Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 02, 2015 | |
Document And Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | true | |
Amendment Description | Physicians Realty Trust (the “Company”) is filing this Amendment No. 1 (this "Amendment") to its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015, as filed with the Securities and Exchange Commission (the "SEC") on November 9, 2015 (the "Original Report"), solely to correct an error in the number of outstanding common shares set forth on the cover page of the Original Report, which inadvertently omitted 15,812,500 common shares that were issued in connection with the completion of the Company’s follow-on public offering on October 19, 2015. The correct number of outstanding common shares as of November 2, 2015 is 87,167,181 common shares as set forth on the cover page of this Amendment, correcting and increasing the outstanding common share count of 71,354,781 disclosed in the Original Report by 15,812,500 common shares. In addition, as required by SEC rules, the certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 included in the Original Report have been updated as required for the date of this Amendment. Except as described above, no changes have been made to the Original Report. This Amendment does not modify, amend or update any financial information in the Original Report. This Amendment continues to speak as of the date of the Original Report, and the Company has not updated the disclosures contained therein to reflect any events that occurred at a date subsequent to the Original Report. | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | Physicians Realty Trust | |
Entity Central Index Key | 1,574,540 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 87,167,181 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Investment properties: | ||
Land and improvements | $ 123,240 | $ 79,334 |
Building and improvements | 1,167,768 | 644,086 |
Tenant improvements | 8,524 | 5,614 |
Acquired lease intangibles | 176,087 | 72,985 |
Gross real estate property | 1,475,619 | 802,019 |
Accumulated depreciation | (75,930) | (45,569) |
Net real estate property | 1,399,689 | 756,450 |
Real estate loans receivable | 28,979 | 15,876 |
Investment in unconsolidated entity | 1,323 | 1,324 |
Net real estate investments | 1,429,991 | 773,650 |
Cash and cash equivalents | 4,718 | 15,923 |
Tenant receivables, net | 3,047 | 1,324 |
Deferred costs, net | 7,118 | 4,870 |
Other assets | 33,951 | 15,806 |
Total assets | 1,478,825 | 811,573 |
Liabilities: | ||
Credit facility | 473,000 | 138,000 |
Mortgage debt | 95,195 | 78,105 |
Accounts payable | 1,393 | 700 |
Dividends payable | 17,059 | 16,548 |
Accrued expenses and other liabilities | 19,038 | 6,140 |
Acquired lease intangibles, net | 5,053 | 2,871 |
Total liabilities | 610,738 | 242,364 |
Redeemable noncontrolling interest - Operating Partnership and partially owned properties | 11,719 | 0 |
Equity: | ||
Common shares, $0.01 par value, 500,000,000 common shares authorized, 71,040,502 and 50,640,863 common shares issued and outstanding as of September 30, 2015 and December 31, 2014, respectively. | 713 | 510 |
Additional paid-in capital | 904,939 | 586,017 |
Accumulated deficit | (94,370) | (51,797) |
Total shareholders’ equity | 811,282 | 534,730 |
Noncontrolling interests: | ||
Operating Partnership | 43,737 | 33,727 |
Partially owned properties | 1,349 | 752 |
Total noncontrolling interests | 45,086 | 34,479 |
Total equity | 856,368 | 569,209 |
Total liabilities and equity | $ 1,478,825 | $ 811,573 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 71,040,502 | 50,640,863 |
Common stock, shares outstanding (in shares) | 71,040,502 | 50,640,863 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues: | ||||
Rental revenues | $ 28,145 | $ 12,506 | $ 72,111 | $ 29,555 |
Expense recoveries | 5,821 | 1,355 | 14,265 | 3,445 |
Interest income on real estate loans and other | 904 | 300 | 2,661 | 640 |
Total revenues | 34,870 | 14,161 | 89,037 | 33,640 |
Expenses: | ||||
Interest expense | 3,341 | 1,911 | 7,244 | 4,849 |
General and administrative | 4,018 | 4,445 | 11,359 | 8,867 |
Operating expenses | 7,966 | 2,531 | 20,979 | 6,367 |
Depreciation and amortization | 12,476 | 4,413 | 31,067 | 10,565 |
Acquisition expenses | 3,257 | 2,922 | 11,764 | 9,254 |
Impairment loss | 0 | 250 | 0 | 250 |
Total expenses | 31,058 | 16,472 | 82,413 | 40,152 |
Income (loss) before equity in income of unconsolidated entity, gain on sale of investment properties, and noncontrolling interests: | 3,812 | (2,311) | 6,624 | (6,512) |
Equity in income of unconsolidated entity | 26 | 26 | 78 | 69 |
Gain on sale of investment properties | 145 | 34 | 130 | 34 |
Net income (loss) | 3,983 | (2,251) | 6,832 | (6,409) |
Net (income) loss attributable to noncontrolling interests: | ||||
Operating Partnership | (200) | 233 | (333) | 887 |
Partially owned properties | (79) | (76) | (255) | (226) |
Net income (loss) attributable to controlling interest | 3,704 | (2,094) | 6,244 | (5,748) |
Preferred distributions | (300) | 0 | (791) | 0 |
Numerator for earnings per share - basic | $ 3,404 | $ (2,094) | $ 5,453 | $ (5,748) |
Net income (loss) per share: | ||||
Basic (in dollars per share) | $ 0.05 | $ (0.06) | $ 0.08 | $ (0.21) |
Diluted (in dollars per share) | $ 0.05 | $ (0.06) | $ 0.08 | $ (0.21) |
Weighted average common shares: | ||||
Basic (in shares) | 71,034,747 | 36,313,644 | 69,040,121 | 27,980,408 |
Diluted (in shares) | 75,104,821 | 36,313,644 | 73,040,846 | 27,980,408 |
Dividends and distributions declared per common share and OP Unit (in dollars per share) | $ 0.225 | $ 0.225 | $ 0.675 | $ 0.675 |
Consolidated Statement of Equit
Consolidated Statement of Equity - 9 months ended Sep. 30, 2015 - USD ($) $ in Thousands | Total | Par Value | Additional Paid in Capital | Accumulated Deficit | Total Shareholders' Equity | Operating Partnership Noncontrolling interest | Partially Owned Properties Noncontrolling Interest | Total Non-Controlling Interests |
Balance at Dec. 31, 2014 | $ 569,209 | $ 510 | $ 586,017 | $ (51,797) | $ 534,730 | $ 33,727 | $ 752 | $ 34,479 |
Increase (Decrease) in stockholders' Equity | ||||||||
Net proceeds from sale of common shares | 318,170 | 202 | 317,968 | 318,170 | ||||
Restricted share award grants, net | 2,228 | 1 | 2,333 | (106) | 2,228 | |||
Purchase of OP Units | (253) | (253) | (253) | |||||
Conversion of OP Units | 171 | 171 | (171) | (171) | ||||
Dividends/distributions declared | (50,434) | (47,920) | (47,920) | (2,514) | (2,514) | |||
Preferred distributions | (791) | (791) | (791) | |||||
Issuance of OP Units in connection with acquisition | 10,973 | 10,973 | 10,973 | |||||
Contribution | 500 | 500 | 500 | |||||
Distributions | (158) | (158) | (158) | |||||
Noncontrolling Interest, Change in Redemption Value | 92 | 92 | 92 | |||||
Net income | 6,832 | 6,244 | 6,244 | 333 | 255 | 588 | ||
Adjustment for Noncontrolling Interests ownership in Operating Partnership | (1,642) | (1,642) | 1,642 | 1,642 | ||||
Balance at Sep. 30, 2015 | $ 856,368 | $ 713 | $ 904,939 | $ (94,370) | $ 811,282 | $ 43,737 | $ 1,349 | $ 45,086 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash Flows from Operating Activities: | ||
Net income (loss) | $ 6,832 | $ (6,409) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities | ||
Depreciation and amortization | 31,067 | 10,565 |
Amortization of deferred financing costs | 953 | 626 |
Accelerated amortization of deferred financing costs | 0 | 141 |
Amortization of lease inducements and above/below market lease intangibles | 1,559 | 331 |
Straight-line rental revenue/expense | (6,262) | (2,785) |
Amortization of above market assumed debt | (114) | 0 |
Gain on sale of investment properties | (130) | (34) |
Equity in income of unconsolidated entity | (78) | (69) |
Distribution from unconsolidated entity | 79 | 45 |
Change in fair value of derivatives | (116) | (138) |
Provision for bad debts | 26 | 5 |
Non-cash share compensation | 2,929 | 1,681 |
Ziegler shared service amendment payment | 0 | 1,800 |
Impairment on investment property | 0 | 250 |
Change in operating assets and liabilities: | ||
Tenant receivables | (2,448) | (521) |
Other assets | (1,268) | (1,285) |
Accounts payable | 693 | (203) |
Accrued expenses and other liabilities | 7,929 | 3,445 |
Net cash provided by operating activities | 41,651 | 7,445 |
Cash Flows from Investing Activities: | ||
Proceeds on sales of investment properties | 3,039 | 235 |
Acquisition of investment properties, net | (629,888) | (404,715) |
Capital expenditures on existing investment properties | (3,974) | (551) |
Real estate loans receivable | (12,404) | (6,836) |
Note receivable | (4,123) | 0 |
Leasing commissions | (278) | (5) |
Lease inducements | (2,478) | (1,532) |
Net cash used in investing activities | (650,106) | (413,404) |
Cash Flows from Financing Activities: | ||
Net proceeds from sale of common shares | 318,170 | 295,610 |
Proceeds from credit facility borrowings | 473,000 | 286,200 |
Payment on credit facility borrowings | (138,000) | (216,200) |
Proceeds from issuance of mortgage debt | 0 | 26,550 |
Principal payments on mortgage debt | (1,486) | (1,234) |
Debt issuance costs | (3,029) | (3,848) |
Dividends paid - shareholders | (47,665) | (17,443) |
Distributions to noncontrolling interest - Operating Partnership | (2,374) | (2,665) |
Preferred distributions paid - OP Unit holder | (360) | 0 |
Distributions to noncontrolling interest - partially owned properties | (158) | (143) |
Purchase of OP Units | (253) | 0 |
Common shares repurchased and retired | (595) | (321) |
Net cash provided by financing activities | 597,250 | 366,506 |
Net decrease in cash and cash equivalents | (11,205) | (39,453) |
Cash and cash equivalents, beginning of period | 15,923 | 56,478 |
Cash and cash equivalents, end of period | 4,718 | 17,025 |
Supplemental disclosure of cash flow information - interest paid during the period | 6,010 | 4,113 |
Supplemental disclosure of noncash activity - assumed debt | 18,690 | 15,283 |
Supplemental disclosure of noncash activity - issuance of OP Units and Series A Preferred Units in connection with acquisitions | 20,677 | 28,589 |
Supplemental disclosure of noncash activity - contingent consideration | $ 550 | $ 840 |
Organization and Business
Organization and Business | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | Organization and Business Physicians Realty Trust (the “Trust”) was organized in the state of Maryland on April 9, 2013. As of September 30, 2015 , the Trust was authorized to issue up to 500,000,000 common shares of beneficial interest, par value $0.01 per share (“common shares”). The Trust filed a Registration Statement on Form S-11 with the Securities and Exchange Commission (the “Commission” or the “SEC”) with respect to a proposed underwritten initial public offering (the “IPO”) and completed the IPO of its common shares and commenced operations on July 24, 2013. The Trust contributed the net proceeds from the IPO to Physicians Realty L.P., a Delaware limited partnership (the “Operating Partnership”), and is the sole general partner of the Operating Partnership. The Trust’s operations are conducted through the Operating Partnership and wholly-owned and majority-owned subsidiaries of the Operating Partnership. The Trust, as the general partner of the Operating Partnership, controls the Operating Partnership and consolidates the assets, liabilities and results of operations of the Operating Partnership. The Trust is a self-managed 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. 2015 Equity Offerings On January 21, 2015, the Trust completed a follow-on public offering of 18,975,000 common shares at $16.40 per share, including 2,475,000 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to the Trust of approximately $297.3 million . The Trust contributed the net proceeds of this offering to the Operating Partnership in exchange for 18,975,000 partnership interests in the Operating Partnership (“OP Units”), and the Operating Partnership used the net proceeds of the public offering to repay borrowings under the Trust’s unsecured revolving credit facility and for general corporate purposes, including working capital and investment in real estate. On October 19, 2015, the Trust completed a follow-on public offering of 15,812,500 common shares at $15.00 per share, including 2,062,500 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to the Trust of approximately $226.3 million . The Trust contributed the net proceeds of this offering to the Operating Partnership in exchange for 15,812,500 OP Units, and the Operating Partnership used the net proceeds of the public offering to repay a portion of the outstanding indebtedness under the Trust's unsecured revolving credit facility and for general corporate purposes, including working capital and investment in real estate. On August 19, 2014, the Trust and the Operating Partnership entered into separate At Market Issuance Sales Agreements (the “Sales Agreements”) with each of MLV & Co. LLC, KeyBanc Capital Markets Inc., JMP Securities LLC, and RBC Capital Markets, LLC (the “Agents”), pursuant to which the Trust may issue and sell common shares having an aggregate offering price of up to $150 million , from time to time, through the Agents pursuant to a shelf registration statement on Form S-3 (the “ATM Program”). During 2015, the Trust’s issuance and sale of common shares pursuant to the ATM Program is as follows (in thousands, except common shares and price): Common shares sold Weighted average price Net proceeds Quarterly period ended March 31, 2015 247,397 $ 16.96 $ 4,140 Quarterly period ended June 30, 2015 1,007,695 16.56 16,438 Quarterly period ended September 30, 2015 — — — Year to date 1,255,092 $ 16.63 $ 20,578 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies The accompanying unaudited consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the periods ended September 30, 2015 and 2014 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, 2014 , filed with the SEC on March 12, 2015. Principles of Consolidation GAAP requires the Trust to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The Trust consolidates its investment in a VIE when it determines that it is its primary beneficiary. The Trust may change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary. The Trust identifies the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. The Trust performs this analysis on an ongoing basis. For property holding entities not determined to be VIEs, the Trust consolidates such entities in which the Trust or the Operating Partnership owns 100 % of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest. All inter-company balances and transactions are eliminated in consolidation. 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 noncontrolling interest representing equity held by noncontrolling interests. Noncontrolling Interests The portion of equity held by minority interests in entities controlled (and thus consolidated) by the Trust is presented within the consolidated balance sheets as a component of consolidated equity, separate from the Trust's total shareholders' equity. 