliminated against accumulated depreciation. Depreciation and amortization of real estate assets and liabilities in place as of December 31, 2016, is provided for on a straight-line basis over the asset’s estimated useful life:
The Company capitalizes direct costs, including costs such as construction costs and professional services, and indirect costs, including capitalized interest and overhead costs, associated with the development and construction of real estate assets while substantive activities are ongoing to prepare the assets for their intended use. Capitalized interest cost is calculated using the weighted average interest rate of the Company's unsecured debt or the interest rate on project specific debt, if applicable. The Company continues to capitalize interest on the unoccupied portion of the properties in stabilization for up to one year after the buildings have been placed into service, at which time the capitalization of interest must cease. Land Held for Development Land held for development includes parcels of land owned by the Company, upon which the Company intends to develop and own outpatient healthcare facilities. The Company’s investment in land held for development totaled approximately $20.1 million and $17.5 million as of December 31, 2016 and 2015, respectively. Asset Impairment The Company assesses the potential for impairment of identifiable, definite-lived, intangible assets and long-lived assets, including real estate properties, whenever events occur or a change in circumstances indicates that the carrying value might not be fully recoverable. Indicators of impairment may include significant underperformance of an asset relative to historical or expected operating results; significant changes in the Company’s use of assets or the strategy for its overall business; plans to sell an asset before its depreciable life has ended; the expiration of a significant portion of leases in a property; or significant negative economic trends or negative industry trends for the Company or its operators. In addition, the Company reviews for possible impairment, those assets subject to purchase options and those impacted by casualties, such as tornadoes and hurricanes. If management determines that the carrying value of the Company’s assets may not be fully recoverable based on the existence of any of the factors above, or others, management would measure and record an impairment charge based on the estimated fair value of the property or the estimated fair value less costs to sell the property. Acquisitions of Real Estate Properties with In-Place Leases Acquisitions of real estate properties with in-place leases are accounted for at fair value. When a building with in-place leases is acquired, the cost of the acquisition must be allocated between the tangible real estate assets "as-if-vacant" and the intangible real estate assets related to in-place leases based on their estimated fair values. Where appropriate, the intangible assets recorded could include goodwill or customer relationship assets. The values related to above- or below-market in-place lease intangibles are amortized over the remaining term of the leases upon acquisition to rental income where the Company is the lessor and to property operating expense where the Company is the lessee, and are amortized over the remaining term of the leases upon acquisition. The Company considers whether any of the in-place lease rental rates are above- or below-market. An asset (if the actual rental rate is above-market) or a liability (if the actual rental rate is below-market) is calculated and recorded in an amount equal to the present value of the future cash flows that represent the difference between the actual lease rate and the average market rate. If an in-place lease is identified as a below-market rental rate, the Company would also evaluate any renewal options associated with that lease to determine if the intangible should include those periods. The Company also estimates an absorption period, which can vary by property, assuming the building is vacant and must be leased up to the actual level of occupancy when acquired. During that absorption period, the owner would incur direct costs, such as tenant improvements, and would suffer lost rental income. Likewise, the owner would have acquired a measurable asset in that, assuming the building was vacant, certain fixed costs would be avoided because the actual in-place lessees would reimburse a certain portion of fixed costs through expense reimbursements during the absorption period. All of these intangible assets (above- or below-market lease, tenant improvement costs avoided, rental income lost, and expenses recovered through in-place lessee reimbursements) are estimated and recorded in amounts equal to the present value of estimated future cash flows. The actual purchase price is allocated based on the various asset fair values described above. The building and tenant improvement components of the purchase price are depreciated over the estimated useful life of the building or the weighted average remaining term of the in-places leases. The at-market, in-place lease intangibles are amortized to amortization expense over the weighted average remaining term of the leases, customer relationship assets are amortized to amortization expense over terms applicable to each acquisition, and any goodwill recorded would be reviewed for impairment at least annually. The fair values of at-market in-place lease and other intangible assets are amortized and reflected in amortization expense in the Company’s Consolidated Statements of Income. See Note 8 for more details on the Company’s intangible assets. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. In calculating fair value, a company must maximize the use of observable market inputs, minimize the use of unobservable market inputs and disclose in the form of an outlined hierarchy the details of such fair value measurements. A hierarchy of valuation techniques is defined to determine whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when available. These inputs have created the following fair value hierarchy:
Executed purchase and sale agreements, that are binding agreements, are categorized as level one inputs. Brokerage estimates, letters of intent, or unexecuted purchase and sale agreements are considered to be level three as they are nonbinding in nature. During 2016, the Company used level one inputs to record an impairment charge in discontinued operations of approximately $0.1 million related to a property in held for sale, reducing the Company's carrying value to the estimated fair value of the property less costs to sell prior to sale. Fair Value of Derivative Financial Instruments Derivative financial instruments are recorded at fair value on the Company's Consolidated Balance Sheets as other assets or other liabilities. The valuation of derivative instruments requires the Company to make estimates and judgments that affect the fair value of the instruments. Fair values of derivatives are estimated by pricing models that consider the forward yield curves and discount rates. The fair value of the Company's forward starting interest rate swap contracts are estimated by pricing models that consider foreign trade rates and discount rates. Such amounts and the recognition of such amounts are subject to significant estimates that may change in the future. For derivatives designated in qualifying cash flow hedging relationships, the change in fair value of the effective portion of the derivatives is recognized in accumulated other comprehensive income (loss), whereas the change in fair value of the ineffective portion is recognized in earnings. Gains and losses are reclassified from accumulated other comprehensive income into earnings once the underlying hedged transaction is recognized in earnings. As of December 31, 2016, the Company had $1.4 million recorded in accumulated other comprehensive loss related to a forward starting interest rate swap entered into and settled during 2015. See Note 10 for additional information. Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents includes short-term investments with original maturities of three months or less when purchased. Restricted cash includes cash held in escrow in connection with proceeds from the sales of certain real estate properties. These sales proceeds will be disbursed as the Company acquires real estate investments under Section 1031 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The carrying amount approximates fair value due to the short term maturity of these investments. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Company's Consolidated Balance Sheets the same amounts shown on the Company's Consolidated Statements of Cash Flows:
Allowance for Doubtful Accounts and Credit Losses Accounts Receivable Management monitors the aging and collectibility of its accounts receivable balances on an ongoing basis. Whenever deterioration in the timeliness of payment from a tenant or sponsoring health system is noted, management investigates and determines the reason or reasons for the delay. Considering all information gathered, management’s judgment is exercised in determining whether a receivable is potentially uncollectible and, if so, how much or what percentage may be uncollectible. Among the factors management considers in determining collectibility are: the type of contractual arrangement under which the receivable was recorded (e.g., a triple net lease, a gross lease, a property operating agreement, or some other type of agreement); the tenant’s reason for slow payment; industry influences under which the tenant operates; evidence of willingness and ability of the tenant to pay the receivable; credit-worthiness of the tenant; collateral, security deposit, letters of credit or other monies held as security; tenant’s historical payment pattern; other contractual agreements between the tenant and the Company; relationship between the tenant and the Company; the state in which the tenant operates; and the existence of a guarantor and the willingness and ability of the guarantor to pay the receivable. Considering these factors and others, management concludes whether all or some of the aged receivable balance is likely uncollectible. Upon determining that some portion of the receivable is likely uncollectible, the Company records a provision for bad debts for the amount it expects will be uncollectible. When efforts to collect a receivable are exhausted, the receivable amount is charged off against the allowance. The Company does not hold any accounts receivable for sale. Mortgage Notes The Company had no mortgage notes receivable outstanding as of December 31, 2016 and 2015 and no allowances were recorded on mortgage notes receivables during 2016 or 2015. The Company evaluates collectibility of any mortgage notes and records allowances on the notes as necessary. A loan is impaired when it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan as scheduled, including both contractual interest and principal payments. This assessment also includes an evaluation of the loan collateral. If a mortgage loan becomes past due, the Company will review the specific circumstances and may discontinue the accrual of interest on the loan. The loan is not returned to accrual status until the debtor has demonstrated the ability to continue debt service in accordance with the contractual terms. Loans placed on non-accrual status will be accounted for either on a cash basis, in which income is recognized only upon receipt of cash, or on a cost-recovery basis, in which all cash receipts reduce the carrying value of the loan, based on the Company’s expectation of future collectibility. Goodwill and Other Intangible Assets Goodwill and intangible assets with indefinite lives are not amortized, but are tested at least annually for impairment. Intangible assets with finite lives are amortized over their respective lives to their estimated residual values and are reviewed for impairment only when impairment indicators are present. Identifiable intangible assets of the Company are comprised of enterprise goodwill, in-place lease intangible assets, customer relationship intangible assets, and deferred financing costs. In-place lease and customer relationship intangible assets are amortized on a straight-line basis over the applicable lives of the assets. Deferred financing costs are amortized over the term of the related credit facility or other debt instrument under the straight-line method, which approximates amortization under the effective interest method. Goodwill is not amortized but is evaluated annually as of December 31 for impairment. Both the 2016 and 2015 impairment evaluations indicated that no impairment had occurred with respect to the $3.5 million goodwill asset. See Note 8 for more detail on the Company’s intangible assets. Contingent Liabilities From time to time, the Company may be subject to loss contingencies arising from legal proceedings and similar matters. Additionally, while the Company maintains comprehensive liability and property insurance with respect to each of its properties, the Company may be exposed to unforeseen losses related to uninsured or underinsured damages. The Company continually monitors any matters that may present a contingent liability, and, on a quarterly basis, management reviews the Company’s reserves and accruals in relation to each of them, adjusting provisions as necessary in view of changes in available information. Liabilities for contingencies are first recorded when a loss is determined to be both probable and can be reasonably estimated. Changes in estimates regarding the exposure to a contingent loss are reflected as adjustments to the related liability in the periods when they occur. Because of uncertainties inherent in the estimation of contingent liabilities, it is possible that the Company’s provision for contingent losses could change materially in the near term. To the extent that any significant losses, in addition to amounts recognized, are at least reasonably possible, such amounts will be disclosed in the notes to the Consolidated Financial Statements. Defined Benefit Pension Plan During 2015, the Company terminated its Executive Retirement Plan under which three of the Company’s founding officers were eligible to receive retirement benefits upon retirement. The Company recognized a total benefit obligation of $19.6 million in connection with the termination and recorded a charge of approximately $5.3 million, inclusive of the acceleration of $2.5 million recorded in accumulated other comprehensive loss on the Company's Consolidated Balance Sheets that was being amortized. The one-time lump sum payment was paid in cash in May 2016. See Note 12 for additional information. Stock-Based Compensation The Company has various employee and director stock-based awards outstanding. These awards include non-vested common stock and options to purchase common stock granted to employees pursuant to the 2015 Stock Incentive Plan and its predecessor plans (the “2015 Incentive Plan”) and the 2000 Employee Stock Purchase Plan (the “Employee Stock Purchase Plan”). The Company recognizes share-based payments to employees and directors in the Consolidated Statements of Income on a straight-line basis over the requisite service period based on the fair value of the award on the measurement date. The Employee Stock Purchase Plan features a “look-back” provision which enables the employee to purchase a fixed number of common shares at the lesser of 85% of the market price on the date of grant or 85% of the market price on the date of exercise, with optional purchase dates occurring once each quarter for 27 months. The Company accounts for awards to its employees under the Employee Stock Purchase Plan based on fair value, using the Black-Scholes model, and generally recognizes expense over the award’s vesting period, net of estimated forfeitures. Since the options granted under the Employee Stock Purchase Plan immediately vest, the Company records compensation expense for those options when they are granted in the first quarter of each year and then may record additional compensation expense in subsequent quarters as warranted. In each of the years ended December 31, 2016, 2015 and 2014, the Company recognized in general and administrative expenses approximately $0.2 million, $0.2 million, and $0.3 million, respectively, of compensation expense related to the annual grant of options to its employees to purchase shares under the Employee Stock Purchase Plan. See Note 13 for details on the Company’s stock-based awards. Accumulated Other Comprehensive Income (Loss) Certain items must be included in comprehensive income, including items such as foreign currency translation adjustments, minimum pension liability adjustments, derivative instruments and unrealized gains or losses on available-for-sale securities. The Company’s accumulated other comprehensive income (loss) consists only of the loss on the effective portion of changes in the fair value of derivatives designated as cash flow hedges as of December 31, 2016. As of December 31, 2015, the Company's accumulated other comprehensive income (loss) consisted of the cumulative pension liability adjustment and changes in the fair value of derivatives designated as cash flow hedges. As of December 31, 2014, the Company's accumulated other comprehensive income (loss) consisted only of the cumulative pension liability adjustments. The Company terminated its Pension Plan during 2015 and reclassified this amount into earnings. See Note 10 for more details on the Company's derivative financial instruments and Note 12 for more details on the Company's pension termination. Revenue Recognition The Company recognizes revenue when it is realized or realizable and earned. There are four criteria that must all be met before a Company may recognize revenue, including that persuasive evidence that an arrangement exists, delivery has occurred or services have been rendered (i.e., the tenant has taken possession of and controls the physical use of the leased asset), the price has been fixed or is determinable, and collectibility is reasonably assured. Income received but not yet earned is deferred until such time it is earned. Deferred revenue, included in other liabilities on the Consolidated Balance Sheets, was $32.4 million and $36.4 million, respectively, as of December 31, 2016 and 2015 which includes deferred tenant improvement reimbursements of $20.6 million and $21.3 million, respectively, which will be recognized as revenue over the life of each respective lease. The Company derives most of its revenues from its real estate property and mortgage notes receivable portfolio. The Company’s rental and mortgage interest income is recognized based on contractual arrangements with its tenants, sponsoring health systems or borrowers. These contractual arrangements fall into three categories: leases, mortgage notes receivable, and property operating agreements as described in the following paragraphs. The Company may accrue late fees based on the contractual terms of a lease or note. Such fees, if accrued, are included in rental income or mortgage interest income on the Company’s Consolidated Statements of Income, based on the type of contractual agreement. Rental Income Rental income related to non-cancelable operating leases is recognized as earned over the life of the lease agreements on a straight-line basis. The Company's lease agreements generally include provisions for stated annual increases or increases based on a Consumer Price Index ("CPI"). Rental income from properties under multi-tenant office lease arrangements and rental income from properties with single-tenant lease arrangements are included in rental income on the Company's Consolidated Statements of Income. The components of rental income are as follows:
Operating expense recoveries, included in property operating income, were approximately $66.0 million, $58.9 million and $53.9 million, respectively, for the years ended December 31, 2016, 2015 and 2014. Additional rent, generally defined in most lease agreements as the cumulative increase in CPI from the lease start date to the CPI as of the end of the previous year, is calculated as of the beginning of each year, and is then billed and recognized as income during the year as provided for in the lease. There was no additional rental income for the years ended December 31, 2016 and 2015. Included in rental income was additional rental income, net of reserves, of approximately $0.7 million for the year ended December 31, 2014. Mortgage Interest Income Interest income on the Company’s mortgage notes receivable is recognized based on the interest rates, maturity dates and amortization periods in accordance with each note agreement. The Company has no outstanding mortgage notes receivable as of December 31, 2016 and 2015. However, the Company had one fixed rate mortgage note receivable that was outstanding as of December 31, 2014, which was repaid prior to December 31, 2015. The Company amortizes any fees paid related to its mortgage notes receivable to mortgage interest income over the term of the loan on a straight-line basis which approximates amortization under the effective interest method. Other Operating Income Other operating income on the Company’s Consolidated Statements of Income was comprised of the following:
