Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Jun. 30, 2014 | Aug. 08, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Physicians Realty Trust | ' |
Entity Central Index Key | '0001574540 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Jun-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 34,322,589 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q2 | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Investment properties: | ' | ' |
Land and improvements | $51,694 | $26,088 |
Building and improvements | 372,097 | 193,184 |
Tenant improvements | 5,505 | 5,458 |
Acquired lease intangibles | 47,239 | 31,236 |
Total Investment Properties, gross | 476,535 | 255,966 |
Accumulated depreciation | -34,636 | -28,427 |
Net real estate property | 441,899 | 227,539 |
Real estate loan receivable | 6,881 | ' |
Investment in unconsolidated entity | 1,298 | ' |
Net real estate investments | 450,078 | 227,539 |
Cash and cash equivalents | 6,697 | 56,478 |
Tenant receivables, net | 836 | 837 |
Deferred costs, net | 3,025 | 2,105 |
Other assets | 8,516 | 5,901 |
Total assets | 469,152 | 292,860 |
Liabilities: | ' | ' |
Mortgage debt | 78,963 | 42,821 |
Accounts payable | 697 | 836 |
Dividend payable | 8,728 | 5,681 |
Accrued expenses and other liabilities | 4,241 | 2,288 |
Acquired lease intangible, net | 133 | ' |
Derivative liability | 325 | 397 |
Total liabilities | 93,087 | 52,023 |
Equity: | ' | ' |
Common shares, $0.01 par value, 500,000,000 shares authorized, 34,288,126 and 21,548,597 shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively. | 343 | 215 |
Additional paid-in capital | 360,908 | 213,359 |
Accumulated deficit | -24,919 | -8,670 |
Total shareholders' equity | 336,332 | 204,904 |
Noncontrolling interests: | ' | ' |
Operating partnership | 39,059 | 35,310 |
Partially owned properties | 674 | 623 |
Total noncontrolling interest | 39,733 | 35,933 |
Total equity | 376,065 | 240,837 |
Total liabilities and equity | $469,152 | $292,860 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Consolidated Balance Sheets | ' | ' |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 34,288,126 | 21,548,597 |
Common stock, shares outstanding | 34,288,126 | 21,548,597 |
Consolidated_and_Combined_Stat
Consolidated and Combined Statements of Operations (USD $) | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended |
In Thousands, except Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2013 |
Predecessor | Predecessor | |||
Revenues: | ' | ' | ' | ' |
Rental revenues | $10,241 | $17,049 | $2,535 | $5,032 |
Expense recoveries | 1,020 | 2,090 | 786 | 1,601 |
Interest income on real estate loans and other | 186 | 340 | 116 | 196 |
Total revenues | 11,447 | 19,479 | 3,437 | 6,829 |
Expenses: | ' | ' | ' | ' |
Interest expense, net | 1,657 | 2,938 | 1,102 | 2,171 |
General and administrative | 2,408 | 4,422 | 102 | 222 |
Operating expenses | 2,227 | 3,836 | 1,260 | 2,524 |
Depreciation and amortization | 3,736 | 6,152 | 1,018 | 2,021 |
Acquisition expenses | 2,045 | 6,332 | ' | ' |
Management fees | ' | ' | 238 | 475 |
Total expenses | 12,073 | 23,680 | 3,720 | 7,413 |
Loss before equity in income of unconsolidated entity and noncontrolling interests: | -626 | -4,201 | -283 | -584 |
Equity in income of unconsolidated entity | 26 | 43 | ' | ' |
Net loss | -600 | -4,158 | ' | ' |
Net loss | ' | ' | -283 | -584 |
Less: Net loss attributable to noncontrolling interests -operating partnership | 123 | 654 | ' | ' |
Less: Net income attributable to noncontrolling interests - partially owned properties | -84 | -150 | ' | ' |
Net loss attributable to common shareholders | ($561) | ($3,654) | ' | ' |
Net loss per share: | ' | ' | ' | ' |
Basic and diluted (in dollars per share) | ($0.02) | ($0.15) | ' | ' |
Weighted average common shares: | ' | ' | ' | ' |
Basic and diluted (in shares) | 26,163,982 | 23,744,730 | ' | ' |
Dividends and distributions declared per common share and unit (in dollars per share) | $0.23 | $0.45 | ' | ' |
Consolidated_and_Combined_Stat1
Consolidated and Combined Statement of Equity (USD $) | Total | Par Value | Additional Paid in Capital | Accumulated Deficit | Predecessor Equity | Total Shareholders' and Predecessor Equity | Operating Partnership Noncontrolling interest | Partially Owned Properties Noncontrolling Interest | Total Non-controlling Interests | Predecessor | Predecessor | Predecessor | Predecessor | Predecessor |
In Thousands, except Share data, unless otherwise specified | Predecessor Equity | Total Shareholders' and Predecessor Equity | Partially Owned Properties Noncontrolling Interest | Total Non-controlling Interests | ||||||||||
Balance at Dec. 31, 2012 | ' | ' | ' | ' | ' | ' | ' | ' | ' | $19,097 | ' | ' | ' | ' |
Change in predecessor equity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net (loss)/income | ' | ' | ' | ' | ' | ' | ' | ' | ' | -584 | ' | ' | ' | ' |
Balance at Jun. 30, 2013 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance at Dec. 31, 2012 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 19,097 | 19,068 | 19,068 | 29 | 29 |
Change in predecessor equity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net (loss)/income | ' | ' | ' | ' | ' | ' | ' | ' | ' | -576 | -712 | -712 | 136 | 136 |
Transfer | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 36 | 36 | -36 | -36 |
Distributions | ' | ' | ' | ' | ' | ' | ' | ' | ' | -420 | -211 | -211 | -209 | -209 |
Balance at Jul. 23, 2013 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 18,101 | 18,181 | 18,181 | -80 | -80 |
Balance at Jul. 24, 2013 | 18,101 | ' | ' | ' | 18,181 | 18,181 | ' | -80 | -80 | ' | ' | ' | ' | ' |
Increase (Decrease) in stockholders' Equity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net proceeds from sale of common stock | 225,920 | 213 | 225,707 | ' | ' | 225,920 | ' | ' | ' | ' | ' | ' | ' | ' |
Net proceeds from sale of common stock (in shares) | ' | 21,298,597 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Formation Transactions | -354 | ' | 35 | ' | -18,181 | -18,146 | 18,181 | -389 | 17,792 | ' | ' | ' | ' | ' |
Restricted share award grants | 433 | 2 | 431 | ' | ' | 433 | ' | ' | ' | ' | ' | ' | ' | ' |
Restricted share award grants (in shares) | ' | 250,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Dividends/distributions declared | -8,335 | ' | ' | -7,009 | ' | -7,009 | -1,326 | ' | -1,326 | ' | ' | ' | ' | ' |
Adjustment for Noncontrolling Interests ownership in Operating Partnership | ' | ' | -7,391 | ' | ' | -7,391 | 7,391 | ' | 7,391 | ' | ' | ' | ' | ' |
Issuance of Operating Partnership Units in connection with acquisitions | 7,387 | ' | -5,423 | ' | ' | -5,423 | 11,534 | 1,276 | 12,810 | ' | ' | ' | ' | ' |
Distributions | -255 | ' | ' | ' | ' | ' | ' | -255 | -255 | ' | ' | ' | ' | ' |
Net (loss) income | -2,060 | ' | ' | -1,661 | ' | -1,661 | -470 | 71 | -399 | ' | ' | ' | ' | ' |
Balance at Dec. 31, 2013 | 240,837 | 215 | 213,359 | -8,670 | ' | 204,904 | 35,310 | 623 | 35,933 | ' | ' | ' | ' | ' |
Balance (in shares) at Dec. 31, 2013 | 21,548,597 | 21,548,597 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Increase (Decrease) in stockholders' Equity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net proceeds from sale of common stock | 149,917 | 127 | 149,790 | ' | ' | 149,917 | ' | ' | ' | ' | ' | ' | ' | ' |
Net proceeds from sale of common stock (in shares) | ' | 12,650,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Restricted share award grants | 860 | 1 | 859 | ' | ' | 860 | ' | ' | ' | ' | ' | ' | ' | ' |
Restricted share award grants (in shares) | ' | 89,529 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Dividends/distributions declared | -14,427 | ' | ' | -12,595 | ' | -12,595 | -1,832 | ' | -1,832 | ' | ' | ' | ' | ' |
Adjustment for Noncontrolling Interests ownership in Operating Partnership | ' | ' | -3,100 | ' | ' | -3,100 | 3,100 | ' | 3,100 | ' | ' | ' | ' | ' |
Issuance of Operating Partnership Units in connection with acquisitions | 3,135 | ' | ' | ' | ' | ' | 3,135 | ' | 3,135 | ' | ' | ' | ' | ' |
Distributions | -99 | ' | ' | ' | ' | ' | ' | -99 | -99 | ' | ' | ' | ' | ' |
Net (loss) income | -4,158 | ' | ' | -3,654 | ' | -3,654 | -654 | 150 | -504 | ' | ' | ' | ' | ' |
Balance at Jun. 30, 2014 | $376,065 | $343 | $360,908 | ($24,919) | ' | $336,332 | $39,059 | $674 | $39,733 | ' | ' | ' | ' | ' |
Balance (in shares) at Jun. 30, 2014 | 34,288,126 | 34,288,126 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated_and_Combined_Stat2
Consolidated and Combined Statements of Cash Flows (USD $) | 6 Months Ended | 7 Months Ended | |
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jul. 23, 2013 |
Predecessor | Predecessor | ||
Cash Flows from Operating Activities: | ' | ' | ' |
Net loss | ($4,158) | ' | ' |
Net loss | ' | -584 | -576 |
Adjustments to reconcile net loss to net cash provided by operating activities | ' | ' | ' |
Depreciation and amortization | 6,152 | 2,021 | ' |
Amortization of deferred financing costs | 352 | 42 | ' |
Amortization of lease inducements and above/below market lease intangibles | 186 | 35 | ' |
Straight-line rental revenue | -1,585 | -1 | ' |
Equity in income of unconsolidated entity | -43 | ' | ' |
Distribution from unconsolidated entity | 45 | ' | ' |
Change in fair value of derivative | -72 | -190 | ' |
Provision for bad debts | 6 | 30 | ' |
Non-cash share compensation | 860 | ' | ' |
Change in operating assets and liabilities: | ' | ' | ' |
Tenant receivables | -50 | 97 | ' |
Other assets | 402 | -737 | ' |
Accounts payable to related parties | ' | 384 | ' |
Accounts payable | -138 | -270 | ' |
Accrued expenses and other liabilities | 1,954 | 239 | ' |
Net cash provided by operating activities | 3,911 | 1,066 | ' |
Cash Flows from Investing Activities: | ' | ' | ' |
Acquisition of investment properties, net | -208,118 | ' | ' |
Capital expenditures on investment properties | -87 | -268 | ' |
Real estate loan receivable | -6,836 | ' | ' |
Leasing commissions | -5 | -39 | ' |
Lease inducement | -1,500 | ' | ' |
Cash used in investing activities | -216,546 | -307 | ' |
Cash Flows from Financing Activities: | ' | ' | ' |
Net proceeds from sale of common shares | 149,917 | ' | ' |
Proceeds from credit facility borrowings | 113,200 | ' | ' |
Payment on credit facility borrowings | -113,200 | ' | ' |
Proceeds from issuance of mortgage debt | 26,550 | 163 | ' |
Payments on mortgage debt | -803 | -857 | ' |
Debt issuance costs | -1,331 | ' | ' |
Dividends paid - shareholders | -9,716 | ' | ' |
Distributions to noncontrolling interest-operating partnership | -1,664 | -173 | ' |
Distributions to members and partners | ' | -140 | ' |
Distributions to noncontrolling interest - partially owned properties | -99 | ' | ' |
Net cash provided by (used in) financing activities | 162,854 | -1,007 | ' |
Net decrease in cash and cash equivalents | -49,781 | -248 | ' |
Cash and cash equivalents, beginning of period | 56,478 | 2,614 | 2,614 |
Cash and cash equivalents, end of period | 6,697 | 2,366 | ' |
Supplemental disclosure of cash flow information - interest paid during the period | 2,607 | 2,131 | ' |
Supplemental disclosure of noncash activity - assumed debt | 10,395 | ' | ' |
Supplemental disclosure of noncash activity - issuance of Operating Partnership units in connection with acquisitions | $3,135 | ' | ' |
Organization_and_Business
Organization and Business | 6 Months Ended |
Jun. 30, 2014 | |
Organization and Business | ' |
Organization and Business | ' |
Note 1—Organization and Business | |
Physicians Realty Trust (the “Trust”) was organized in the state of Maryland on April 9, 2013. As of June 30, 2014, the Trust was authorized to issue up to 500,000,000 common shares of beneficial interest, par value $0.01 per share. The Trust filed a Registration Statement on Form S-11 with the Securities and Exchange Commission (the “Commission”) with respect to a proposed underwritten initial public offering (the “IPO”) and completed the IPO of its common shares and commenced operations on July 24, 2013. | |
The Trust contributed the net proceeds from the IPO to Physicians Realty L.P. (the “Operating Partnership”), a Delaware limited partnership, and is the sole general partner of the Operating Partnership. The Trust’s operations are conducted through the Operating Partnership and wholly-owned and majority-owned subsidiaries of the Operating Partnership. The Trust, as the general partner of the Operating Partnership, controls the Operating Partnership and consolidates the assets, liabilities and results of operations of the Operating Partnership. | |
The Trust is a self-managed real estate investment trust (“REIT”) formed primarily to acquire, selectively develop, own and manage healthcare properties that are leased to physicians, hospitals and healthcare delivery systems. | |
Initial Public Offering and Formation Transactions and Follow-On Public Offerings | |