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. During the three months ended March 31, 2015, the Operating Partnership partially funded a property acquisition by issuing an aggregate of 420,963 OP Units valued at approximately $7.3 million . The acquisition had a total purchase price of approximately $10.0 million . During the three months ended June 30, 2015, the Operating Partnership partially funded a property acquisition by issuing an aggregate of 210,820 OP Units valued at approximately $3.4 million . The acquisition had a total purchase price of approximately $11.3 million . During the three months ended September 30, 2015, the Operating Partnership partially funded a property acquisition by issuing an aggregate of 16,866 OP Units valued at approximately $0.2 million . The acquisition had a total purchase price of approximately $11.2 million . Noncontrolling interests in the Trust represent OP Units held by the Predecessor’s prior investors and other investors. As of September 30, 2015 , the Trust held a 94.9% 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 OP 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 OP Units for redemption by the Operating Partnership in exchange for cash equal to the market price of the Trust’s common shares at the time of redemption or for unregistered common shares on a one-for-one basis. Such selection to pay cash or issue common shares to satisfy an OP Unit holder’s redemption request is solely within the control of the 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 net income or loss attributable to noncontrolling interests partially owned properties in the consolidated statement of operations. Redeemable Noncontrolling Interests - Operating Partnership and Partially Owned Properties On February 5, 2015, the Trust entered into a Second Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”) which provides for the designation and issuance of the newly designated Series A Participating Redeemable Preferred Units of the Operating Partnership (“Series A Preferred Units”). Series A Preferred Units have priority over all other partnership interests of the Operating Partnership with respect to distributions and liquidation. Holders of Series A Preferred Units are entitled to a 5% cumulative return and upon redemption, the receipt of one common share and $200 . The holders of the Series A Preferred Units have agreed not to cause the Operating Partnership to redeem their Series A Preferred Units prior to February 5, 2016. In addition, Series A Preferred Units are redeemable at the option of the holders which redemption obligation may be satisfied, at the Trust’s option, in cash or registered common shares. Instruments that require settlement in registered common shares may not be classified in permanent equity as it is not always completely within an issuer’s control to deliver registered common shares. Due to the redemption rights associated with the Series A Preferred Units, the Trust classifies the Series A Preferred Units in the mezzanine section of its consolidated balance sheet. On February 5, 2015, the acquisition of the Minnetonka MOB was partially funded with the issuance of 44,685 Series A Preferred Units which are valued at $9.7 million . The Series A Preferred Units were evaluated for embedded features that should be bifurcated and separately accounted for as a freestanding derivative. The Trust determined that the Series A Preferred Units contained features that require bifurcation. The fair value of the embedded derivative is $3.4 million and is included on the Trust’s consolidated balance sheets in accrued expenses and other liabilities. In connection with the acquisition of the Minnetonka MOB, the Trust received a $5 million equity investment from a third party, effective March 1, 2015. This investment earns a 15% cumulative preferred return. At any point subsequent to the third anniversary of the investment, the holder can require the Trust to redeem the instrument at a price for which the investor will realize a 15% internal rate of return. Due to the redemption provision, which is outside of the control of the Trust, the Trust classifies the investment in the mezzanine section of its consolidated balance sheet. The Trust records the carrying amount of the redeemable noncontrolling interests at the greater of the carrying value or their redemption value. Dividends and Distributions On September 28, 2015 , the Trust announced that its Board of Trustees authorized and the Trust declared a cash dividend of $0.225 per common share for the quarterly period ended September 30, 2015 . The distribution was paid on October 30, 2015 to common shareholders and OP Unit holders of record as of the close of business on October 16, 2015 . Purchase of Investment Properties A property acquired not subject to an existing lease is treated as an asset acquisition and recorded at its purchase price, inclusive of acquisition costs, allocated between the acquired tangible assets and assumed liabilities based upon their relative fair values at the date of acquisition. A property acquired with an existing lease is accounted for as a business combination pursuant to the acquisition method in accordance with ASC Topic 805, Business Combinations (“ASC 805”), and assets acquired and liabilities assumed, including identified intangible assets and liabilities, are recorded at fair value. The determination of fair value involves the use of significant judgment and estimation. The Trust makes estimates of the fair value of the tangible and intangible acquired assets and assumed liabilities using information obtained from multiple sources as a result of pre-acquisition due diligence and may include the assistance of a third party appraiser. The Trust estimates the fair value of buildings acquired on an "as-if-vacant" basis and depreciates the building value over the estimated remaining life of the building. The Trust determines the allocated value of other fixed assets, such as site improvements, based upon the replacement cost and depreciates such value over the assets’ estimated remaining useful lives as determined at the applicable acquisition date. The fair value of land is determined either by considering the sales prices of similar properties in recent transactions or based on internal analyses of recently acquired and existing comparable properties within the Trust’s portfolio. In recognizing identified intangible assets and liabilities in connection with a business combination, the value of above-or-below market leases is estimated based on the present value (using an interest rate which reflected the risks associated with the leases acquired) of the difference between contractual amounts to be received pursuant to the leases and management’s estimate of market lease rates measured over a period equal to the estimated remaining term of the lease. The capitalized above-market or below-market lease intangibles are amortized as a reduction or addition to rental income over the estimated remaining term of the respective leases. In determining the value of in-place leases, management considers current market conditions and costs to execute similar leases in arriving at an estimate of the carrying costs during the expected lease-up period from vacant to existing occupancy. In estimating carrying costs, management includes real estate taxes, insurance, other operating expenses, estimates of lost rental revenue during the expected lease-up periods, and costs to execute similar leases, including leasing commissions, tenant improvements, legal, and other related costs based on current market demand. The values assigned to in-place leases are amortized to amortization expense over the estimated remaining term of the lease. The values assigned to all lease intangible assets and liabilities are amortized to amortization expense over the estimated remaining term of the lease. If a lease terminates prior to its scheduled expiration, all unamortized costs related to that lease are written off, net of any required lease termination payments. The Trust calculates the fair value of any long-term debt assumed by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings, which the Trust approximates based on the rate at which it would expect to incur on a replacement instrument on the date of acquisition, and recognize any fair value adjustments related to long-term debt as effective yield adjustments over the remaining term of the instrument. Based on these estimates, the Trust recognizes the acquired assets and assumed liabilities at their estimated fair values, which are generally determined using Level 3 inputs, such as market rental rates, capitalization rates, discount rates, or other available market data. Initial valuations are subject to change until the information is finalized, no later than 12 months from the acquisition date. The Trust expenses transaction costs associated with acquisitions accounted for as business combinations in the period incurred. Impairment of Intangible and Long-Lived Assets The Trust periodically evaluates its long-lived assets, primarily consisting of investments in real estate, for impairment indicators or whenever events or changes in circumstances indicate that the recorded amount of an asset may not be fully recoverable. If indicators of impairment are present, the Trust evaluates the carrying value of the related real estate properties in relation to the undiscounted expected future cash flows of the underlying operations. In performing this evaluation, management considers market conditions and current intentions with respect to holding or disposing of the real estate property. The Trust adjusts the net book value of real estate properties to fair value if the sum of the expected future undiscounted cash flows, including sales proceeds, is less than book value. The Trust recognizes an impairment loss at the time it makes any such determination. 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. Fair value is typically determined using a discounted future cash flow analysis or other acceptable valuation techniques, which are based, in turn, upon Level 3 inputs, such as revenue and expense growth rates, capitalization rates, discount rates or other available market data. The Trust did not record impairment charges in the three and nine month periods ended September 30, 2015 . For the three and nine month periods ended September 30, 2014 , the Trust recognized $0.3 million of an impairment loss on a medical office building in Pickerington, OH. 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 statements of operations. The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the equity interest. Real Estate Loans Receivable Real estate loans receivable consists of three mezzanine loans and a term loan. Each mezzanine loan is collateralized by an ownership interest in the respective borrower, while the term loan is secured by an equity interest in one medical office building development. Interest income on the loans are recognized as earned based on the terms of the loans subject to evaluation of collectability risks and are included in the Trust’s consolidated statement of operations. Rental Revenue Rental revenue is recognized on a straight-line basis over the terms of the related leases when collectability is reasonably assured. Recognizing rental revenue on a straight-line basis for leases may result in recognizing revenue for amounts more or less than amounts currently due from tenants. Amounts recognized in excess of amounts currently due from tenants are included in other assets and were approximately $12.8 million and $6.4 million as of September 30, 2015 and December 31, 2014 , 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 adjusted by amortization of lease inducements and above or below market rents on certain leases. Lease inducements and above or below market rents are amortized over the remaining life of the lease. Expense Recoveries Expense recoveries relate to tenant reimbursement of real estate taxes, insurance and other operating expenses that are recognized as expense recovery revenue in the period the applicable expenses are incurred. The reimbursements are recorded at gross, as the 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 expense recoveries. Income Taxes The Trust elected to be taxed as a REIT for federal tax purposes commencing with the filing of its tax return for the short taxable year ending December 31, 2013. The Trust had no taxable income prior to electing REIT status. To qualify as a REIT, the Trust must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income to its shareholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Trust generally will not be subject to federal income tax to the extent it distributes qualifying dividends to its shareholders. If the Trust fails to qualify as a REIT in any taxable year, it will be subject to federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants the Trust relief under certain statutory provisions. Such an event could materially adversely affect the Trust’s net income and net cash available for distribution to shareholders. However, the Trust intends to continue to operate in such a manner as to continue qualifying for treatment as a REIT. Even if the Trust continues to qualify for taxation as a REIT, the Trust may be subject to state and local taxes on its income and property and federal income and excise taxes on its undistributed income. Management Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the amounts of revenue and expenses reported in the period. Significant estimates are made for the fair value assessments with respect to purchase price allocations, impairment assessments, stock-based compensation, and the valuation of financial instruments. Actual results could differ from these estimates. Contingent Liabilities The Trust records a liability for contingent consideration (included in accrued expenses and other liabilities on its consolidated balance sheets) at fair value as of the acquisition date and reassesses the fair value at the end of each reporting period, with any changes being recognized in earnings. Increases or decreases in the fair value of contingent consideration can result from changes in discount periods, discount rates and probabilities that contingencies will be met. Reclassifications Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the previously reported consolidated financial position or consolidated results of operations. New Accounting Pronouncements In May 2014, the FASB issued ASU 2014-9, Revenue from Contracts with Customers , which creates a new Topic, Accounting Standards Codification Topic 606. The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This standard is effective for interim or annual periods beginning after December 15, 2017 and allows for either full retrospective or modified retrospective adoption. Early adoption of this standard is permitted for reporting periods beginning after December 15, 2016. The Trust is currently evaluating the impact the adoption of Topic 606 will have on its consolidated financial statements. In February 2015, the FASB issued ASU 2015-2, Amendments to the Consolidation Analysis . This update is intended to improve targeted areas of consolidation guidance by simplifying the consolidation evaluation process and by placing more emphasis on risk of loss when determining a controlling financial interest. The provisions of this ASU are effective for interim and annual periods beginning after December 15, 2015. The Trust is currently in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements. In April 2015, the FASB issued ASU 2015-3, Simplifying the Presentation of Debt Issuance Costs , which changes the presentation of debt issuance costs in financial statements. ASU 2015-3 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. ASU 2015-3 is effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The Company will adopt ASU 2015-3 on January 1, 2016, and it is not expected to have a material impact on the Company’s consolidated financial statements and disclosures. In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments . The update requires that acquiring entities in a business combination recognize adjustments to provisional amounts identified in the reporting period in which the adjustment amounts are determined, including the cumulative effect of the change in provisional amount, as if the accounting had been completed at the acquisition date. Adjustments related to previous reporting periods must be disclosed by income statement line item, either on the face of the income statement or in the notes, in the period for which the adjustment was identified. ASU 2015-16 is effective for annual reporting periods beginning after December 15, 2015. The Company does not expect ASU 2015-16 to have a material impact on the Company's consolidated financial statements and disclosures. |