Two and five of the Company’s owned real estate properties as of December 31, 2016 and 2015, respectively, were covered under property operating agreements between the Company and a sponsoring health system, which contractually obligate the sponsoring health system to provide to the Company a minimum return on the Company’s investment in the property in exchange for the right to be involved in the operating decisions of the property, including tenancy. If the minimum return is not achieved through normal operations of the property, the Company calculates and accrues to property lease guaranty revenue, each quarter, any shortfalls due from the sponsoring health systems under the terms of the property operating agreement. Interest income generally relates to interest on tenant improvement reimbursements as defined in each note or lease agreement. Management fees for property management services provided to third parties are generally calculated, accrued and billed monthly based on a percentage of cash collections of tenant receivables for the month or a stated amount per square foot. Management fees related to the Company’s owned properties are eliminated in consolidation. Federal Income Taxes No provision has been made for federal income taxes. The Company intends at all times to qualify as a REIT under Sections 856 through 860 of the Internal Revenue Code. The Company must distribute at least 90% per annum of its real estate investment trust taxable income to its stockholders and meet other requirements to continue to qualify as a real estate investment trust. See Note 16 for further discussion. The Company classifies interest and penalties related to uncertain tax positions, if any, in the Consolidated Financial Statements as a component of general and administrative expenses. No such amounts were recognized during the three years ended December 31, 2016. Federal tax returns for the years 2013, 2014, 2015 and 2016 are currently subject to examination by taxing authorities. State Income Taxes The Company must pay certain state income taxes and the provisions for such taxes are generally included in general and administrative expense on the Company’s Consolidated Statements of Income. See Note 16 for further discussion. Sales and Use Taxes The Company must pay sales and use taxes to certain state tax authorities based on rents collected from tenants in properties located in those states. The Company is generally reimbursed for these taxes by the tenant. The Company accounts for the payments to the taxing authority and subsequent reimbursement from the tenant on a net basis in revenues in the Company’s Consolidated Statements of Income. Discontinued Operations The Company sells properties from time to time due to a variety of factors, including among other things, market conditions or the exercise of purchase options by tenants. The Company does not expect these dispositions to meet the amended definition of a discontinued operation as defined in Accounting Standards Update ("ASU") No. 2014-08, "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity." The Company adopted ASU No. 2014-08 on a prospective basis beginning January 1, 2015 which excluded properties previously in discontinued operations prior to adoption. However, if a sale were to meet the amended definition representing a strategic shift that has or will have a major effect on the Company's operations and financial results, the operating results of the properties that have been sold or are held for sale will be reported as discontinued operations in the Company’s Consolidated Statements of Income for all periods presented. Assets Held for Sale Long-lived assets held for sale are reported at the lower of their carrying amount or their fair value less cost to sell estimate. Further, depreciation of these assets ceases at the time the assets are classified as held for sale. Losses resulting from the sale of such properties are characterized as impairment losses in the Consolidated Statements of Income. See Note 5 for more detail on discontinued operations and assets held for sale. Earnings per Share Basic earnings per common share is calculated using weighted average shares outstanding less issued and outstanding non-vested shares of common stock. Diluted earnings per common share is calculated using weighted average shares outstanding plus the dilutive effect of the outstanding stock options from the Employee Stock Purchase Plan and non-vested shares of common stock using the treasury stock method and the average stock price during the period. See Note 14 for the calculations of earnings per share. New Accounting Pronouncements Accounting Standards Update No. 2014-09 and No. 2015-14 In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, "Revenue from Contracts with Customers," a comprehensive new revenue recognition standard that supersedes most existing revenue recognition guidance, including sales of real estate. This standard's core principle is that a company will recognize revenue when it transfers goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods and services. However, leasing contracts, representing the major source of the Company's revenues, are not within the scope of the new standard and will continue to be accounted for under other standards. In August 2015, the FASB issued ASU No. 2015-14, "Revenue from Contracts with Customers (Topic 606); Deferral of the Effective Date." This standard is effective for the Company for annual and interim periods beginning after December 15, 2017 with early adoption permitted only as of annual reporting periods beginning after December 15, 2016, including interim periods within that year. The Company plans on adopting this standard by using the full retrospective adoption method beginning on January 1, 2018. The Company's revenue-producing contracts are primarily leases that are not within the scope of this standard. As a result, the Company does not expect the adoption of this standard to have a material impact on the Company's leasing revenues. The Company is continuing to evaluate the impact on other revenue sources. However, the Company does expect additional disclosures that are required from the adoption of this standard. Accounting Standards Update No. 2015-03 In April 2015, the FASB issued ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs." This standard required debt issuance costs to be reported in the balance sheet as a direct reduction from the face amount of the note to which it is directly related. In August 2015, the FASB issued ASU No. 2015-15, "Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements," which allowed entities to defer and present debt issuance costs related to line-of-credit arrangements as assets regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company adopted this standard as of January 1, 2016. As a result of the adoption, all deferred financing costs, excluding costs related to the unsecured revolving credit facility, were reclassified to Notes and bonds payable. Unsecured revolving credit facility costs remain classified as an asset and will continue to be amortized over the remaining term. The guidance requires retrospective adoption for all prior periods presented. The following table represents the previously reported balances and reclassified balances for the impacted line items of the Consolidated Balance Sheet as of December 31, 2015:
Accounting Standards Update No. 2015-16 In September 2015, the FASB issued ASU No. 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments." This standard requires adjustments to provisional amounts that are identified during the measurement period after a business combination to be recognized in the reporting period in which the adjustment amounts are determined. The adjustments recognized in the current period include the effects on earnings of changes in depreciation, amortization, or other income effects as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The Company adopted this standard effective as of January 1, 2016. The adoption of this standard did not have a material impact on the Company's consolidated financial position, results of operations or cash flows. Accounting Standards Update No. 2016-02 In February 2016, the FASB issued ASU No. 2016-02, "Leases." For lessees, the new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company expects that all of the leases where the Company is the lessee will be recorded on the Company's balance sheet. For lessors, the new standard requires a lessor to classify leases as either sales-type, finance or operating. A lease will be treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control, the lease is treated as financing. If the lessor doesn't convey risks and rewards or control, an operating lease results. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years with early adoption permitted. A modified retrospective transition approach is required for lessors for sales-type, direct financing, and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is in the initial stages of evaluating the impact from the adoption of this new standard on the Consolidated Financial Statements and related notes. Accounting Standards Update No. 2016-09 In March 2016, the FASB issued ASU No. 2016-09, "Compensation - Stock Compensation; Improvements to Employee Share-Based Payment Accounting." This update was issued as part of the simplification initiative. The areas of simplification relevant to the Company include the following:
This standard is effective for the Company for annual and interim periods beginning on January 1, 2017 with early adoption permitted. The Company adopted this standard effective January 1, 2016. The adoption of this standard did not have a material impact on the Company's consolidated financial position, results of operations or cash flows. Accounting Standards Update No. 2016-13 In June 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments." This update is intended to improve financial reporting by requiring timelier recognition of credit losses on loans and other financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other such commitments. This update requires that financial statement assets measured at an amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. This standard is effective for the fiscal year beginning after December 15, 2019 with early adoption permitted. The Company is in the initial stages of evaluating the impact from the adoption of this new standard on the Consolidated Financial Statements and related notes. Accounting Standards Update No. 2016-15 In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows; Classification of Certain Cash Receipts and Cash Payments." This update clarifies whether the following items should be classified as operating, investing or financing in the statement of cash flows: (i) debt prepayments and extinguishment costs, (ii) settlement of zero-coupon debt, (iii) settlement of contingent consideration, (iv) insurance proceeds, (v) settlement of corporate-owned life insurance and bank-owned life insurance policies, (vi) distributions from equity method investees, (vii) beneficial interest in securitization transactions and (viii) receipts and payments with aspects of more than one class of cash flows. This standard is effective for the Company for annual and interim periods beginning on January 1, 2018 with early adoption permitted on a retrospective transition method to each period presented. The Company adopted this standard effective January 1, 2017. There is not expected to be a material impact on the Company's Consolidated Financial Statements and related notes resulting from the adoption of this standard. Accounting Standards Update No. 2016-18 In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows; Restricted Cash." This update requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This standard is effective for the Company for annual and interim periods beginning after December 15, 2017 with early adoption permitted. The Company has adopted this standard for the 2016 annual reporting period. The adoption of this standard did not have a material impact on the Company's Consolidated Financial Statements and related notes. Accounting Standards Update No. 2017-01 In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations; Clarifying the Definition of a Business." This update modifies the requirements to meet the definition of a business under Topic 805, "Business Combinations." The amendments provide a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that will need to be further evaluated. The Company believes that this amendment will result in most if its real estate acquisitions to be accounted for as asset acquisitions rather than business combinations. This standard is effective for the Company for annual and interim periods beginning after December 15, 2017 with early adoption permitted. The Company adopted this standard effective January 1, 2017. The impact to the Consolidated Financial Statements and related notes as a result of the adoption of this standard is primarily related to the difference in the accounting of acquisition costs. When accounting for these costs as a part of an asset acquisition, the Company will be permitted to capitalize the costs. The Company does not believe that this will have a material impact on the Consolidated Financial Statements and related notes. |
Property Investments |
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Real Estate Investment Property, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property Investments | Property Investments The Company invests in healthcare-related properties and mortgages located throughout the United States. The Company provides management, leasing, development and redevelopment services, and capital for the construction of new facilities as well as for the acquisition of existing properties. The Company had gross investments of approximately $3.6 billion in 202 real estate properties, land held for development and corporate property as of December 31, 2016. The following table summarizes the Company’s investments at December 31, 2016.
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Real Estate Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||
Real Estate Leases | Real Estate Leases Real Estate Leases The Company’s properties are generally leased pursuant to non-cancelable, fixed-term operating leases or are supported through other financial support arrangements with expiration dates through 2036. Some leases and financial arrangements provide for fixed rent renewal terms in addition to market rent renewal terms. Some leases provide the lessee, during the term of the lease and for a short period thereafter, with an option or a right of first refusal to purchase the leased property. The Company’s portfolio of single-tenant net leases generally requires the lessee to pay minimum rent, additional rent based upon fixed percentage increases or increases in the Consumer Price Index and all taxes (including property tax), insurance, maintenance and other operating costs associated with the leased property. Future minimum lease payments under the non-cancelable operating leases and guaranteed amounts due to the Company under property operating agreements as of December 31, 2016 are as follows (in thousands):
Revenue Concentrations The Company’s real estate portfolio is leased to a diverse tenant base. The Company's largest revenue concentration is with Baylor Scott & White Health and its affiliates which accounted for 9.8%, 9.8% and 10.5% of the Company's consolidated revenues for the years ended December 31, 2016, 2015 and 2014, respectively. Purchase Option Provisions Certain of the Company’s leases include purchase option provisions. The provisions vary by agreement but generally allow the lessee to purchase the property covered by the agreement at fair market value or an amount equal to the Company’s gross investment. The Company expects that the purchase price from its purchase options will be greater than its net investment in the properties at the time of potential exercise by the lessee. The Company had approximately $173.7 million in real estate properties as of December 31, 2016 that were subject to purchase options that were exercisable or become exercisable during 2017. |
Acquisitions, Dispositions and Mortgage Repayments |
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Acquisitions and Dispositions and Mortgage Repayments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions, Dispositions and Mortgage Repayments | Acquisitions, Dispositions and Mortgage Repayments 2016 Real Estate Acquisitions For the year ended December 31, 2016, the Company acquired 10 medical office buildings for an aggregate purchase price of $241.9 million, including cash consideration of $224.9 million, purchase price credits of $1.0 million, capital commitments of $2.8 million and the assumption of debt of $13.2 million (excluding a $0.8 million fair value premium recorded at acquisition). The following table details the Company's acquisitions for the year ended December 31, 2016:
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed in the real estate acquisitions for 2016 as of the acquisition date:
2015 Real Estate Acquisitions For the year ended December 31, 2015, the Company acquired eight medical office buildings and two parcels of land for an aggregate purchase price of $190.1 million, including cash consideration of $156.4 million, purchase price credits of $2.3 million, capital commitments of $3.0 million and the assumption of debt of $28.4 million (excluding a $0.4 million fair value premium recorded at acquisition). The following table details the Company's acquisitions for the year ended December 31, 2015:
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The following table summarizes the estimated fair values of the assets acquired and liabilities assumed in the real estate acquisitions for 2015 as of the acquisition date:
2016 Real Estate Asset Dispositions During the year ended December 31, 2016, the Company disposed of six properties for an aggregate sales price of $94.7 million, including net proceeds of $93.3 million and $1.4 million of closing costs and related adjustments. The following table details the Company's dispositions for the year ended December 31, 2016:
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2015 Real Estate Asset Dispositions and Company-Financed Mortgage Note Repayments During the year ended December 31, 2015, the Company disposed of eight medical office buildings and one surgical facility for an aggregate sales price of $158.0 million, including net proceeds of $153.1 million and $4.9 million of closing costs and related adjustments. Also, during the year ended December 31, 2015, one Company-financed mortgage note receivable totaling $1.9 million was repaid. The following table details the Company's dispositions for the year ended December 31, 2015:
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Held for Sale and Discontinued Operations |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Held for Sale and Discontinued Operations | Held for Sale and Discontinued Operations Assets and liabilities of properties sold or classified as held for sale are separately identified on the Company’s Consolidated Balance Sheets in the current period. As of December 31, 2016 and 2015, the Company had two and one properties, respectively, classified as held for sale. As of December 31, 2016, the Company had one property remaining in assets held for sale that was classified as discontinued operations prior to the adoption of Accounting Standards Update No. 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”. This property will be included in discontinued operations on the Company's Consolidated Statements of Income until such time that the Company sells the asset. None of the Company's 2015 or 2016 dispositions or assets classified as held for sale represented a strategic shift that had or will have a major effect on the Company's operations and financial results. Therefore, the 2015 and 2016 dispositions were not classified as discontinued operations. The table below reflects the assets and liabilities of the properties classified as held for sale and discontinued operations as of December 31, 2016 and 2015.
The table below reflects the results of operations of the properties included in discontinued operations on the Company’s Consolidated Statements of Income for the years ended December 31, 2016, 2015 and 2014.