Pursuant to the IPO, the Trust issued an aggregate of 11,753,597 common shares, including common shares issued upon exercise of the underwriters’ overallotment option, and received approximately $123.8 million of net proceeds. The Trust contributed the net proceeds of the IPO to the Operating Partnership in exchange for 11,753,597 common units of partnership interest (“OP Units”). Concurrently with the completion of the IPO, the Trust acquired, through a series of contribution transactions, the entities that own the 19 properties that comprised the Trust’s initial properties from four healthcare real estate funds (the “Ziegler Funds”), as well as certain operating assets and liabilities, including the assumption of approximately $84.3 million of debt related to such properties. The Trust determined that the Ziegler Funds constitute the Trust’s accounting predecessor (the “Predecessor”). The Predecessor, which is not a legal entity, is comprised of the four Ziegler Funds that owned directly or indirectly interests in entities that owned the initial 19 properties in the Trust’s portfolio. The combined historical data for the Predecessor is not necessarily indicative of the Trust’s future financial position or results of operations. In addition, at the completion of the IPO, the Trust entered into a shared services agreement with B.C. Ziegler & Company (“Ziegler”) pursuant to which Ziegler provides office space, IT support, accounting support and other services to the Trust in exchange for an annual fee. | |
To acquire the ownership interests in the entities that own the 19 properties included in the Trust’s initial properties, and certain other operating assets and liabilities, from the Ziegler Funds, the Operating Partnership issued to the Ziegler Funds an aggregate of 2,744,000 OP Units, having an aggregate value of approximately $31.6 million based on the price to the public per share in the IPO. These formation transactions were effected concurrently with the completion of the IPO. | |
The net proceeds from the IPO, inclusive of shares issued pursuant to the exercise of the underwriters’ overallotment option, were approximately $123.8 million (after deducting the underwriting discount and expenses of the IPO and the formation transactions payable by the Trust). The Trust contributed the net proceeds of the IPO to the Operating Partnership in exchange for 11,753,597 OP Units on July 24, 2013, and upon closing of the IPO, the Trust owned a 79.6% interest in the Operating Partnership. The Operating Partnership used a portion of the IPO proceeds received from the Trust to purchase the 50% interest in the Arrowhead Commons property not owned by the Ziegler Funds for approximately $850,000, after which the Operating Partnership became the 100% owner of the property, and to pay certain expenses related to debt assumptions and the Trust’s senior secured revolving credit facility. The balance of the net proceeds was subsequently invested in healthcare properties. | |
On December 11, 2013, the Trust completed a public offering of 9,545,000 common shares of beneficial interest, including 1,245,000 shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to the Trust of approximately $103.1 million. The Trust contributed the net proceeds of this offering to the Operating Partnership in exchange for 9,545,000 OP Units, and the Operating Partnership used the net proceeds of the public offering to repay borrowings under the Trust’s senior secured revolving credit facility and for general corporate and working capital purposes, funding future acquisitions, including any pending acquisitions, and development activities. | |
On May 27, 2014, the Trust completed a public offering of 12,650,000 common shares of beneficial interest, including 1,650,000 shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to the Trust of approximately $149.9 million. The Trust contributed the net proceeds of this offering to the Operating Partnership in exchange for OP Units, and the Operating Partnership used the net proceeds of the public offering to repay borrowings under the Trust’s senior secured revolving credit facility and for general corporate and working capital purposes, funding future acquisitions, including any pending acquisitions, and development activities. | |
Because the IPO and the formation transactions were completed on July 24, 2013, the Trust had no operations prior to that date. References in these notes to the consolidated and combined financial statements of Physicians Realty Trust signify the Trust for the period from July 24, 2013, the date of completion of the IPO and the formation transactions, and of the Predecessor for all prior periods. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2014 | |
Summary of Significant Accounting Policies | ' |
Summary of Significant Accounting Policies | ' |
Note 2—Summary of Significant Accounting Policies | |
The accompanying unaudited consolidated and combined financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the periods ended June 30, 2014 and 2013 pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited financial statements included in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on March 21, 2014. | |
Principles of Consolidation | |
Property holding entities and other subsidiaries of which the Trust owns 100% of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest are consolidated. All inter-company balances and transactions are eliminated. For entities in which the Trust owns less than 100% of the equity interest, the Trust consolidates the property if it has the direct or indirect ability to control the entities’ activities based upon the terms of the respective entities’ ownership agreements. For these entities, the Trust records a non-controlling interest representing equity held by non-controlling interests. | |
The Trust continually evaluates all of its transactions and investments to determine if they represent variable interests in a variable interest entity (“VIE”). If the Trust determines that it has a variable interest in a VIE, the Trust then evaluates if it is the primary beneficiary of the VIE. The evaluation is a qualitative assessment as to whether the Trust has the ability to direct the activities of a VIE that most significantly impact the entity’s economic performance. The Trust consolidates each VIE in which it, by virtue of or transactions with the Trust’s investments in the entity, is considered to be the primary beneficiary. | |
Noncontrolling Interests | |
Operating Partnership: Net income or loss is allocated to noncontrolling interests based on their respective ownership percentage of the Operating Partnership. The ownership percentage is calculated by dividing the number of OP Units held by the noncontrolling interests by the total OP Units held by the noncontrolling interests and the Trust. Issuance of additional Common Shares and OP Units changes the ownership interests of both the noncontrolling interests and the Trust. Such transactions and the related proceeds are treated as capital transactions. | |
In connection with the closing of the IPO, the Trust and the Operating Partnership completed related formation transactions pursuant to which the Operating Partnership acquired from the Ziegler Funds, the Ziegler Funds’ ownership interests in 19 medical office buildings located in ten states in exchange for an aggregate of 2,744,000 OP Units. | |
In connection with the acquisition of a surgical center hospital in the New Orleans, Louisiana metropolitan area for approximately $37.5 million, on September 30, 2013, the Operating Partnership partially funded the purchase price by issuing 954,877 OP Units valued at approximately $11.5 million on the date of issuance. | |
In the second quarter of 2014, the Operating Partnership has partially funded 2 additional acquisitions by issuing 243,758 OP Units valued at approximately $3.1 million on the date of issuance. The 2 acquisitions had a total purchase price of $21.4 million. | |
Noncontrolling interests in the Trust represent OP Units held by the Predecessor’s prior investors and other investors. As of June 30, 2014, the Trust held an 89.6% interest in the Operating Partnership. As the sole general partner and the majority interest holder, the Trust consolidates the financial position and results of operation of the Operating Partnership. | |
Holders of OP Units may not transfer their units without the Trust’s prior written consent, as general partner of the Operating Partnership. Beginning on the first anniversary of the issuance of OP Units, OP Unit holders may tender their units for redemption by the Operating Partnership in exchange for cash equal to the market price of the Trust’s common shares at the time of redemption or, for common shares on a one-for-one basis. Such election to pay cash or issue shares to satisfy an OP Unit holder’s redemption request is solely within the control of the Trust. Accordingly, the Trust presents the OP Units of the Operating Partnership held by the Predecessor’s prior investors and other investors as noncontrolling interests within equity in the consolidated balance sheet. | |
Partially Owned Properties: The Trust reflects noncontrolling interests in partially owned properties on the balance sheet for the portion of properties consolidated by the Trust that are not wholly owned by the Trust. The earnings or losses from those properties attributable to the noncontrolling interests are reflected as noncontrolling interests in partially owned properties in the consolidated and combined statement of operations. | |
Investment Properties | |
A property acquired not subject to an existing lease is treated as an asset acquisition and recorded at its purchase price, inclusive of acquisition costs, allocated between land and building based upon their relative fair values at the date of acquisition. A property acquired with an existing lease is accounted for as a business combination pursuant to the acquisition method in accordance with ASC Topic 805, Business Combinations, and assets acquired and liabilities assumed, including lease intangibles, are recorded at fair value. | |
Investments in Unconsolidated Entities | |
The Trust reports investments in unconsolidated entities over whose operating and financial policies it has the ability to exercise significant influence under the equity method of accounting. Under this method of accounting, the Trust’s share of the investee’s earnings or losses is included in its consolidated and combined statement of operations. The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the entity interest. | |
Real Estate Loans Receivable | |
Real estate loans receivable consists of a mezzanine loan which is collateralized by an equity interest in a medical office building development. Interest income on the loan is recognized as earned based on the terms of the loan subject to evaluation of collectability risks and is included in the Trust’s consolidated and combined statement of operations. | |
Dividends and Distributions | |
On June 30, 2014, the Trust’s Board of Trustees declared a cash dividend of $0.225 per share for the quarterly period ended June 30, 2014. The dividend was paid on August 1, 2014 to common shareholders and common OP Unit holders of record on July 18, 2014. | |
Impairment of Real Estate Property | |
The Trust evaluates the recoverability of the recorded amount of real estate property whenever events or changes in circumstances indicate that the recorded amount of an asset may not be fully recoverable. Impairment is assessed when the undiscounted expected future cash flows derived from an asset are less than its carrying amount. If the Trust determines that an asset is impaired, the impairment to be recognized is measured as the amount by which the recorded amount of the asset exceeds its fair value. Assets to be disposed of are reported at the lower of the recorded amount or fair value less cost to sell. Fair value is determined using a discounted future cash flow analysis. | |
The Trust did not recognize any impairment for the three and six months ended June 30, 2014, nor did the Predecessor in the comparative periods presented. | |
Rental Revenue | |
Rental revenue is recognized on a straight-line basis over the terms of the related leases when collectability is reasonably assured. Recognizing rental revenue on a straight-line basis for leases may result in recognizing revenue for amounts more or less than amounts currently due from tenants. Amounts recognized in excess of amounts currently due from tenants are included in other assets and were $3.6 million and $2.0 million as of June 30, 2014 and December 31, 2013, respectively. If the Trust determines that collectability of straight-line rents is not reasonably assured, the Trust limits future recognition to amounts contractually owed and, where appropriate, establishes an allowance for estimated losses. Rental revenue is reduced by amortization of lease inducements and above market lease intangibles and increased by amortization of below market lease intangibles on certain leases. Lease inducements, above market lease intangibles and below market lease intangibles are amortized over the average remaining life of the lease. | |
Expense Recoveries | |
Expense recoveries relate to tenant reimbursement of real estate taxes, insurance and other operating expenses that are recognized as expense recovery revenue in the period the applicable expenses are incurred. The reimbursements are recorded at gross amounts, as the Trust is generally the primary obligor with respect to real estate taxes and purchasing goods and services from third-party suppliers and has discretion in selecting the supplier and bears the credit risk of tenant reimbursement. | |
The Trust has certain tenants with absolute net leases. Under these lease agreements, the tenant is responsible for operating and building expenses. For absolute net leases, the Trust does not recognize the operating expenses or expense recoveries. | |
