Physicians Realty Trust
Unaudited Pro Forma Condensed Consolidated Balance Sheet
June 30, 2015
(in thousands)
|
| | | | | | | | | | | | |
| | | Historical | | IMS Properties | | Pro Forma Reflecting Acquisition |
| ASSETS | | |
| | |
| | |
|
| Investment properties | | |
| | |
| | |
|
| Land and improvements | | $ | 110,349 |
| | $ | 4,484 |
| | $ | 114,833 |
|
| Building and improvements | | 931,467 |
| | 115,533 |
| | 1,047,000 |
|
| Tenant improvements | | 6,810 |
| | — |
| | 6,810 |
|
| Acquired lease intangibles | | 132,255 |
| | 20,865 |
| | 153,120 |
|
| | | 1,180,881 |
| | 140,882 |
| | 1,321,763 |
|
| Accumulated depreciation | | (64,353 | ) | | — |
| | (64,353 | ) |
| Net real estate property | | 1,116,528 |
| | 140,882 |
| | 1,257,410 |
|
| Real estate loans receivable | | 25,320 |
| | — |
| | 25,320 |
|
| Investment in unconsolidated entity | | 1,324 |
| | — |
| | 1,324 |
|
| Net real estate investments | | 1,143,172 |
| | 140,882 |
| | 1,284,054 |
|
| Cash and cash equivalents | | 22,549 |
| | — |
| | 22,549 |
|
| Tenant receivables, net | | 2,333 |
| | — |
| | 2,333 |
|
| Deferred costs, net | | 4,413 |
| | — |
| | 4,413 |
|
| Other assets | | 30,989 |
| | — |
| | 30,989 |
|
| Total Assets | | $ | 1,203,456 |
| | $ | 140,882 |
| | $ | 1,344,338 |
|
| | | | | | | |
| LIABILITIES AND EQUITY | | | | | | |
| Credit facility | | $ | 191,000 |
| | $ | 140,882 |
| | $ | 331,882 |
|
| Mortgage debt | | 95,774 |
| | — |
| | 95,774 |
|
| Accounts payable | | 1,097 |
| | — |
| | 1,097 |
|
| Dividends payable | | 16,942 |
| | — |
| | 16,942 |
|
| Accrued expenses and other liabilities | | 14,997 |
| | — |
| | 14,997 |
|
| Acquired lease intangibles, net | | 3,171 |
| | — |
| | 3,171 |
|
| Total liabilities | | 322,981 |
| | 140,882 |
| | 463,863 |
|
| | | | | | |
|
|
| Redeemable noncontrolling interest — Operating Partnership and partially owned properties | | 11,656 |
| | — |
| | 11,656 |
|
| | | | | | |
|
|
| Shareholder’s equity | | 823,032 |
| | — |
| | 823,032 |
|
| Noncontrolling interests | | 45,787 |
| | — |
| | 45,787 |
|
| Total equity | | 868,819 |
| | — |
| | 868,819 |
|
| Total liabilities and equity | | $ | 1,203,456 |
| | $ | 140,882 |
| | $ | 1,344,338 |
|
See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
Physicians Realty Trust
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
Basis of Presentation
The unaudited Pro Forma Condensed Consolidated Balance Sheet of Physicians Realty Trust (the “Company”) as of June 30, 2015 reflects the Company’s third quarter 2015 acquisition of four medical office facilities located in the Phoenix, Arizona metropolitan area (collectively, the “IMS Properties”) from a third party for a total purchase price of $140.9 million. The acquisition of the IMS Properties was accounted for as business combinations and recorded at fair value, which approximated the purchase price, exclusive of acquisition costs, which were expensed. Each property’s fair value was then allocated between land, building, and acquired lease intangibles based upon their fair values at the date of acquisition. The purchase of the IMS Properties was fully funded from proceeds under the Company's unsecured credit facility.
The Recent Properties acquired in the first and second quarters of 2015 are reflected in the historical consolidated balance sheet.
Notes and Management Assumptions
The historical consolidated balance sheet of the Company prior to the acquisition of the IMS Properties has been derived from the unaudited consolidated balance sheet included in the Company’s Quarterly report on Form 10-Q for the quarter ended June 30, 2015, filed with the Securities and Exchange Commission (“SEC”) on August 10, 2015.
The IMS Properties column on the Pro Forma Consolidated Balance Sheet reflects the properties acquired in the third quarter of 2015.