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Impairment Charges |
12 Months Ended |
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Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Impairment Charges | Impairment Charges An asset is impaired when undiscounted cash flows expected to be generated by the asset are less than the carrying value of the asset. The Company must assess the potential for impairment of its long-lived assets, including real estate properties, whenever events occur or there is a change in circumstances, such as the sale of a property or the decision to sell a property, that indicate that the recorded value might not be fully recoverable. The Company recorded impairment charges on properties sold or classified as held for sale, included in discontinued operations, for the years ended December 31, 2016, 2015 and 2014 totaling $0.1 million, $0.7 million and $12.0 million, respectively. The Company recorded impairment charges on two properties sold, included in continuing operations, for the year ended December 31, 2015 totaling $3.6 million. Both level 1 and level 3 fair value techniques were used to derive these impairment charges. |
Other Assets |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets | Other Assets Other assets consist primarily of straight-line rent receivables, prepaids, intangible assets, deferred financing costs and accounts receivable. Items included in "Other assets, net" on the Company’s Consolidated Balance Sheets as of December 31, 2016 and 2015 are detailed in the table below:
______ (1) The Company adopted ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs" as of January 1, 2016. Balance Sheet data for the year ending December 31, 2015 reflects this reclassification. See Note 1 to the Consolidated Financial Statements for more information. |
Intangible Assets and Liabilities |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets and Liabilities | Intangible Assets and Liabilities The Company has several types of intangible assets and liabilities included in its Consolidated Balance Sheets, including goodwill, deferred financing costs, above-, below-, and at-market lease intangibles, and customer relationship intangibles. The Company’s intangible assets and liabilities as of December 31, 2016 and 2015 consisted of the following:
The following table represents expected amortization over the next five years of the Company’s intangible assets and liabilities in place as of December 31, 2016:
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Notes and Bonds Payable |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes and Bonds Payable | Notes and Bonds Payable The table below details the Company’s notes and bonds payable. The Company adopted ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs" as of January 1, 2016. The balances the year ending December 31, 2015 shown below reflect the required reclassification of debt issuance costs. See Note 1 to the Consolidated Financial Statements for more information.
The Company’s various debt agreements contain certain representations, warranties, and financial and other covenants customary in such loan agreements. Among other things, these provisions require the Company to maintain certain financial ratios and impose certain limits on the Company’s ability to incur indebtedness and create liens or encumbrances. As of December 31, 2016, the Company was in compliance with its financial covenant provisions under its various debt instruments. Unsecured Credit Facility due 2020 On October 14, 2011, the Company entered into a $700.0 million unsecured credit facility ("Unsecured Credit Facility") with a syndicate of 17 lenders. On July 29, 2016, the Company entered into the third amendment to the Unsecured Credit Facility with a syndicate of 14 lenders to extend the maturity date to July 2020. The credit facility agreement provides the Company with two six-month extension options that could extend the maturity date to July 2021. Each option is subject to an extension fee of 0.075% of the aggregate commitments. Amounts outstanding under the Unsecured Credit Facility bear interest at LIBOR plus an applicable margin rate. The margin rate, which depends on the Company's credit ratings, ranges from 0.83% to 1.55% (1.00% as of December 31, 2016). In addition, the Company pays a facility fee per annum on the aggregate amount of commitments ranging from 0.13% to 0.30% (0.20% as of December 31, 2016). In connection with the amendment, the Company paid up-front fees to the lenders of approximately $4.4 million, which will be amortized over the term of the facility. The Company wrote-off certain unamortized deferred financing costs of the original facility of approximately $0.1 million upon execution of the amendment. As of December 31, 2016, the Company had $107.0 million outstanding under the Unsecured Credit Facility with an effective interest rate of approximately 1.8% and had a remaining borrowing capacity of approximately $593.0 million. Unsecured Term Loan due 2019 In February 2014, the Company entered into a $200.0 million unsecured term loan facility ("Unsecured Term Loan due 2019") with a syndicate of nine lenders that matures on February 26, 2019. The Unsecured Term Loan due 2019 bears interest at a rate equal to (x) LIBOR plus (y) a margin ranging from 1.00% to 1.95% (1.20% as of December 31, 2016) based upon the Company's unsecured debt ratings. Payments under the Unsecured Term Loan due 2019 are interest only, with the full amount of the principal due at maturity. The Unsecured Term Loan due 2019 may be prepaid at any time, without penalty. The proceeds from the Unsecured Term Loan due 2019 were used by the Company to repay borrowings on its Unsecured Credit Facility. The Unsecured Term Loan due 2019 has various financial covenant provisions that are required to be met on a quarterly and annual basis that are equivalent to those of the Unsecured Credit Facility. With proceeds of the equity offering that the Company completed on July 5, 2016, the Company repaid $50.0 million of the Unsecured Term Loan due 2019 leaving an outstanding balance of $150.0 million as of December 31, 2016 with an effective interest rate of approximately 1.8%. Senior Notes due 2021 On December 13, 2010, the Company issued $400.0 million of unsecured senior notes due 2021 (the "Senior Notes due 2021") in a registered public offering. The Senior Notes due 2021 bear interest at 5.75%, payable semi-annually on January 15 and July 15, and are due on January 15, 2021, unless redeemed earlier by the Company. The notes were issued at a discount of approximately $3.2 million and the Company incurred $3.3 million in debt issuance costs, which yielded a 5.97% interest rate per annum upon issuance. For each of the years ended December 31, 2016, 2015 and 2014, the Company amortized approximately $0.3 million of the discount and $0.3 million of the debt issuance costs which are included in interest expense on the Company’s Consolidated Statements of Income. The following table reconciles the balance of the Senior Notes due 2021 on the Company’s Consolidated Balance Sheets as of December 31, 2016 and 2015:
Senior Notes due 2023 On March 26, 2013, the Company issued $250.0 million of unsecured senior notes due 2023 (the "Senior Notes due 2023") in a registered public offering. The Senior Notes due 2023 bear interest at 3.75%, payable semi-annually on April 15 and October 15, beginning October 15, 2013, and are due on April 15, 2023, unless redeemed earlier by the Company. The notes were issued at a discount of approximately $2.1 million and the Company incurred debt issuance cost of $2.1 million, which yielded a 3.95% interest rate per annum upon issuance. For each of the years ended December 31, 2016, 2015 and 2014, the Company amortized approximately $0.2 million of the discount and $0.2 million of the debt issuance cost which are included in interest expense on the Company’s Consolidated Statements of Income. The following table reconciles the balance of the Senior Notes due 2023 on the Company’s Consolidated Balance Sheets as of December 31, 2016 and 2015:
Senior Notes due 2025 On April 24, 2015, the Company issued $250.0 million of unsecured senior notes due 2025 (the "Senior Notes due 2025") in a registered public offering. The Senior Notes due 2025 bear interest at 3.875%, payable semi-annually on May 1 and November 1, beginning November 1, 2015, and are due on May 1, 2025, unless redeemed earlier by the Company. The notes were issued at a discount of approximately $0.2 million and the Company incurred approximately $2.3 million in debt issuance costs which yielded a 4.08% interest rate per annum upon issuance. For the years ended December 31, 2016 and 2015, the Company amortized approximately $0.2 million and $0.1 million, respectively, of the debt issuance costs which is included in interest expense on the Company's Consolidated Statements of Income. Concurrent with this transaction, the Company settled four forward starting swap agreements for $1.7 million. The Senior Notes due 2025 have various financial covenants that are required to be met on a quarterly and annual basis. The following table reconciles the balance of the Senior Notes due 2025 on the Company’s Consolidated Balance Sheets as of December 31, 2016 and 2015:
Mortgage Notes Payable The following table reconciles the Company’s aggregate mortgage notes principal balance with the Company’s Consolidated Balance Sheets as of December 31, 2016 and 2015. For the years ended December 31, 2016, 2015 and 2014, the Company amortized approximately $0.3 million, $0.8 million and $1.1 million of the discount and $0.9 million, $1.0 million, and $1.0 million of the premium. For the years ended December 31, 2016, 2015 and 2014, the Company also amortized approximately $0.2 million, $0.2 million, and $0.2 million of the debt issuance costs, respectively, on the mortgage notes payable which is included in interest expense on the Company’s Consolidated Statements of Income.
The following table details the Company’s mortgage notes payable, with related collateral.
Other Long-Term Debt Information Future maturities of the Company’s notes and bonds payable as of December 31, 2016 were as follows:
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Derivative Financial Instruments |
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments Risk Management Objective of Using Derivatives In addition to operational risks which arise in the normal course of business, the Company is exposed to economic risks such as interest rate, liquidity, and credit risk. In certain situations, the Company may enter into derivative financial instruments such as interest rate swap and interest rate cap agreements to manage interest rate risk exposure arising from variable rate debt transactions that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company's objective in using interest rate derivatives is to add stability to interest expense and to manage its exposure to interest rate movements. Cash Flow Hedges of Interest Rate Risk Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without changing the underlying notional amount. During the year ended December 31, 2015, the Company entered into four forward starting interest rate swaps with a total notional value of $225.0 million to hedge the risk of changes in the interest-related cash flows associated with the potential issuance of long-term debt. That debt was issued in April 2015, as discussed in Note 9, and the forward starting interest rate swaps were terminated. As a result, the Company realized a loss at the termination date which was deferred and will be amortized over the term of the Senior Notes due 2025. As of December 31, 2016, the Company did not have any outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk. The effective portion of changes in the fair value of derivatives designated as, and that qualify as, cash flow hedges is recorded in accumulated other comprehensive income or loss (“OCI”) and is reclassified into earnings as interest expense in the period that the hedged forecasted transaction affects earnings. The effective portion of the Company’s interest rate swaps that was recorded in the accompanying consolidated statements of income for the year ended December 31, 2016 and 2015 was as follows:
The Company estimates that an additional $0.2 million will be reclassified from accumulated other comprehensive loss as an increase to interest expense over the next 12 months. No gain or loss was recognized related to hedge ineffectiveness or to amounts excluded from effectiveness testing on the Company's cash flow hedges during the year ended December 31, 2016. |
Stockholders' Equity |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ Equity Common Stock The Company had no preferred shares outstanding and had common shares outstanding for the three years ended December 31, 2016 as follows:
Equity Offering On July 5, 2016, the Company issued 9,200,000 shares of common stock, par value $0.01 per share, at $33.13 per share in an underwritten public offering pursuant to the Company's shelf registration statement. The net proceeds of the offering, after offering expenses, were approximately $304.6 million. At-The-Market Equity Offering Program The Company has in place an at-the-market equity offering program to sell shares of the Company’s common stock from time to time in at-the-market sales transactions. The following table details the shares sold under this program.
On February 19, 2016, the Company entered into sales agreements with five investment banks to allow sales under its at-the-market equity offering program of up to 10,000,000 shares of common stock. A previous sales agreement with one investment bank was terminated effective February 17, 2016. During the year ended December 31, 2016, the Company sold a total of 4,795,601 shares of common stock under this program, including 664,298 shares of common stock under the previous sales agreement. The sales generated $144.6 million in net proceeds at prices ranging from $28.31 to $33.66 per share (weighted average of $30.61 per share). The Company has 5,868,697 authorized shares remaining available to be sold under the current sales agreements as of February 15, 2017. Dividends Declared During 2016, the Company declared and paid common stock dividends aggregating $1.20 per share ($0.30 per share per quarter). On January 31, 2017, the Company declared a quarterly common stock dividend in the amount of $0.30 per share payable on February 28, 2017 to stockholders of record on February 14, 2017. Authorization to Repurchase Common Stock The Company’s Board of Directors has authorized management to repurchase up to 3,000,000 shares of the Company’s common stock. As of December 31, 2016, the Company had not repurchased any shares under this authorization. The Company may elect, from time to time, to repurchase shares either when market conditions are appropriate or as a means to reinvest excess cash flows. Such purchases, if any, may be made either in the open market or through privately negotiated transactions. Noncontrolling Interest Transfers The following schedule discloses the effects of changes in the Company's ownership interest in its less-than-wholly-owned subsidiary on the Company's stockholders' equity:
Accumulated Other Comprehensive Income (Loss) During the year ended December 31, 2014, the Company had recorded an increase to future benefit obligations related to its pension plan of $2.6 million, resulting in a decrease to Other liabilities and an offsetting decrease to Accumulated other comprehensive income (loss) which is included in Stockholders' equity on the Consolidated Balance Sheets. During the year ended December 31, 2015, the Company reclassified $2.5 million, from accumulated other comprehensive loss, which is included in stockholders' equity on the Consolidated Balance Sheets, to net income as a result of the termination of the defined benefit pension plan. See Note 12 for more information regarding the termination of the defined benefit pension plan. Also, during the year ended December 31, 2015, the Company recorded an increase to accumulated other comprehensive loss of $1.6 million, as a result of the settlement and payment of forward-starting interest rate swaps. This amount will be reclassified out of accumulated other comprehensive loss impacting net income over the 10-year term of the associated senior note issuance. See Note 10 for more information regarding the Company's forward-starting interest rate swaps. The following table represents the changes in Accumulated other comprehensive income (loss) during the year ended December 31, 2016:
The following table represents the details regarding the reclassifications from Accumulated other comprehensive income (loss) during the year ended December 31, 2016:
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Benefit Plans |
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Compensation and Retirement Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Benefit Plans | Benefit Plans Executive Retirement Plan Effective May 5, 2015, the Company terminated its Executive Retirement Plan and recorded a charge of approximately $5.3 million, inclusive of the acceleration of $2.5 million recorded in accumulated other comprehensive loss on the Company's Consolidated Balance Sheet that was being amortized resulting in a total benefit obligation of $19.6 million in connection with the termination of the Executive Retirement Plan. The charge includes amounts resulting from assumed additional years of service for two plan participants who have not reached age 65 and payments associated with FICA and other tax obligations. On May 6, 2016, the Company paid the total benefit obligation of $19.6 million which reduced Other liabilities on the Company's Consolidated Balance Sheets. As a result of the termination of the plan, and included in the payment of the total benefit obligation, Mr. Emery received a lump sum amount equal to his accrued benefit under the plan of approximately $14.4 million in May 2016. Net periodic benefit cost for the Executive Retirement Plan for the three years in the period ended December 31, 2016 is comprised of the following:
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The following table sets forth the benefit obligations as of December 31, 2016 and 2015:
Amounts recognized in the Consolidated Balance Sheets are as follows:
The Company's assumed discount rates and compensation increases, which are used to measure the year-end benefit obligations and earnings for the subsequent year related to the Executive Retirement Plan, which was terminated on May 5, 2015 and are detailed in the following table for the three years ended December 31, 2016 :