Management Estimates | |
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated and combined financial statements and the amounts of revenue and expenses reported in the period. Significant estimates are made for the valuation of investment property, valuation of financial instruments, impairment assessments and fair value assessments with respect to purchase price allocations. Actual results could differ from these estimates. | |
Reclassifications | |
Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the consolidated financial position or results of operations. | |
New Accounting Pronouncements | |
In April 2014, the Financial Accounting Standards Board issued Accounting Standards Updated, or ASU, 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360) which changes the requirements for reporting discontinued operations. ASU 2014-08 changes the threshold for disclosing discontinued operations and the related disclosure requirements. Pursuant to ASU 2014-08, only disposals representing a strategic shift, such as a major line of business, a major geographical area or majority equity investment, should be presented as a discontinued operation. If the disposal does qualify as a discontinued operation under ASU 2014-08, the entity will be required to provide expanded disclosures. The guidance will be applied prospectively to new disposals and new classifications of disposal groups held for sale after the effective date. ASU 2014-08 is effective for annual periods beginning on or after December 14, 2014 with early adoption permitted. The Trust early adopted the provisions of the guidance in the first quarter of 2104. Such adoption has had no impact on the Trust’s financial statements as no dispositions have occurred during the six months ended June 30, 2014 | |
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which creates a new Topic Accounting Standards Codification (Topic 606). The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This standard is effective for interim or annual periods beginning after December 15, 2016 and allows for either full retrospective or modified retrospective adoption. Early adoption of this standard is not allowed. The Trust is currently evaluating the impact the adoption of Topic 606 will have on its financial statements. | |
Acquisitions_and_Investments
Acquisitions and Investments | 6 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
Acquisitions and Investments | ' | |||||||||||||
Acquisitions and Investments | ' | |||||||||||||
Note 3—Acquisitions and Investments | ||||||||||||||
During the six months ended June 30, 2014, the Trust completed acquisitions of 22 operating healthcare properties located in eight states for an aggregate purchase price of approximately $221.0 million as summarized below (in thousands): | ||||||||||||||
Property(1) | Location | Acquisition | Purchase | |||||||||||
Date | Price | |||||||||||||
Foundations San Antonio Surgical Hospital(2) | San Antonio, TX | February 19, 2014 | $ | 25,556 | ||||||||||
Eagles Landing Family Practice 4 MOBs(2) | Atlanta, GA | February 19, 2014 | $ | 20,800 | ||||||||||
21st Century Oncology 4 MOBs(3) | Sarasota, FL | February 26, 2014 | $ | 17,486 | ||||||||||
Foundations San Antonio MOB(3) | San Antonio, TX | February 28, 2014 | $ | 6,800 | ||||||||||
Peachtree Dunwoody MOB(3) | Atlanta, GA | February 28, 2014 | $ | 36,726 | ||||||||||
LifeCare LTACH(2) | Fort Worth, TX | March 28, 2014 | $ | 27,160 | ||||||||||
LifeCare LTACH(2) | Pittsburgh, PA | March 28, 2014 | $ | 12,840 | ||||||||||
Pinnacle Health Cardiology Portfolio 2 MOBs (3) | Carlisle & Wormleyburg, PA | April 22, 2014 | $ | 9,208 | ||||||||||
South Bend Orthopedic MOB (3) | South Bend, IN | April 30, 2014 | $ | 14,900 | ||||||||||
Grenada Medical Complex MOB (3) | Grenada, MS | April 30,2014 | $ | 7,100 | ||||||||||
Mississippi Sports Medicine and Orthopaedics Center MOB (2)(4) | Jackson, MS | May 23, 2014 | $ | 16,700 | ||||||||||
Carmel Medical Pavilion MOB (3)(4) | Carmel, IN | May 28, 2014 | $ | 4,664 | ||||||||||
Summit Urology MOB (2) | Bloomington, IN | June 30, 2014 | $ | 4,783 | ||||||||||
Renaissance Center (3) | Oshkosh, WI | June 30, 2014 | $ | 8,500 | ||||||||||
Presbyterian Medical Plaza MOB (3) | Monroe, NC | June 30, 2014 | $ | 7,750 | ||||||||||
(1) “MOB” means medical office building and “LTACH” means long-term acute care hospital | ||||||||||||||
(2) The Trust accounted for these acquisitions as asset acquisitions and capitalized $0.8 million of total acquisition costs to the basis of the properties | ||||||||||||||
(3) The Trust accounted for these acquisitions as business combinations pursuant to the acquisition method and expensed total acquisition costs of $6.3 million. | ||||||||||||||
(4) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 243,758 OP Units valued at approximately $3.1 million on the date of issuance. | ||||||||||||||
During the three months ended June 30, 2014, the Trust recorded revenues and net income of $4.9 million and $1.7 million, respectively, from its 2014 acquisitions. During the six months ended June 30, 2014, the Trust recorded revenues and net income of $6.0 million and $1.8 million, respectively, from its 2014 acquisitions. | ||||||||||||||
The following table summarizes the acquisition date fair values of the assets acquired and the liabilities assumed, which we determined using level two and level three inputs (in thousands): | ||||||||||||||
1ST Quarter | 2nd Quarter | Total | ||||||||||||
Land | $ | 18,331 | $ | 7,275 | $ | 25,606 | ||||||||
Building and improvements | 121,472 | 57,401 | 178,873 | |||||||||||
In-place lease intangible | 7,585 | 7,061 | 14,646 | |||||||||||
Above market in-place lease intangible | 891 | 465 | 1,356 | |||||||||||
Below market in-place lease intangible | — | (133 | ) | (133 | ) | |||||||||
Investment in unconsolidated entity | 1,300 | — | 1,300 | |||||||||||
Issuance of OP units | — | (3,135 | ) | (3,135 | ) | |||||||||
Mortgage debt assumed | (10,800 | ) | 405 | (10,395 | ) | |||||||||
Lease inducement | — | 1,500 | 1,500 | |||||||||||
Net assets acquired | $ | 138,779 | $ | 70,839 | $ | 209,618 | ||||||||
These preliminary allocations are subject to revision within the measurement period, not to exceed one year from the date of the acquisitions. | ||||||||||||||
Unaudited Pro Forma Financial Information | ||||||||||||||
The following table illustrates the pro forma combined revenue, net income, and earnings per share —basic and diluted as if the Trust had acquired the above acquisitions as of January 1, 2013 (in thousands, except per share amounts): | ||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
Predecessor | Predecessor | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Revenue | $ | 12,439 | $ | 9,280 | $ | 24,978 | $ | 18,323 | ||||||
Net income | 1,868 | 1,822 | 3,864 | 2,872 | ||||||||||
Net income available to common shareholders | 1,868 | — | 4,192 | — | ||||||||||
Earnings per share - basic and diluted | $ | 0.07 | $ | — | $ | 0.18 | $ | — | ||||||
Weighted average common shares - basic and diluted | 26,163,982 | — | 23,744,730 | — | ||||||||||
Intangibles
Intangibles | 6 Months Ended | |||||||||||||||||||
Jun. 30, 2014 | ||||||||||||||||||||
Intangibles | ' | |||||||||||||||||||
Intangibles | ' | |||||||||||||||||||
Note 4—Intangibles | ||||||||||||||||||||
The following is a summary of the carrying amount of acquired lease intangibles as of June 30, 2014 and December 31, 2013 (in thousands): | ||||||||||||||||||||
June 30, 2014 | December 31, 2013 | |||||||||||||||||||
Cost | Accumulated | Net | Cost | Accumulated | Net | |||||||||||||||
Amortization | Amortization | |||||||||||||||||||
Assets | ||||||||||||||||||||
In-place leases | $ | 43,702 | $ | (9,741 | ) | $ | 33,961 | $ | 29,056 | $ | (8,080 | ) | $ | 20,976 | ||||||
Above market leases | 3,537 | (167 | ) | 3,370 | 2,180 | (48 | ) | 2,132 | ||||||||||||
Total | $ | 47,239 | $ | (9,908 | ) | $ | 37,331 | $ | 31,236 | $ | (8,128 | ) | $ | 23,108 | ||||||
Liability | ||||||||||||||||||||
Below market lease | $ | 134 | $ | (1 | ) | $ | 133 | — | — | — | ||||||||||
The following is a summary of the acquired lease intangible amortization for the three and six months ended June 30, 2014 and 2013 (in thousands): | ||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Amortization expense related to in-place leases | $ | 1,013 | $ | 312 | $ | 1,724 | $ | 512 | ||||||||||||
Amortization recorded against rental income related to above market leases | 73 | — | 119 | — | ||||||||||||||||
Amortization recorded to rental income related to below market leases | 1 | — | 1 | — | ||||||||||||||||
Future aggregate amortization of the acquired lease intangibles as of June 30, 2014, is as follows (in thousands): | ||||||||||||||||||||
Assets | Liability | |||||||||||||||||||
2014 | $ | 2,412 | $ | 7 | ||||||||||||||||
2015 | 4,824 | 13 | ||||||||||||||||||
2016 | 4,812 | 13 | ||||||||||||||||||
2017 | 4,635 | 13 | ||||||||||||||||||
2018 | 4,280 | 13 | ||||||||||||||||||
Thereafter | 16,368 | 74 | ||||||||||||||||||
Total | $ | 37,331 | $ | 133 | ||||||||||||||||
The weighted average amortization period for asset lease intangibles and liability lease intangible is 10 years. |
Debt
Debt | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
Debt | ' | |||||||
Debt | ' | |||||||
Note 5—Debt | ||||||||
The following is a summary of debt as of June 30, 2014 and December 31, 2013 (in thousands): | ||||||||
June 30, | December 31, | |||||||
2014 | 2013 | |||||||
$ 200 million senior secured revolving credit facility bearing interest at floating rates, due August 2016, collateralized by twenty properties with a net book value of $274,112. | $ | — | $ | — | ||||
Mortgage notes, bearing fixed interest from 4.82% to 6.58%, with a weighted average interest rate of 5.27%, and due in 2016, 2017, 2018, 2019, 2021 and 2022 collateralized by nine properties with a net book value of $51,230. | 74,497 | 38,288 | ||||||
Mortgage note, bearing variable interest of LIBOR plus 2.65% and due in 2017, collateralized by one property with a net book value of $2,444 | 4,466 | 4,533 | ||||||
Total debt | $ | 78,963 | $ | 42,821 | ||||
Senior Secured Credit Facility: | ||||||||
On August 29, 2013, the Trust and the Operating Partnership entered into a Credit Agreement with Regions Bank, as Administrative Agent, Regions Capital Markets, as Sole Lead Arranger and Sole Book Runner, and various other lenders in connection with a $75 million senior secured revolving credit facility (the “Credit Agreement”). On November 8, 2013, the Trust agreed with the lenders to increase the total amount available under the credit agreement from $75 million to $90 million. On February 21, 2014, the Trust agreed with the lenders to increase the total amount available under the Trust’s senior secured revolving credit facility from $90 million to $140 million. On June 20, 2014, the Trust agreed with the lenders to increase the total amount available under the Trust’s senior secured revolving credit facility from $140 million to $200 million. Subject to satisfaction of certain conditions, including additional lender commitments, we have the option to increase the borrowing capacity under the revolving credit facility to up to $250 million. The amount available to the Trust under the Credit Agreement is subject to certain limitations including, but not limited to, the appraised value of the pledged properties that comprise the borrowing base of the credit facility. | ||||||||
The Credit Agreement has a three-year term with an initial maturity date of August 29, 2016. Subject to the terms of the Credit Agreement, the Operating Partnership has the option to extend the term of the Credit Agreement to August 29, 2017. | ||||||||
The obligations of the Operating Partnership under the Credit Agreement are guaranteed by the Trust and certain of its subsidiaries. In addition, the Credit Agreement provides for security in the form of, among other things, mortgage liens on certain properties owned by the Operating Partnership that comprise the borrowing base. | ||||||||
The Credit Agreement provides for revolving credit loans to the Operating Partnership. Base Rate Loans, Adjusted LIBOR Rate Loans and Letters of Credit (each, as defined in the Credit Agreement) will be subject to interest rates, based upon the consolidated leverage ratio of the Trust, the Operating Partnership and its subsidiaries as follows: | ||||||||
Consolidated Leverage | Adjusted LIBOR Rate Loans | Base Rate Loans | ||||||
Ratio | and Letter of Credit Fee | |||||||
<35% | LIBOR + 2.65% | Base Rate + 1.65% | ||||||
>35% and <45% | LIBOR + 2.85% | Base Rate + 1.85% | ||||||
>45% and <50% | LIBOR + 2.95% | Base Rate + 1.95% | ||||||
>50% | LIBOR + 3.40% | Base Rate + 2.40% | ||||||
The Operating Partnership may, at any time, voluntarily prepay any loan under the Credit Agreement in whole or in part without premium or penalty. | ||||||||
The Credit Agreement contains financial covenants that, among other things, require compliance with loan-to-value, leverage and coverage ratios and maintenance of minimum tangible net worth, as well as covenants that may limit the Trust’s and the Operating Partnership’s ability to incur additional debt or make distributions. The Credit Agreement also contains customary events of default. Any event of default, if not cured or waived, could result in the acceleration of any outstanding indebtedness under the Credit Agreement. As of June 30, 2014, the Trust was in compliance with all financial covenants. | ||||||||