Physicians Realty Trust
Unaudited Pro Forma Condensed Consolidated Statement of Operation
For the Six Months Ended June 30, 2015
(In thousands, except share and per share data)
|
| | | | | | | | | | | | | | | | |
| | | Historical | | IMS Properties | | Recent Properties | | Pro Forma Reflecting Acquisitions |
| Revenues: | | | | | | | | |
| Rental revenues | | $ | 43,966 |
| | $ | 4,869 |
| | $ | 2,968 |
| | $ | 51,803 |
|
| Expense recoveries | | 8,444 |
| | 2,127 |
| | 1,040 |
| | 11,611 |
|
| Interest income on real estate loans and other | | 1,757 |
| | 139 |
| | 157 |
| | 2,053 |
|
| Total revenues | | 54,167 |
| | 7,135 |
| | 4,165 |
| | 65,467 |
|
| Expenses: | | | | | | | |
|
|
| Interest expense | | 3,903 |
| | 1,188 |
| | 839 |
| | 5,930 |
|
| General and administrative | | 7,341 |
| | — |
| | — |
| | 7,341 |
|
| Operating expenses | | 13,013 |
| | 2,307 |
| | 1,286 |
| | 16,606 |
|
| Depreciation and amortization | | 18,591 |
| | 2,728 |
| | 1,830 |
| | 23,149 |
|
| Acquisition costs | | 8,507 |
| | — |
| | — |
| | 8,507 |
|
| Total expenses | | 51,355 |
| | 6,223 |
| | 3,955 |
| | 61,533 |
|
| | | | | | | | |
|
|
| Income before equity in income of unconsolidated entity, loss on sale of investment property, and noncontrolling interests: | | 2,812 |
| | 912 |
| | 210 |
| | 3,934 |
|
| Equity in income of unconsolidated entity | | 52 |
| | — |
| | — |
| | 52 |
|
| Loss on sale of investment property | | (15 | ) | | — |
| | — |
| | (15 | ) |
| Net income | | 2,849 |
| | $ | 912 |
| | $ | 210 |
| | 3,971 |
|
| Less: Net income attributable to noncontrolling interests | | (309 | ) | | (47 | ) | | (11 | ) | | (367 | ) |
| Preferred distributions | | (491 | ) | | | | (89 | ) | | (580 | ) |
| Net income attributable to common shareholders | | $ | 2,049 |
| |
|
| |
|
| | $ | 3,024 |
|
| | | | | | | | |
|
|
| Net income per share: | | | | | | | |
|
|
| Basic | | $ | 0.03 |
| | | | | | $ | 0.04 |
|
| Diluted | | $ | 0.03 |
| | | | | | $ | 0.04 |
|
| | | | | | | | | |
| Weighted average common shares: | | | | | | | | |
| Basic | | 68,026,278 |
| | | | | | 68,026,278 |
|
| Diluted | | 71,862,249 |
| | | | | | 71,862,249 |
|
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations.
Physicians Realty Trust
Unaudited Pro Forma Condensed Consolidated Statement of Operation
For the Year Ended December 31, 2014
(In thousands, except share and per share data)
|
| | | | | | | | | | | | | | | | | | | | |
| | | Historical | | IMS Properties | | 2014 Acquisition Properties | | Recent Properties | | Pro Forma Reflecting Acquisitions |
| Revenues: | | | | | | | | | | |
| Rental revenues | | $ | 46,397 |
| | $ | 10,814 |
| | $ | 10,772 |
| | $ | 14,085 |
| | $ | 82,068 |
|
| Expense recoveries | | 5,871 |
| | 4,343 |
| | 4,276 |
| | 7,087 |
| | 21,577 |
|
| Interest income on real estate loans and other | | 1,066 |
| | — |
| | 179 |
| | — |
| | 1,245 |
|
| Total revenues | | 53,334 |
| | 15,157 |
| | 15,227 |
| | 21,172 |
| | 104,890 |
|
| Expenses: | | | | | | | | | |
|
|
| Interest expense | | 6,907 |
| | 2,375 |
| | 3,225 |
| | 4,345 |
| | 16,852 |
|
| General and administrative | | 11,440 |
| | — |
| | — |
| | — |
| | 11,440 |
|
| Operating expenses | | 10,154 |
| | 4,759 |
| | 4,700 |
| | 7,583 |
| | 27,196 |
|
| Depreciation and amortization | | 16,731 |
| | 5,455 |
| | 4,966 |
| | 10,165 |
| | 37,317 |
|
| Acquisition costs | | 10,897 |
| | — |
| | — |
| | — |
| | 10,897 |
|
| Impairment loss | | 1,750 |
| | — |
| | — |
| | — |
| | 1,750 |
|
| Total expenses | | 57,879 |
| | 12,589 |
| | 12,891 |
| | 22,093 |
| | 105,452 |
|
| | | | | | | | | | |
|
|
| (Loss) income before equity in income of unconsolidated entity, loss on sale of investment property, and noncontrolling interests: | | (4,545 | ) | | 2,568 |
| | 2,336 |
| | (921 | ) | | (562 | ) |
| Equity in income of unconsolidated entity | | 95 |
| | — |
| | — |
| | — |
| | 95 |
|
| Gain on sale of investment property | | 32 |
| | — |
| | — |
| | — |
| | 32 |
|
| Net (loss) income | | (4,418 | ) | | $ | 2,568 |
| | $ | 2,336 |
| | $ | (921 | ) | | (435 | ) |
| Less: Net loss/(income) attributable to noncontrolling interests | | 381 |
| | (152 | ) | | (253 | ) | | 54 |
| | 30 |
|
| Preferred distributions | | — |
| | | | | | (1,197 | ) | | (1,197 | ) |
| Net (loss)/income attributable to common shareholders | | $ | (4,037 | ) | |
|
| |
|
| |
|
| | $ | (1,602 | ) |
| | | | | | | | | | |
|
|
| Net (loss)/income per share: | | | | | | | | | |
|
|
| Basic and diluted | | $ | (0.12 | ) | | | | | | | | $ | (0.05 | ) |
| | | | | | | | | | |
|
|
| Weighted average common shares: | | | | | | | | | |
|
|
| Basic and diluted | | 33,063,093 |
| | | | | | | | 33,063,093 |
|
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations.