Acquisitions and Disposition
Acquisitions and Disposition | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Acquisitions and Disposition | Acquisitions and Dispositions During the nine months ended September 30, 2015 , the Trust completed acquisitions of 47 operating healthcare properties located in 18 states for an aggregate purchase price of approximately $676.0 million . In addition, the Trust completed a $9.0 million mezzanine loan transaction on June 1, 2015 and a $3.1 million mezzanine loan transaction on August 21, 2015 . Investment activity for the three months ended September 30, 2015 is summarized below: Property (1) Location Acquisition Date Purchase Price (in thousands) Randall Road MOB - Suite 140 (2) Elgin, IL July 17, 2015 $ 1,750 Medical Specialists of Palm Beach (2) Atlantis, FL July 24, 2015 11,051 Trios Health MOB (2) Kennewick, WA July 31, 2015 64,000 OhioHealth - SW Health Center (2) Grove City, OH July 31, 2015 11,460 Integrated Medical Services (IMS) Portfolio IMS - Paradise Valley MOB (2) Phoenix, AZ August 14, 2015 31,814 IMS - Avondale MOB (2) Avondale, AZ August 19, 2015 22,144 IMS - Palm Valley MOB (2) Goodyear, AZ August 19, 2015 35,184 IMS - North Mountain MOB (2) Phoenix, AZ August 31, 2015 51,740 Warm Springs Rehab Hospital Mezz Loan (3) Kyle, TX August 21, 2015 3,138 Memorial Hermann Medical Complex (2 MOBs) (2) Katy, TX September 1, 2015 40,400 New Albany Medical Center (2) (4) New Albany, OH September 9, 2015 11,200 Fountain Hills Medical Campus (2) Fountain Hills, AZ September 30, 2015 13,250 $ 297,131 (1) “MOB” means medical office building. (2) The Trust accounted for these acquisitions as business combinations pursuant to the acquisition method and expensed total acquisition costs of $3.3 million . (3) The Trust made a $3.1 million mezzanine term loan to partially fund the borrower's acquisition of the 54,500 square foot Warm Springs Rehabilitation Hospital in Kyle, Texas. The mezzanine loan is collateralized by an equity interest in the property and accrues interest at a rate of 8.5% per year. The Trust has an option to purchase the property. (4) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 16,866 OP Units valued at approximately $0.2 million in the aggregate on the date of issuance. For the three months ended September 30, 2015 , the Trust recorded revenues and net income from its 2015 acquisitions of $13.0 million and $3.8 million , respectively. For the nine months ended September 30, 2015 , the Trust recorded revenues and net income from its 2015 acquisitions of $23.1 million and $5.7 million , respectively. The following table summarizes the acquisition date fair values of the assets acquired and the liabilities assumed, which the Trust determined using Level 2 and Level 3 inputs (in thousands): 1st Quarter 2nd Quarter 3rd Quarter Total Land $ 21,075 $ 10,401 $ 13,199 $ 44,675 Building and improvements 175,050 113,411 238,209 526,670 In-place lease intangible 32,398 13,651 31,125 77,174 Above market in-place lease intangible 3,679 7,950 2,288 13,917 Below market in-place lease intangible (315 ) (258 ) (2,052 ) (2,625 ) Below market in-place ground lease 158 1,482 11,230 12,870 Lease inducement 462 1,983 33 2,478 Contingent consideration (1,482 ) — — (1,482 ) Receivables 3,564 — — 3,564 Debt assumed (6,323 ) (12,367 ) — (18,690 ) Issuance of OP Units (7,314 ) (3,420 ) (239 ) (10,973 ) Issuance of Series A Preferred Units (9,704 ) — — (9,704 ) Noncontrolling interest (5,508 ) — — (5,508 ) Net assets acquired $ 205,740 $ 132,833 $ 293,793 $ 632,366 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 effect on net income, earnings per share - basic and diluted as if the Trust had acquired the above acquisitions as of January 1, 2014 (in thousands, except per share amounts): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Revenue $ 38,473 $ 21,134 $ 113,673 $ 81,413 Net income 8,680 838 25,672 6,339 Net income available to common shareholders 8,161 646 24,118 5,560 Earnings per share $ 0.11 $ 0.01 $ 0.34 $ 0.08 Common shares outstanding 71,320,174 71,320,174 71,320,174 71,320,174 Dispositions On March 26, 2015, the Trust sold a 20,329 square foot medical office building located in Ohio for approximately $1.6 million and recognized a loss on the sale of approximately $15,000 . On July 31, 2015, the Trust sold a 26,783 square foot medical office building located in Michigan for approximately $1.5 million and recognized a gain on the sale of approximately $0.1 million . Due to the Trust’s adoption of Accounting Standards Update 2014-8, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-8”), which raises the threshold for disposals to qualify as discontinued operations, the Trust did not report these dispositions as discontinued operations. |
Intangibles
Intangibles | 9 Months Ended |
Sep. 30, 2015 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
Intangibles | Intangibles The following is a summary of the carrying amount of intangible assets and liabilities as of September 30, 2015 and December 31, 2014 (in thousands): September 30, 2015 December 31, 2014 Cost Accumulated Amortization Net Cost Accumulated Amortization Net Assets In-place leases $ 141,139 $ (21,525 ) $ 119,614 $ 64,777 $ (12,213 ) $ 52,564 Above market leases 21,366 (2,249 ) 19,117 7,449 (578 ) 6,871 Leasehold interest 712 (49 ) 663 759 (5 ) 754 Below market ground lease 12,870 (37 ) 12,833 — — — Total $ 176,087 $ (23,860 ) $ 152,227 $ 72,985 $ (12,796 ) $ 60,189 Liability Below market lease $ 4,955 $ (587 ) $ 4,368 $ 2,330 $ (156 ) $ 2,174 Above market ground lease 701 (16 ) 685 701 (4 ) 697 Total $ 5,656 $ (603 ) $ 5,053 $ 3,031 $ (160 ) $ 2,871 The following is a summary of the acquired lease intangible amortization for the three and nine month periods ended September 30, 2015 and 2014 , respectively (in thousands): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Amortization expense related to in-place leases $ 4,253 $ 1,002 $ 10,124 $ 2,724 Decrease of rental income related to above-market leases 742 86 1,671 205 Decrease of rental income related to leasehold interest 15 — 44 — Increase of rental income related to below-market leases 167 9 431 10 Decrease of operating expense related to above market ground leases 4 — 12 — Increase in operating expense related to below market ground lease 32 — 37 — Future aggregate net amortization of the acquired lease intangibles as of September 30, 2015 , is as follows (in thousands): Net Decrease in Revenue Net Increase in Expenses 2015 $ (641 ) $ 4,896 2016 (2,523 ) 18,904 2017 (1,969 ) 16,991 2018 (1,662 ) 15,545 2019 (1,504 ) 12,484 Thereafter (7,113 ) 62,942 Total $ (15,412 ) $ 131,762 As of September 30, 2015 , the weighted average amortization period for asset lease intangibles and liability lease intangible is seven and 12 years , respectively. |
Other Assets
Other Assets | 9 Months Ended |
Sep. 30, 2015 | |
Other Assets, Unclassified [Abstract] | |
Other Assets | Other Assets Other assets consisted of the following as of September 30, 2015 and December 31, 2014 (in thousands): September 30, December 31, Straight line rent receivable $ 12,809 $ 6,431 Lease inducements, net 5,073 2,845 Escrows 5,179 1,906 Earnest deposits 1,333 2,343 Note receivable 4,168 — Prepaid expenses and other 5,389 2,281 Total $ 33,951 $ 15,806 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt | Debt The following is a summary of debt as of September 30, 2015 and December 31, 2014 (in thousands): September 30, December 31, Mortgage notes, bearing fixed interest from 4.71% to 6.58%, with a weighted average interest rate of 5.39%, and due in 2016, 2017, 2019, 2020, 2021 and 2022 collateralized by 11 properties with a net book value of $146,650. $ 90,164 $ 73,706 Mortgage note, bearing variable interest of LIBOR plus 2.75% and due in 2017, collateralized by one property with a net book value of $6,058. 4,297 4,399 Total mortgage debt 94,461 78,105 $750 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.20%, due September 2019. 473,000 138,000 Total principal 567,461 216,105 Unamortized fair value adjustment 734 — Total debt $ 568,195 $ 216,105 On July 22, 2015, the Operating Partnership, as borrower, and the Trust and certain subsidiaries and other affiliates of the Operating Partnership, as guarantors, entered into an amendment to the existing Credit Agreement with KeyBank National Association, as administrative agent, KeyBanc Capital Markets Inc., Regions Capital Markets and BMO Capital Markets, as joint lead arrangers and joint bookrunners, Regions Capital Markets and BMO Capital Markets, as co-syndication agents, and the lenders party thereto (as amended, the “Credit Agreement”) which increased the maximum principal amount available under the unsecured revolving credit facility from $400 million to $750 million . The Credit Agreement includes a swingline loan commitment for up to 10% of the maximum principal amount and provides an accordion feature allowing the Trust to increase borrowing capacity by up to an additional $350 million , subject to customary terms and conditions, resulting in a maximum borrowing capacity of $1.1 billion . The Credit Agreement has a maturity date of September 18, 2019 and includes a one year extension option. Borrowings under the Credit Agreement bear interest on the outstanding principal amount at a rate which is determined by the Trust's credit rating, currently equal to LIBOR plus 1.20% . In addition, the Credit Agreement includes a facility fee equal to 0.25% per annum, which is determined by the Trust's investment grade rating under the Credit Agreement. The Credit Agreement contains financial covenants that, among other things, require compliance with leverage and coverage ratios and maintenance of minimum tangible net worth, as well as covenants that may limit the Trust’s and the Operating Partnership’s ability to incur additional debt or make distributions. The Trust may, at any time, voluntarily prepay any loan under the Credit Agreement in whole or in part without premium or penalty. As of September 30, 2015 , the Trust was in compliance with all financial covenants. The Credit Agreement includes customary representations and warranties by the Operating Partnership, the Trust and each other guarantor and imposes customary covenants on the Operating Partnership, the Trust and each other guarantor. The Credit Agreement also contains customary events of default, and if an event of default occurs and continues, the Operating Partnership is subject to certain actions by the administrative agent, including without limitation, the acceleration of repayment of all amounts outstanding under the Credit Agreement. The Credit Agreement provides for revolving credit loans to the Operating Partnership. Base Rate Loans, Adjusted LIBOR Rate Loans and Letters of Credit (each, as defined in the Credit Agreement) will be subject to interest rates, based upon the investment grade rating of the Trust, the Operating Partnership and its subsidiaries as follows: Credit Rating Adjusted LIBOR Rate Loans and Letter of Credit Fee Base Rate Loans At Least A- or A3 LIBOR + 0.85% — % At Least BBB+ or BAA1 LIBOR + 0.90% — % At Least BBB or BAA2 LIBOR + 1.00% 0.10 % At Least BBB- or BAA3 LIBOR + 1.20% 0.20 % Below BBB- or BAA3 LIBOR + 1.55% 0.60 % As of September 30, 2015 , there were $473.0 million of borrowings outstanding under the unsecured revolving credit facility and $178.0 million available for the Trust to borrow without adding additional properties to the unencumbered borrowing base of assets, as defined by the Credit Agreement. Also, the Trust had an additional $99.0 million of availability under its unsecured revolving credit facility as of September 30, 2015 which is subject to customary property underwriting standards. Certain properties have mortgage debt that contains financial covenants. As of September 30, 2015 , the Trust was in compliance with all mortgage debt financial covenants. Scheduled principal payments due on debt as of September 30, 2015 , are as follows (in thousands): 2015 $ 560 2016 9,752 2017 40,629 2018 1,265 2019 493,081 Thereafter 22,174 Total Payments $ 567,461 As of September 30, 2015, we had total consolidated indebtedness of approximately $567.5 million . The weighted average interest rate on our consolidated indebtedness was 2.05% (based on the 30-day LIBOR rate as of September 30, 2015, of 0.20% ). For the three month periods ended September 30, 2015 and 2014 , the Trust incurred interest expense on its debt of $3.0 million and $1.7 million , respectively. For the nine month periods ended September 30, 2015 and 2014 , the Trust incurred interest expense on its debt of $6.3 million and $4.1 million , respectively. |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based Compensation | Stock-based Compensation The Trust follows ASC 718, Compensation — Stock Compensation (“ASC 718”), in accounting for its share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee’s requisite service period. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized when incurred. Share-based payments classified as liability awards are marked to fair value at each reporting period. Certain of the Trust’s employee stock awards vest only upon the achievement of performance targets. ASC 718 requires recognition of compensation cost only when achievement of performance conditions is considered probable. Consequently, the Trust’s determination of the amount of stock compensation expense requires a significant level of judgment in estimating the probability of achievement of these performance targets. Additionally, the Trust must make estimates regarding employee forfeitures in determining compensation expense. Subsequent changes in actual experience are monitored and estimates are updated as information is available. In connection with the IPO, the Trust adopted the 2013 Equity Incentive Plan (“2013 Plan”), which made available 600,000 common shares to be administered by the compensation and nominating governance committee of the Board of Trustees (the “Committee”). On August 7, 2014, at the Annual Meeting of Shareholders of Physicians Realty Trust, the Trust’s shareholders approved an amendment to the 2013 Plan to increase the number of common shares authorized for issuance under the 2013 Plan by 1,850,000 common shares, for a total of 2,450,000 common shares. The Committee has broad discretion in administering the terms of the 2013 Plan. Restricted common shares granted under the 2013 Plan are eligible for dividends as well as the right to vote. The Trust granted to its officers and trustees 250,000 restricted common shares upon completion of the IPO under the 2013 Plan at a value per share of $11.50 and total value of $2.9 million with a vesting period of three years. During 2014, a total of 152,987 restricted common shares with a total value of $2.1 million were granted to Trust officers, certain of its employees and its trustees with a one year vesting period. In the nine month period ended September 30, 2015 , a total of 129,277 restricted common shares with a total value of $2.1 million were granted to Trust officers and certain of its employees, which have a one -year vesting period for officer award-recipients and a three -year vesting period for employee award-recipients. A summary of the status of the Trust’s non-vested restricted common shares as of September 30, 2015 and changes during the nine month period then ended follow: Common Shares Weighted Average Grant Date Fair Value Non-vested at December 31, 2014 319,654 $ 12.60 Granted 129,277 16.18 Vested (169,259 ) 12.91 Non-vested at September 30, 2015 279,672 $ 14.07 For all service awards, the Trust records compensation expense for the entire award on a straight-line basis (or, if applicable, on the accelerated method) over the requisite service period. For the three month periods ended September 30, 2015 and 2014 , the Trust recognized non-cash share compensation of $0.7 million and $0.6 million , respectively. For the nine month periods ended September 30, 2015 and 2014 , the Trust recognized non-cash share compensation of $2.2 million and $1.5 million , respectively. Unrecognized compensation expense at September 30, 2015 was $2.3 million . The Trust’s compensation expense recorded in connection with grants of restricted common shares 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 2015 and March 2014, under the 2013 Plan, the Trust granted restricted share units at target level of 116,206 and 55,680 , respectively, to its officers and trustees, which are subject to certain performance and market conditions and a two -year and three -year service period for trustees and officers, respectively. In addition, each restricted share unit contains one dividend equivalent. The recipient will accrue dividend equivalents on awarded share units equal to the cash dividend that would have been paid on the awarded share unit had the awarded share unit been an issued and outstanding common share on the record date for the dividend. Approximately 80% of the restricted share units vest based on certain market conditions. The market conditions were valued with the assistance of independent valuation specialists. The Trust utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $20.06 per unit for the March 2015 grant using the following assumptions: Volatility 20.7 % Dividend assumption reinvested Expected term in years 2.8 Risk-free rate 1.14 % Share price (per share) 15.87 The remaining 20% of the restricted share units vest based upon certain performance conditions. With respect to the performance conditions, the grant date fair value of $15.87 per unit was based on the share price at the date of grant. The restricted share units’ combined weighted average grant date fair value is $19.22 per unit. The following is a summary of the activity in the Trust’s restricted share units during the nine months ended September 30, 2015 : Restricted Share Units Weighted Average Grant Date Fair Value Non-vested at December 31, 2014 55,680 $ 16.94 Granted 116,206 19.22 Non-vested at September 30, 2015 171,886 $ 18.48 For the three month periods ended September 30, 2015 and 2014 , the Trust recognized non-cash share unit compensation expense of $0.3 million and $0.1 million , respectively. For the nine month periods ended September 30, 2015 and 2014 , the Trust recognized non-cash share unit compensation expense of $0.8 million and $0.2 million , respectively. Unrecognized compensation expense at September 30, 2015 was $2.0 million . |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements ASC Topic 820, Fair Value Measurement (“ASC 820”), requires certain assets and liabilities be reported and/or disclosed at fair value in the financial statements and provides a framework for establishing that fair value. The framework for determining fair value is based on a hierarchy that prioritizes the valuation techniques and inputs used to measure fair value. In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the 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 trust has two derivative instruments at September 30, 2015 consisting of (1) the embedded derivative detailed in the Redeemable Noncontrolling Interests - Operating Partnership and Partially Owned Properties section of Note 1 (Summary of Significant Accounting Policies) and (2) an interest rate swap. Neither the embedded derivative nor the interest rate swap are traded on an exchange. The Trust’s derivative liabilities are recorded at fair value based on a variety of observable inputs including contractual terms, interest rate curves, yield curves, measure of volatility, and correlations of such inputs. The Trust measures its derivatives at fair value on a recurring basis. The fair values are based on 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 impairment. There were no such assets measured at fair value as of September 30, 2015 . The carrying amounts of cash and cash equivalents, tenant receivables, payables, and accrued interest are reasonable estimates of fair value because of the short term maturities of these instruments. Fair values for real estate loans receivable and mortgage debt are estimated based on rates currently prevailing for similar instruments of similar maturities and are based primarily on Level 2 inputs. The following table presents the fair value of the Trust’s financial instruments (in thousands): September 30, December 31, Carrying Amount Fair Value Carrying Amount Fair Value Real estate loans receivable $ 28,979 $ 28,979 $ 15,876 $ 15,876 Credit facility $ (473,000 ) $ (473,000 ) $ (138,000 ) $ (138,000 ) Mortgage debt $ (95,195 ) $ (95,963 ) $ (78,105 ) $ (78,642 ) Derivative liabilities $ (3,468 ) $ (3,468 ) $ (233 ) $ (233 ) |
Tenant Operating Leases
Tenant Operating Leases | 9 Months Ended |
Sep. 30, 2015 | |
Leases [Abstract] | |
Tenant Operating Leases | Tenant Operating Leases The Trust is lessor of medical office buildings and other healthcare facilities. Leases have expirations from 2015 through 2045 . As of September 30, 2015 , the future minimum rental payments on non-cancelable leases, exclusive of expense recoveries, were as follows (in thousands): 2015 $ 28,744 2016 113,979 2017 110,771 2018 105,654 2019 101,245 Thereafter 789,599 Total $ 1,249,992 |
Rent Expense
Rent Expense | 9 Months Ended |
Sep. 30, 2015 | |
Leases [Abstract] | |
Rent Expense | Rent Expense The Trust leases the rights to a parking structure at one of its properties and the land upon which fourteen 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 90 years remaining, excluding extension options. As of September 30, 2015 , the future minimum lease obligations under non-cancelable parking and ground leases were as follows (in thousands): 2015 $ 403 2016 1,629 2017 1,666 2018 1,708 2019 1,751 Thereafter 32,794 Total $ 39,951 Rent expense for the parking and ground leases of $0.4 million and $0.3 million for the three month periods ended September 30, 2015 and 2014 , respectively, and $1.2 million and $0.7 million for the nine month periods ended September 30, 2015 and 2014 , respectively, are reported in operating expenses in the consolidated statements of operations. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The following table shows the amounts used in computing the Trust’s basic and diluted earnings per share. (in thousands, except share and per share data): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Numerator for earnings per share - basic: Net income (loss) $ 3,983 $ (2,251 ) $ 6,832 $ (6,409 ) Net (income) loss attributable to noncontrolling interests: Operating Partnership (200 ) 233 (333 ) 887 Partially owned properties (79 ) (76 ) (255 ) (226 ) Preferred distribution (300 ) — (791 ) — Numerator for earnings per share - basic $ 3,404 $ (2,094 ) $ 5,453 $ (5,748 ) Numerator for earnings per share - diluted: Numerator for earnings per share - basic $ 3,404 $ (2,094 ) $ 5,453 $ (5,748 ) Operating Partnership net income 200 — 333 — Numerator for earnings per share - diluted $ 3,604 $ (2,094 ) $ 5,786 $ (5,748 ) Denominator for earnings per share - basic and diluted: Denominator for earnings per share - basic 71,034,747 36,313,644 69,040,121 27,980,408 Effect of dilutive securities: Noncontrolling interest - OP Units 3,829,930 — 3,676,395 — Restricted common shares 123,343 — 194,640 — Restricted share units 116,801 — 129,690 — Denominator for earnings per share - diluted common shares: 75,104,821 36,313,644 73,040,846 27,980,408 Earnings per share - basic $ 0.05 $ (0.06 ) $ 0.08 $ (0.21 ) Earnings per share - diluted $ 0.05 $ (0.06 ) $ 0.08 $ (0.21 ) |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On October 19, 2015, the Trust completed a follow-on public offering of 15,812,500 common shares at $15.00 per share, including 2,062,500 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to the Trust of approximately $226.3 million . The Trust contributed the net proceeds of this offering to the Operating Partnership in exchange for 15,812,500 OP Units, and the Operating Partnership used the net proceeds of the public offering to repay a portion of the outstanding indebtedness under the Trust's unsecured revolving credit facility and for general corporate purposes, including working capital and investment in real estate. The Trust, through subsidiaries of its Operating Partnership, closed on the below acquisitions: Property(1) Location Acquisition Date Purchase Price (in thousands) Catalyst Portfolio (12 MOBs) (2) AL & FL October 13, 2015 $ 23,805 Truman Medical Center Mezz Loan (3) Kansas City, MO October 16, 2015 4,500 Arete Surgical Centre Johnstown, CO October 19, 2015 9,100 Cambridge Professional Center Waldorf, MD October 30, 2015 11,550 Great Falls Replacement Surgical Hospital Mezz Loan (4) Great Falls, MT November 2, 2015 4,500 $ 53,455 (1) “MOB” means medical office building. (2) The Trust received a right of first refusal to acquire the seller's future development pipeline upon completion, which currently totals nearly 240,000 net leasable square feet. (3) The Trust received a right of first offer and a right of first refusal to acquire the building. (4) The Trust entered into an agreement to acquire the building upon completion of construction for approximately $26.3 million . The acquisition is subject to customary closing conditions and there can be no assurance the Trust will complete the transactions or acquire the facility. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation GAAP requires the Trust to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The Trust consolidates its investment in a VIE when it determines that it is its primary beneficiary. The Trust may change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary. The Trust identifies the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. The Trust performs this analysis on an ongoing basis. For property holding entities not determined to be VIEs, the Trust consolidates such entities in which the Trust or the Operating Partnership owns 100 % of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest. All inter-company balances and transactions are eliminated in consolidation. 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 noncontrolling interest representing equity held by noncontrolling interests. |