As of June 30, 2014, there were no outstanding borrowings under the Trust’s Credit Agreement and $171.0 million was available to borrow without adding additional properties to the borrowing base securing the Credit Agreement. | ||||||||
Scheduled principal payments due on debt as of June 30, 2014, are as follows (in thousands): | ||||||||
2014 | $ | 903 | ||||||
2015 | 1,869 | |||||||
2016 | 9,425 | |||||||
2017 | 28,697 | |||||||
2018 | 1,100 | |||||||
Thereafter | 36,969 | |||||||
Total | $ | 78,963 | ||||||
Stockbased_Compensation
Stock-based Compensation | 6 Months Ended | ||||||
Jun. 30, 2014 | |||||||
Stock-based Compensation | ' | ||||||
Stock-based Compensation | ' | ||||||
Note 6—Stock-based Compensation | |||||||
The Trust follows ASC 718 in accounting for its share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee’s requisite service period. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized when incurred. Share-based payments classified as liability awards are marked to fair value at each reporting period. | |||||||
Certain of the Trust’s employee stock awards vest only upon the achievement of performance targets. ASC 718 requires recognition of compensation cost only when achievement of performance conditions is considered probable. Consequently, the Trust’s determination of the amount of stock compensation expense requires a significant level of judgment in estimating the probability of achievement of these performance targets. Additionally, the Trust must make estimates regarding employee forfeitures in determining compensation expense. Subsequent changes in actual experience are monitored and estimates are updated as information is available. | |||||||
In connection with the IPO, the Trust adopted the 2013 Equity Incentive Plan which made available 600,000 restricted shares to be administered by the Compensation and Nominating Governance Committee of the Board of Trustees. The committee has broad discretion in administering the terms of the plan. Restricted shares granted under the plan are eligible for dividends as well as the right to vote. The Trust granted to management and the Board of Trustees 250,000 restricted common shares upon completion of the IPO under the Trust’s 2013 Equity Incentive Plan at a value per share of $11.50 and total value of $2.9 million with a vesting period of three years. In March 2014 an additional 84,266 restricted common shares were granted to management and the Board of Trustees. In June 2014, an additional 5,263 restricted common shares were granted to certain Trust employees. | |||||||
Shares | Weighted | ||||||
Average Grant | |||||||
Date Fair Value | |||||||
Non-vested at December 31, 2013 | 250,000 | $ | 11.5 | ||||
Granted | 89,529 | 13.52 | |||||
Vested | — | — | |||||
Forfeited | — | — | |||||
Non-vested at June 30, 2014 | 339,529 | $ | 12.03 | ||||
For all service awards, we record compensation expense for the entire award on a straight-line basis (or, if applicable, on the accelerated method) over the requisite service period. For the three and six months ended June 30, 2014, the Trust recognized non-cash share compensation of $0.5 million and $0.9 million. Unrecognized compensation expense at June 30, 2014 was $2.8 million. The Trust’s compensation expense recorded in connection with grants of restricted stock reflects an initial estimated cumulative forfeiture rate of 0% over the requisite service period of the awards. That estimate will be revised if subsequent information indicates that the actual number of awards expected to vest is likely to differ from previous estimates. | |||||||
Restricted Share Units: | |||||||
In March 2014, under the Trust’s 2013 Equity Incentive Plan, the Trust granted 55,680 restricted share units at target level to management, which are subject to various criteria and a three year service period. Based on the criteria the restricted share units are accounted for as a liability award. Also, each restricted share unit contains one dividend equivalent. The recipient will accrue dividend equivalents on awarded share units equal to the cash dividend that would have been paid on the awarded share unit had the awarded share unit been an issued and outstanding common share on the record date for the dividend. The Trust recognized $0.02 million and $0.08 million of non-cash share unit compensation expense for the three and six month periods ended June 30, 2014. Unrecognized compensation expense at June 30, 2014 was $0.7 million. | |||||||
Fair_Value_Measurements
Fair Value Measurements | 6 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
Fair Value Measurements | ' | |||||||||||||
Fair Value Measurements | ' | |||||||||||||
Note 7—Fair Value Measurements | ||||||||||||||
Accounting standards require certain assets and liabilities be reported and/or disclosed at fair value in the financial statements and provides a framework for establishing that fair value. The framework for determining fair value is based on a hierarchy that prioritizes the valuation techniques and inputs used to measure fair value. | ||||||||||||||
In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access. Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals. | ||||||||||||||
Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset. These Level 3 fair value measurements are based primarily on management’s own estimates using pricing models, discounted cash flow methodologies, or similar techniques taking into account the characteristics of the asset or liability. In instances where inputs used to measure fair value fall into different levels of the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability. | ||||||||||||||
The derivative instrument (Note 9) consists solely of an interest rate swap that is not traded on an exchange and is recorded at fair value based on a variety of observable inputs including contractual terms, interest rate curves, yield curves, measure of volatility, and correlations of such inputs. | ||||||||||||||
The Trust measures its interest rate swap at fair value on a recurring basis. The fair value is based on primarily Level 2 inputs described above. | ||||||||||||||
The Trust also has assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. This generally includes assets subject to impairments. There were no such assets measured at fair value as of June 30, 2014. | ||||||||||||||
The carrying amounts of cash and cash equivalents, tenant receivables, payables, and accrued interest are reasonable estimates of fair value because of the short term maturities of these instruments. Fair values for real estate loan receivable and mortgage notes are estimated based on rates currently prevailing for similar instruments of similar maturities and are based primarily on level 2 inputs | ||||||||||||||
The following table presents the fair value of other financial instruments (in thousands). The swap is measured at fair value on a recurring basis. | ||||||||||||||
June 30, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
(unaudited) | ||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||
Amount | Value | Amount | Value | |||||||||||
Cash and cash equivalents | $ | 6,697 | $ | 6,697 | $ | 56,478 | $ | 56,478 | ||||||
Real estate loan receivable | $ | 6,881 | $ | 6,881 | $ | — | $ | — | ||||||
Mortgage notes | $ | 78,963 | $ | 79,045 | $ | 42,821 | $ | 44,130 | ||||||
Derivative liability | $ | 325 | $ | 325 | $ | 397 | $ | 397 | ||||||
Derivative_Financial_Instrumen
Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2014 | |
Derivative Financial Instruments | ' |
Derivative Financial Instruments | ' |
Note 8—Derivative Financial Instruments | |
The Trust is exposed to certain risks in the normal course of its business operations. One risk relating to the variability of interest on variable rate debt is managed through the use of derivatives. All derivative financial instruments are reported in the balance sheet at fair value. The Trust has elected not to apply hedge accounting to its derivative financial instrument. | |
Generally, the Trust enters into swap relationships such that changes in the fair value or cash flows of items and transactions being hedged are expected to be offset by corresponding changes in the values of the derivatives. | |
The Trust and the Predecessor held a swap to pay fixed/receive variable interest rates with a total notional amount of $7.8 million and $7.9 million as of June 30, 2014 and December 31, 2013, respectively. Gains recognized on the interest rate swap of $0.03 million and $0.1 million were included in interest income on real estate loans and other in the consolidated and combined statements of operations for the three and six months ended June 30, 2014, respectively. Gains recognized on the interest rate swap of $0.1 million and $0.2 million were included in interest income on real estate loans and other in the consolidated and combined statements of operations for the three and six months ended June 30, 2013, respectively. | |
Tenant_Operating_Leases
Tenant Operating Leases | 6 Months Ended | ||||
Jun. 30, 2014 | |||||
Tenant Operating Leases | ' | ||||
Tenant Operating Leases | ' | ||||
Note 9—Tenant Operating Leases | |||||
The Trust is lessor of medical office buildings and other healthcare facilities. Leases have expirations from 2014 through 2028. As of June 30, 2014, the future minimum rental payments on non-cancelable leases, exclusive of expense recoveries, were as follows (in thousands): | |||||
2014 | $ | 32,426 | |||
2015 | 40,815 | ||||
2016 | 40,550 | ||||
2017 | 40,452 | ||||
2018 | 38,430 | ||||
Thereafter | 301,701 | ||||
Total | $ | 494,374 | |||
Rent_Expense
Rent Expense | 6 Months Ended | ||||
Jun. 30, 2014 | |||||
Rent Expense | ' | ||||
Rent Expense | ' | ||||
Note 10—Rent Expense | |||||
The Trust leases the rights to a parking structure at one of its properties and the land upon which three of its properties are located from third party land owners pursuant to separate ground and parking leases. The parking and ground leases require fixed annual rental payments and may also include escalation clauses and renewal options. These leases have terms up to 68 years remaining, excluding extension options. As of June 30, 2014, the future minimum lease obligations under non-cancelable parking and ground leases were as follows (in thousands): | |||||
2014 | $ | 597 | |||
2015 | 1,226 | ||||
2016 | 1,264 | ||||
2017 | 1,304 | ||||
2018 | 1,345 | ||||
Thereafter | 18,542 | ||||
Total | $ | 24,278 | |||
Rent expense for the parking and ground leases are reported in operating expenses in the Consolidated and Combined Statement of Operations. | |||||
Earnings_Per_Share
Earnings Per Share | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
Earnings Per Share | ' | |||||||
Earnings Per Share | ' | |||||||
Note 11—Earnings Per Share | ||||||||
The following table shows the amounts used in computing the Trust’s basic and diluted earnings per share. As the three and six months ended June 30, 2014 resulted in a net loss, there is no dilution to earnings per share (in thousands, except share and per share data): | ||||||||
Three Months | Six Months | |||||||
Ended June30, | Ended June 30, | |||||||
2014 | 2014 | |||||||
Numerator for earnings per share — basic and diluted: | ||||||||
Net loss | $ | (600 | ) | $ | (4,158 | ) | ||
Less: Net loss attributable to noncontrolling interests —operating partnership | 123 | 654 | ||||||
Less: Net income attributable to noncontrolling interests — partially owned properties | (84 | ) | (150 | ) | ||||
Numerator for earnings per share — basic and diluted | $ | (561 | ) | $ | (3,654 | ) | ||
Denominator for earnings per share - basic and diluted shares: | 26,163,982 | 23,744,730 | ||||||
Basic and diluted earnings per share | $ | (0.02 | ) | $ | (0.15 | ) | ||
There were 182,961 potentially dilutive shares outstanding related to the 2013 Equity Incentive Plan during the three and six months ended June 30, 2014. However, the shares were excluded from the computation of diluted shares as their impact would have been anti-dilutive. As a result, the number of outstanding shares was the same for basic and diluted earnings per share. | ||||||||
Related_Party_Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2014 | |
Related Party Transactions | ' |
Related Party Transactions | ' |
Note 12—Related Party Transactions | |
The Trust has entered into a shared services agreement with Ziegler pursuant to which Ziegler provides office space, IT support, accounting support and other services to the Trust in exchange for an annual fee. The shared service fee was $0.2 million and $0.3 million for the three and six months ended June 30, 2014, respectively, and is recorded in general and administrative expense in the consolidated statement of operations. | |
Ziegler charged the Predecessor an annual management fee equal to 2 percent of the total capital commitments. Total management fees charged to the Predecessor were $0.2 million and $0.5 million for the three and six months ended June 30, 2013, respectively. The Trust did not incur a management fee for the three and six months ended June 30, 2014. |
Subsequent_Events
Subsequent Events | 6 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Subsequent Events | ' | ||||||||
Subsequent Events | ' | ||||||||
Note 13 — Subsequent Events | |||||||||