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Stock and Other Incentive Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock and Other Incentive Plans | Stock and Other Incentive Plans Stock Incentive Plan In May 2015, the Company's stockholders approved the 2015 Incentive Plan which authorizes the Company to issue 3,500,000 shares of common stock to its employees and directors. The 2015 Incentive Plan, which superseded the 2007 Employee Stock Incentive Plan (the "Predecessor Plan"), will continue until terminated by the Company’s Board of Directors. As of December 31, 2016 and 2015, the Company had issued a total of 1,024,739 and 139,520 restricted shares, respectively, under the 2015 Incentive Plan for compensation-related awards to employees and directors, with a total of 2,475,261and 3,360,480, respectively, remaining which had not been issued. Under the Predecessor Plan for compensation-related awards to employees and directors, the Company had issued, net of forfeitures, a total of 1,878,637 and 1,816,580 restricted shares for the years ended December 31, 2015 and 2014, respectively. Non-vested shares issued under the 2015 Incentive Plan are generally subject to fixed vesting periods varying from three to eight years beginning on the date of issue. If a recipient voluntarily terminates his or her relationship with the Company or is terminated for cause before the end of the vesting period, the shares are forfeited, at no cost to the Company. The Company recognizes the impact of forfeitures as they occur. Once the shares have been issued, the recipient has the right to receive dividends and the right to vote the shares. Compensation expense recognized during the years ended December 31, 2016, 2015 and 2014 from the amortization of the value of shares over the vesting period issued to employees and directors was $7.4 million, $5.9 million and $4.1 million, respectively. The following table represents expected amortization of the Company's non-vested shares issued:
Executive Incentive Plan On July 31, 2012, the Company adopted an Executive Incentive Plan, which was amended and restated on February 16, 2016 ("Executive Incentive Plan") to provide specific award criteria with respect to incentive awards made under the 2015 Incentive Plan subject to the discretion of the Compensation Committee. No new shares of common stock were authorized in connection with the Executive Incentive Plan. Under the terms of the Executive Incentive Plan, the Company's named executive officers, and certain other members of senior management, may earn incentive awards in the form of cash and non-vested stock. Cash incentive awards are based on individual and Company performance. Company performance is measured over a four-quarter period against targeted financial and operational metrics set in advance by the Compensation Committee. Non-vested stock awards are based on the Company's relative total shareholder return ("TSR") performance over one-year and three-year periods, measured against the Company's peer group. From 2013 through 2015, the officers could elect to receive all or a portion of the cash based awards on Company performance in the form of non-vested stock awards. This option has been eliminated from the Executive Incentive Plan beginning in 2016. For 2016, 2015 and 2014, compensation expense resulting from the amortization of non-vested share grants to officers was approximately $2.6 million, $2.5 million, and $1.3 million, respectively. Details of the awards that have been earned from this plan are as follows:
Long-Term Incentive Program In the first quarter of 2016 and 2015, the Company granted a performance-based award to officers excluding five named executive officers and five senior vice presidents under the Long-term Incentive Program adopted under the 2015 Incentive Plan (the "LTIP") totaling approximately $1.3 million and $1.0 million, respectively, which was granted in the form of 44,162 non-vested shares and 33,145 non-vested shares, respectively. The shares have vesting periods ranging from three to eight years with a weighted average vesting period of approximately six years. Beginning in 2012, the Company's executive officers were no longer eligible to participate in the LTIP and beginning in 2013, five senior vice presidents were also no longer eligible to participate. In the first quarter of 2014, the Company granted a special release of 2,968 non-vested shares to three of its officers in lieu of a cash compensation increase. The shares have a vesting period of eight years. For 2016, 2015 and 2014, compensation expense resulting from the amortization of non-vested share grants to officers was approximately $0.5 million, $0.3 million, and $0.1 million, respectively. Salary Deferral Plan The Company's salary deferral plan allows officers to elect to defer up to 50% of their base salary in the form of non-vested shares issued under the 2015 Incentive Plan subject to long-term vesting. The number of shares will be increased through a Company match depending on the length of the vesting period selected by the officer. The officer's vesting period choices are: three years for a 30% match; five years for a 50% match; and eight years for a 100% match. During 2016, 2015 and 2014, the Company issued 42,256 shares, 55,923 shares and 71,460 shares, respectively, to its officers through the salary deferral plan. For 2016, 2015 and 2014, compensation expense resulting from the amortization of non-vested share grants to officers was approximately $1.1 million, $1.1 million, and $1.7 million, respectively. Non-employee Directors Incentive Plan The Company issues non-vested shares to its non-employee directors under the 2015 Incentive Plan. The directors’ shares issued have a one-year vesting period beginning with the May 2015 grant (previously a three-year vesting period) and are subject to forfeiture prior to such date upon termination of the director’s service, at no cost to the Company. During 2016, 2015 and 2014, the Company issued 21,374 shares, 23,201 shares, and 26,677 shares, respectively, to its non-employee directors through the 2015 Incentive Plan. For 2016, 2015 and 2014, compensation expense resulting from the amortization of non-vested share grants to directors was approximately $1.0 million, $1.0 million, and $0.5 million, respectively. Other Grants The Company issued three one-time non-vested share grants. For 2016, compensation expense resulting from the amortization of these non-vested share grants to officers was approximately $0.1 million, respectively. The following information provides information about each grant:
A summary of the activity under the 2015 Incentive Plan and related information for the three years in the period ended December 31, 2016 follows:
The vesting periods for the non-vested shares granted during 2016 ranged from one to ten years with a weighted-average amortization period remaining as of December 31, 2016 of approximately 5.9 years. During 2016, 2015 and 2014, the Company withheld 48,428 shares, 49,225 shares and 371,017 shares, respectively, of common stock from its officers to pay estimated withholding taxes related to the vesting of shares. 401(k) Plan The Company maintains a 401(k) plan that allows eligible employees to defer salary, subject to certain limitations imposed by the Internal Revenue Code. The Company provides a matching contribution of up to 3% of each eligible employee’s salary, subject to certain limitations. The Company’s matching contributions were approximately $0.4 million for each year during 2016, 2015 and 2014. Dividend Reinvestment Plan The Company is authorized to issue 1,000,000 shares of common stock to stockholders under the Dividend Reinvestment Plan. As of December 31, 2016, the Company had issued 555,596 shares under the plan of which 9,575 shares were issued in 2016, 13,950 shares were issued in 2015 and 12,606 shares were issued in 2014. Employee Stock Purchase Plan The Company has an Employee Stock Purchase Plan, pursuant to which the Company is authorized to issue shares of common stock. As of December 31, 2016, 2015 and 2014, the Company had a total of 63,690 shares, 96,977 shares and 88,495 shares authorized under the Employee Stock Purchase Plan, respectively, which had not been issued or optioned. Under the Employee Stock Purchase Plan, each eligible employee in January of each year is able to purchase up to $25,000 of common stock at the lesser of 85% of the market price on the date of grant or 85% of the market price on the date of exercise of such option. The number of shares subject to each year’s option becomes fixed on the date of grant. Options granted under the Employee Stock Purchase Plan expire if not exercised 27 months after each such option’s date of grant. Cash received from employees upon exercising options under the Employee Stock Purchase Plan was approximately $1.2 million for the year ended December 31, 2016, $0.9 million for the year ended December 31, 2015, and $1.2 million for the year ended December 31, 2014. A summary of the Employee Stock Purchase Plan activity and related information for the three years in the period ended December 31, 2016 is as follows:
The fair values for these options were estimated at the date of grant using a Black-Scholes options pricing model with the weighted-average assumptions for the options granted during the period noted in the following table. The risk-free interest rate was based on the U.S. Treasury constant maturity-nominal two-year rate whose maturity is nearest to the date of the expiration of the latest option outstanding and exercisable; the expected dividend yield was based on the expected dividends of the current year as a percentage of the average stock price of the prior year; the expected life of each option was estimated using the historical exercise behavior of employees; expected volatility was based on historical volatility of the Company’s common stock; and expected forfeitures were based on historical forfeiture rates within the look-back period.
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share The table below sets forth the computation of basic and diluted earnings per common share for the three years in the period ended December 31, 2016.
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Redevelopment Activity The Company is in the process of redeveloping two medical office buildings in Tennessee and began constructing an expansion of one of the buildings during 2015. The Company spent approximately $50.6 million on the redevelopment of these properties through December 31, 2016, including the acquisition of a land parcel for $3.1 million on which the Company built a parking garage. Development Activity The Company continued the development of a 98,000 square foot medical office building in Colorado during 2016. Of the total budget,$11.7 million had been spent as of December 31, 2016. Construction is expected to be completed in the second quarter of 2017. The table below details the Company’s construction activity as of December 31, 2016. The information included in the table below represents management’s estimates and expectations at December 31, 2016, which are subject to change. The Company’s disclosures regarding certain projections or estimates of completion dates may not reflect actual results.
Tenant Improvements The Company may provide a tenant improvement allowance in new or renewal leases for the purpose of refurbishing or renovating tenant space. As of December 31, 2016, the Company had commitments of approximately $19.1 million that is expected to be spent on tenant improvements throughout the portfolio. Land Held for Development Land held for development includes parcels of land owned by the Company, upon which the Company intends to develop and own outpatient healthcare facilities. The Company’s investment in land held for development totaled approximately $20.1 million and $17.5 million as of December 31, 2016 and 2015, respectively. Operating Leases As of December 31, 2016, the Company was obligated under operating lease agreements consisting primarily of the Company’s corporate office lease and ground leases. At December 31, 2016, the Company had 99 properties totaling 8.0 million square feet that were held under ground leases with a remaining weighted average term of 69.4 years, including renewal options. These ground leases typically have initial terms of 50 to 75 years with one to two renewal options extending the terms to 75 to 100 years. These ground leases have initial term expiration dates through 2115. The Company’s corporate office lease currently covers approximately 36,653 square feet of rented space and expires on October 31, 2020. Annual base rent on the corporate office lease increases approximately 3.25% annually. The Company’s ground leases generally increase annually based on increases in the Consumer Price Index. Rental expense relating to the operating leases for the years ended December 31, 2016, 2015 and 2014 was $5.7 million, $5.1 million and $4.9 million, respectively. The Company prepaid 47 ground leases, which represented approximately $0.5 million of the Company’s rental expense for the years ended December 31, 2016, 2015, and 2014. The Company’s future minimum lease payments for its corporate office lease and 52 ground leases, excluding leases that the Company has prepaid and leases in which an operator pays or fully reimburses the Company, as of December 31, 2016 were as follows (in thousands):
Environmental Matters During 2015, the Company acquired a medical office building in Tacoma, Washington. During the due diligence period, the Company identified a specific area of the property that contains soils with above-tolerance levels of tetrachloroethylene (a dry cleaning solvent commonly known as perc) and recorded a $1.2 million liability upon acquisition. Remediation efforts are underway and the Company has funded $0.3 million in 2016. |
Other Data |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Data | Other Data Taxable Income (unaudited) The Company has elected to be taxed as a REIT, as defined under the Internal Revenue Code. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its taxable income to its stockholders. As a REIT, the Company generally will not be subject to federal income tax on taxable income it distributes currently to its stockholders. Accordingly, no provision for federal income taxes has been made in the accompanying Consolidated Financial Statements. If the Company fails to qualify as a REIT for any taxable year, then it will be subject to federal income taxes at regular corporate rates, including any applicable alternative minimum tax, and may not be able to qualify as a REIT for four subsequent taxable years. Even if the Company qualifies as a REIT, it may be subject to certain state and local taxes on its income and property and to federal income and excise tax on its undistributed taxable income. Earnings and profits (as defined under the Internal Revenue Code), the current and accumulated amounts of which determine the taxability of distributions to stockholders, vary from net income attributable to common stockholders and taxable income because of different depreciation recovery periods, depreciation methods, and other items. On a tax-basis, the Company’s gross real estate assets totaled approximately $3.7 billion, $3.4 billion, and $3.3 billion as of December 31, 2016, 2015 and 2014, respectively. The following table reconciles the Company’s consolidated net income attributable to common stockholders to taxable income for the three years ended December 31, 2016:
______ (1) Before REIT dividend paid deduction. Characterization of Distributions (unaudited) Distributions in excess of earnings and profits generally constitute a return of capital. The following table gives the characterization of the distributions on the Company’s common stock for the three years ended December 31, 2016. For the three years ended December 31, 2016, there were no preferred shares outstanding. As such, no dividends were distributed related to preferred shares for those periods.
State Income Taxes The Company must pay certain state income taxes, which are included in general and administrative expense on the Company’s Consolidated Statements of Income. The State of Texas gross margins tax on gross receipts from operations is disclosed in the table below as an income tax because it is considered such by the Securities and Exchange Commission. State income tax expense and state income tax payments for the three years ended December 31, 2016 are detailed in the table below:
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Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practical to estimate that value. Cash, cash equivalents and restricted cash - The carrying amount approximates fair value. Mortgage notes receivable - The fair value of mortgage notes receivable is estimated based either on cash flow analyses at an assumed market rate of interest or at a rate consistent with the rates on mortgage notes acquired by the Company recently, if any. Borrowings under the Unsecured Credit Facility and Unsecured Term Loan due 2019 - The carrying amount approximates fair value because the borrowings are based on variable market interest rates. Senior unsecured notes payable - The fair value of notes and bonds payable is estimated using cash flow analyses, based on the Company’s current interest rates for similar types of borrowing arrangements. Mortgage notes payable - The fair value is estimated using cash flow analyses, based on the Company’s current interest rates for similar types of borrowing arrangements. The table below details the fair value and carrying values for notes and bonds payable as of December 31, 2016 and 2015.
______ (1) Level 3 - Fair value derived from valuation techniques in which one of more significant inputs or significant value drivers are unobservable. |
Selected Quarterly Financial Data (unaudited) |
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Selected Quarterly Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Quarterly Financial Data (unaudited) | Selected Quarterly Financial Data (unaudited) Quarterly financial information for the year ended December 31, 2016 is summarized below.
______ (1) The increases in net income and amounts per share for the fourth quarter of 2016 are primarily attributable to gains of $41.0 million on the sale of six properties. Quarterly financial information for the year ended December 31, 2015 is summarized below.