Physicians Realty Trust
Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations
Basis of Presentation
The unaudited Pro Forma Condensed Consolidated Statements of Operations of the Company for the six months ended June 30, 2015 and for the year ended December 31, 2014 included the historical operations of the Company and have been derived from the unaudited consolidated statement of operations included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015 filed with the SEC on August 10, 2015 and the audited consolidated and combined statement of operations included in the Company's Annual Report on Form 10-K for the year ended December 31, 2014, filed with the with SEC on March 12, 2015. The Company’s historical operations have been adjusted to take into consideration the following acquisitions as if they occurred on January 1, 2014.
During the third quarter of 2015, the Company acquired the IMS Properties. Historical financial results for the periods presented for the IMS Properties are included elsewhere in this Form 8-K. Financial results for the period ended June 30, 2015 and for the year ended December 31, 2014 related to the IMS Properties prior to their acquisition represents the results of operations under the previous owners and are included in the column labeled IMS Properties and adjusted as noted under “Notes and Management Assumptions.”
During the first quarter of 2015, the Company acquired the Minneapolis Properties. During the first and second quarter of 2015, the Company acquired the Bridgeport Medical Center, the Calkins Properties, the Sitex Medical Plaza, the Health Park Surgery Center, and the Livonia MOB (collectively the "First and Second Quarter Acquisitions"). Historical financial results and other information related to the Minneapolis Properties was included in a previously filed Form 8-KA, fined on April 17, 2015. Historical financial results and other information related to the First and Second Quarter Acquisitions was included in a previously filed Form 8-K, filed on June 16, 2015. Financial results for the six month period ended June 30, 2015 and for the year ended December 31, 2014 related to the Minneapolis Properties and the First and Second Quarter Acquisitions (collectively, the "Recent Properties") prior to their acquisition represents the results of operations under the previous owners and are included in the column labeled Recent Properties and adjusted as noted under "Notes and Management Assumptions" below. Operating results for the Recent Properties since their acquisition date are included in the Company’s historical results of operations, including acquisition costs associated with the properties.
During 2014, the Company acquired the Columbus Properties, the El Paso Properties, the Harrisburg Properties (collectively the “Third Quarter Acquisitions”), the Pinnacle Properties and the Oshkosh Property (collectively the “Second Quarter Acquisitions”) and the Atlanta Property, the Sarasota Properties and the San Antonio Property (collectively the “First Quarter Acquisitions”) (collectively the “2014 Acquisitions). Financial results and other information related to the Third Quarter Acquisitions, Second Quarter Acquisitions and First Quarter Acquisitions was included in a previously filed Form 8-KA, filed on November 12, 2014, August 4, 2014 and May 6, 2014, respectively. Financial results for the 2014 Acquisitions prior to their acquisition represents the results of operations under the previous owners and are included in the column labeled 2014 Acquisition Properties and adjusted as noted under “Notes and Management Assumptions.” Financial results since their acquisition are included in the Company’s historical consolidated results of operations for the period.
Notes and Management Assumptions
Revenue and operating expenses for the IMS Properties, Recent Properties, and 2014 Acquisition Properties (prior to their acquisitions) are based upon the historical operations under the Properties’ previous ownership. Interest expense is a pro-forma adjustment relating to the period prior to acquisition utilizing the Company’s average borrowing rate. Depreciation and amortization expense are pro-forma adjustments based upon the Company’s ownership, utilizing its own depreciation and amortization policies outlined in the Company’s Annual Report on Form 10-K. The impact of the annual 5% coupon rate associated with the Series A Preferred Units and the 15% internal rate of return associated with the $5 million equity investment relating to the acquisition of the Minneapolis Properties are reflected as preferred distributions within the column labeled Recent Properties as if they were outstanding for the full periods. Net loss/(income) attributable to noncontrolling interests is calculated based on the Company’s ownership percentage of the operating partnership as of the end of each period.