On May 13, 2014, the Trust hired Jeffrey Theiler, 40, as Executive Vice President and Chief Financial Officer, effective July 7, 2014. John Lucey, the Trust’s Senior Vice President—Principal Accounting and Reporting Officer, remains the Trust’s principal accounting officer. On July 7, 2014, the Trust granted an award of 56,617 restricted common shares to Mr. Theiler. Additional information regarding the hiring of Mr. Theiler, his employment agreement and the grant of restricted common shares to Mr. Theiler can be found in the Trust’s Current Report on Form 8-K filed with the Commission on May 14, 2014. | |||||||||
On July 31, 2014, the Trust and its Operating Partnership entered into the First Amendment to Shared Services Agreement to the existing Shared Services Agreement dated July 24, 2013 with Ziegler. The amendment reduces the shared services provided by Ziegler, the initial term of the agreement, and the monthly fee paid by the Trust for the remainder of the term of the agreement. The amendment also clarifies that the monthly fee includes the rent payable by the Trust to Ziegler under its sublease for office space with Ziegler. In consideration of the reductions in shared services, the initial term and the monthly fee, the Trust will make a one-time payment to Ziegler in the amount of $1,800,000, which may be paid in cash or in unrestricted shares of the Trust’s common shares as determined by the Trust in its sole discretion. | |||||||||
On August 4, 2014, the Trust filed a universal shelf registration statement on Form S-3 with the Commission, allowing the Trust to offer up to $900 million of an indeterminate amount of common shares, preferred shares, convertible preferred shares, debt securities, convertible debt securities or other types of securities, from time to time. | |||||||||
On August 7, 2014, at the Annual Meeting of Shareholders of the Trust, the Trust’s shareholders approved an amendment to the Physicians Realty Trust 2013 Equity Incentive Plan to increase the number of common shares authorized for issuance under the plan by 1,850,000 common shares. | |||||||||
The Trust, through subsidiaries of its operating partnership, closed on the below acquisitions: | |||||||||
Property(1) | Location | Acquisition | Purchase | ||||||
Date | Price (in thousands) | ||||||||
Premier Healthcare Portfolio 3 MOBs | Bloomington, IN | July 1, 2014 | $ | 23,837 | |||||
Carlisle MOB II | Carlisle, PA | July 25, 2014 | $ | 4,500 | |||||
Surgical Institute of Monroe | Monroe, MI | July 28, 2014 | $ | 6,000 | |||||
The Oaks MOB | Lady Lake, FL | July 31, 2014 | $ | 10,600 | |||||
(1) “MOB” means medical office building. | |||||||||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2014 | |
Summary of Significant Accounting Policies | ' |
Principles of Consolidation | ' |
Principles of Consolidation | |
Property holding entities and other subsidiaries of which the Trust owns 100% of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest are consolidated. All inter-company balances and transactions are eliminated. For entities in which the Trust owns less than 100% of the equity interest, the Trust consolidates the property if it has the direct or indirect ability to control the entities’ activities based upon the terms of the respective entities’ ownership agreements. For these entities, the Trust records a non-controlling interest representing equity held by non-controlling interests. | |
The Trust continually evaluates all of its transactions and investments to determine if they represent variable interests in a variable interest entity (“VIE”). If the Trust determines that it has a variable interest in a VIE, the Trust then evaluates if it is the primary beneficiary of the VIE. The evaluation is a qualitative assessment as to whether the Trust has the ability to direct the activities of a VIE that most significantly impact the entity’s economic performance. The Trust consolidates each VIE in which it, by virtue of or transactions with the Trust’s investments in the entity, is considered to be the primary beneficiary. | |
Noncontrolling Interests | ' |
Noncontrolling Interests | |
Operating Partnership: Net income or loss is allocated to noncontrolling interests based on their respective ownership percentage of the Operating Partnership. The ownership percentage is calculated by dividing the number of OP Units held by the noncontrolling interests by the total OP Units held by the noncontrolling interests and the Trust. Issuance of additional Common Shares and OP Units changes the ownership interests of both the noncontrolling interests and the Trust. Such transactions and the related proceeds are treated as capital transactions. | |
In connection with the closing of the IPO, the Trust and the Operating Partnership completed related formation transactions pursuant to which the Operating Partnership acquired from the Ziegler Funds, the Ziegler Funds’ ownership interests in 19 medical office buildings located in ten states in exchange for an aggregate of 2,744,000 OP Units. | |
In connection with the acquisition of a surgical center hospital in the New Orleans, Louisiana metropolitan area for approximately $37.5 million, on September 30, 2013, the Operating Partnership partially funded the purchase price by issuing 954,877 OP Units valued at approximately $11.5 million on the date of issuance. | |
In the second quarter of 2014, the Operating Partnership has partially funded 2 additional acquisitions by issuing 243,758 OP Units valued at approximately $3.1 million on the date of issuance. The 2 acquisitions had a total purchase price of $21.4 million. | |
Noncontrolling interests in the Trust represent OP Units held by the Predecessor’s prior investors and other investors. As of June 30, 2014, the Trust held an 89.6% interest in the Operating Partnership. As the sole general partner and the majority interest holder, the Trust consolidates the financial position and results of operation of the Operating Partnership. | |
Holders of OP Units may not transfer their units without the Trust’s prior written consent, as general partner of the Operating Partnership. Beginning on the first anniversary of the issuance of OP Units, OP Unit holders may tender their units for redemption by the Operating Partnership in exchange for cash equal to the market price of the Trust’s common shares at the time of redemption or, for common shares on a one-for-one basis. Such election to pay cash or issue shares to satisfy an OP Unit holder’s redemption request is solely within the control of the Trust. Accordingly, the Trust presents the OP Units of the Operating Partnership held by the Predecessor’s prior investors and other investors as noncontrolling interests within equity in the consolidated balance sheet. | |
Partially Owned Properties: The Trust reflects noncontrolling interests in partially owned properties on the balance sheet for the portion of properties consolidated by the Trust that are not wholly owned by the Trust. The earnings or losses from those properties attributable to the noncontrolling interests are reflected as noncontrolling interests in partially owned properties in the consolidated and combined statement of operations. | |
Investment Properties | ' |
Investment Properties | |
A property acquired not subject to an existing lease is treated as an asset acquisition and recorded at its purchase price, inclusive of acquisition costs, allocated between land and building based upon their relative fair values at the date of acquisition. A property acquired with an existing lease is accounted for as a business combination pursuant to the acquisition method in accordance with ASC Topic 805, Business Combinations, and assets acquired and liabilities assumed, including lease intangibles, are recorded at fair value. | |
Investments in Unconsolidated Entities | ' |
Investments in Unconsolidated Entities | |
The Trust reports investments in unconsolidated entities over whose operating and financial policies it has the ability to exercise significant influence under the equity method of accounting. Under this method of accounting, the Trust’s share of the investee’s earnings or losses is included in its consolidated and combined statement of operations. The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the entity interest. | |
Real Estate Loans Receivable | ' |
Real Estate Loans Receivable | |
Real estate loans receivable consists of a mezzanine loan which is collateralized by an equity interest in a medical office building development. Interest income on the loan is recognized as earned based on the terms of the loan subject to evaluation of collectability risks and is included in the Trust’s consolidated and combined statement of operations. | |
Dividends and Distributions | ' |
Dividends and Distributions | |
On June 30, 2014, the Trust’s Board of Trustees declared a cash dividend of $0.225 per share for the quarterly period ended June 30, 2014. The dividend was paid on August 1, 2014 to common shareholders and common OP Unit holders of record on July 18, 2014. | |
Impairment of Real Estate Property | ' |
Impairment of Real Estate Property | |
The Trust evaluates the recoverability of the recorded amount of real estate property whenever events or changes in circumstances indicate that the recorded amount of an asset may not be fully recoverable. Impairment is assessed when the undiscounted expected future cash flows derived from an asset are less than its carrying amount. If the Trust determines that an asset is impaired, the impairment to be recognized is measured as the amount by which the recorded amount of the asset exceeds its fair value. Assets to be disposed of are reported at the lower of the recorded amount or fair value less cost to sell. Fair value is determined using a discounted future cash flow analysis. | |
The Trust did not recognize any impairment for the three and six months ended June 30, 2014, nor did the Predecessor in the comparative periods presented. | |
Rental Revenue | ' |
Rental Revenue | |
Rental revenue is recognized on a straight-line basis over the terms of the related leases when collectability is reasonably assured. Recognizing rental revenue on a straight-line basis for leases may result in recognizing revenue for amounts more or less than amounts currently due from tenants. Amounts recognized in excess of amounts currently due from tenants are included in other assets and were $3.6 million and $2.0 million as of June 30, 2014 and December 31, 2013, respectively. If the Trust determines that collectability of straight-line rents is not reasonably assured, the Trust limits future recognition to amounts contractually owed and, where appropriate, establishes an allowance for estimated losses. Rental revenue is reduced by amortization of lease inducements and above market lease intangibles and increased by amortization of below market lease intangibles on certain leases. Lease inducements, above market lease intangibles and below market lease intangibles are amortized over the average remaining life of the lease. | |
Expense Recoveries | ' |
Expense Recoveries | |
Expense recoveries relate to tenant reimbursement of real estate taxes, insurance and other operating expenses that are recognized as expense recovery revenue in the period the applicable expenses are incurred. The reimbursements are recorded at gross amounts, as the Trust is generally the primary obligor with respect to real estate taxes and purchasing goods and services from third-party suppliers and has discretion in selecting the supplier and bears the credit risk of tenant reimbursement. | |
The Trust has certain tenants with absolute net leases. Under these lease agreements, the tenant is responsible for operating and building expenses. For absolute net leases, the Trust does not recognize the operating expenses or expense recoveries. | |
Management Estimates | ' |
Management Estimates | |
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated and combined financial statements and the amounts of revenue and expenses reported in the period. Significant estimates are made for the valuation of investment property, valuation of financial instruments, impairment assessments and fair value assessments with respect to purchase price allocations. Actual results could differ from these estimates. | |
Reclassifications | ' |
Reclassifications | |
Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the consolidated financial position or results of operations. | |
New Accounting Pronouncements | ' |
New Accounting Pronouncements | |
In April 2014, the Financial Accounting Standards Board issued Accounting Standards Updated, or ASU, 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360) which changes the requirements for reporting discontinued operations. ASU 2014-08 changes the threshold for disclosing discontinued operations and the related disclosure requirements. Pursuant to ASU 2014-08, only disposals representing a strategic shift, such as a major line of business, a major geographical area or majority equity investment, should be presented as a discontinued operation. If the disposal does qualify as a discontinued operation under ASU 2014-08, the entity will be required to provide expanded disclosures. The guidance will be applied prospectively to new disposals and new classifications of disposal groups held for sale after the effective date. ASU 2014-08 is effective for annual periods beginning on or after December 14, 2014 with early adoption permitted. The Trust early adopted the provisions of the guidance in the first quarter of 2104. Such adoption has had no impact on the Trust’s financial statements as no dispositions have occurred during the six months ended June 30, 2014 | |