Noncontrolling Interests | Noncontrolling Interests The portion of equity held by minority interests in entities controlled (and thus consolidated) by the Trust is presented within the consolidated balance sheets as a component of consolidated equity, separate from the Trust's total shareholders' equity. 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. During the three months ended March 31, 2015, the Operating Partnership partially funded a property acquisition by issuing an aggregate of 420,963 OP Units valued at approximately $7.3 million . The acquisition had a total purchase price of approximately $10.0 million . During the three months ended June 30, 2015, the Operating Partnership partially funded a property acquisition by issuing an aggregate of 210,820 OP Units valued at approximately $3.4 million . The acquisition had a total purchase price of approximately $11.3 million . During the three months ended September 30, 2015, the Operating Partnership partially funded a property acquisition by issuing an aggregate of 16,866 OP Units valued at approximately $0.2 million . The acquisition had a total purchase price of approximately $11.2 million . Noncontrolling interests in the Trust represent OP Units held by the Predecessor’s prior investors and other investors. As of September 30, 2015 , the Trust held a 94.9% 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 OP 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 OP Units for redemption by the Operating Partnership in exchange for cash equal to the market price of the Trust’s common shares at the time of redemption or for unregistered common shares on a one-for-one basis. Such selection to pay cash or issue common shares to satisfy an OP Unit holder’s redemption request is solely within the control of the 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 net income or loss attributable to noncontrolling interests partially owned properties in the consolidated statement of operations. Redeemable Noncontrolling Interests - Operating Partnership and Partially Owned Properties On February 5, 2015, the Trust entered into a Second Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”) which provides for the designation and issuance of the newly designated Series A Participating Redeemable Preferred Units of the Operating Partnership (“Series A Preferred Units”). Series A Preferred Units have priority over all other partnership interests of the Operating Partnership with respect to distributions and liquidation. Holders of Series A Preferred Units are entitled to a 5% cumulative return and upon redemption, the receipt of one common share and $200 . The holders of the Series A Preferred Units have agreed not to cause the Operating Partnership to redeem their Series A Preferred Units prior to February 5, 2016. In addition, Series A Preferred Units are redeemable at the option of the holders which redemption obligation may be satisfied, at the Trust’s option, in cash or registered common shares. Instruments that require settlement in registered common shares may not be classified in permanent equity as it is not always completely within an issuer’s control to deliver registered common shares. Due to the redemption rights associated with the Series A Preferred Units, the Trust classifies the Series A Preferred Units in the mezzanine section of its consolidated balance sheet. On February 5, 2015, the acquisition of the Minnetonka MOB was partially funded with the issuance of 44,685 Series A Preferred Units which are valued at $9.7 million . The Series A Preferred Units were evaluated for embedded features that should be bifurcated and separately accounted for as a freestanding derivative. The Trust determined that the Series A Preferred Units contained features that require bifurcation. The fair value of the embedded derivative is $3.4 million and is included on the Trust’s consolidated balance sheets in accrued expenses and other liabilities. In connection with the acquisition of the Minnetonka MOB, the Trust received a $5 million equity investment from a third party, effective March 1, 2015. This investment earns a 15% cumulative preferred return. At any point subsequent to the third anniversary of the investment, the holder can require the Trust to redeem the instrument at a price for which the investor will realize a 15% internal rate of return. Due to the redemption provision, which is outside of the control of the Trust, the Trust classifies the investment in the mezzanine section of its consolidated balance sheet. The Trust records the carrying amount of the redeemable noncontrolling interests at the greater of the carrying value or their redemption value. |
Dividends and Distributions | Dividends and Distributions On September 28, 2015 , the Trust announced that its Board of Trustees authorized and the Trust declared a cash dividend of $0.225 per common share for the quarterly period ended September 30, 2015 . The distribution was paid on October 30, 2015 to common shareholders and OP Unit holders of record as of the close of business on October 16, 2015 . |
Purchase of Investment Properties | Purchase of Investment Properties A property acquired not subject to an existing lease is treated as an asset acquisition and recorded at its purchase price, inclusive of acquisition costs, allocated between the acquired tangible assets and assumed liabilities based upon their relative fair values at the date of acquisition. A property acquired with an existing lease is accounted for as a business combination pursuant to the acquisition method in accordance with ASC Topic 805, Business Combinations (“ASC 805”), and assets acquired and liabilities assumed, including identified intangible assets and liabilities, are recorded at fair value. The determination of fair value involves the use of significant judgment and estimation. The Trust makes estimates of the fair value of the tangible and intangible acquired assets and assumed liabilities using information obtained from multiple sources as a result of pre-acquisition due diligence and may include the assistance of a third party appraiser. The Trust estimates the fair value of buildings acquired on an "as-if-vacant" basis and depreciates the building value over the estimated remaining life of the building. The Trust determines the allocated value of other fixed assets, such as site improvements, based upon the replacement cost and depreciates such value over the assets’ estimated remaining useful lives as determined at the applicable acquisition date. The fair value of land is determined either by considering the sales prices of similar properties in recent transactions or based on internal analyses of recently acquired and existing comparable properties within the Trust’s portfolio. In recognizing identified intangible assets and liabilities in connection with a business combination, the value of above-or-below market leases is estimated based on the present value (using an interest rate which reflected the risks associated with the leases acquired) of the difference between contractual amounts to be received pursuant to the leases and management’s estimate of market lease rates measured over a period equal to the estimated remaining term of the lease. The capitalized above-market or below-market lease intangibles are amortized as a reduction or addition to rental income over the estimated remaining term of the respective leases. In determining the value of in-place leases, management considers current market conditions and costs to execute similar leases in arriving at an estimate of the carrying costs during the expected lease-up period from vacant to existing occupancy. In estimating carrying costs, management includes real estate taxes, insurance, other operating expenses, estimates of lost rental revenue during the expected lease-up periods, and costs to execute similar leases, including leasing commissions, tenant improvements, legal, and other related costs based on current market demand. The values assigned to in-place leases are amortized to amortization expense over the estimated remaining term of the lease. The values assigned to all lease intangible assets and liabilities are amortized to amortization expense over the estimated remaining term of the lease. If a lease terminates prior to its scheduled expiration, all unamortized costs related to that lease are written off, net of any required lease termination payments. The Trust calculates the fair value of any long-term debt assumed by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings, which the Trust approximates based on the rate at which it would expect to incur on a replacement instrument on the date of acquisition, and recognize any fair value adjustments related to long-term debt as effective yield adjustments over the remaining term of the instrument. Based on these estimates, the Trust recognizes the acquired assets and assumed liabilities at their estimated fair values, which are generally determined using Level 3 inputs, such as market rental rates, capitalization rates, discount rates, or other available market data. Initial valuations are subject to change until the information is finalized, no later than 12 months from the acquisition date. The Trust expenses transaction costs associated with acquisitions accounted for as business combinations in the period incurred. |
Impairment of Intangible and Long-Lived Assets | Impairment of Intangible and Long-Lived Assets The Trust periodically evaluates its long-lived assets, primarily consisting of investments in real estate, for impairment indicators or whenever events or changes in circumstances indicate that the recorded amount of an asset may not be fully recoverable. If indicators of impairment are present, the Trust evaluates the carrying value of the related real estate properties in relation to the undiscounted expected future cash flows of the underlying operations. In performing this evaluation, management considers market conditions and current intentions with respect to holding or disposing of the real estate property. The Trust adjusts the net book value of real estate properties to fair value if the sum of the expected future undiscounted cash flows, including sales proceeds, is less than book value. The Trust recognizes an impairment loss at the time it makes any such determination. 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. Fair value is typically determined using a discounted future cash flow analysis or other acceptable valuation techniques, which are based, in turn, upon Level 3 inputs, such as revenue and expense growth rates, capitalization rates, discount rates or other available market data. The Trust did not record impairment charges in the three and nine month periods ended September 30, 2015 . For the three and nine month periods ended September 30, 2014 , the Trust recognized $0.3 million of an impairment loss on a medical office building in Pickerington, OH. |
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 statements of operations. The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the equity interest. |
Real Estate Loans Receivable | Real Estate Loans Receivable Real estate loans receivable consists of three mezzanine loans and a term loan. Each mezzanine loan is collateralized by an ownership interest in the respective borrower, while the term loan is secured by an equity interest in one medical office building development. Interest income on the loans are recognized as earned based on the terms of the loans subject to evaluation of collectability risks and are included in the Trust’s consolidated statement of operations. |
Rental Revenue | Rental Revenue Rental revenue is recognized on a straight-line basis over the terms of the related leases when collectability is reasonably assured. Recognizing rental revenue on a straight-line basis for leases may result in recognizing revenue for amounts more or less than amounts currently due from tenants. Amounts recognized in excess of amounts currently due from tenants are included in other assets and were approximately $12.8 million and $6.4 million as of September 30, 2015 and December 31, 2014 , 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 adjusted by amortization of lease inducements and above or below market rents on certain leases. Lease inducements and above or below market rents are amortized over the 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, 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 expense recoveries. |
Income Taxes | Income Taxes The Trust elected to be taxed as a REIT for federal tax purposes commencing with the filing of its tax return for the short taxable year ending December 31, 2013. The Trust had no taxable income prior to electing REIT status. To qualify as a REIT, the Trust must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income to its shareholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Trust generally will not be subject to federal income tax to the extent it distributes qualifying dividends to its shareholders. If the Trust fails to qualify as a REIT in any taxable year, it will be subject to federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants the Trust relief under certain statutory provisions. Such an event could materially adversely affect the Trust’s net income and net cash available for distribution to shareholders. However, the Trust intends to continue to operate in such a manner as to continue qualifying for treatment as a REIT. Even if the Trust continues to qualify for taxation as a REIT, the Trust may be subject to state and local taxes on its income and property and federal income and excise taxes on its undistributed income. |
Management Estimates | Management Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the amounts of revenue and expenses reported in the period. Significant estimates are made for the fair value assessments with respect to purchase price allocations, impairment assessments, stock-based compensation, and the valuation of financial instruments. Actual results could differ from these estimates. |
Contingent Liabilities | Contingent Liabilities The Trust records a liability for contingent consideration (included in accrued expenses and other liabilities on its consolidated balance sheets) at fair value as of the acquisition date and reassesses the fair value at the end of each reporting period, with any changes being recognized in earnings. Increases or decreases in the fair value of contingent consideration can result from changes in discount periods, discount rates and probabilities that contingencies will be met. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the previously reported consolidated financial position or consolidated results of operations. |
New Accounting Pronouncements | New Accounting Pronouncements In May 2014, the FASB issued ASU 2014-9, Revenue from Contracts with Customers , which creates a new Topic, Accounting Standards Codification Topic 606. The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This standard is effective for interim or annual periods beginning after December 15, 2017 and allows for either full retrospective or modified retrospective adoption. Early adoption of this standard is permitted for reporting periods beginning after December 15, 2016. The Trust is currently evaluating the impact the adoption of Topic 606 will have on its consolidated financial statements. In February 2015, the FASB issued ASU 2015-2, Amendments to the Consolidation Analysis . This update is intended to improve targeted areas of consolidation guidance by simplifying the consolidation evaluation process and by placing more emphasis on risk of loss when determining a controlling financial interest. The provisions of this ASU are effective for interim and annual periods beginning after December 15, 2015. The Trust is currently in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements. In April 2015, the FASB issued ASU 2015-3, Simplifying the Presentation of Debt Issuance Costs , which changes the presentation of debt issuance costs in financial statements. ASU 2015-3 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. ASU 2015-3 is effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The Company will adopt ASU 2015-3 on January 1, 2016, and it is not expected to have a material impact on the Company’s consolidated financial statements and disclosures. In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments . The update requires that acquiring entities in a business combination recognize adjustments to provisional amounts identified in the reporting period in which the adjustment amounts are determined, including the cumulative effect of the change in provisional amount, as if the accounting had been completed at the acquisition date. Adjustments related to previous reporting periods must be disclosed by income statement line item, either on the face of the income statement or in the notes, in the period for which the adjustment was identified. ASU 2015-16 is effective for annual reporting periods beginning after December 15, 2015. The Company does not expect ASU 2015-16 to have a material impact on the Company's consolidated financial statements and disclosures. |