______ (1) The decreases in net income and amounts per share for the first quarter of 2015 are primarily attributable to impairment charges of $3.3 million. (2) The increases in net income and amounts per share for the second quarter of 2015 are primarily attributable to a $41.5 million gain on the sale of two properties, partially offset by a $28.0 million loss on extinguishment of the Senior Notes due 2017. (3) The increases in net income and amounts per share for the third quarter of 2015 are primarily attributable to a $10.6 million gain on the sale of one property previously classified as an asset held for sale. (4) The increases in net income and amounts per share for the fourth quarter of 2015 are primarily attributable to gains on sales of real estate totaling $9.1 million, partially offset by impairment charges of $0.7 million. |
Schedule II - Valuation and Qualifying Accounts |
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Valuation and Qualifying Accounts | Schedule II – Valuation and Qualifying Accounts for the years ended December 31, 2016, 2015 and 2014 (Dollars in thousands)
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Schedule III - Real Estate and Accumulated Depreciation |
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SEC Schedule III, Real Estate and Accumulated Depreciation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate and Accumulated Depreciation | Schedule III – Real Estate and Accumulated Depreciation as of December 31, 2016 (Dollars in thousands)
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Schedule IV - Mortgage Loans on Real Estate |
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Mortgage Loans on Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage Loans on Real Estate | Schedule IV – Mortgage Loans on Real Estate as of December 31, 2016 The Company had no mortgage notes receivable outstanding as of December 31, 2016. A rollforward of mortgage loans on real estate for the three years ended December 31, 2016 follows:
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Overview | Business Overview Healthcare Realty Trust Incorporated (the “Company”) is a real estate investment trust ("REIT") that owns, leases, manages, acquires, finances, develops and redevelops income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States of America. The Company had gross investments of approximately $3.6 billion in 202 real estate properties, construction in progress, land held for development and corporate property as of December 31, 2016. The Company’s 202 owned real estate properties are located in 27 states and total approximately 14.6 million square feet. The Company provided property management services to approximately 10.3 million square feet nationwide. Square footage disclosures in this Annual Report on Form 10-K are unaudited. |
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Principles of Consolidation | Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company, its wholly owned subsidiaries, joint ventures, partnerships and consolidated variable interest entities (“VIE”) where the Company controls the operating activities of the VIE. In accordance with the consolidation accounting standards, the Company must evaluate each contractual relationship it has with its lessees, borrowers, or others to determine whether or not the contractual arrangement creates a variable interest in those entities. If the Company determines that it has a variable interest and the entity is a VIE, then management must determine whether or not the Company is the primary beneficiary of the VIE, resulting in consolidation of the VIE if the Company is the primary beneficiary. A primary beneficiary has the power to direct those activities of the VIE that most significantly impact its economic performance and has the obligation to absorb the losses of, or receive the benefits from, the VIE. The Company had no VIEs as of December 31, 2016 and 2015. All significant intercompany accounts, transactions and balances have been eliminated upon consolidation in the Consolidated Financial Statements. |
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Use of Estimates in the Consolidated Financial Statements | Use of Estimates in the Consolidated Financial Statements Preparation of the Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates. |
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Segment Reporting | Segment Reporting The Company owns, leases, acquires, manages, finances, develops and redevelops outpatient and other healthcare-related properties. The Company is managed as one reporting unit, rather than multiple reporting units, for internal reporting purposes and for internal decision-making. Therefore, the Company discloses its operating results in a single reportable segment. |
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Real Estate Properties | Real Estate Properties Real estate properties are recorded at cost or at fair value if acquired in a transaction that is a business combination under Accounting Standards Codification Topic 805, Business Combinations. Cost or fair value at the time of acquisition is allocated among land, buildings, tenant improvements, lease and other intangibles, and personal property as applicable. The Company’s gross real estate assets, on a financial reporting basis, totaled approximately $3.6 billion as of December 31, 2016 and $3.4 billion as of December 31, 2015. During 2016 and 2015, the Company eliminated against accumulated depreciation approximately $6.7 million and $6.8 million, respectively, of fully amortized real estate intangibles that were initially recorded as a component of certain real estate acquisitions. Also during 2016 and 2015, approximately $0.1 million and $1.3 million of fully depreciated tenant and capital improvements that were no longer in service were eliminated against accumulated depreciation. Depreciation and amortization of real estate assets and liabilities in place as of December 31, 2016, is provided for on a straight-line basis over the asset’s estimated useful life:
The Company capitalizes direct costs, including costs such as construction costs and professional services, and indirect costs, including capitalized interest and overhead costs, associated with the development and construction of real estate assets while substantive activities are ongoing to prepare the assets for their intended use. Capitalized interest cost is calculated using the weighted average interest rate of the Company's unsecured debt or the interest rate on project specific debt, if applicable. The Company continues to capitalize interest on the unoccupied portion of the properties in stabilization for up to one year after the buildings have been placed into service, at which time the capitalization of interest must cease. |
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Land Held for Development | Land Held for Development Land held for development includes parcels of land owned by the Company, upon which the Company intends to develop and own outpatient healthcare facilities. The Company’s investment in land held for development totaled approximately $20.1 million and $17.5 million as of December 31, 2016 and 2015, respectively. |
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Asset Impairment | Asset Impairment The Company assesses the potential for impairment of identifiable, definite-lived, intangible assets and long-lived assets, including real estate properties, whenever events occur or a change in circumstances indicates that the carrying value might not be fully recoverable. Indicators of impairment may include significant underperformance of an asset relative to historical or expected operating results; significant changes in the Company’s use of assets or the strategy for its overall business; plans to sell an asset before its depreciable life has ended; the expiration of a significant portion of leases in a property; or significant negative economic trends or negative industry trends for the Company or its operators. In addition, the Company reviews for possible impairment, those assets subject to purchase options and those impacted by casualties, such as tornadoes and hurricanes. If management determines that the carrying value of the Company’s assets may not be fully recoverable based on the existence of any of the factors above, or others, management would measure and record an impairment charge based on the estimated fair value of the property or the estimated fair value less costs to sell the property. Assets Held for Sale Long-lived assets held for sale are reported at the lower of their carrying amount or their fair value less cost to sell estimate. Further, depreciation of these assets ceases at the time the assets are classified as held for sale. Losses resulting from the sale of such properties are characterized as impairment losses in the Consolidated Statements of Income. |
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Acquisitions of Real Estate Properties with In-Place Leases | Acquisitions of Real Estate Properties with In-Place Leases Acquisitions of real estate properties with in-place leases are accounted for at fair value. When a building with in-place leases is acquired, the cost of the acquisition must be allocated between the tangible real estate assets "as-if-vacant" and the intangible real estate assets related to in-place leases based on their estimated fair values. Where appropriate, the intangible assets recorded could include goodwill or customer relationship assets. The values related to above- or below-market in-place lease intangibles are amortized over the remaining term of the leases upon acquisition to rental income where the Company is the lessor and to property operating expense where the Company is the lessee, and are amortized over the remaining term of the leases upon acquisition. The Company considers whether any of the in-place lease rental rates are above- or below-market. An asset (if the actual rental rate is above-market) or a liability (if the actual rental rate is below-market) is calculated and recorded in an amount equal to the present value of the future cash flows that represent the difference between the actual lease rate and the average market rate. If an in-place lease is identified as a below-market rental rate, the Company would also evaluate any renewal options associated with that lease to determine if the intangible should include those periods. The Company also estimates an absorption period, which can vary by property, assuming the building is vacant and must be leased up to the actual level of occupancy when acquired. During that absorption period, the owner would incur direct costs, such as tenant improvements, and would suffer lost rental income. Likewise, the owner would have acquired a measurable asset in that, assuming the building was vacant, certain fixed costs would be avoided because the actual in-place lessees would reimburse a certain portion of fixed costs through expense reimbursements during the absorption period. All of these intangible assets (above- or below-market lease, tenant improvement costs avoided, rental income lost, and expenses recovered through in-place lessee reimbursements) are estimated and recorded in amounts equal to the present value of estimated future cash flows. The actual purchase price is allocated based on the various asset fair values described above. The building and tenant improvement components of the purchase price are depreciated over the estimated useful life of the building or the weighted average remaining term of the in-places leases. The at-market, in-place lease intangibles are amortized to amortization expense over the weighted average remaining term of the leases, customer relationship assets are amortized to amortization expense over terms applicable to each acquisition, and any goodwill recorded would be reviewed for impairment at least annually. The fair values of at-market in-place lease and other intangible assets are amortized and reflected in amortization expense in the Company’s Consolidated Statements of Income. See Note 8 for more details on the Company’s intangible assets. |
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Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. In calculating fair value, a company must maximize the use of observable market inputs, minimize the use of unobservable market inputs and disclose in the form of an outlined hierarchy the details of such fair value measurements. A hierarchy of valuation techniques is defined to determine whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when available. These inputs have created the following fair value hierarchy:
Executed purchase and sale agreements, that are binding agreements, are categorized as level one inputs. Brokerage estimates, letters of intent, or unexecuted purchase and sale agreements are considered to be level three as they are nonbinding in nature. During 2016, the Company used level one inputs to record an impairment charge in discontinued operations of approximately $0.1 million related to a property in held for sale, reducing the Company's carrying value to the estimated fair value of the property less costs to sell prior to sale. |
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Fair Value of Derivative Financial Instruments | Fair Value of Derivative Financial Instruments Derivative financial instruments are recorded at fair value on the Company's Consolidated Balance Sheets as other assets or other liabilities. The valuation of derivative instruments requires the Company to make estimates and judgments that affect the fair value of the instruments. Fair values of derivatives are estimated by pricing models that consider the forward yield curves and discount rates. The fair value of the Company's forward starting interest rate swap contracts are estimated by pricing models that consider foreign trade rates and discount rates. Such amounts and the recognition of such amounts are subject to significant estimates that may change in the future. For derivatives designated in qualifying cash flow hedging relationships, the change in fair value of the effective portion of the derivatives is recognized in accumulated other comprehensive income (loss), whereas the change in fair value of the ineffective portion is recognized in earnings. Gains and losses are reclassified from accumulated other comprehensive income into earnings once the underlying hedged transaction is recognized in earnings. As of December 31, 2016, the Company had $1.4 million recorded in accumulated other comprehensive loss related to a forward starting interest rate swap entered into and settled during 2015. |
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Cash and Cash Equivalents | Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents includes short-term investments with original maturities of three months or less when purchased. Restricted cash includes cash held in escrow in connection with proceeds from the sales of certain real estate properties. These sales proceeds will be disbursed as the Company acquires real estate investments under Section 1031 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The carrying amount approximates fair value due to the short term maturity of these investments. |
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Allowance for Doubtful Accounts and Credit Losses | Allowance for Doubtful Accounts and Credit Losses Accounts Receivable Management monitors the aging and collectibility of its accounts receivable balances on an ongoing basis. Whenever deterioration in the timeliness of payment from a tenant or sponsoring health system is noted, management investigates and determines the reason or reasons for the delay. Considering all information gathered, management’s judgment is exercised in determining whether a receivable is potentially uncollectible and, if so, how much or what percentage may be uncollectible. Among the factors management considers in determining collectibility are: the type of contractual arrangement under which the receivable was recorded (e.g., a triple net lease, a gross lease, a property operating agreement, or some other type of agreement); the tenant’s reason for slow payment; industry influences under which the tenant operates; evidence of willingness and ability of the tenant to pay the receivable; credit-worthiness of the tenant; collateral, security deposit, letters of credit or other monies held as security; tenant’s historical payment pattern; other contractual agreements between the tenant and the Company; relationship between the tenant and the Company; the state in which the tenant operates; and the existence of a guarantor and the willingness and ability of the guarantor to pay the receivable. Considering these factors and others, management concludes whether all or some of the aged receivable balance is likely uncollectible. Upon determining that some portion of the receivable is likely uncollectible, the Company records a provision for bad debts for the amount it expects will be uncollectible. When efforts to collect a receivable are exhausted, the receivable amount is charged off against the allowance. The Company does not hold any accounts receivable for sale. Mortgage Notes The Company had no mortgage notes receivable outstanding as of December 31, 2016 and 2015 and no allowances were recorded on mortgage notes receivables during 2016 or 2015. The Company evaluates collectibility of any mortgage notes and records allowances on the notes as necessary. A loan is impaired when it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan as scheduled, including both contractual interest and principal payments. This assessment also includes an evaluation of the loan collateral. If a mortgage loan becomes past due, the Company will review the specific circumstances and may discontinue the accrual of interest on the loan. The loan is not returned to accrual status until the debtor has demonstrated the ability to continue debt service in accordance with the contractual terms. Loans placed on non-accrual status will be accounted for either on a cash basis, in which income is recognized only upon receipt of cash, or on a cost-recovery basis, in which all cash receipts reduce the carrying value of the loan, based on the Company’s expectation of future collectibility. |
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Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill and intangible assets with indefinite lives are not amortized, but are tested at least annually for impairment. Intangible assets with finite lives are amortized over their respective lives to their estimated residual values and are reviewed for impairment only when impairment indicators are present. Identifiable intangible assets of the Company are comprised of enterprise goodwill, in-place lease intangible assets, customer relationship intangible assets, and deferred financing costs. In-place lease and customer relationship intangible assets are amortized on a straight-line basis over the applicable lives of the assets. Deferred financing costs are amortized over the term of the related credit facility or other debt instrument under the straight-line method, which approximates amortization under the effective interest method. Goodwill is not amortized but is evaluated annually as of December 31 for impairment. Both the 2016 and 2015 impairment evaluations indicated that no impairment had occurred with respect to the $3.5 million goodwill asset. |
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Contingent Liabilities | Contingent Liabilities From time to time, the Company may be subject to loss contingencies arising from legal proceedings and similar matters. Additionally, while the Company maintains comprehensive liability and property insurance with respect to each of its properties, the Company may be exposed to unforeseen losses related to uninsured or underinsured damages. The Company continually monitors any matters that may present a contingent liability, and, on a quarterly basis, management reviews the Company’s reserves and accruals in relation to each of them, adjusting provisions as necessary in view of changes in available information. Liabilities for contingencies are first recorded when a loss is determined to be both probable and can be reasonably estimated. Changes in estimates regarding the exposure to a contingent loss are reflected as adjustments to the related liability in the periods when they occur. Because of uncertainties inherent in the estimation of contingent liabilities, it is possible that the Company’s provision for contingent losses could change materially in the near term. To the extent that any significant losses, in addition to amounts recognized, are at least reasonably possible, such amounts will be disclosed in the notes to the Consolidated Financial Statements. |
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Defined Benefit Pension Plan | Defined Benefit Pension Plan During 2015, the Company terminated its Executive Retirement Plan under which three of the Company’s founding officers were eligible to receive retirement benefits upon retirement. The Company recognized a total benefit obligation of $19.6 million in connection with the termination and recorded a charge of approximately $5.3 million, inclusive of the acceleration of $2.5 million recorded in accumulated other comprehensive loss on the Company's Consolidated Balance Sheets that was being amortized. The one-time lump sum payment was paid in cash in May 2016. |
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Stock-based Compensation | Stock-Based Compensation The Company has various employee and director stock-based awards outstanding. These awards include non-vested common stock and options to purchase common stock granted to employees pursuant to the 2015 Stock Incentive Plan and its predecessor plans (the “2015 Incentive Plan”) and the 2000 Employee Stock Purchase Plan (the “Employee Stock Purchase Plan”). The Company recognizes share-based payments to employees and directors in the Consolidated Statements of Income on a straight-line basis over the requisite service period based on the fair value of the award on the measurement date. The Employee Stock Purchase Plan features a “look-back” provision which enables the employee to purchase a fixed number of common shares at the lesser of 85% of the market price on the date of grant or 85% of the market price on the date of exercise, with optional purchase dates occurring once each quarter for 27 months. The Company accounts for awards to its employees under the Employee Stock Purchase Plan based on fair value, using the Black-Scholes model, and generally recognizes expense over the award’s vesting period, net of estimated forfeitures. Since the options granted under the Employee Stock Purchase Plan immediately vest, the Company records compensation expense for those options when they are granted in the first quarter of each year and then may record additional compensation expense in subsequent quarters as warranted. In each of the years ended December 31, 2016, 2015 and 2014, the Company recognized in general and administrative expenses approximately $0.2 million, $0.2 million, and $0.3 million, respectively, of compensation expense related to the annual grant of options to its employees to purchase shares under the Employee Stock Purchase Plan. |