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which creates a new Topic Accounting Standards Codification (Topic 606). The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This standard is effective for interim or annual periods beginning after December 15, 2016 and allows for either full retrospective or modified retrospective adoption. Early adoption of this standard is not allowed. The Trust is currently evaluating the impact the adoption of Topic 606 will have on its financial statements. | |
Acquisitions_and_Investments_T
Acquisitions and Investments (Tables) | 6 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
Acquisitions and Investments | ' | |||||||||||||
Schedule of acquisitions and aggregate purchase price | ' | |||||||||||||
During the six months ended June 30, 2014, the Trust completed acquisitions of 22 operating healthcare properties located in eight states for an aggregate purchase price of approximately $221.0 million as summarized below (in thousands): | ||||||||||||||
Property(1) | Location | Acquisition | Purchase | |||||||||||
Date | Price | |||||||||||||
Foundations San Antonio Surgical Hospital(2) | San Antonio, TX | February 19, 2014 | $ | 25,556 | ||||||||||
Eagles Landing Family Practice 4 MOBs(2) | Atlanta, GA | February 19, 2014 | $ | 20,800 | ||||||||||
21st Century Oncology 4 MOBs(3) | Sarasota, FL | February 26, 2014 | $ | 17,486 | ||||||||||
Foundations San Antonio MOB(3) | San Antonio, TX | February 28, 2014 | $ | 6,800 | ||||||||||
Peachtree Dunwoody MOB(3) | Atlanta, GA | February 28, 2014 | $ | 36,726 | ||||||||||
LifeCare LTACH(2) | Fort Worth, TX | March 28, 2014 | $ | 27,160 | ||||||||||
LifeCare LTACH(2) | Pittsburgh, PA | March 28, 2014 | $ | 12,840 | ||||||||||
Pinnacle Health Cardiology Portfolio 2 MOBs (3) | Carlisle & Wormleyburg, PA | April 22, 2014 | $ | 9,208 | ||||||||||
South Bend Orthopedic MOB (3) | South Bend, IN | April 30, 2014 | $ | 14,900 | ||||||||||
Grenada Medical Complex MOB (3) | Grenada, MS | April 30,2014 | $ | 7,100 | ||||||||||
Mississippi Sports Medicine and Orthopaedics Center MOB (2)(4) | Jackson, MS | May 23, 2014 | $ | 16,700 | ||||||||||
Carmel Medical Pavilion MOB (3)(4) | Carmel, IN | May 28, 2014 | $ | 4,664 | ||||||||||
Summit Urology MOB (2) | Bloomington, IN | June 30, 2014 | $ | 4,783 | ||||||||||
Renaissance Center (3) | Oshkosh, WI | June 30, 2014 | $ | 8,500 | ||||||||||
Presbyterian Medical Plaza MOB (3) | Monroe, NC | June 30, 2014 | $ | 7,750 | ||||||||||
(1) “MOB” means medical office building and “LTACH” means long-term acute care hospital | ||||||||||||||
(2) The Trust accounted for these acquisitions as asset acquisitions and capitalized $0.8 million of total acquisition costs to the basis of the properties | ||||||||||||||
(3) The Trust accounted for these acquisitions as business combinations pursuant to the acquisition method and expensed total acquisition costs of $6.3 million. | ||||||||||||||
(4) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 243,758 OP Units valued at approximately $3.1 million on the date of issuance. | ||||||||||||||
Schedule of acquisition date fair values of assets acquired and liabilities assumed | ' | |||||||||||||
The following table summarizes the acquisition date fair values of the assets acquired and the liabilities assumed, which we determined using level two and level three inputs (in thousands): | ||||||||||||||
1ST Quarter | 2nd Quarter | Total | ||||||||||||
Land | $ | 18,331 | $ | 7,275 | $ | 25,606 | ||||||||
Building and improvements | 121,472 | 57,401 | 178,873 | |||||||||||
In-place lease intangible | 7,585 | 7,061 | 14,646 | |||||||||||
Above market in-place lease intangible | 891 | 465 | 1,356 | |||||||||||
Below market in-place lease intangible | — | (133 | ) | (133 | ) | |||||||||
Investment in unconsolidated entity | 1,300 | — | 1,300 | |||||||||||
Issuance of OP units | — | (3,135 | ) | (3,135 | ) | |||||||||
Mortgage debt assumed | (10,800 | ) | 405 | (10,395 | ) | |||||||||
Lease inducement | — | 1,500 | 1,500 | |||||||||||
Net assets acquired | $ | 138,779 | $ | 70,839 | $ | 209,618 | ||||||||
Schedule of pro forma combined revenue, net income, and earnings per share-basic and diluted as if the trust had acquired the acquisitions as of January 1, 2013 | ' | |||||||||||||
The following table illustrates the pro forma combined revenue, net income, and earnings per share —basic and diluted as if the Trust had acquired the above acquisitions as of January 1, 2013 (in thousands, except per share amounts): | ||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
Predecessor | Predecessor | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Revenue | $ | 12,439 | $ | 9,280 | $ | 24,978 | $ | 18,323 | ||||||
Net income | 1,868 | 1,822 | 3,864 | 2,872 | ||||||||||
Net income available to common shareholders | 1,868 | — | 4,192 | — | ||||||||||
Earnings per share - basic and diluted | $ | 0.07 | $ | — | $ | 0.18 | $ | — | ||||||
Weighted average common shares - basic and diluted | 26,163,982 | — | 23,744,730 | — | ||||||||||
Intangibles_Tables
Intangibles (Tables) | 6 Months Ended | |||||||||||||||||||
Jun. 30, 2014 | ||||||||||||||||||||
Intangibles | ' | |||||||||||||||||||
Summary of the carrying amount of acquired lease intangibles | ' | |||||||||||||||||||
The following is a summary of the carrying amount of acquired lease intangibles as of June 30, 2014 and December 31, 2013 (in thousands): | ||||||||||||||||||||
June 30, 2014 | December 31, 2013 | |||||||||||||||||||
Cost | Accumulated | Net | Cost | Accumulated | Net | |||||||||||||||
Amortization | Amortization | |||||||||||||||||||
Assets | ||||||||||||||||||||
In-place leases | $ | 43,702 | $ | (9,741 | ) | $ | 33,961 | $ | 29,056 | $ | (8,080 | ) | $ | 20,976 | ||||||
Above market leases | 3,537 | (167 | ) | 3,370 | 2,180 | (48 | ) | 2,132 | ||||||||||||
Total | $ | 47,239 | $ | (9,908 | ) | $ | 37,331 | $ | 31,236 | $ | (8,128 | ) | $ | 23,108 | ||||||
Liability | ||||||||||||||||||||
Below market lease | $ | 134 | $ | (1 | ) | $ | 133 | — | — | — | ||||||||||
Summary of the acquired lease intangible amortization | ' | |||||||||||||||||||
The following is a summary of the acquired lease intangible amortization for the three and six months ended June 30, 2014 and 2013 (in thousands): | ||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Amortization expense related to in-place leases | $ | 1,013 | $ | 312 | $ | 1,724 | $ | 512 | ||||||||||||
Amortization recorded against rental income related to above market leases | 73 | — | 119 | — | ||||||||||||||||
Amortization recorded to rental income related to below market leases | 1 | — | 1 | — | ||||||||||||||||
Schedule of future aggregate amortization of the acquired lease intangibles | ' | |||||||||||||||||||
Future aggregate amortization of the acquired lease intangibles as of June 30, 2014, is as follows (in thousands): | ||||||||||||||||||||
Assets | Liability | |||||||||||||||||||
2014 | $ | 2,412 | $ | 7 | ||||||||||||||||
2015 | 4,824 | 13 | ||||||||||||||||||
2016 | 4,812 | 13 | ||||||||||||||||||
2017 | 4,635 | 13 | ||||||||||||||||||
2018 | 4,280 | 13 | ||||||||||||||||||
Thereafter | 16,368 | 74 | ||||||||||||||||||
Total | $ | 37,331 | $ | 133 |
Debt_Tables
Debt (Tables) | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
Debt | ' | |||||||
Schedule of debt | ' | |||||||
The following is a summary of debt as of June 30, 2014 and December 31, 2013 (in thousands): | ||||||||
June 30, | December 31, | |||||||
2014 | 2013 | |||||||
$ 200 million senior secured revolving credit facility bearing interest at floating rates, due August 2016, collateralized by twenty properties with a net book value of $274,112. | $ | — | $ | — | ||||
Mortgage notes, bearing fixed interest from 4.82% to 6.58%, with a weighted average interest rate of 5.27%, and due in 2016, 2017, 2018, 2019, 2021 and 2022 collateralized by nine properties with a net book value of $51,230. | 74,497 | 38,288 | ||||||
Mortgage note, bearing variable interest of LIBOR plus 2.65% and due in 2017, collateralized by one property with a net book value of $2,444 | 4,466 | 4,533 | ||||||
Total debt | $ | 78,963 | $ | 42,821 | ||||
Schedule of consolidated leverage ratios | ' | |||||||
Consolidated Leverage | Adjusted LIBOR Rate Loans | Base Rate Loans | ||||||
Ratio | and Letter of Credit Fee | |||||||
<35% | LIBOR + 2.65% | Base Rate + 1.65% | ||||||
>35% and <45% | LIBOR + 2.85% | Base Rate + 1.85% | ||||||
>45% and <50% | LIBOR + 2.95% | Base Rate + 1.95% | ||||||
>50% | LIBOR + 3.40% | Base Rate + 2.40% | ||||||
Schedule of principal payments due on debt | ' | |||||||
Scheduled principal payments due on debt as of June 30, 2014, are as follows (in thousands): | ||||||||
2014 | $ | 903 | ||||||
2015 | 1,869 | |||||||
2016 | 9,425 | |||||||
2017 | 28,697 | |||||||
2018 | 1,100 | |||||||
Thereafter | 36,969 | |||||||
Total | $ | 78,963 |
Stockbased_Compensation_Tables
Stock-based Compensation (Tables) | 6 Months Ended | ||||||
Jun. 30, 2014 | |||||||
Stock-based Compensation | ' | ||||||
Schedule of restricted stock activity | ' | ||||||
Shares | Weighted | ||||||
Average Grant | |||||||
Date Fair Value | |||||||
Non-vested at December 31, 2013 | 250,000 | $ | 11.5 | ||||
Granted | 89,529 | 13.52 | |||||
Vested | — | — | |||||
Forfeited | — | — | |||||
Non-vested at June 30, 2014 | 339,529 | $ | 12.03 |
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 6 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
Fair Value Measurements | ' | |||||||||||||
Schedule of fair value of other financial instruments | ' | |||||||||||||
The following table presents the fair value of other financial instruments (in thousands). | ||||||||||||||
June 30, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
(unaudited) | ||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||
Amount | Value | Amount | Value | |||||||||||
Cash and cash equivalents | $ | 6,697 | $ | 6,697 | $ | 56,478 | $ | 56,478 | ||||||
Real estate loan receivable | $ | 6,881 | $ | 6,881 | $ | — | $ | — | ||||||
Mortgage notes | $ | 78,963 | $ | 79,045 | $ | 42,821 | $ | 44,130 | ||||||
Derivative liability | $ | 325 | $ | 325 | $ | 397 | $ | 397 |
Tenant_Operating_Leases_Tables
Tenant Operating Leases (Tables) | 6 Months Ended | ||||
Jun. 30, 2014 | |||||
Tenant Operating Leases | ' | ||||
Schedule of future minimum rental payments on non-cancelable leases, exclusive of expense recoveries | ' | ||||
As of June 30, 2014, the future minimum rental payments on non-cancelable leases, exclusive of expense recoveries, were as follows (in thousands): | |||||
2014 | $ | 32,426 | |||
2015 | 40,815 | ||||
2016 | 40,550 | ||||
2017 | 40,452 | ||||
2018 | 38,430 | ||||
Thereafter | 301,701 | ||||
Total | $ | 494,374 |
Rent_Expense_Tables
Rent Expense (Tables) | 6 Months Ended | ||||
Jun. 30, 2014 | |||||
Rent Expense | ' | ||||
Schedule of future minimum lease obligations under non-cancelable ground leases | ' | ||||
As of June 30, 2014, the future minimum lease obligations under non-cancelable parking and ground leases were as follows (in thousands): | |||||
2014 | $ | 597 | |||
2015 | 1,226 | ||||
2016 | 1,264 | ||||
2017 | 1,304 | ||||
2018 | 1,345 | ||||
Thereafter | 18,542 | ||||
Total | $ | 24,278 |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
Earnings Per Share | ' | |||||||
Schedule of amounts used in computing basic and diluted earnings per share | ' | |||||||
As the three and six months ended June 30, 2014 resulted in a net loss, there is no dilution to earnings per share (in thousands, except share and per share data): | ||||||||
Three Months | Six Months | |||||||
Ended June30, | Ended June 30, | |||||||
2014 | 2014 | |||||||
Numerator for earnings per share — basic and diluted: | ||||||||
Net loss | $ | (600 | ) | $ | (4,158 | ) | ||
Less: Net loss attributable to noncontrolling interests —operating partnership | 123 | 654 | ||||||
Less: Net income attributable to noncontrolling interests — partially owned properties | (84 | ) | (150 | ) | ||||
Numerator for earnings per share — basic and diluted | $ | (561 | ) | $ | (3,654 | ) | ||
Denominator for earnings per share - basic and diluted shares: | 26,163,982 | 23,744,730 | ||||||
Basic and diluted earnings per share | $ | (0.02 | ) | $ | (0.15 | ) | ||
Subsequent_Events_Tables
Subsequent Events (Tables) | 6 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Subsequent events | ' | ||||||||
Schedule of acquisitions through subsidiaries of operating partnership | ' | ||||||||
During the six months ended June 30, 2014, the Trust completed acquisitions of 22 operating healthcare properties located in eight states for an aggregate purchase price of approximately $221.0 million as summarized below (in thousands): | |||||||||
Property(1) | Location | Acquisition | Purchase | ||||||
Date | Price | ||||||||
Foundations San Antonio Surgical Hospital(2) | San Antonio, TX | February 19, 2014 | $ | 25,556 | |||||
Eagles Landing Family Practice 4 MOBs(2) | Atlanta, GA | February 19, 2014 | $ | 20,800 | |||||
21st Century Oncology 4 MOBs(3) | Sarasota, FL | February 26, 2014 | $ | 17,486 | |||||
Foundations San Antonio MOB(3) | San Antonio, TX | February 28, 2014 | $ | 6,800 | |||||