Organization and Business (Tabl
Organization and Business (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Trust's common shares issuance and sale | During 2015, the Trust’s issuance and sale of common shares pursuant to the ATM Program is as follows (in thousands, except common shares and price): Common shares sold Weighted average price Net proceeds Quarterly period ended March 31, 2015 247,397 $ 16.96 $ 4,140 Quarterly period ended June 30, 2015 1,007,695 16.56 16,438 Quarterly period ended September 30, 2015 — — — Year to date 1,255,092 $ 16.63 $ 20,578 |
Acquisitions and Disposition (T
Acquisitions and Disposition (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Schedule of acquisitions and aggregate purchase price | Investment activity for the three months ended September 30, 2015 is summarized below: Property (1) Location Acquisition Date Purchase Price (in thousands) Randall Road MOB - Suite 140 (2) Elgin, IL July 17, 2015 $ 1,750 Medical Specialists of Palm Beach (2) Atlantis, FL July 24, 2015 11,051 Trios Health MOB (2) Kennewick, WA July 31, 2015 64,000 OhioHealth - SW Health Center (2) Grove City, OH July 31, 2015 11,460 Integrated Medical Services (IMS) Portfolio IMS - Paradise Valley MOB (2) Phoenix, AZ August 14, 2015 31,814 IMS - Avondale MOB (2) Avondale, AZ August 19, 2015 22,144 IMS - Palm Valley MOB (2) Goodyear, AZ August 19, 2015 35,184 IMS - North Mountain MOB (2) Phoenix, AZ August 31, 2015 51,740 Warm Springs Rehab Hospital Mezz Loan (3) Kyle, TX August 21, 2015 3,138 Memorial Hermann Medical Complex (2 MOBs) (2) Katy, TX September 1, 2015 40,400 New Albany Medical Center (2) (4) New Albany, OH September 9, 2015 11,200 Fountain Hills Medical Campus (2) Fountain Hills, AZ September 30, 2015 13,250 $ 297,131 (1) “MOB” means medical office building. (2) The Trust accounted for these acquisitions as business combinations pursuant to the acquisition method and expensed total acquisition costs of $3.3 million . (3) The Trust made a $3.1 million mezzanine term loan to partially fund the borrower's acquisition of the 54,500 square foot Warm Springs Rehabilitation Hospital in Kyle, Texas. The mezzanine loan is collateralized by an equity interest in the property and accrues interest at a rate of 8.5% per year. The Trust has an option to purchase the property. (4) The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 16,866 OP Units valued at approximately $0.2 million in the aggregate on the date of issuance. |
Schedule of preliminary purchase price allocations of assets acquired and liabilities assumed | The following table summarizes the acquisition date fair values of the assets acquired and the liabilities assumed, which the Trust determined using Level 2 and Level 3 inputs (in thousands): 1st Quarter 2nd Quarter 3rd Quarter Total Land $ 21,075 $ 10,401 $ 13,199 $ 44,675 Building and improvements 175,050 113,411 238,209 526,670 In-place lease intangible 32,398 13,651 31,125 77,174 Above market in-place lease intangible 3,679 7,950 2,288 13,917 Below market in-place lease intangible (315 ) (258 ) (2,052 ) (2,625 ) Below market in-place ground lease 158 1,482 11,230 12,870 Lease inducement 462 1,983 33 2,478 Contingent consideration (1,482 ) — — (1,482 ) Receivables 3,564 — — 3,564 Debt assumed (6,323 ) (12,367 ) — (18,690 ) Issuance of OP Units (7,314 ) (3,420 ) (239 ) (10,973 ) Issuance of Series A Preferred Units (9,704 ) — — (9,704 ) Noncontrolling interest (5,508 ) — — (5,508 ) Net assets acquired $ 205,740 $ 132,833 $ 293,793 $ 632,366 |
Schedule of pro forma combined revenue, net income, and earnings per share-basic and diluted | The following table illustrates the effect on net income, earnings per share - basic and diluted as if the Trust had acquired the above acquisitions as of January 1, 2014 (in thousands, except per share amounts): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Revenue $ 38,473 $ 21,134 $ 113,673 $ 81,413 Net income 8,680 838 25,672 6,339 Net income available to common shareholders 8,161 646 24,118 5,560 Earnings per share $ 0.11 $ 0.01 $ 0.34 $ 0.08 Common shares outstanding 71,320,174 71,320,174 71,320,174 71,320,174 |
Intangibles (Tables)
Intangibles (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
Summary of the carrying amount of intangible assets and liabilities | The following is a summary of the carrying amount of intangible assets and liabilities as of September 30, 2015 and December 31, 2014 (in thousands): September 30, 2015 December 31, 2014 Cost Accumulated Amortization Net Cost Accumulated Amortization Net Assets In-place leases $ 141,139 $ (21,525 ) $ 119,614 $ 64,777 $ (12,213 ) $ 52,564 Above market leases 21,366 (2,249 ) 19,117 7,449 (578 ) 6,871 Leasehold interest 712 (49 ) 663 759 (5 ) 754 Below market ground lease 12,870 (37 ) 12,833 — — — Total $ 176,087 $ (23,860 ) $ 152,227 $ 72,985 $ (12,796 ) $ 60,189 Liability Below market lease $ 4,955 $ (587 ) $ 4,368 $ 2,330 $ (156 ) $ 2,174 Above market ground lease 701 (16 ) 685 701 (4 ) 697 Total $ 5,656 $ (603 ) $ 5,053 $ 3,031 $ (160 ) $ 2,871 |
Summary of the carrying amount of acquired lease intangibles | The following is a summary of the acquired lease intangible amortization for the three and nine month periods ended September 30, 2015 and 2014 , respectively (in thousands): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Amortization expense related to in-place leases $ 4,253 $ 1,002 $ 10,124 $ 2,724 Decrease of rental income related to above-market leases 742 86 1,671 205 Decrease of rental income related to leasehold interest 15 — 44 — Increase of rental income related to below-market leases 167 9 431 10 Decrease of operating expense related to above market ground leases 4 — 12 — Increase in operating expense related to below market ground lease 32 — 37 — |
Schedule of future amortization of the acquired lease intangibles | Future aggregate net amortization of the acquired lease intangibles as of September 30, 2015 , is as follows (in thousands): Net Decrease in Revenue Net Increase in Expenses 2015 $ (641 ) $ 4,896 2016 (2,523 ) 18,904 2017 (1,969 ) 16,991 2018 (1,662 ) 15,545 2019 (1,504 ) 12,484 Thereafter (7,113 ) 62,942 Total $ (15,412 ) $ 131,762 |
Other Assets (Tables)
Other Assets (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Other Assets, Unclassified [Abstract] | |
Schedule of other assets | Other assets consisted of the following as of September 30, 2015 and December 31, 2014 (in thousands): September 30, December 31, Straight line rent receivable $ 12,809 $ 6,431 Lease inducements, net 5,073 2,845 Escrows 5,179 1,906 Earnest deposits 1,333 2,343 Note receivable 4,168 — Prepaid expenses and other 5,389 2,281 Total $ 33,951 $ 15,806 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of debt | The following is a summary of debt as of September 30, 2015 and December 31, 2014 (in thousands): September 30, December 31, Mortgage notes, bearing fixed interest from 4.71% to 6.58%, with a weighted average interest rate of 5.39%, and due in 2016, 2017, 2019, 2020, 2021 and 2022 collateralized by 11 properties with a net book value of $146,650. $ 90,164 $ 73,706 Mortgage note, bearing variable interest of LIBOR plus 2.75% and due in 2017, collateralized by one property with a net book value of $6,058. 4,297 4,399 Total mortgage debt 94,461 78,105 $750 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.20%, due September 2019. 473,000 138,000 Total principal 567,461 216,105 Unamortized fair value adjustment 734 — Total debt $ 568,195 $ 216,105 |
Schedule of consolidated leverage ratios | The Credit Agreement provides for revolving credit loans to the Operating Partnership. Base Rate Loans, Adjusted LIBOR Rate Loans and Letters of Credit (each, as defined in the Credit Agreement) will be subject to interest rates, based upon the investment grade rating of the Trust, the Operating Partnership and its subsidiaries as follows: Credit Rating Adjusted LIBOR Rate Loans and Letter of Credit Fee Base Rate Loans At Least A- or A3 LIBOR + 0.85% — % At Least BBB+ or BAA1 LIBOR + 0.90% — % At Least BBB or BAA2 LIBOR + 1.00% 0.10 % At Least BBB- or BAA3 LIBOR + 1.20% 0.20 % Below BBB- or BAA3 LIBOR + 1.55% 0.60 % |
Schedule of principal payments due on debt | Scheduled principal payments due on debt as of September 30, 2015 , are as follows (in thousands): 2015 $ 560 2016 9,752 2017 40,629 2018 1,265 2019 493,081 Thereafter 22,174 Total Payments $ 567,461 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of non-vested restricted common shares | A summary of the status of the Trust’s non-vested restricted common shares as of September 30, 2015 and changes during the nine month period then ended follow: Common Shares Weighted Average Grant Date Fair Value Non-vested at December 31, 2014 319,654 $ 12.60 Granted 129,277 16.18 Vested (169,259 ) 12.91 Non-vested at September 30, 2015 279,672 $ 14.07 |
Schedule of weighted average grant date fair value assumptions | The Trust utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $20.06 per unit for the March 2015 grant using the following assumptions: Volatility 20.7 % Dividend assumption reinvested Expected term in years 2.8 Risk-free rate 1.14 % Share price (per share) 15.87 |
Summary of the activity in the restricted share units | The following is a summary of the activity in the Trust’s restricted share units during the nine months ended September 30, 2015 : Restricted Share Units Weighted Average Grant Date Fair Value Non-vested at December 31, 2014 55,680 $ 16.94 Granted 116,206 19.22 Non-vested at September 30, 2015 171,886 $ 18.48 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of other financial instruments | The following table presents the fair value of the Trust’s financial instruments (in thousands): September 30, December 31, Carrying Amount Fair Value Carrying Amount Fair Value Real estate loans receivable $ 28,979 $ 28,979 $ 15,876 $ 15,876 Credit facility $ (473,000 ) $ (473,000 ) $ (138,000 ) $ (138,000 ) Mortgage debt $ (95,195 ) $ (95,963 ) $ (78,105 ) $ (78,642 ) Derivative liabilities $ (3,468 ) $ (3,468 ) $ (233 ) $ (233 ) |
Tenant Operating Leases (Tables
Tenant Operating Leases (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Leases [Abstract] | |
Schedule of future minimum rental payments on non-cancelable leases, exclusive of expense recoveries | As of September 30, 2015 , the future minimum rental payments on non-cancelable leases, exclusive of expense recoveries, were as follows (in thousands): 2015 $ 28,744 2016 113,979 2017 110,771 2018 105,654 2019 101,245 Thereafter 789,599 Total $ 1,249,992 |
Rent Expense (Tables)
Rent Expense (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Leases [Abstract] | |
Schedule of future minimum lease obligations under non-cancelable ground leases | As of September 30, 2015 , the future minimum lease obligations under non-cancelable parking and ground leases were as follows (in thousands): 2015 $ 403 2016 1,629 2017 1,666 2018 1,708 2019 1,751 Thereafter 32,794 Total $ 39,951 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Schedule of amounts used in computing basic and diluted earnings per share | Earnings Per Share The following table shows the amounts used in computing the Trust’s basic and diluted earnings per share. (in thousands, except share and per share data): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Numerator for earnings per share - basic: Net income (loss) $ 3,983 $ (2,251 ) $ 6,832 $ (6,409 ) Net (income) loss attributable to noncontrolling interests: Operating Partnership (200 ) 233 (333 ) 887 Partially owned properties (79 ) (76 ) (255 ) (226 ) Preferred distribution (300 ) — (791 ) — Numerator for earnings per share - basic $ 3,404 $ (2,094 ) $ 5,453 $ (5,748 ) Numerator for earnings per share - diluted: Numerator for earnings per share - basic $ 3,404 $ (2,094 ) $ 5,453 $ (5,748 ) Operating Partnership net income 200 — 333 — Numerator for earnings per share - diluted $ 3,604 $ (2,094 ) $ 5,786 $ (5,748 ) Denominator for earnings per share - basic and diluted: Denominator for earnings per share - basic 71,034,747 36,313,644 69,040,121 27,980,408 Effect of dilutive securities: Noncontrolling interest - OP Units 3,829,930 — 3,676,395 — Restricted common shares 123,343 — 194,640 — Restricted share units 116,801 — 129,690 — Denominator for earnings per share - diluted common shares: 75,104,821 36,313,644 73,040,846 27,980,408 Earnings per share - basic $ 0.05 $ (0.06 ) $ 0.08 $ (0.21 ) Earnings per share - diluted $ 0.05 $ (0.06 ) $ 0.08 $ (0.21 ) |
Subsequent Events (Tables)
Subsequent Events (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Operating Partnership | |
Subsequent events | |
Schedule of acquisitions through subsidiaries of operating partnership | The Trust, through subsidiaries of its Operating Partnership, closed on the below acquisitions: Property(1) Location Acquisition Date Purchase Price (in thousands) Catalyst Portfolio (12 MOBs) (2) AL & FL October 13, 2015 $ 23,805 Truman Medical Center Mezz Loan (3) Kansas City, MO October 16, 2015 4,500 Arete Surgical Centre Johnstown, CO October 19, 2015 9,100 Cambridge Professional Center Waldorf, MD October 30, 2015 11,550 Great Falls Replacement Surgical Hospital Mezz Loan (4) Great Falls, MT November 2, 2015 4,500 $ 53,455 (1) “MOB” means medical office building. (2) The Trust received a right of first refusal to acquire the seller's future development pipeline upon completion, which currently totals nearly 240,000 net leasable square feet. (3) The Trust received a right of first offer and a right of first refusal to acquire the building. (4) The Trust entered into an agreement to acquire the building upon completion of construction for approximately $26.3 million . The acquisition is subject to customary closing conditions and there can be no assurance the Trust will complete the transactions or acquire the facility. |
Organization and Business (Deta
Organization and Business (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 19, 2015 | Jan. 21, 2015 | Aug. 19, 2014 | Jun. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 | |||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |||||
Organization and Business | |||||||
Shares issued upon exercise of the underwriters' overallotment option | 2,475,000 | ||||||