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Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) Certain items must be included in comprehensive income, including items such as foreign currency translation adjustments, minimum pension liability adjustments, derivative instruments and unrealized gains or losses on available-for-sale securities. The Company’s accumulated other comprehensive income (loss) consists only of the loss on the effective portion of changes in the fair value of derivatives designated as cash flow hedges as of December 31, 2016. As of December 31, 2015, the Company's accumulated other comprehensive income (loss) consisted of the cumulative pension liability adjustment and changes in the fair value of derivatives designated as cash flow hedges. As of December 31, 2014, the Company's accumulated other comprehensive income (loss) consisted only of the cumulative pension liability adjustments. The Company terminated its Pension Plan during 2015 and reclassified this amount into earnings. |
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Revenue Recognition | Revenue Recognition The Company recognizes revenue when it is realized or realizable and earned. There are four criteria that must all be met before a Company may recognize revenue, including that persuasive evidence that an arrangement exists, delivery has occurred or services have been rendered (i.e., the tenant has taken possession of and controls the physical use of the leased asset), the price has been fixed or is determinable, and collectibility is reasonably assured. Income received but not yet earned is deferred until such time it is earned. Deferred revenue, included in other liabilities on the Consolidated Balance Sheets, was $32.4 million and $36.4 million, respectively, as of December 31, 2016 and 2015 which includes deferred tenant improvement reimbursements of $20.6 million and $21.3 million, respectively, which will be recognized as revenue over the life of each respective lease. The Company derives most of its revenues from its real estate property and mortgage notes receivable portfolio. The Company’s rental and mortgage interest income is recognized based on contractual arrangements with its tenants, sponsoring health systems or borrowers. These contractual arrangements fall into three categories: leases, mortgage notes receivable, and property operating agreements as described in the following paragraphs. The Company may accrue late fees based on the contractual terms of a lease or note. Such fees, if accrued, are included in rental income or mortgage interest income on the Company’s Consolidated Statements of Income, based on the type of contractual agreement. Rental Income Rental income related to non-cancelable operating leases is recognized as earned over the life of the lease agreements on a straight-line basis. The Company's lease agreements generally include provisions for stated annual increases or increases based on a Consumer Price Index ("CPI"). Rental income from properties under multi-tenant office lease arrangements and rental income from properties with single-tenant lease arrangements are included in rental income on the Company's Consolidated Statements of Income. The components of rental income are as follows:
Operating expense recoveries, included in property operating income, were approximately $66.0 million, $58.9 million and $53.9 million, respectively, for the years ended December 31, 2016, 2015 and 2014. Additional rent, generally defined in most lease agreements as the cumulative increase in CPI from the lease start date to the CPI as of the end of the previous year, is calculated as of the beginning of each year, and is then billed and recognized as income during the year as provided for in the lease. There was no additional rental income for the years ended December 31, 2016 and 2015. Included in rental income was additional rental income, net of reserves, of approximately $0.7 million for the year ended December 31, 2014. Mortgage Interest Income Interest income on the Company’s mortgage notes receivable is recognized based on the interest rates, maturity dates and amortization periods in accordance with each note agreement. The Company has no outstanding mortgage notes receivable as of December 31, 2016 and 2015. However, the Company had one fixed rate mortgage note receivable that was outstanding as of December 31, 2014, which was repaid prior to December 31, 2015. The Company amortizes any fees paid related to its mortgage notes receivable to mortgage interest income over the term of the loan on a straight-line basis which approximates amortization under the effective interest method. |
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Other operating income | Other Operating Income Other operating income on the Company’s Consolidated Statements of Income was comprised of the following:
Two and five of the Company’s owned real estate properties as of December 31, 2016 and 2015, respectively, were covered under property operating agreements between the Company and a sponsoring health system, which contractually obligate the sponsoring health system to provide to the Company a minimum return on the Company’s investment in the property in exchange for the right to be involved in the operating decisions of the property, including tenancy. If the minimum return is not achieved through normal operations of the property, the Company calculates and accrues to property lease guaranty revenue, each quarter, any shortfalls due from the sponsoring health systems under the terms of the property operating agreement. Interest income generally relates to interest on tenant improvement reimbursements as defined in each note or lease agreement. Management fees for property management services provided to third parties are generally calculated, accrued and billed monthly based on a percentage of cash collections of tenant receivables for the month or a stated amount per square foot. Management fees related to the Company’s owned properties are eliminated in consolidation. |
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Federal Income Taxes | Federal Income Taxes No provision has been made for federal income taxes. The Company intends at all times to qualify as a REIT under Sections 856 through 860 of the Internal Revenue Code. The Company must distribute at least 90% per annum of its real estate investment trust taxable income to its stockholders and meet other requirements to continue to qualify as a real estate investment trust. See Note 16 for further discussion. The Company classifies interest and penalties related to uncertain tax positions, if any, in the Consolidated Financial Statements as a component of general and administrative expenses. No such amounts were recognized during the three years ended December 31, 2016. Federal tax returns for the years 2013, 2014, 2015 and 2016 are currently subject to examination by taxing authorities. |
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State Income Taxes | State Income Taxes The Company must pay certain state income taxes and the provisions for such taxes are generally included in general and administrative expense on the Company’s Consolidated Statements of Income. See Note 16 for further discussion. |
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Sales and Use Taxes | Sales and Use Taxes The Company must pay sales and use taxes to certain state tax authorities based on rents collected from tenants in properties located in those states. The Company is generally reimbursed for these taxes by the tenant. The Company accounts for the payments to the taxing authority and subsequent reimbursement from the tenant on a net basis in revenues in the Company’s Consolidated Statements of Income. |
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Discontinued Operations | Discontinued Operations The Company sells properties from time to time due to a variety of factors, including among other things, market conditions or the exercise of purchase options by tenants. The Company does not expect these dispositions to meet the amended definition of a discontinued operation as defined in Accounting Standards Update ("ASU") No. 2014-08, "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity." The Company adopted ASU No. 2014-08 on a prospective basis beginning January 1, 2015 which excluded properties previously in discontinued operations prior to adoption. However, if a sale were to meet the amended definition representing a strategic shift that has or will have a major effect on the Company's operations and financial results, the operating results of the properties that have been sold or are held for sale will be reported as discontinued operations in the Company’s Consolidated Statements of Income for all periods presented. |
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Earning Per Share | Earnings per Share Basic earnings per common share is calculated using weighted average shares outstanding less issued and outstanding non-vested shares of common stock. Diluted earnings per common share is calculated using weighted average shares outstanding plus the dilutive effect of the outstanding stock options from the Employee Stock Purchase Plan and non-vested shares of common stock using the treasury stock method and the average stock price during the period. |
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New Accounting Pronouncements | New Accounting Pronouncements Accounting Standards Update No. 2014-09 and No. 2015-14 In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, "Revenue from Contracts with Customers," a comprehensive new revenue recognition standard that supersedes most existing revenue recognition guidance, including sales of real estate. This standard's core principle is that a company will recognize revenue when it transfers goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods and services. However, leasing contracts, representing the major source of the Company's revenues, are not within the scope of the new standard and will continue to be accounted for under other standards. In August 2015, the FASB issued ASU No. 2015-14, "Revenue from Contracts with Customers (Topic 606); Deferral of the Effective Date." This standard is effective for the Company for annual and interim periods beginning after December 15, 2017 with early adoption permitted only as of annual reporting periods beginning after December 15, 2016, including interim periods within that year. The Company plans on adopting this standard by using the full retrospective adoption method beginning on January 1, 2018. The Company's revenue-producing contracts are primarily leases that are not within the scope of this standard. As a result, the Company does not expect the adoption of this standard to have a material impact on the Company's leasing revenues. The Company is continuing to evaluate the impact on other revenue sources. However, the Company does expect additional disclosures that are required from the adoption of this standard. Accounting Standards Update No. 2015-03 In April 2015, the FASB issued ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs." This standard required debt issuance costs to be reported in the balance sheet as a direct reduction from the face amount of the note to which it is directly related. In August 2015, the FASB issued ASU No. 2015-15, "Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements," which allowed entities to defer and present debt issuance costs related to line-of-credit arrangements as assets regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company adopted this standard as of January 1, 2016. As a result of the adoption, all deferred financing costs, excluding costs related to the unsecured revolving credit facility, were reclassified to Notes and bonds payable. Unsecured revolving credit facility costs remain classified as an asset and will continue to be amortized over the remaining term. The guidance requires retrospective adoption for all prior periods presented. The following table represents the previously reported balances and reclassified balances for the impacted line items of the Consolidated Balance Sheet as of December 31, 2015:
Accounting Standards Update No. 2015-16 In September 2015, the FASB issued ASU No. 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments." This standard requires adjustments to provisional amounts that are identified during the measurement period after a business combination to be recognized in the reporting period in which the adjustment amounts are determined. The adjustments recognized in the current period include the effects on earnings of changes in depreciation, amortization, or other income effects as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The Company adopted this standard effective as of January 1, 2016. The adoption of this standard did not have a material impact on the Company's consolidated financial position, results of operations or cash flows. Accounting Standards Update No. 2016-02 In February 2016, the FASB issued ASU No. 2016-02, "Leases." For lessees, the new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company expects that all of the leases where the Company is the lessee will be recorded on the Company's balance sheet. For lessors, the new standard requires a lessor to classify leases as either sales-type, finance or operating. A lease will be treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control, the lease is treated as financing. If the lessor doesn't convey risks and rewards or control, an operating lease results. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years with early adoption permitted. A modified retrospective transition approach is required for lessors for sales-type, direct financing, and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is in the initial stages of evaluating the impact from the adoption of this new standard on the Consolidated Financial Statements and related notes. Accounting Standards Update No. 2016-09 In March 2016, the FASB issued ASU No. 2016-09, "Compensation - Stock Compensation; Improvements to Employee Share-Based Payment Accounting." This update was issued as part of the simplification initiative. The areas of simplification relevant to the Company include the following:
This standard is effective for the Company for annual and interim periods beginning on January 1, 2017 with early adoption permitted. The Company adopted this standard effective January 1, 2016. The adoption of this standard did not have a material impact on the Company's consolidated financial position, results of operations or cash flows. Accounting Standards Update No. 2016-13 In June 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments." This update is intended to improve financial reporting by requiring timelier recognition of credit losses on loans and other financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other such commitments. This update requires that financial statement assets measured at an amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. This standard is effective for the fiscal year beginning after December 15, 2019 with early adoption permitted. The Company is in the initial stages of evaluating the impact from the adoption of this new standard on the Consolidated Financial Statements and related notes. Accounting Standards Update No. 2016-15 In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows; Classification of Certain Cash Receipts and Cash Payments." This update clarifies whether the following items should be classified as operating, investing or financing in the statement of cash flows: (i) debt prepayments and extinguishment costs, (ii) settlement of zero-coupon debt, (iii) settlement of contingent consideration, (iv) insurance proceeds, (v) settlement of corporate-owned life insurance and bank-owned life insurance policies, (vi) distributions from equity method investees, (vii) beneficial interest in securitization transactions and (viii) receipts and payments with aspects of more than one class of cash flows. This standard is effective for the Company for annual and interim periods beginning on January 1, 2018 with early adoption permitted on a retrospective transition method to each period presented. The Company adopted this standard effective January 1, 2017. There is not expected to be a material impact on the Company's Consolidated Financial Statements and related notes resulting from the adoption of this standard. Accounting Standards Update No. 2016-18 In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows; Restricted Cash." This update requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This standard is effective for the Company for annual and interim periods beginning after December 15, 2017 with early adoption permitted. The Company has adopted this standard for the 2016 annual reporting period. The adoption of this standard did not have a material impact on the Company's Consolidated Financial Statements and related notes. Accounting Standards Update No. 2017-01 In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations; Clarifying the Definition of a Business." This update modifies the requirements to meet the definition of a business under Topic 805, "Business Combinations." The amendments provide a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that will need to be further evaluated. The Company believes that this amendment will result in most if its real estate acquisitions to be accounted for as asset acquisitions rather than business combinations. This standard is effective for the Company for annual and interim periods beginning after December 15, 2017 with early adoption permitted. The Company adopted this standard effective January 1, 2017. The impact to the Consolidated Financial Statements and related notes as a result of the adoption of this standard is primarily related to the difference in the accounting of acquisition costs. When accounting for these costs as a part of an asset acquisition, the Company will be permitted to capitalize the costs. The Company does not believe that this will have a material impact on the Consolidated Financial Statements and related notes. |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of cash and cash equivalents | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Company's Consolidated Balance Sheets the same amounts shown on the Company's Consolidated Statements of Cash Flows:
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Assets' estimated useful life | Depreciation and amortization of real estate assets and liabilities in place as of December 31, 2016, is provided for on a straight-line basis over the asset’s estimated useful life:
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Schedule of rental income | The components of rental income are as follows:
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Other operating income | Other operating income on the Company’s Consolidated Statements of Income was comprised of the following:
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Schedule of previously reported balances | The following table represents the previously reported balances and reclassified balances for the impacted line items of the Consolidated Balance Sheet as of December 31, 2015:
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Property Investments (Tables) |
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Real Estate Investment Property, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property Investment | The following table summarizes the Company’s investments at December 31, 2016.
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Real Estate Leases (Tables) |
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||
Future minimum lease payments due to the Company under property operating agreements | Future minimum lease payments under the non-cancelable operating leases and guaranteed amounts due to the Company under property operating agreements as of December 31, 2016 are as follows (in thousands):
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Acquisitions, Dispositions and Mortgage Repayments (Tables) |
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Acquisitions and Dispositions and Mortgage Repayments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of acquisitions | The following table details the Company's acquisitions for the year ended December 31, 2016:
The following table details the Company's acquisitions for the year ended December 31, 2015:
______
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Summary of assets acquired and liabilities assumed | The following table summarizes the estimated fair values of the assets acquired and liabilities assumed in the real estate acquisitions for 2016 as of the acquisition date:
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed in the real estate acquisitions for 2015 as of the acquisition date:
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Summary of dispositions | The following table details the Company's dispositions for the year ended December 31, 2015:
______
The following table details the Company's dispositions for the year ended December 31, 2016:
______
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Held for Sale and Discontinued Operations (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures | The table below reflects the assets and liabilities of the properties classified as held for sale and discontinued operations as of December 31, 2016 and 2015.
The table below reflects the results of operations of the properties included in discontinued operations on the Company’s Consolidated Statements of Income for the years ended December 31, 2016, 2015 and 2014.
______
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Other Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Items included in other assets | Other assets consist primarily of straight-line rent receivables, prepaids, intangible assets, deferred financing costs and accounts receivable. Items included in "Other assets, net" on the Company’s Consolidated Balance Sheets as of December 31, 2016 and 2015 are detailed in the table below:
______ (1) The Company adopted ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs" as of January 1, 2016. Balance Sheet data for the year ending December 31, 2015 reflects this reclassification. See Note 1 to the Consolidated Financial Statements for more information. |
Intangible Assets and Liabilities (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of finite lived intangible assets and liabilities | The Company’s intangible assets and liabilities as of December 31, 2016 and 2015 consisted of the following:
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Schedule of expected net future amortization expense | The following table represents expected amortization over the next five years of the Company’s intangible assets and liabilities in place as of December 31, 2016:
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Notes and Bonds Payable (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt | The table below details the Company’s notes and bonds payable. The Company adopted ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs" as of January 1, 2016. The balances the year ending December 31, 2015 shown below reflect the required reclassification of debt issuance costs. See Note 1 to the Consolidated Financial Statements for more information.
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Schedule of Mortgage Notes Payable | The following table details the Company’s mortgage notes payable, with related collateral.