Peachtree Dunwoody MOB(3) | Atlanta, GA | February 28, 2014 | $ | 36,726 | |||||
LifeCare LTACH(2) | Fort Worth, TX | March 28, 2014 | $ | 27,160 | |||||
LifeCare LTACH(2) | Pittsburgh, PA | March 28, 2014 | $ | 12,840 | |||||
Pinnacle Health Cardiology Portfolio 2 MOBs (3) | Carlisle & Wormleyburg, PA | April 22, 2014 | $ | 9,208 | |||||
South Bend Orthopedic MOB (3) | South Bend, IN | April 30, 2014 | $ | 14,900 | |||||
Grenada Medical Complex MOB (3) | Grenada, MS | April 30,2014 | $ | 7,100 | |||||
Mississippi Sports Medicine and Orthopaedics Center MOB (2)(4) | Jackson, MS | May 23, 2014 | $ | 16,700 | |||||
Carmel Medical Pavilion MOB (3)(4) | Carmel, IN | May 28, 2014 | $ | 4,664 | |||||
Summit Urology MOB (2) | Bloomington, IN | June 30, 2014 | $ | 4,783 | |||||
Renaissance Center (3) | Oshkosh, WI | June 30, 2014 | $ | 8,500 | |||||
Presbyterian Medical Plaza MOB (3) | Monroe, NC | June 30, 2014 | $ | 7,750 | |||||
(1) “MOB” means medical office building and “LTACH” means long-term acute care hospital | |||||||||
(2) The Trust accounted for these acquisitions as asset acquisitions and capitalized $0.8 million of total acquisition costs to the basis of the properties | |||||||||
(3) The Trust accounted for these acquisitions as business combinations pursuant to the acquisition method and expensed total acquisition costs of $6.3 million. | |||||||||
(4) The Operating Partnership partially funded the purchase price of these acquisitions by issuing a total of 243,758 OP Units valued at approximately $3.1 million on the date of issuance. | |||||||||
Subsequent events | Operating Partnership | ' | ||||||||
Subsequent events | ' | ||||||||
Schedule of acquisitions through subsidiaries of operating partnership | ' | ||||||||
Property(1) | Location | Acquisition | Purchase | ||||||
Date | Price (in thousands) | ||||||||
Premier Healthcare Portfolio 3 MOBs | Bloomington, IN | July 1, 2014 | $ | 23,837 | |||||
Carlisle MOB II | Carlisle, PA | July 25, 2014 | $ | 4,500 | |||||
Surgical Institute of Monroe | Monroe, MI | July 28, 2014 | $ | 6,000 | |||||
The Oaks MOB | Lady Lake, FL | July 31, 2014 | $ | 10,600 | |||||
(1) “MOB” means medical office building. | |||||||||
Organization_and_Business_Deta
Organization and Business (Details) (USD $) | 0 Months Ended | 6 Months Ended | 0 Months Ended | 6 Months Ended | 0 Months Ended | |||||||
Jul. 24, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | 27-May-14 | Dec. 11, 2013 | Jul. 24, 2013 | Jun. 30, 2014 | Jul. 24, 2013 | Dec. 11, 2013 | Jul. 24, 2013 | Jul. 24, 2013 | Jul. 24, 2013 | |
Common Stock | Common Stock | Physicians Realty, L.P. | Physicians Realty, L.P. | Physicians Realty, L.P. | Units | Units | Ziegler Funds Properties | Ziegler Funds Properties | ||||
Arrowhead Commons | Physicians Realty, L.P. | Units | ||||||||||
fund | Physicians Realty, L.P. | |||||||||||
properties | ||||||||||||
Organization and Business | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares authorized | ' | 500,000,000 | 500,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, par value (in dollars per share) | ' | $0.01 | $0.01 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Organization and Business | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Aggregate common shares issued pursuant to the IPO | 11,753,597 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of properties | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 19 | ' |
Debt related to properties acquired | ' | $10,395,000 | ' | ' | ' | ' | ' | ' | ' | ' | $84,300,000 | ' |
Number of healthcare real estate funds managed | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4 | ' |
Number of partnership units issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,744,000 |
Aggregate value from issuance of OP Units | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 31,600,000 | ' |
Net proceeds from IPO, after deducting underwriting discounts and commissions and estimated expenses of the IPO | 123,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares issued | ' | ' | ' | 12,650,000 | 9,545,000 | ' | ' | ' | 9,545,000 | 11,753,597 | ' | ' |
Common units of partnership interest (as a percent) | ' | ' | ' | ' | ' | 79.60% | 89.60% | ' | ' | ' | ' | ' |
Additional ownership percentage of interest acquired | ' | ' | ' | ' | ' | ' | ' | 50.00% | ' | ' | ' | ' |
Purchase price | ' | ' | ' | ' | ' | ' | ' | 850,000 | ' | ' | ' | ' |
Percentage of ownership interest acquired | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' |
Shares issued upon exercise of the underwriters' overallotment option | ' | ' | ' | 1,650,000 | 1,245,000 | ' | ' | ' | ' | ' | ' | ' |
Net proceeds from issuance of shares | ' | $149,917,000 | ' | $149,900,000 | $103,100,000 | ' | ' | ' | ' | ' | ' | ' |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Details) | 6 Months Ended |
Jun. 30, 2014 | |
Principles of Consolidation | ' |
Ownership interest in consolidated subsidiaries (as a percent) | 100.00% |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details 2) (USD $) | 6 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | 6 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | |
Jun. 30, 2014 | Sep. 30, 2013 | Jun. 30, 2014 | Jul. 24, 2013 | Jun. 30, 2014 | Sep. 30, 2013 | Jun. 30, 2014 | Jul. 24, 2013 | Jul. 24, 2013 | |
New Orleans, LA acquisitions | Additional acquisitions | Operating Partnership | Operating Partnership | Operating Partnership | Operating Partnership | Ziegler Funds Properties | Ziegler Funds Properties | ||
item | New Orleans, LA acquisitions | Additional acquisitions | Operating Partnership | Operating Partnership | |||||
Units | Units | properties | Units | ||||||
state | |||||||||
Noncontrolling Interests | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of medical office buildings | ' | ' | ' | ' | ' | ' | ' | 19 | ' |
Number of states | ' | ' | ' | ' | ' | ' | ' | 10 | ' |
Number of partnership units issued | ' | ' | ' | ' | ' | ' | ' | ' | 2,744,000 |
Purchase price | $221,000,000 | $37,500,000 | $21,400,000 | ' | ' | ' | ' | ' | ' |
Number of additional acquisitions | ' | ' | 2 | ' | ' | ' | ' | ' | ' |
Number of units issued for funding purchase price | ' | ' | ' | ' | ' | 954,877 | 243,758 | ' | ' |
Value of units issued for funding purchase price | ' | ' | ' | ' | ' | $11,500,000 | $3,100,000 | ' | ' |
Percentage of interest held | ' | ' | ' | 79.60% | 89.60% | ' | ' | ' | ' |
Operating partnership units redemption ratio | 1 | ' | ' | ' | ' | ' | ' | ' | ' |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 3) (USD $) | 3 Months Ended | 6 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 |
Dividends and Distributions | ' | ' | ' |
Cash dividend declared to common shareholders (in dollars per share) | $0.23 | $0.45 | ' |
Rental Revenue | ' | ' | ' |
Rental revenue due in excess of amounts currently due from tenants | $3.60 | $3.60 | $2 |
Acquisitions_and_Investments_D
Acquisitions and Investments (Details) (USD $) | 3 Months Ended | 6 Months Ended | 0 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 0 Months Ended | ||||||||||||||||||||||||||
Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Apr. 22, 2014 | Apr. 30, 2014 | Apr. 30, 2014 | 23-May-14 | 28-May-14 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Feb. 28, 2014 | Feb. 19, 2014 | Feb. 28, 2014 | Feb. 19, 2014 | Feb. 26, 2014 | Mar. 28, 2014 | Mar. 28, 2014 | |||
item | 1ST Quarter | 2nd Quarter | In-place leases | In-place leases | In-place leases | Above market in-place leases | Above market in-place leases | Above market in-place leases | Below market in-place lease | Below market in-place lease | Carlisle & Wormleyburg, PA | South Bend, IN | Grenada, MS | Jackson, MS | Carmel, IN | Bloomington, IN | Oshkosh, WI | Monroe, NC | 2014 acquisitions | 2014 acquisitions | 2014 acquisitions | San Antonio, TX | San Antonio, TX | Atlanta, GA | Atlanta, GA | Sarasota, FL | Fort Worth, TX | Pittsburgh, PA | |||||
state | 1ST Quarter | 2nd Quarter | 1ST Quarter | 2nd Quarter | 2nd Quarter | Medical | Medical | Medical | Medical | Medical | Medical | Surgical Center | Medical | Operating Partnership | Medical | Surgical Hospital | Medical | Medical | Medical | LTACH | LTACH | ||||||||||||
Units | |||||||||||||||||||||||||||||||||
Acquisitions and investments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Number of operating healthcare properties | ' | 22 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Number of states in which operating healthcare properties and land parcel located | ' | 8 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Purchase price | ' | $221,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $9,208,000 | $14,900,000 | $7,100,000 | $16,700,000 | [1] | $4,664,000 | [1] | $4,783,000 | $8,500,000 | $7,750,000 | $21,400,000 | ' | ' | $6,800,000 | $25,556,000 | $36,726,000 | $20,800,000 | $17,486,000 | $27,160,000 | $12,840,000 |
Acquisition costs expensed | 2,045,000 | 6,332,000 | 4,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Acquisition costs capitalized | ' | 800,000 | 400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Acquisition date fair values of the assets acquired and the liabilities assumed | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Land | 25,606,000 | 25,606,000 | ' | 18,331,000 | 7,275,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Building and improvements | 178,873,000 | 178,873,000 | ' | 121,472,000 | 57,401,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Intangible assets | ' | ' | ' | ' | ' | 14,646,000 | 7,585,000 | 7,061,000 | 1,356,000 | 891,000 | 465,000 | -133,000 | -133,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Investment in unconsolidated entity | 1,300,000 | 1,300,000 | ' | 1,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Issuance of OP units | -3,135,000 | -3,135,000 | ' | ' | -3,135,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Mortgage debt assumed | -10,395,000 | -10,395,000 | ' | -10,800,000 | 405,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Lease inducement | 1,500,000 | 1,500,000 | ' | ' | 1,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Net assets acquired | 209,618,000 | 209,618,000 | ' | 138,779,000 | 70,839,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Number of units issued for funding purchase price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 243,758 | ' | ' | ' | ' | ' | ' | ' | ||
Value of units issued for funding purchase price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,100,000 | ' | ' | ' | ' | ' | ' | ' | ||
Revenue | 12,439,000 | 24,978,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,900,000 | 6,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ||
Net income | $1,868,000 | $3,864,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,700,000 | $1,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ||
[1] | The Operating Partnership partially funded the purchase price by issuing 243,758 OP Units valued at approximately $3.1 million on the date of issuance |
Acquisitions_and_Investments_D1
Acquisitions and Investments (Details 2) (USD $) | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended |
In Thousands, except Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2013 |
Predecessor | Predecessor | |||
Unaudited Pro Forma Financial Information | ' | ' | ' | ' |
Revenue | $12,439 | $24,978 | $9,280 | $18,323 |
Net income | 1,868 | 3,864 | 1,822 | 2,872 |
Net income available to common shareholders | $1,868 | $4,192 | ' | ' |
Earnings per share - basic (in dollars per share) | $0.07 | $0.18 | ' | ' |
Earnings per share - diluted (in dollars per share) | $0.07 | $0.18 | ' | ' |
Weighted average common shares - basic (in shares) | 26,163,982 | 23,744,730 | ' | ' |
Weighted average common shares - diluted (in shares) | 26,163,982 | 23,744,730 | ' | ' |
Intangibles_Details
Intangibles (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Intangibles | ' | ' |
Cost | $47,239 | $31,236 |
Accumulated Amortization | -9,908 | -8,128 |
Total | 37,331 | 23,108 |
Liability | ' | ' |
Below market lease ,cost | 134 | ' |
Below market lease, accumulated amortization | -1 | ' |
Below market lease, net | 133 | ' |
In-place leases | ' | ' |
Intangibles | ' | ' |
Cost | 43,702 | 29,056 |
Accumulated Amortization | -9,741 | -8,080 |
Total | 33,961 | 20,976 |
Above market leases | ' | ' |
Intangibles | ' | ' |
Cost | 3,537 | 2,180 |
Accumulated Amortization | -167 | -48 |
Total | $3,370 | $2,132 |
Intangibles_Details_2
Intangibles (Details 2) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Intangibles | ' | ' | ' | ' |
Amortization recorded against rental income related to above market leases | $73 | ' | $119 | ' |
Amortization recorded to rental income related to below market leases | 1 | ' | 1 | ' |
In-place leases | ' | ' | ' | ' |
Intangibles | ' | ' | ' | ' |
Amortization expense | $1,013 | $312 | $1,724 | $512 |
Intangibles_Details_3
Intangibles (Details 3) (USD $) | 6 Months Ended | |
In Thousands, unless otherwise specified | Jun. 30, 2014 | Dec. 31, 2013 |
Assets | ' | ' |
2014 | $2,412 | ' |
2015 | 4,824 | ' |
2016 | 4,812 | ' |
2017 | 4,635 | ' |
2018 | 4,280 | ' |
Thereafter | 16,368 | ' |
Total | 37,331 | 23,108 |
Weighted average amortization period for asset lease intangibles | '10 years | ' |
Liability | ' | ' |
2014 | 7 | ' |
2015 | 13 | ' |
2016 | 13 | ' |
2017 | 13 | ' |
2018 | 13 | ' |
Thereafter | 74 | ' |
Total | $133 | ' |