Common shares sold | 18,975,000 | ||||||
Common share price (in dollars per share) | $ 16.40 | ||||||
Number of partnership units issued | 18,975,000 | ||||||
Units | |||||||
Organization and Business | |||||||
Net proceeds | $ 297,300 | ||||||
ATM Program | Operating Partnership | |||||||
Organization and Business | |||||||
Common shares sold | 1,007,695 | 247,397 | 1,255,092 | ||||
Net proceeds | $ 16,438 | $ 4,140 | $ 20,578 | ||||
Weighted average price | $ 16.56 | $ 16.96 | $ 16.63 | ||||
ATM Program | Maximum | |||||||
Organization and Business | |||||||
Aggregate offering price of common stock | $ 150,000 | ||||||
Subsequent events | |||||||
Organization and Business | |||||||
Shares issued upon exercise of the underwriters' overallotment option | 2,062,500 | ||||||
Common shares sold | 15,812,500 | ||||||
Common share price (in dollars per share) | $ 15 | ||||||
Net proceeds | $ 226,300 | ||||||
Number of partnership units issued | 15,812,500 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Details) | 9 Months Ended |
Sep. 30, 2015 | |
Principles of Consolidation | |
Ownership interest in consolidated subsidiaries (as a percent) | 100.00% |
Summary of Significant Accoun33
Summary of Significant Accounting Policies (Details 2) - USD ($) $ / shares in Units, $ in Thousands | Feb. 05, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 |
Noncontrolling Interests | |||||||
Impairment loss | $ 0 | $ 250 | $ 0 | $ 250 | |||
Purchase price | $ 297,131 | ||||||
Operating partnership units redemption ratio | 1 | ||||||
Minnetonka MOB | |||||||
Noncontrolling Interests | |||||||
Cumulative preferred return | 15.00% | ||||||
Equity method investment received | $ 5,000 | ||||||
Investor's percentage of internal rate of return | 15.00% | ||||||
Minnetonka MOB | Series A Preferred units | |||||||
Noncontrolling Interests | |||||||
Number of units issued for funding purchase price | 44,685 | ||||||
Value of units issued for funding purchase price | $ 9,700 | ||||||
Fair value of embedded derivative | 3,400 | $ 3,400 | |||||
Redemption value (in dollars per share) | $ 200 | ||||||
Cumulative preferred return | 5.00% | ||||||
Operating Partnership | |||||||
Noncontrolling Interests | |||||||
Purchase price | $ 11,200 | $ 11,300 | $ 10,000 | ||||
Percentage of interest held | 94.90% | ||||||
Operating Partnership | Units | |||||||
Noncontrolling Interests | |||||||
Number of units issued for funding purchase price | 16,866 | 210,820 | 420,963 | ||||
Value of units issued for funding purchase price | $ 200 | $ 3,400 | $ 7,300 | $ 200 |
Summary of Significant Accoun34
Summary of Significant Accounting Policies (Details 3) $ / shares in Units, $ in Millions | Sep. 28, 2015$ / shares | Sep. 30, 2015USD ($)$ / shares | Sep. 30, 2014$ / shares | Sep. 30, 2015USD ($)itembuildings$ / shares | Sep. 30, 2014$ / shares | Dec. 31, 2014USD ($) |
Dividends and Distributions | ||||||
Cash dividend declared to common shareholders (in dollars per share) | $ 0.225 | $ 0.225 | $ 0.225 | $ 0.675 | $ 0.675 | |
Cash dividend distributed to common shareholders (in dollars per share) | $ 0.225 | |||||
Real Estate Loans Receivable | ||||||
Number of mezzanine loans collateralized | item | 3 | |||||
Number of medical office building developments as collateral for real estate loans receivable | buildings | 1 | |||||
Rental Revenue | ||||||
Rental revenue due in excess of amounts currently due from tenants | $ | $ 12.8 | $ 12.8 | $ 6.4 |
Acquisitions and Disposition (D
Acquisitions and Disposition (Details) | Sep. 30, 2015USD ($)ft²states | Sep. 09, 2015USD ($) | Sep. 01, 2015USD ($) | Aug. 31, 2015USD ($) | Aug. 21, 2015USD ($) | Aug. 19, 2015USD ($) | Aug. 14, 2015USD ($) | Jul. 31, 2015USD ($)ft² | Jul. 24, 2015USD ($) | Jul. 17, 2015USD ($) | Jun. 01, 2015USD ($) | Jan. 28, 2015USD ($)shares | Sep. 30, 2015USD ($)ft²statesshares | Jun. 30, 2015USD ($)shares | Mar. 31, 2015USD ($)shares | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)ft²stateshealthcareproperty | Sep. 30, 2014USD ($) | Mar. 26, 2015ft² |
Acquisitions and Disposition | |||||||||||||||||||
Acquisition price | $ 297,131,000 | ||||||||||||||||||
Acquisition expenses | $ 3,257,000 | $ 2,922,000 | 11,764,000 | $ 9,254,000 | |||||||||||||||
Revenue | 34,870,000 | 14,161,000 | 89,037,000 | 33,640,000 | |||||||||||||||
Net income | 3,983,000 | $ (2,251,000) | 6,832,000 | $ (6,409,000) | |||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
Land | $ 44,675,000 | 44,675,000 | 44,675,000 | ||||||||||||||||
Building and improvements | 526,670,000 | 526,670,000 | 526,670,000 | ||||||||||||||||
Lease inducement | 2,478,000 | 2,478,000 | 2,478,000 | ||||||||||||||||
Contingent consideration | (1,482,000) | (1,482,000) | (1,482,000) | ||||||||||||||||
Receivables | 3,564,000 | 3,564,000 | 3,564,000 | ||||||||||||||||
Debt assumed | (18,690,000) | (18,690,000) | (18,690,000) | ||||||||||||||||
Issuance of OP Units | (10,973,000) | (10,973,000) | (10,973,000) | ||||||||||||||||
Noncontrolling interest | (5,508,000) | (5,508,000) | (5,508,000) | ||||||||||||||||
Net assets acquired | 632,366,000 | 632,366,000 | 632,366,000 | ||||||||||||||||
Series A Preferred units | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
Issuance of Series A Preferred Units | (9,704,000) | (9,704,000) | (9,704,000) | ||||||||||||||||
In-place leases | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
In-place leases | 77,174,000 | 77,174,000 | 77,174,000 | ||||||||||||||||
Above market leases | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
In-place leases | 13,917,000 | 13,917,000 | 13,917,000 | ||||||||||||||||
Below market in-place lease | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
Intangible leases | (2,625,000) | (2,625,000) | (2,625,000) | ||||||||||||||||
Below Market Ground Lease | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
Intangible leases | $ (12,870,000) | $ (12,870,000) | $ (12,870,000) | ||||||||||||||||
Medical Building | |||||||||||||||||||
Acquisitions and Disposition | |||||||||||||||||||
Area of property (in square feet) | ft² | 26,783 | 20,329 | |||||||||||||||||
Series of Individually Immaterial Business Acquisitions | |||||||||||||||||||
Acquisitions and Disposition | |||||||||||||||||||
Number of Operating Healthcare Properties | healthcareproperty | 47 | ||||||||||||||||||
Number of states | states | 18 | 18 | 18 | ||||||||||||||||
Acquisition price | $ 676,000,000 | ||||||||||||||||||
Revenue | $ 13,000,000 | 23,100,000 | |||||||||||||||||
Net income | 3,800,000 | 5,700,000 | |||||||||||||||||
Jacksonville F L | Medical Building | Mezzanine loan | |||||||||||||||||||
Acquisitions and Disposition | |||||||||||||||||||
Acquisition price | $ 9,000,000 | ||||||||||||||||||
Operating Partnership | |||||||||||||||||||
Acquisitions and Disposition | |||||||||||||||||||
Acquisition price | $ 11,200,000 | $ 11,300,000 | $ 10,000,000 | ||||||||||||||||
Operating Partnership | Units | |||||||||||||||||||
Acquisitions and Disposition | |||||||||||||||||||
Number of units issued for funding purchase price | shares | 16,866 | 210,820 | 420,963 | ||||||||||||||||
Value of units issued for funding purchase price | $ 200,000 | $ 200,000 | $ 3,400,000 | $ 7,300,000 | 200,000 | ||||||||||||||
Operating Partnership | Elgin, IL | Medical office building condominium unit | |||||||||||||||||||
Acquisitions and Disposition | |||||||||||||||||||
Acquisition price | $ 1,750,000 | ||||||||||||||||||
Operating Partnership | Atlantis, FL | Medical Building | |||||||||||||||||||
Acquisitions and Disposition | |||||||||||||||||||
Acquisition price | $ 11,051,000 | ||||||||||||||||||
Operating Partnership | Kennewick WA | Medical Building | |||||||||||||||||||
Acquisitions and Disposition | |||||||||||||||||||
Acquisition price | $ 64,000,000 | ||||||||||||||||||
Operating Partnership | Grove City, OH | |||||||||||||||||||
Acquisitions and Disposition | |||||||||||||||||||
Acquisition price | $ 11,460,000 | ||||||||||||||||||
Operating Partnership | Phoenix AZ | Medical office building condominium unit | |||||||||||||||||||
Acquisitions and Disposition | |||||||||||||||||||
Acquisition price | $ 31,814,000 | ||||||||||||||||||
Operating Partnership | Avondale AZ | Medical office building condominium unit | |||||||||||||||||||
Acquisitions and Disposition | |||||||||||||||||||
Acquisition price | $ 22,144,000 | ||||||||||||||||||
Operating Partnership | Goodyear AZ | Medical office building condominium unit | |||||||||||||||||||
Acquisitions and Disposition | |||||||||||||||||||
Acquisition price | $ 35,184,000 | ||||||||||||||||||
Operating Partnership | Phoenix AZ II | Medical office building condominium unit | |||||||||||||||||||
Acquisitions and Disposition | |||||||||||||||||||
Acquisition price | $ 51,740,000 | ||||||||||||||||||
Operating Partnership | Kyle TX | Medical office building condominium unit | |||||||||||||||||||
Acquisitions and Disposition | |||||||||||||||||||
Acquisition price | $ 3,100,000 | ||||||||||||||||||
Mezzanine term loan | $ 3,100,000 | $ 3,100,000 | $ 3,100,000 | ||||||||||||||||
Area of property (in square feet) | ft² | 54,500 | 54,500 | 54,500 | ||||||||||||||||
Interest rate | $ 0.085 | $ 0.085 | $ 0.085 | ||||||||||||||||
Operating Partnership | Katy TX | Medical office building condominium unit | |||||||||||||||||||
Acquisitions and Disposition | |||||||||||||||||||
Acquisition price | $ 40,400,000 | ||||||||||||||||||
Operating Partnership | New Albany OH | Medical office building condominium unit | |||||||||||||||||||
Acquisitions and Disposition | |||||||||||||||||||
Acquisition price | $ 11,200,000 | ||||||||||||||||||
Operating Partnership | Fountain Hills AZ | Medical office building condominium unit | |||||||||||||||||||
Acquisitions and Disposition | |||||||||||||||||||
Acquisition price | 13,250,000 | ||||||||||||||||||
Operating Partnership | Greenwood I N | Units | |||||||||||||||||||
Acquisitions and Disposition | |||||||||||||||||||
Number of units issued for funding purchase price | shares | 16,866 | ||||||||||||||||||
Value of units issued for funding purchase price | $ 200,000 | ||||||||||||||||||
1st Quarter | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
Land | 21,075,000 | 21,075,000 | 21,075,000 | ||||||||||||||||
Building and improvements | 175,050,000 | 175,050,000 | 175,050,000 | ||||||||||||||||
Lease inducement | 462,000 | 462,000 | 462,000 | ||||||||||||||||
Contingent consideration | (1,482,000) | (1,482,000) | (1,482,000) | ||||||||||||||||
Receivables | 3,564,000 | 3,564,000 | 3,564,000 | ||||||||||||||||
Debt assumed | (6,323,000) | (6,323,000) | (6,323,000) | ||||||||||||||||
Issuance of OP Units | (7,314,000) | (7,314,000) | (7,314,000) | ||||||||||||||||
Noncontrolling interest | (5,508,000) | (5,508,000) | (5,508,000) | ||||||||||||||||
Net assets acquired | 205,740,000 | 205,740,000 | 205,740,000 | ||||||||||||||||
1st Quarter | Series A Preferred units | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
Issuance of Series A Preferred Units | (9,704,000) | (9,704,000) | (9,704,000) | ||||||||||||||||
1st Quarter | In-place leases | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
In-place leases | 32,398,000 | 32,398,000 | 32,398,000 | ||||||||||||||||
1st Quarter | Above market leases | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
In-place leases | 3,679,000 | 3,679,000 | 3,679,000 | ||||||||||||||||
1st Quarter | Below market in-place lease | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
Intangible leases | (315,000) | (315,000) | (315,000) | ||||||||||||||||
1st Quarter | Below Market Ground Lease | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
Intangible leases | (158,000) | (158,000) | (158,000) | ||||||||||||||||
2nd Quarter | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
Land | 10,401,000 | 10,401,000 | 10,401,000 | ||||||||||||||||
Building and improvements | 113,411,000 | 113,411,000 | 113,411,000 | ||||||||||||||||
Lease inducement | 1,983,000 | 1,983,000 | 1,983,000 | ||||||||||||||||
Debt assumed | (12,367,000) | (12,367,000) | (12,367,000) | ||||||||||||||||
Issuance of OP Units | (3,420,000) | (3,420,000) | (3,420,000) | ||||||||||||||||
Net assets acquired | 132,833,000 | 132,833,000 | 132,833,000 | ||||||||||||||||
2nd Quarter | In-place leases | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
In-place leases | 13,651,000 | 13,651,000 | 13,651,000 | ||||||||||||||||
2nd Quarter | Above market leases | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
In-place leases | 7,950,000 | 7,950,000 | 7,950,000 | ||||||||||||||||
2nd Quarter | Below market in-place lease | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
Intangible leases | (258,000) | (258,000) | (258,000) | ||||||||||||||||
2nd Quarter | Below Market Ground Lease | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
Intangible leases | (1,482,000) | (1,482,000) | (1,482,000) | ||||||||||||||||
3rd Quarter | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
Land | 13,199,000 | 13,199,000 | 13,199,000 | ||||||||||||||||
Building and improvements | 238,209,000 | 238,209,000 | 238,209,000 | ||||||||||||||||
Lease inducement | 33,000 | 33,000 | 33,000 | ||||||||||||||||
Issuance of OP Units | (239,000) | (239,000) | (239,000) | ||||||||||||||||
Noncontrolling interest | 0 | 0 | 0 | ||||||||||||||||
Net assets acquired | 293,793,000 | 293,793,000 | 293,793,000 | ||||||||||||||||
3rd Quarter | Series A Preferred units | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
Issuance of Series A Preferred Units | 0 | 0 | 0 | ||||||||||||||||
3rd Quarter | In-place leases | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
In-place leases | 31,125,000 | 31,125,000 | 31,125,000 | ||||||||||||||||
3rd Quarter | Above market leases | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
In-place leases | 2,288,000 | 2,288,000 | 2,288,000 | ||||||||||||||||
3rd Quarter | Below market in-place lease | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
Intangible leases | (2,052,000) | (2,052,000) | (2,052,000) | ||||||||||||||||
3rd Quarter | Below Market Ground Lease | |||||||||||||||||||
Fair values of the assets acquired and the liabilities assumed | |||||||||||||||||||
Intangible leases | $ (11,230,000) | $ (11,230,000) | $ (11,230,000) |
Acquisitions and Disposition 36
Acquisitions and Disposition (Detail 2) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Unaudited Pro Forma Financial Information | ||||
Revenue | $ 38,473 | $ 21,134 | $ 113,673 | $ 81,413 |
Net income | 8,680 | 838 | 25,672 | 6,339 |
Net income available to common shareholders | $ 8,161 | $ 646 | $ 24,118 | $ 5,560 |
Earnings per share (in dollars per share) | $ 0.11 | $ 0.01 | $ 0.34 | $ 0.08 |
Common shares outstanding | 71,320,174 | 71,320,174 | 71,320,174 | 71,320,174 |
Acquisitions and Disposition 37
Acquisitions and Disposition (Details 3) - Medical Building $ in Thousands | Jul. 31, 2015USD ($)ft² | Mar. 26, 2015USD ($)ft² |
Acquisitions and Disposition | ||
Area of property (in square feet) | ft² | 26,783 | 20,329 |