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Future contractual maturities of the Company's notes and bonds payable | Future maturities of the Company’s notes and bonds payable as of December 31, 2016 were as follows:
______
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Senior Notes [Member] | 5.750% Senior Notes Due 2021 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt | The following table reconciles the balance of the Senior Notes due 2021 on the Company’s Consolidated Balance Sheets as of December 31, 2016 and 2015:
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Senior Notes [Member] | 3.75% Senior Notes Due 2023 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt | The following table reconciles the balance of the Senior Notes due 2023 on the Company’s Consolidated Balance Sheets as of December 31, 2016 and 2015:
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Senior Notes [Member] | 3.875% Unsecured Senior Notes due 2025 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt | The following table reconciles the balance of the Senior Notes due 2025 on the Company’s Consolidated Balance Sheets as of December 31, 2016 and 2015:
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Mortgage notes payable [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt | The following table reconciles the Company’s aggregate mortgage notes principal balance with the Company’s Consolidated Balance Sheets as of December 31, 2016 and 2015. For the years ended December 31, 2016, 2015 and 2014, the Company amortized approximately $0.3 million, $0.8 million and $1.1 million of the discount and $0.9 million, $1.0 million, and $1.0 million of the premium. For the years ended December 31, 2016, 2015 and 2014, the Company also amortized approximately $0.2 million, $0.2 million, and $0.2 million of the debt issuance costs, respectively, on the mortgage notes payable which is included in interest expense on the Company’s Consolidated Statements of Income.
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Derivative Financial Instruments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) | The effective portion of the Company’s interest rate swaps that was recorded in the accompanying consolidated statements of income for the year ended December 31, 2016 and 2015 was as follows:
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Stockholders' Equity (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of the beginning and ending common stock outstanding | The Company had no preferred shares outstanding and had common shares outstanding for the three years ended December 31, 2016 as follows:
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Schedule of sale of stock under market equity offering Program | The following table details the shares sold under this program.
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Change in ownership interest in less-than-wholly-owned subsidiary | The following schedule discloses the effects of changes in the Company's ownership interest in its less-than-wholly-owned subsidiary on the Company's stockholders' equity:
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Reconciliation of beginning and ending balances of accumulated other comprehensive income | The following table represents the changes in Accumulated other comprehensive income (loss) during the year ended December 31, 2016:
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Reclassifications out of accumulated other comprehensive income | The following table represents the details regarding the reclassifications from Accumulated other comprehensive income (loss) during the year ended December 31, 2016:
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Benefit Plans (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net periodic benefit cost for both the Executive Retirement Plan and the Outside Director Plan | Net periodic benefit cost for the Executive Retirement Plan for the three years in the period ended December 31, 2016 is comprised of the following:
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Change in benefit obligation | The following table sets forth the benefit obligations as of December 31, 2016 and 2015:
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Amounts recognized in the Consolidated Balance Sheets | Amounts recognized in the Consolidated Balance Sheets are as follows:
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Schedule of assumptions used | The Company's assumed discount rates and compensation increases, which are used to measure the year-end benefit obligations and earnings for the subsequent year related to the Executive Retirement Plan, which was terminated on May 5, 2015 and are detailed in the following table for the three years ended December 31, 2016 :
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Stock and Other Incentive Plans (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Unrecognized Compensation Cost, Nonvested Awards | The following table represents expected amortization of the Company's non-vested shares issued:
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Summary of the activity under the Incentive Plan the previous directors' plan | A summary of the activity under the 2015 Incentive Plan and related information for the three years in the period ended December 31, 2016 follows:
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Summary of the Employee Stock Purchase Plan activity | A summary of the Employee Stock Purchase Plan activity and related information for the three years in the period ended December 31, 2016 is as follows:
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Fair value of options issued based on weighted-average assumptions |
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Earnings Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share | The table below sets forth the computation of basic and diluted earnings per common share for the three years in the period ended December 31, 2016.
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Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of construction activity | The table below details the Company’s construction activity as of December 31, 2016. The information included in the table below represents management’s estimates and expectations at December 31, 2016, which are subject to change. The Company’s disclosures regarding certain projections or estimates of completion dates may not reflect actual results.
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Minimum lease payments for its operating leases | The Company’s future minimum lease payments for its corporate office lease and 52 ground leases, excluding leases that the Company has prepaid and leases in which an operator pays or fully reimburses the Company, as of December 31, 2016 were as follows (in thousands):
|
Other Data (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Taxable Income | The following table reconciles the Company’s consolidated net income attributable to common stockholders to taxable income for the three years ended December 31, 2016:
______ (1) Before REIT dividend paid deduction |
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Characterization of distributions on common stock | For the three years ended December 31, 2016, there were no preferred shares outstanding. As such, no dividends were distributed related to preferred shares for those periods.
|
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State Income Taxes | State income tax expense and state income tax payments for the three years ended December 31, 2016 are detailed in the table below:
|
Fair Value of Financial Instruments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value and carrying values for notes and bonds payable, mortgage notes receivable and notes receivable | The table below details the fair value and carrying values for notes and bonds payable as of December 31, 2016 and 2015.
______ (1) Level 3 - Fair value derived from valuation techniques in which one of more significant inputs or significant value drivers are unobservable. |
Selected Quarterly Financial Data (unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Quarterly Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of quarterly financial information | Quarterly financial information for the year ended December 31, 2016 is summarized below.
______ (1) The increases in net income and amounts per share for the fourth quarter of 2016 are primarily attributable to gains of $41.0 million on the sale of six properties. Quarterly financial information for the year ended December 31, 2015 is summarized below.
______ (1) The decreases in net income and amounts per share for the first quarter of 2015 are primarily attributable to impairment charges of $3.3 million. (2) The increases in net income and amounts per share for the second quarter of 2015 are primarily attributable to a $41.5 million gain on the sale of two properties, partially offset by a $28.0 million loss on extinguishment of the Senior Notes due 2017. (3) The increases in net income and amounts per share for the third quarter of 2015 are primarily attributable to a $10.6 million gain on the sale of one property previously classified as an asset held for sale. (4) The increases in net income and amounts per share for the fourth quarter of 2015 are primarily attributable to gains on sales of real estate totaling $9.1 million, partially offset by impairment charges of $0.7 million. |
Summary of Significant Accounting Policies - Cash and cash equivalents (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
---|---|---|---|---|
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 5,409 | $ 4,102 | $ 3,519 | |
Restricted cash | 49,098 | 0 | 0 | |
Total cash, cash equivalents and restricted cash | $ 54,507 | $ 4,102 | $ 3,519 | $ 8,671 |
Summary of Significant Accounting Policies - Components of rental income (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Accounting Policies [Abstract] | |||
Property operating income | $ 336,409 | $ 306,550 | $ 285,304 |
Single-tenant net lease | 63,871 | 67,238 | 65,252 |
Straight-line rent | 7,201 | 9,545 | 10,969 |
Rental income | $ 407,481 | $ 383,333 | $ 361,525 |
Summary of Significant Accounting Policies - Components of other operating income (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Other Operating Income [Abstract] | |||
Property lease guaranty revenue | $ 3,058 | $ 3,890 | $ 4,430 |
Interest income | 473 | 579 | 731 |
Management fee income | 369 | 370 | 289 |
Other | 249 | 208 | 215 |
Other operating | $ 4,149 | $ 5,047 | $ 5,665 |
Summary of Significant Accounting Policies - Debt Issuance Costs (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Debt Instrument [Line Items] | ||
Other assets, net | $ 195,666 | $ 186,416 |
Total assets | 3,040,647 | 2,810,224 |
Notes and bonds payable | 1,264,370 | 1,424,992 |
Total liabilities | 1,387,233 | 1,567,477 |
Total liabilities and stockholders' equity | $ 3,040,647 | 2,810,224 |
As Previously Reported [Member] | ||
Debt Instrument [Line Items] | ||
Other assets, net | 192,918 | |
Total assets | 2,816,726 | |
Notes and bonds payable | 1,431,494 | |
Total liabilities | 1,573,979 | |
Total liabilities and stockholders' equity | $ 2,816,726 |
Property Investments (Details Textual) $ in Billions |
Dec. 31, 2016
USD ($)
property
|
---|---|
Real Estate Investment Property, Net [Abstract] | |
Investment in real estate properties and mortgage notes | $ | $ 3.6 |
Number of real estate investments | property | 202 |
Real Estate Leases (Details) $ in Thousands |
Dec. 31, 2016
USD ($)
|
---|---|
Leases [Abstract] | |
2017 | $ 315,366 |
2018 | 276,321 |
2019 | 231,077 |
2020 | 188,518 |
2021 | 154,470 |
2022 and thereafter | 603,045 |
Total | $ 1,768,797 |
Real Estate Leases - Narrative (Details) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016
USD ($)
|
Dec. 31, 2015
Customers
|
Dec. 31, 2014
Customers
|
|
Concentration Risk [Line Items] | |||
Approximate Investment in real estate properties subject to outstanding contractual option to purchase | $ | $ 173.7 | ||
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk (percent) | 9.80% | 9.80% | 10.50% |
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | Baylor Health System [Member] | |||
Concentration Risk [Line Items] | |||
Number of customer account for 10% or more of company's revenues including revenue from discontinued operations | Customers | 1 | 1 | |
Concentration risk (percent) | 10.00% | 10.00% |
Held for Sale and Discontinued Operations (Details Textual) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016
USD ($)
property
|
Dec. 31, 2015
USD ($)
property
|
Dec. 31, 2014
USD ($)
property
|
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Number of properties held for sale | 2 | 1 | |
Discontinued Operations [Member] | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Number of properties held for sale | 1 | ||
Revenue related to properties sold | $ | $ 0.8 | $ 5.7 | |
Expenses related to sale of real estate | $ | $ 0.1 | 0.1 | 4.7 |
Impairments related to property held for sale | $ | $ 0.1 | $ 0.7 | 8.3 |
Impairments related to sold property | $ | $ 3.7 | ||
Number of impaired properties sold | 3 | ||
Number of impaired properties held for sale | 1 | 4 | |
Number of properties related to gain on sales | 1 | 3 |
Impairment Charges (Details Textual) $ in Thousands |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2015
property
|
Jun. 30, 2015
property
|
Dec. 31, 2016
USD ($)
property
|
Dec. 31, 2015
USD ($)
property
|
Dec. 31, 2014
USD ($)
|
|
Property, Plant and Equipment [Abstract] | |||||
Number of properties sold | property | 1 | 2 | 6 | 2 | |
Impairments | $ 121 | $ 686 | $ 12,029 | ||
Impairment of real estate | $ 0 | $ 3,639 | $ 0 |
Other Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid assets | $ 64,800 | $ 63,600 |
Straight-line rent receivables | 64,600 | 60,400 |
Above-market intangible assets, net | 19,100 | 17,300 |
Additional long-lived assets, net | 14,500 | 14,800 |
Ground lease modification, net | 10,800 | 11,200 |
Accounts receivable | 8,100 | 8,800 |
Allowance for uncollectible accounts | (100) | (200) |
Credit facility deferred financing costs | 4,900 | 2,200 |
Goodwill | 3,487 | 3,487 |
Customer relationship intangible assets, net | 1,800 | 1,900 |
Other | 3,700 | 2,900 |
Other Assets | $ 195,666 | $ 186,416 |
Intangible Assets and Liabilities - Expected future amortization expense (Details) $ in Millions |
Dec. 31, 2016
USD ($)
|
---|---|
Future Amortization of Intangibles, Net [Abstract] | |
2017 | $ 14.1 |
2018 | 12.1 |
2019 | 10.2 |
2020 | 7.3 |
2021 | $ 3.3 |
Notes and Bonds Payable - Mortgage Notes (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Debt Instrument [Line Items] | ||
Issuance costs | $ (5,620) | |
Notes and bonds payable | 1,264,370 | $ 1,424,992 |
Mortgage notes payable [Member] | ||
Debt Instrument [Line Items] | ||
Mortgage notes | 114,934 | 128,161 |
Unamortized premium | 2,569 | 2,704 |
Unaccreted discount | (1,450) | (1,779) |
Issuance costs | (436) | (339) |
Notes and bonds payable | $ 115,617 | $ 128,747 |
Derivative Financial Instruments (Details) |
12 Months Ended | ||
---|---|---|---|
Apr. 24, 2015
USD ($)
swap_agreement
|
Dec. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
swap_agreement
|
|
Derivative [Line Items] | |||
Number of forward starting swaps | swap_agreement | 4 | 4 | |
Interest rate cash flow hedge gain (loss) to be reclassified to interest expense during the next 12 months | $ (200,000) | ||
Forward Starting Interest Rate Swap [Member] | |||
Derivative [Line Items] | |||
Loss on forward starting interest rate swap agreements recognized in OCI | $ 1,700,000 | 0 | $ (1,684,000) |
Interest Expense [Member] | Forward Starting Interest Rate Swap [Member] | |||
Derivative [Line Items] | |||
Amount of loss reclassified from accumulated OCI into Income (effective portion) | (168,000) | (115,000) | |
Amount of gain (loss) recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing) | $ 0 | 0 | |
Cash Flow Hedging [Member] | Forward Starting Interest Rate Swap [Member] | |||
Derivative [Line Items] | |||
Notional value | $ 225,000,000.0 |