Weighted average amortization period for liability lease intangible | '10 years | ' |
Debt_Details
Debt (Details) (USD $) | 0 Months Ended | 6 Months Ended |
Dec. 31, 2013 | Jun. 30, 2014 | |
Debt | ' | ' |
Total debt | 42,821,000 | 78,963,000 |
$200 million senior secured revolving credit facility bearing interest at floating rates, due August 2016 | ' | ' |
Debt | ' | ' |
Maximum borrowing capacity | ' | 200,000,000 |
Number of properties included in collateralized | ' | 20 |
Net book value of properties included in the collateralized | ' | 274,112,000 |
Mortgage notes, bearing fixed interest from 4.82% to 6.58% | ' | ' |
Debt | ' | ' |
Total debt | 38,288,000 | 74,497,000 |
Weighted average interest rate (as a percent) | 5.27% | 5.27% |
Number of properties included in collateralized | ' | 9 |
Net book value of properties included in the collateralized | ' | 51,230,000 |
Mortgage notes, bearing fixed interest from 4.82% to 6.58% | Minimum | ' | ' |
Debt | ' | ' |
Interest rate (as a percent) | 4.82% | 4.82% |
Mortgage notes, bearing fixed interest from 4.82% to 6.58% | Maximum | ' | ' |
Debt | ' | ' |
Interest rate (as a percent) | 6.58% | 6.58% |
Mortgage note, bearing variable interest of LIBOR plus 2.65% | ' | ' |
Debt | ' | ' |
Total debt | 4,533,000 | 4,466,000 |
Number of properties included in collateralized | ' | 1 |
Net book value of properties included in the collateralized | ' | 2,444,000 |
Mortgage note, bearing variable interest of LIBOR plus 2.65% | LIBOR | ' | ' |
Debt | ' | ' |
Variable rate basis | 'LIBOR | 'LIBOR |
Margin (as a percent) | 2.65% | 2.65% |
Debt_Details_2
Debt (Details 2) (USD $) | 0 Months Ended | ||||
In Millions, unless otherwise specified | Aug. 29, 2013 | Jun. 30, 2014 | Jun. 20, 2014 | Feb. 21, 2014 | Nov. 08, 2013 |
Operating Partnership | LIBOR | Adjusted LIBOR Rate Loans and Letter of Credit | Consolidated Leverage Ratio, 35% | ' | ' | ' | ' | ' |
Debt | ' | ' | ' | ' | ' |
Consolidated leverage ratio, maximum (as a percent) | 35.00% | ' | ' | ' | ' |
Variable rate basis | 'LIBOR | ' | ' | ' | ' |
Margin (as a percent) | 2.65% | ' | ' | ' | ' |
Operating Partnership | LIBOR | Adjusted LIBOR Rate Loans and Letter of Credit | Consolidated Leverage Ratio, >35% and 45% | ' | ' | ' | ' | ' |
Debt | ' | ' | ' | ' | ' |
Consolidated leverage ratio, minimum (as a percent) | 35.00% | ' | ' | ' | ' |
Consolidated leverage ratio, maximum (as a percent) | 45.00% | ' | ' | ' | ' |
Variable rate basis | 'LIBOR | ' | ' | ' | ' |
Margin (as a percent) | 2.85% | ' | ' | ' | ' |
Operating Partnership | LIBOR | Adjusted LIBOR Rate Loans and Letter of Credit | Consolidated Leverage Ratio, >45% and 50% | ' | ' | ' | ' | ' |
Debt | ' | ' | ' | ' | ' |
Consolidated leverage ratio, minimum (as a percent) | 45.00% | ' | ' | ' | ' |
Consolidated leverage ratio, maximum (as a percent) | 50.00% | ' | ' | ' | ' |
Variable rate basis | 'LIBOR | ' | ' | ' | ' |
Margin (as a percent) | 2.95% | ' | ' | ' | ' |
Operating Partnership | LIBOR | Adjusted LIBOR Rate Loans and Letter of Credit | Consolidated Leverage Ratio, >50% | ' | ' | ' | ' | ' |
Debt | ' | ' | ' | ' | ' |
Consolidated leverage ratio, minimum (as a percent) | 50.00% | ' | ' | ' | ' |
Variable rate basis | 'LIBOR | ' | ' | ' | ' |
Margin (as a percent) | 3.40% | ' | ' | ' | ' |
Operating Partnership | Base Rate | Base Rate Loans | Consolidated Leverage Ratio, 35% | ' | ' | ' | ' | ' |
Debt | ' | ' | ' | ' | ' |
Consolidated leverage ratio, maximum (as a percent) | 35.00% | ' | ' | ' | ' |
Variable rate basis | 'Base Rate | ' | ' | ' | ' |
Margin (as a percent) | 1.65% | ' | ' | ' | ' |
Operating Partnership | Base Rate | Base Rate Loans | Consolidated Leverage Ratio, >35% and 45% | ' | ' | ' | ' | ' |
Debt | ' | ' | ' | ' | ' |
Consolidated leverage ratio, minimum (as a percent) | 35.00% | ' | ' | ' | ' |
Consolidated leverage ratio, maximum (as a percent) | 45.00% | ' | ' | ' | ' |
Variable rate basis | 'Base Rate | ' | ' | ' | ' |
Margin (as a percent) | 1.85% | ' | ' | ' | ' |
Operating Partnership | Base Rate | Base Rate Loans | Consolidated Leverage Ratio, >45% and 50% | ' | ' | ' | ' | ' |
Debt | ' | ' | ' | ' | ' |
Consolidated leverage ratio, minimum (as a percent) | 45.00% | ' | ' | ' | ' |
Consolidated leverage ratio, maximum (as a percent) | 50.00% | ' | ' | ' | ' |
Variable rate basis | 'Base Rate | ' | ' | ' | ' |
Margin (as a percent) | 1.95% | ' | ' | ' | ' |
Operating Partnership | Base Rate | Base Rate Loans | Consolidated Leverage Ratio, >50% | ' | ' | ' | ' | ' |
Debt | ' | ' | ' | ' | ' |
Consolidated leverage ratio, minimum (as a percent) | 50.00% | ' | ' | ' | ' |
Variable rate basis | 'Base Rate | ' | ' | ' | ' |
Margin (as a percent) | 2.40% | ' | ' | ' | ' |
Credit Agreement | ' | ' | ' | ' | ' |
Debt | ' | ' | ' | ' | ' |
Maximum borrowing capacity | ' | $200 | ' | ' | ' |
Credit Agreement | Operating Partnership | ' | ' | ' | ' | ' |
Debt | ' | ' | ' | ' | ' |
Maximum borrowing capacity | 75 | ' | 200 | 140 | 90 |
Maximum borrowing capacity, option | 250 | ' | ' | ' | ' |
Term of facility | '3 years | ' | ' | ' | ' |
Amount outstanding | ' | 0 | ' | ' | ' |
Current borrowing capacity | ' | $171 | ' | ' | ' |
Debt_Details_3
Debt (Details 3) (USD $) | Jun. 30, 2014 |
In Thousands, unless otherwise specified | |
Scheduled principal payments | ' |
2014 | $903 |
2015 | 1,869 |
2016 | 9,425 |
2017 | 28,697 |
2018 | 1,100 |
Thereafter | 36,969 |
Total | $78,963 |
Stockbased_Compensation_Detail
Stock-based Compensation (Details) (USD $) | 0 Months Ended | 1 Months Ended | 3 Months Ended | 6 Months Ended | |
Jul. 24, 2013 | Jun. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2014 | |
Weighted Average Grant Date Fair Value | ' | ' | ' | ' | ' |
Non-cash share compensation | ' | ' | ' | ' | $860,000 |
Restricted common shares | ' | ' | ' | ' | ' |
Stock-based compensation | ' | ' | ' | ' | ' |
Maximum number of shares authorized | 600,000 | ' | ' | ' | ' |
Grant date value (in dollars) | 2,900,000 | ' | ' | ' | ' |
Vesting period | '3 years | ' | ' | ' | ' |
Shares | ' | ' | ' | ' | ' |
Non-vested at the beginning of the period | ' | ' | ' | 250,000 | 250,000 |
Granted (in shares) | 250,000 | 5,263 | ' | 84,266 | 89,529 |
Non-vested at the end of the period | ' | 339,529 | 339,529 | ' | 339,529 |
Weighted Average Grant Date Fair Value | ' | ' | ' | ' | ' |
Non-vested at beginning of period | ' | ' | ' | $11.50 | $11.50 |
Grant date value (in dollars per share) | $11.50 | ' | ' | ' | $13.52 |
Non-vested at the end of period | ' | $12.03 | $12.03 | ' | $12.03 |
Non-cash share compensation | ' | ' | 500,000 | ' | 900,000 |
Unrecognized compensation expense | ' | $2,800,000 | $2,800,000 | ' | $2,800,000 |
Initial estimated cumulative forfeiture rate (as a percent) | ' | ' | ' | ' | 0.00% |
Stockbased_Compensation_Detail1
Stock-based Compensation (Details 2) (USD $) | 1 Months Ended | 3 Months Ended | 6 Months Ended |
Mar. 31, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | |
Stock-based compensation | ' | ' | ' |
Non-cash share compensation | ' | ' | $860,000 |
Restricted share units | ' | ' | ' |
Stock-based compensation | ' | ' | ' |
Granted (in shares) | 55,680 | ' | ' |
Vesting period | '3 years | ' | ' |
Number of dividend equivalent included in award | ' | 1 | 1 |
Non-cash share compensation | ' | 20,000 | 80,000 |
Unrecognized compensation expense | ' | $700,000 | $700,000 |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (Nonrecurring basis, USD $) | Jun. 30, 2014 |
In Thousands, unless otherwise specified | |
Nonrecurring basis | ' |
Fair value measurements | ' |
Assets subject to impairment | $0 |
Fair_Value_Measurements_Detail1
Fair Value Measurements (Details 2) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Fair value of other financial instruments | ' | ' |
Real estate loan receivable | $6,881 | ' |
Derivative liability | 325 | 397 |
Carrying Amount | ' | ' |
Fair value of other financial instruments | ' | ' |
Cash and cash equivalents | 6,697 | 56,478 |
Real estate loan receivable | 6,881 | ' |
Mortgage notes | 78,963 | 42,821 |
Fair Value | ' | ' |
Fair value of other financial instruments | ' | ' |
Cash and cash equivalents | 6,697 | 56,478 |
Real estate loan receivable | 6,881 | ' |
Mortgage notes | 79,045 | 44,130 |
Recurring basis | Carrying Amount | Interest rates swaps | ' | ' |
Fair value of other financial instruments | ' | ' |
Derivative liability | 325 | 397 |
Recurring basis | Fair Value | Interest rates swaps | ' | ' |
Fair value of other financial instruments | ' | ' |
Derivative liability | $325 | $397 |
Derivative_Financial_Instrumen1
Derivative Financial Instruments (Details) (Interest rates swaps, Designated as hedge, Cash flow hedges, USD $) | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | |
In Millions, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2013 |
Ziegler Healthcare Real Estate Funds | Ziegler Healthcare Real Estate Funds | ||||
Derivative financial instruments | ' | ' | ' | ' | ' |
Notional amount | $7.80 | $7.80 | $7.90 | ' | ' |
Gains recognized | $0.03 | $0.10 | ' | $0.10 | $0.20 |
Tenant_Operating_Leases_Detail
Tenant Operating Leases (Details) (USD $) | Jun. 30, 2014 |
In Thousands, unless otherwise specified | |
Future minimum rental payments on noncancelable leases | ' |
2014 | $32,426 |
2015 | 40,815 |
2016 | 40,550 |
2017 | 40,452 |
2018 | 38,430 |
Thereafter | 301,701 |
Total | $494,374 |
Rent_Expense_Details
Rent Expense (Details) (USD $) | 6 Months Ended |
In Thousands, unless otherwise specified | Jun. 30, 2014 |
item | |
Rent Expense | ' |
Number of leases properties | 3 |
Maximum leases terms | '68 years |
"Future minimum lease obligations under non-cancelable parking and ground leases " | ' |
2014 | $597 |
2015 | 1,226 |
2016 | 1,264 |
2017 | 1,304 |
2018 | 1,345 |
Thereafter | 18,542 |
Total | $24,278 |
Number of properties on which rights to parking structure is leased | 1 |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | 5 Months Ended | 6 Months Ended |
In Thousands, except Share data, unless otherwise specified | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 |
Numerator for earnings per share - basic and diluted: | ' | ' | ' |
Net loss | ($600) | ($2,060) | ($4,158) |
Less: Net loss attributable to noncontrolling interests -operating partnership | 123 | ' | 654 |
Less: Net income attributable to noncontrolling interests - partially owned properties | -84 | ' | -150 |
Net loss attributable to common shareholders | ($561) | ' | ($3,654) |
Denominator for earnings per share - basic and diluted shares: | 26,163,982 | ' | 23,744,730 |
Basic and diluted earnings per share (in dollar per share) | ($0.02) | ' | ($0.15) |
Number of potentially dilutive shares | 182,961 | ' | 182,961 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (Ziegler, USD $) | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended |
In Millions, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 |
Shared service fee | Shared service fee | Ziegler Healthcare Real Estate Funds | Ziegler Healthcare Real Estate Funds | Ziegler Healthcare Real Estate Funds | Ziegler Healthcare Real Estate Funds | |
Management fees | Management fees | |||||
Related Party Transactions | ' | ' | ' | ' | ' | ' |
Fees charged | $0.20 | $0.30 | ' | ' | $0.20 | $0.50 |
Annual management fee as a percentage of total capital commitments | ' | ' | 2.00% | 2.00% | ' | ' |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 6 Months Ended | 0 Months Ended | 1 Months Ended | 3 Months Ended | 6 Months Ended | 0 Months Ended | 0 Months Ended | ||||||||
Jun. 30, 2014 | Jun. 30, 2014 | Jul. 24, 2013 | Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2014 | Aug. 07, 2014 | Aug. 04, 2014 | Jul. 31, 2014 | Jul. 01, 2014 | Jul. 25, 2014 | Jul. 28, 2014 | Jul. 31, 2014 | 13-May-14 | Jul. 07, 2014 | |
Bloomington, IN | Restricted common shares | Restricted common shares | Restricted common shares | Restricted common shares | Subsequent events | Subsequent events | Subsequent events | Subsequent events | Subsequent events | Subsequent events | Subsequent events | Subsequent events | Subsequent events | ||
Medical Office Buildings | Operating Partnership | Bloomington, IN | Carlisle, PA | Monroe, MI | Lady Lake, FL | Executive Vice President and Chief Financial Officer | Executive Vice President and Chief Financial Officer | ||||||||
Ziegler Healthcare Real Estate Funds | Medical Office Buildings | Medical Office Buildings | Surgical Institute | Medical Office Buildings | Restricted common shares | ||||||||||
Operating Partnership | Operating Partnership | Operating Partnership | Operating Partnership | ||||||||||||
Subsequent events | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Age of hired executive | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '40 years | ' |
Granted (in shares) | ' | ' | 250,000 | 5,263 | 84,266 | 89,529 | ' | ' | ' | ' | ' | ' | ' | ' | 56,617 |
Amount of one-time payment which may be paid in cash or in unrestricted shares | ' | ' | ' | ' | ' | ' | ' | ' | $1,800,000 | ' | ' | ' | ' | ' | ' |
Maximum amount of shares and securities that can be offered | ' | ' | ' | ' | ' | ' | ' | 900,000,000 | ' | ' | ' | ' | ' | ' | ' |
Increase in number of common shares authorized for issuance under Physicians Realty Trust 2013 Equity Incentive Plan | ' | ' | ' | ' | ' | ' | 1,850,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase price | $221,000,000 | $4,783,000 | ' | ' | ' | ' | ' | ' | ' | $23,837,000 | $4,500,000 | $6,000,000 | $10,600,000 | ' | ' |