Stockholders' Equity - Common shares (Details) - shares |
12 Months Ended | |||
---|---|---|---|---|
Jul. 05, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Reconciliation of the beginning and ending common stock outstanding | ||||
Balance, beginning of year (shares) | 101,517,000 | |||
Issuance of common stock (shares) | 9,200,000 | |||
Balance, end of year (shares) | 116,417,000 | 101,517,000 | ||
Common Stock [Member] | ||||
Reconciliation of the beginning and ending common stock outstanding | ||||
Balance, beginning of year (shares) | 101,517,009 | 98,828,098 | 95,924,339 | |
Issuance of common stock (shares) | 14,063,100 | 2,493,171 | 3,073,445 | |
Non-vested stock-based awards, net of withheld shares and forfeitures (shares) | 836,791 | 195,740 | (169,686) | |
Balance, end of year (shares) | 116,416,900 | 101,517,009 | 98,828,098 |
Stockholders' Equity - Reclassifications out of Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
General and Administrative Expense | $ (35,805) | $ (26,925) | $ (22,808) |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | $ 2,519 | |
Reclassification out of Accumulated Other Comprehensive Income [Member] | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Amounts reclassified from accumulated other comprehensive income (loss) | 168 | ||
Amounts reclassified from accumulated other comprehensive income (loss) related to forward starting swaps [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member] | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
General and Administrative Expense | $ 168 |
Benefit Plans (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Net periodic benefit cost for both the Executive Retirement Plan and the Outside Director Plan | |||
Service cost | $ 0 | $ 29 | $ 88 |
Interest cost | $ 0 | 225 | 687 |
Amortization of prior service cost (benefit) | (198) | (1,189) | |
Amortization of net gain (loss) | 343 | 469 | |
Total | 399 | 55 | |
Net loss recognized in Accumulated other comprehensive income (loss) | 2,570 | ||
Total recognized in net periodic benefit gain and Accumulated other comprehensive income (loss) (1) | $ 399 | $ 2,625 |
Benefit Plans (Details 1) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Change in benefit obligation | |||
Benefit obligation at beginning of year | $ 19,571 | $ 16,473 | |
Service cost | 0 | 29 | $ 88 |
Interest cost | 0 | 225 | 687 |
Benefits paid | (19,575) | (42) | |
Amortization of net gain/loss and prior service cost | 0 | 145 | |
Actuarial loss, net | 0 | 0 | |
Settlement loss | 4 | 5,260 | |
Amounts reclassified from accumulated other comprehensive loss arising from settlement on defined benefit pension plan | 0 | (2,519) | |
Benefit obligation at end of year | 0 | 19,571 | $ 16,473 |
Amounts recognized in the Consolidated Balance Sheets | |||
Net liabilities included in other liabilities | 0 | (19,571) | |
Amounts recognized in accumulated other comprehensive income (loss) | (1,401) | (1,569) | |
Accumulated Other Comprehensive Income (Loss) [Member] | |||
Amounts recognized in the Consolidated Balance Sheets | |||
Amounts recognized in accumulated other comprehensive income (loss) | $ 0 | $ 0 |
Benefit Plans (Details 2) |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|---|
Compensation and Retirement Disclosure [Abstract] | |||
Discount rates | 0.00% | 0.00% | 4.08% |
Compensation increases | 0.00% | 0.00% | 2.70% |
Benefit Plans (Details Textual) $ in Thousands |
1 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
May 05, 2015
USD ($)
plan_participant
|
May 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2016
USD ($)
|
May 06, 2016
USD ($)
|
Dec. 31, 2014
USD ($)
|
|
Defined Benefit Plan Disclosure [Line Items] | ||||||
Current period charge | $ 5,300 | $ 5,300 | ||||
Total benefit obligation | $ 19,600 | 19,571 | $ 0 | $ 19,600 | $ 16,473 | |
Number of plan participants who have not reached age 65 | plan_participant | 2 | |||||
Chief Executive Officer [Member] | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Lump sum obligation at termination of plan | $ 14,400 | |||||
Accumulated Other Comprehensive Income (Loss) [Member] | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Current period charge | $ 2,500 | $ 2,500 |
Stock and Other Incentive Plans - Amortization of Compensation for Nonvested Shares (Details) $ in Millions |
Dec. 31, 2016
USD ($)
|
---|---|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
2017 | $ 8.8 |
2018 | 6.7 |
2019 | 4.6 |
2020 | 4.4 |
2021 | 3.4 |
2022 and thereafter | 4.3 |
Total | $ 32.2 |
Stock and Other Incentive Plans (Details 2) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Fair value of options issued based on weighted-average assumptions | |||
Risk-free interest rates | 1.06% | 0.67% | 0.38% |
Expected dividend yields | 4.64% | 4.79% | 4.94% |
Expected life (in years) | 1 year 5 months 1 day | 1 year 4 months 17 days | 1 year 4 months 21 days |
Expected volatility | 17.60% | 21.00% | 23.00% |
Expected forfeiture rates | 85.00% | 80.00% | 75.00% |
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Weighted Average Common Shares | |||||||||||
Weighted average Common Shares outstanding | 109,861,580 | 100,280,059 | 97,093,960 | ||||||||
Non-vested shares | (1,289,478) | (1,108,707) | (1,814,734) | ||||||||
Weighted average Common Shares - Basic | 108,572,102 | 99,171,352 | 95,279,226 | ||||||||
Dilutive effect of non-vested shares | 709,559 | 623,212 | 1,364,236 | ||||||||
Dilutive effect of employee stock purchase plan | 105,336 | 85,738 | 115,948 | ||||||||
Weighted average Common Shares - Diluted | 109,386,997 | 99,880,302 | 96,759,410 | ||||||||
Net Income | |||||||||||
Income (loss) from continuing operations | $ 52,580 | $ 11,857 | $ 12,157 | $ 9,163 | $ 19,354 | $ 16,848 | $ 17,586 | $ 5,049 | $ 85,756 | $ 58,836 | $ 33,979 |
Noncontrolling interests’ share in earnings | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (313) | ||
Income from continuing operations attributable to common stockholders | 85,756 | 58,836 | 33,666 | ||||||||
Income (loss) from discontinued operations | (143) | (23) | (12) | (7) | (696) | 10,632 | 330 | 333 | (185) | 10,600 | (1,779) |
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ 52,437 | $ 11,834 | $ 12,145 | $ 9,156 | $ 18,658 | $ 27,480 | $ 17,916 | $ 5,382 | $ 85,571 | $ 69,436 | $ 31,887 |
Basic Earnings (loss) Per Common Share | |||||||||||
Income (loss) from continuing operations (in dollars per share) | $ 0.79 | $ 0.59 | $ 0.35 | ||||||||
Income (loss) from discontinued operations (in dollars per share) | 0.00 | 0.11 | (0.02) | ||||||||
Net income attributable to common stockholders (in dollars per share) | $ 0.46 | $ 0.10 | $ 0.12 | $ 0.09 | $ 0.19 | $ 0.28 | $ 0.18 | $ 0.05 | 0.79 | 0.70 | 0.33 |
Diluted Earnings (loss) Per Common Share | |||||||||||
Income (loss) from continuing operations (in dollars per share) | 0.78 | 0.59 | 0.35 | ||||||||
Income (loss) from discontinued operations (in dollars per share) | 0.00 | 0.11 | (0.02) | ||||||||
Net income attributable to common stockholders (in dollars per share) | $ 0.45 | $ 0.10 | $ 0.12 | $ 0.09 | $ 0.19 | $ 0.27 | $ 0.18 | $ 0.05 | $ 0.78 | $ 0.70 | $ 0.33 |
Commitments and Contingencies - Minimum lease payments (Details) $ in Thousands |
Dec. 31, 2016
USD ($)
|
---|---|
Future minimum lease payments due to the Company under property operating agreements | |
2017 | $ 5,719 |
2018 | 5,798 |
2019 | 5,980 |
2020 | 5,840 |
2021 | 5,062 |
2022 and thereafter | 361,666 |
Total | $ 390,065 |
Commitments and Contingencies - Casualty loss and environmental matters (Details) - Washington [Member] - Medical Office Building [Member] - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Loss Contingencies [Line Items] | ||
Liability related to an environmental concern | $ 1,200,000 | |
Remediation funded during period | $ 0.3 |
Other Data (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Income Tax Disclosure [Abstract] | |||||||||||
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ 52,437 | $ 11,834 | $ 12,145 | $ 9,156 | $ 18,658 | $ 27,480 | $ 17,916 | $ 5,382 | $ 85,571 | $ 69,436 | $ 31,887 |
Reconciling items to taxable income: | |||||||||||
Depreciation and amortization | 38,260 | 30,457 | 28,332 | ||||||||
Gain or loss on disposition of depreciable assets | (32,103) | 1,659 | (4,940) | ||||||||
Impairments | 121 | 687 | 0 | ||||||||
Straight-line rent | (7,101) | (8,833) | (12,203) | ||||||||
Receivable allowances | 2,067 | 571 | 2,074 | ||||||||
Stock-based compensation | 1,301 | 7,518 | 2,020 | ||||||||
Other | 2,236 | 4,304 | 1,213 | ||||||||
Reconciling items to taxable income, total | 4,781 | 36,363 | 16,496 | ||||||||
Taxable income | 90,352 | 105,799 | 48,383 | ||||||||
Dividends paid | $ 131,759 | $ 120,266 | $ 116,371 |
Other Data (Details 1) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Characterization of distributions on common stock | |||
Ordinary income per share | $ 0.78 | $ 0.61 | $ 0.50 |
Return of capital per share | 0.35 | 0.08 | 0.70 |
Unrecaptured section 1250 gain per share | 0.07 | 0.51 | 0.00 |
Common stock distributions per share | $ 1.2 | $ 1.2 | $ 1.2 |
Ordinary income in percent of common stock distribution | 65.00% | 51.00% | 42.00% |
Return of capital in percent of common stock distribution | 29.50% | 6.70% | 58.00% |
Unrecaptured section 1250 gain in percent of common stock distribution | 5.50% | 42.30% | 0.00% |
Common stock distribution in percentage | 100.00% | 100.00% | 100.00% |
Other Data (Details 2) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
State income tax expense: | |||
Texas gross margins tax | $ 562 | $ 528 | $ 694 |
Other | 2 | 37 | 58 |
Total state income tax expense | 564 | 565 | 752 |
State income tax payments, net of refunds and collections | $ 544 | 758 | $ 593 |
Income tax expense in discontinued operations | $ 50 |
Other Data (Details Textual) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Other Data (Textual) [Abstract] | |||
Condition to qualify as a REIT as defined under the Internal Revenue Code | Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its taxable income to its stockholders. | ||
Estimated aggregate total cost of total assets for federal income tax purposes | $ 3,700,000,000 | $ 3,400,000,000 | $ 3,300,000,000 |
Number of preferred shares outstanding | 0 | 0 | 0 |
Dividends distributed to preferred shares | $ 0 |
Fair Value of Financial Instruments (Details) - USD ($) $ in Millions |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Carrying Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notes and bonds payable | $ 1,264.4 | $ 1,425.0 |
Fair Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notes and bonds payable | $ 1,265.1 | $ 1,439.0 |
Selected Quarterly Financial Data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Summary of quarterly financial information | |||||||||||
Revenues from continuing operations | $ 105,309 | $ 103,659 | $ 102,642 | $ 100,021 | $ 98,582 | $ 96,725 | $ 96,708 | $ 96,456 | $ 411,630 | $ 388,471 | $ 370,855 |
Income from continuing operations | 52,580 | 11,857 | 12,157 | 9,163 | 19,354 | 16,848 | 17,586 | 5,049 | 85,756 | 58,836 | 33,979 |
Income (loss) from discontinued operations | (143) | (23) | (12) | (7) | (696) | 10,632 | 330 | 333 | (185) | 10,600 | (1,779) |
NET INCOME | 52,437 | 11,834 | 12,145 | 9,156 | 18,658 | 27,480 | 17,916 | 5,382 | 85,571 | 69,436 | 32,200 |
Less: Net income attributable to noncontrolling interests | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (313) | ||
NET INCOME | $ 52,437 | $ 11,834 | $ 12,145 | $ 9,156 | $ 18,658 | $ 27,480 | $ 17,916 | $ 5,382 | $ 85,571 | $ 69,436 | $ 31,887 |
Net income attributable to common stockholders per share: | |||||||||||
Basic earnings per common share (dollars per share) | $ 0.46 | $ 0.10 | $ 0.12 | $ 0.09 | $ 0.19 | $ 0.28 | $ 0.18 | $ 0.05 | $ 0.79 | $ 0.70 | $ 0.33 |
Diluted earnings per common share (dollars per share) | $ 0.45 | $ 0.10 | $ 0.12 | $ 0.09 | $ 0.19 | $ 0.27 | $ 0.18 | $ 0.05 | $ 0.78 | $ 0.70 | $ 0.33 |
Selected Quarterly Financial Data (unaudited) - Additional information (Details) $ in Thousands |
3 Months Ended | 12 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Dec. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
Sep. 30, 2015
USD ($)
property
|
Jun. 30, 2015
USD ($)
property
|
Mar. 31, 2015
USD ($)
|
Dec. 31, 2016
USD ($)
property
|
Dec. 31, 2015
USD ($)
property
|
Dec. 31, 2014
USD ($)
|
|
Quarterly Financial Information Disclosure [Abstract] | ||||||||
Impairment charges | $ 700 | $ 3,300 | ||||||
Gain on sales of real estate assets | $ 41,000 | $ 9,100 | $ 10,600 | $ 41,500 | $ 41,038 | $ 56,602 | $ 0 | |
Number of properties sold | property | 1 | 2 | 6 | 2 | ||||
Loss on extinguishment of debt | $ (28,000) | $ 0 | $ 27,998 | $ 0 |
Schedule II - Valuation and Qualifying Accounts (Details) - Accounts receivable allowance [Member] - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | $ 179 | $ 465 | $ 541 |
Charged/(Credited) to Costs and Expenses, Additions and Deductions | (21) | (194) | 34 |
Charged to Other Accounts, Additions and Deductions | 0 | 0 | 0 |
Uncollectible Accounts Written-off | 10 | 92 | 110 |
Balance at End of Period | $ 148 | $ 179 | $ 465 |
Schedule IV - Mortgage Loans on Real Estate (Details 1) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Rollforward of Mortgage loans on real estate | |||
Balance at beginning of period | $ 0 | $ 1,900 | $ 125,547 |
Additions during period: | |||
New or acquired mortgages | 0 | 0 | 1,900 |
Increased funding on existing mortgages | 0 | 0 | 1,244 |
Additions during period, total | 0 | 0 | 3,144 |
Deductions during period: | |||
Principal repayments and reductions | 0 | (1,900) | (5,605) |
Principal reductions due to acquisitions | 0 | 0 | (81,213) |
Mortgage eliminated in consolidation | 0 | 0 | (39,973) |
Deductions during period, total | 0 | (1,900) | (126,791) |
Balance at end of period | $ 0 | $ 0 | $ 1,900 |
Schedule IV - Mortgage Loans on Real Estate Schedule IV - Mortgage Loans on Real Estate (Details Textual) - USD ($) $ in Thousands |
1 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
May 31, 2014 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Mar. 31, 2014 |
|
Mortgage Loans on Real Estate [Line Items] | |||||
Mortgage Loans on Real Estate Principal Repayments and Reductions | $ 0 | $ 1,900 | $ 5,605 | ||
Purchase Price | 190,100 | ||||
Cash Consideration | 156,400 | ||||
Iowa [Member] | Other Property [Member] | Other Mortgage Loans [Member] | |||||
Mortgage Loans on Real Estate [Line Items] | |||||
Face Amount | $ 40,000 | ||||
Interest Rate | 7.70% | ||||
Incremental Interest Rate for Default | 3.00% | ||||
Mortgage Loan on Real Estate Exit Fee | $ 1,500 | ||||
Real estate acquisitions [Member] | |||||
Mortgage Loans on Real Estate [Line Items] | |||||
Purchase Price | 241,900 | 187,200 | |||
Cash Consideration | $ 224,900 | $ 153,500 | |||
Real estate acquisitions [Member] | Oklahoma [Member] | Construction Loans [Member] | |||||
Mortgage Loans on Real Estate [Line Items] | |||||
Purchase Price | $ 85,400 | ||||
Face Amount | 81,200 | ||||
Cash Consideration | $ 4,100 |
Label | Element | Value |
---|---|---|
Preferred Stock [Member] | ||
Noncontrolling Interest, Decrease from Redemptions or Purchase of Interests | us-gaap_MinorityInterestDecreaseFromRedemptions | $ 0 |
Parent [Member] | ||
Noncontrolling Interest, Decrease from Redemptions or Purchase of Interests | us-gaap_MinorityInterestDecreaseFromRedemptions | 6,577,000 |
Common Stock [Member] | ||
Noncontrolling Interest, Decrease from Redemptions or Purchase of Interests | us-gaap_MinorityInterestDecreaseFromRedemptions | 0 |
Noncontrolling Interest [Member] | ||
Noncontrolling Interest, Decrease from Redemptions or Purchase of Interests | us-gaap_MinorityInterestDecreaseFromRedemptions | 1,612,000 |
AOCI Attributable to Parent [Member] | ||
Noncontrolling Interest, Decrease from Redemptions or Purchase of Interests | us-gaap_MinorityInterestDecreaseFromRedemptions | 0 |
Cumulative Dividends [Member] | ||
Noncontrolling Interest, Decrease from Redemptions or Purchase of Interests | us-gaap_MinorityInterestDecreaseFromRedemptions | $ 0 |
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