Proceeds from sale of building | $ 1,500 | $ 1,600 |
Loss on sale of buildings | $ (100) | $ 15 |
Intangibles (Details)
Intangibles (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Intangibles | ||
Cost | $ 176,087 | $ 72,985 |
Accumulated Amortization | (23,860) | (12,796) |
Net | 152,227 | 60,189 |
Liability | ||
Cost | 5,656 | 3,031 |
Accumulated Amortization | (603) | (160) |
Net | 5,053 | 2,871 |
In-place leases | ||
Intangibles | ||
Cost | 141,139 | 64,777 |
Accumulated Amortization | (21,525) | (12,213) |
Net | 119,614 | 52,564 |
Above market leases | ||
Intangibles | ||
Cost | 21,366 | 7,449 |
Accumulated Amortization | (2,249) | (578) |
Net | 19,117 | 6,871 |
Leasehold interest | ||
Intangibles | ||
Cost | 712 | 759 |
Accumulated Amortization | (49) | (5) |
Net | 663 | 754 |
Below Market Ground Lease | ||
Intangibles | ||
Cost | 12,870 | |
Accumulated Amortization | (37) | |
Net | 12,833 | |
Below market in-place lease | ||
Liability | ||
Below market lease, cost | 4,955 | 2,330 |
Below market lease, accumulated amortization | (587) | (156) |
Below Market Lease, Net | 4,368 | 2,174 |
Above market ground lease | ||
Liability | ||
Cost | 701 | 701 |
Accumulated Amortization | (16) | (4) |
Net | $ 685 | $ 697 |
Intangibles (Details 2)
Intangibles (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
In-place leases | ||||
Intangibles | ||||
Amortization expense related to in-place leases | $ 4,253 | $ 1,002 | $ 10,124 | $ 2,724 |
Above market leases | ||||
Intangibles | ||||
Decrease of rental income | 742 | 86 | 1,671 | 205 |
Leasehold interest | ||||
Intangibles | ||||
Decrease of rental income | 15 | 44 | ||
Below market in-place lease | ||||
Intangibles | ||||
Increase of rental income | 167 | $ 9 | 431 | $ 10 |
Above market ground lease | ||||
Intangibles | ||||
Decrease (increase) of operating expense | 4 | 12 | ||
Below Market Ground Lease | ||||
Intangibles | ||||
Decrease (increase) of operating expense | $ 32 | $ 37 |
Intangibles (Details 3)
Intangibles (Details 3) $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Future aggregate net amortization of acquired lease intangibles (Net decrease in Revenue) | |
2,015 | $ (641) |
2,016 | (2,523) |
2,017 | (1,969) |
2,018 | (1,662) |
2,019 | (1,504) |
Thereafter | (7,113) |
Total | $ (15,412) |
Weighted average amortization period for lease intangible liability | 12 years |
Future aggregate net amortization of acquired lease intangibles (Net Increase in Expenses) | |
2,015 | $ 4,896 |
2,016 | 18,904 |
2,017 | 16,991 |
2,018 | 15,545 |
2,019 | 12,484 |
Thereafter | 62,942 |
Total | $ 131,762 |
Weighted average amortization period for lease intangibles | 7 years |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Other Assets, Unclassified [Abstract] | ||
Straight line rent receivable | $ 12,809 | $ 6,431 |
Lease inducements, net | 5,073 | 2,845 |
Escrows | 5,179 | 1,906 |
Earnest deposits | 1,333 | 2,343 |
Note receivable | 4,168 | |
Prepaid expenses and other | 5,389 | 2,281 |
Total | $ 33,951 | $ 15,806 |
Debt (Details)
Debt (Details) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015USD ($)properties | Dec. 31, 2014USD ($)properties | |
Debt | ||
Total mortgage debt | $ 94,461 | $ 78,105 |
Unsecured Debt | 473,000 | 138,000 |
Total principal | 567,461 | 216,105 |
Unamortized fair value adjustment | 734 | |
Total debt | 568,195 | 216,105 |
Mortgage notes, bearing fixed interest from 4.71% to 6.58% | ||
Debt | ||
Total mortgage debt | $ 90,164 | $ 73,706 |
Weighted average interest rate (as a percent) | 5.40% | 5.40% |
Number of properties included in collateralized | properties | 11 | 11 |
Net book value of properties included in the collateralized | $ 146,650 | $ 146,650 |
Mortgage notes, bearing fixed interest from 4.71% to 6.58% | Minimum | ||
Debt | ||
Interest rate (as a percent) | 4.70% | 4.70% |
Mortgage notes, bearing fixed interest from 4.71% to 6.58% | Maximum | ||
Debt | ||
Interest rate (as a percent) | 6.60% | 6.60% |
Mortgage note, bearing variable interest of LIBOR plus 2.75% | ||
Debt | ||
Total mortgage debt | $ 4,297 | $ 4,399 |
Number of properties included in collateralized | properties | 1 | 1 |
Net book value of properties included in the collateralized | $ 6,058 | $ 6,058 |
Mortgage note, bearing variable interest of LIBOR plus 2.75% | LIBOR | ||
Debt | ||
Reference rate (as a percent) | 2.80% | 2.80% |
Credit Agreement | ||
Debt | ||
Unsecured Debt | $ 473,000 | $ 138,000 |
Maximum borrowing capacity | $ 750,000 | $ 750,000 |
Credit Agreement | LIBOR | ||
Debt | ||
Reference rate (as a percent) | 1.20% | 1.20% |
Debt (Details 2)
Debt (Details 2) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2014 | Jul. 22, 2015 | Jul. 21, 2015 | |
Debt | ||||
Total principal | $ 567,461 | $ 216,105 | ||
Operating Partnership | LIBOR | Adjusted LIBOR Rate Loans and Letter of Credit | Consolidated Leverage Ratio, 35% | ||||
Debt | ||||
Variable rate basis | LIBOR | |||
Reference rate (as a percent) | 0.90% | |||
Operating Partnership | LIBOR | Adjusted LIBOR Rate Loans and Letter of Credit | Consolidated Leverage Ratio, >35% and 45% | ||||
Debt | ||||
Variable rate basis | LIBOR | |||
Reference rate (as a percent) | 0.90% | |||
Operating Partnership | LIBOR | Adjusted LIBOR Rate Loans and Letter of Credit | Consolidated Leverage Ratio, >45% and 45% | ||||
Debt | ||||
Variable rate basis | LIBOR | |||
Reference rate (as a percent) | 1.00% | |||
Operating Partnership | LIBOR | Adjusted LIBOR Rate Loans and Letter of Credit | Consolidated Leverage Ratio, >45% and 50% | ||||
Debt | ||||
Variable rate basis | LIBOR | |||
Reference rate (as a percent) | 1.20% | |||
Operating Partnership | LIBOR | Adjusted LIBOR Rate Loans and Letter of Credit | Consolidated Leverage Ratio, >50% and 55% | ||||
Debt | ||||
Variable rate basis | LIBOR | |||
Reference rate (as a percent) | 1.60% | |||
Operating Partnership | Base Rate | Base Rate Loans | Consolidated Leverage Ratio, 35% | ||||
Debt | ||||
Reference rate (as a percent) | 0.00% | |||
Operating Partnership | Base Rate | Base Rate Loans | Consolidated Leverage Ratio, >35% and 45% | ||||
Debt | ||||
Reference rate (as a percent) | 0.00% | |||
Operating Partnership | Base Rate | Base Rate Loans | Consolidated Leverage Ratio, >45% and 45% | ||||
Debt | ||||
Reference rate (as a percent) | 0.10% | |||
Operating Partnership | Base Rate | Base Rate Loans | Consolidated Leverage Ratio, >45% and 50% | ||||
Debt | ||||
Reference rate (as a percent) | 0.20% | |||
Operating Partnership | Base Rate | Base Rate Loans | Consolidated Leverage Ratio, >50% and 55% | ||||
Debt | ||||
Reference rate (as a percent) | 0.60% | |||
Credit Agreement | ||||
Debt | ||||
Maximum borrowing capacity | $ 750,000 | $ 750,000 | ||
Amount outstanding | 473,000 | |||
Current borrowing capacity | 178,000 | |||
Remaining borrowing capacity | $ 99,000 | |||
Credit Agreement | LIBOR | ||||
Debt | ||||
Reference rate (as a percent) | 1.20% | 1.20% | ||
Credit Agreement | Operating Partnership | ||||
Debt | ||||
Maximum borrowing capacity | $ 750,000 | $ 400,000 | ||
Term of extension option | 1 year | |||
Increase in maximum borrowing capacity | 350,000 | |||
Maximum borrowing capacity under accordion feature | $ 1,100,000 | |||
Interest rate at end of period (as a percent) | 2.05% | |||
Credit Agreement | Operating Partnership | Swingline loan | ||||
Debt | ||||
Maximum borrowing capacity as a percentage of maximum principal amount | 10.00% | |||
Minimum | Credit Agreement | Operating Partnership | LIBOR | ||||
Debt | ||||
Reference rate (as a percent) | 1.20% | |||
Maximum | Credit Agreement | Operating Partnership | ||||
Debt | ||||
Unused fee (as a percent) | 0.25% |
Debt (Details 3)
Debt (Details 3) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Debt Disclosure [Abstract] | |||||
Interest expense | $ 3,000 | $ 1,700 | $ 6,300 | $ 4,100 | |
Scheduled principal payments | |||||
2,015 | 560 | 560 | |||
2,016 | 9,752 | 9,752 | |||
2,017 | 40,629 | 40,629 | |||
2,018 | 1,265 | 1,265 | |||
2,019 | 493,081 | 493,081 | |||
Thereafter | 22,174 | 22,174 | |||
Total principal | $ 567,461 | $ 567,461 | $ 216,105 |
Stock-based Compensation (Detai
Stock-based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 07, 2014 | Jul. 24, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 |
Weighted Average Grant Date Fair Value | |||||||
Non-cash share compensation | $ 2,929 | $ 1,681 | |||||
2013 Plan | Restricted common shares | |||||||
Stock-based compensation | |||||||
Maximum number of shares authorized | 2,450,000 | 600,000 | |||||
Increase in number of common shares authorized for issuance | 1,850,000 | ||||||
Grant date value | $ 2,900 | $ 2,100 | $ 2,100 | ||||
Vesting period | 3 years | 1 year | |||||
Shares | |||||||
Non-vested at the beginning of the period (in shares) | 319,654 | ||||||
Granted (in shares) | 250,000 | 129,277 | 152,987 | ||||
Vested (in shares) | (169,259) | ||||||
Non-vested at the beginning of the period (in shares) | 279,672 | 279,672 | 319,654 | ||||
Weighted Average Grant Date Fair Value | |||||||
Non-vested at beginning of period (in dollars per share) | $ 12.60 | ||||||
Grant date value (in dollars per share) | $ 11.50 | 16.18 | |||||
Vested (in dollars per share) | 12.91 | ||||||
Non-vested at beginning of period (in dollars per share) | $ 14.07 | $ 14.07 | $ 12.60 | ||||
Non-cash share compensation | $ 700 | $ 600 | $ 2,200 | $ 1,500 | |||
Unrecognized compensation expense | $ 2,300 | $ 2,300 | |||||
Initial estimated cumulative forfeiture rate (as a percent) | 0.00% | ||||||
2013 Plan | Restricted common shares | Management | |||||||
Stock-based compensation | |||||||
Vesting period | 1 year | ||||||
2013 Plan | Restricted common shares | Trust Employees | |||||||
Stock-based compensation | |||||||
Vesting period | 3 years |
Stock-based Compensation (Det46
Stock-based Compensation (Details 2) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Stock-based compensation | ||||||
Non-cash share compensation | $ 2,929 | $ 1,681 | ||||
2013 Plan | Restricted Share Units | ||||||
Stock-based compensation | ||||||
Non-vested at the beginning of the period (in shares) | 55,680 | |||||
Granted (in shares) | 116,206 | 55,680 | 116,206 | |||
Non-vested at the beginning of the period (in shares) | 171,886 | 171,886 | ||||
Non-vested at beginning of period (in dollars per share) | $ 16.94 | |||||
Grant date value (in dollars per share) | $ 20.06 | 19.22 | ||||
Non-vested at beginning of period (in dollars per share) | $ 18.48 | $ 18.48 | ||||
Vesting percentage | 80.00% | |||||
Number of dividend equivalent included in award | 1 | |||||
Non-cash share compensation | $ 300 | $ 100 | $ 800 | $ 200 | ||
Unrecognized compensation expense | $ 2,000 | $ 2,000 | ||||
Share based compensation fair value assumptions | ||||||
Volatility | 20.70% | |||||
Expected term in years | 2 years 9 months 18 days | |||||
Risk-free rate | 1.14% | |||||
Share price (per share) | $ 15.87 | |||||
2013 Plan | Restricted Share Units | Trustees | ||||||
Stock-based compensation | ||||||
Service period | 2 years | |||||
2013 Plan | Restricted Share Units | Management | ||||||
Stock-based compensation | ||||||
Service period | 3 years | |||||
2013 Plan | Performance based RSU | ||||||
Stock-based compensation | ||||||
Vesting percentage | 20.00% | |||||
Performance conditions grant date fair value (in dollars per share) | $ 15.87 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) | Sep. 30, 2015USD ($)instruments |
Fair value measurements | |
Number of derivatives instruments | 2 |
Nonrecurring basis | |
Fair value measurements | |
Assets subject to impairment | $ | $ 0 |
Fair Value Measurements (Deta48
Fair Value Measurements (Details2 ) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Fair value of other financial instruments | ||
Real estate loans receivable | $ 28,979 | $ 15,876 |
Credit facility | (473,000) | (138,000) |
Carrying Amount | ||
Fair value of other financial instruments | ||
Real estate loans receivable | 28,979 | 15,876 |
Credit facility | (473,000) | (138,000) |
Mortgage debt | (95,195) | (78,105) |
Carrying Amount | Interest rates swaps | Recurring basis | ||
Fair value of other financial instruments | ||
Derivative liabilities | (3,468) | (233) |
Fair Value | ||
Fair value of other financial instruments | ||
Real estate loans receivable | 28,979 | 15,876 |
Credit facility | (473,000) | (138,000) |
Mortgage debt | (95,963) | (78,642) |
Fair Value | Interest rates swaps | Recurring basis | ||
Fair value of other financial instruments | ||
Derivative liabilities | $ (3,468) | $ (233) |
Tenant Operating Leases (Detail
Tenant Operating Leases (Details) $ in Thousands | Sep. 30, 2015USD ($) |
Future minimum rental payments on non-cancelable leases | |
2,015 | $ 28,744 |
2,016 | 113,979 |
2,017 | 110,771 |
2,018 | 105,654 |
2,019 | 101,245 |
Thereafter | 789,599 |
Total | $ 1,249,992 |
Rent Expense (Details)
Rent Expense (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015USD ($)properties | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)properties | Sep. 30, 2014USD ($) | |
Leases [Abstract] | ||||
Number of properties pursuant to parking lease | properties | 1 | 1 | ||
Number of properties pursuant to ground and parking leases | properties | 14 | 14 | ||
Maximum lease terms | 90 years | |||
Future minimum lease obligations under non-cancelable ground leases | ||||
2,015 | $ 403 | $ 403 | ||
2,016 | 1,629 | 1,629 | ||
2,017 | 1,666 | 1,666 | ||
2,018 | 1,708 | 1,708 | ||
2,019 | 1,751 | 1,751 | ||
Thereafter | 32,794 | 32,794 | ||
Total | 39,951 | 39,951 | ||
Rent expenses for parking and ground leases | $ 400 | $ 300 | $ 1,200 | $ 700 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Numerator for earnings per share - basic: | ||||
Net income (loss) | $ 3,983 | $ (2,251) | $ 6,832 | $ (6,409) |
Operating Partnership | (200) | 233 | (333) | 887 |
Partially owned properties | (79) | (76) | (255) | (226) |
Preferred distribution | (300) | 0 | (791) | 0 |
Numerator for earnings per share - basic | 3,404 | (2,094) | 5,453 | (5,748) |
Numerator for earnings per share - diluted: | ||||
Numerator for earnings per share - basic | 3,404 | (2,094) | 5,453 | (5,748) |
Operating Partnership net income | 200 | 333 | ||
Numerator for earnings per share - diluted | $ 3,604 | $ (2,094) | $ 5,786 | $ (5,748) |
Denominator for earnings per share - basic and diluted: | ||||
Denominator for earnings per share - basic | 71,034,747 | 36,313,644 | 69,040,121 | 27,980,408 |
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract] | ||||
Noncontrolling interest - Operating Partnership units | 3,829,930 | 3,676,395 | ||
Denominator for earnings per share - diluted shares | 75,104,821 | 36,313,644 | 73,040,846 | 27,980,408 |
Earnings per share - basic (in dollars per share) | $ 0.05 | $ (0.06) | $ 0.08 | $ (0.21) |
Earnings per share - diluted (in dollars per share) | $ 0.05 | $ (0.06) | $ 0.08 | $ (0.21) |
Restricted common shares | ||||
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract] | ||||
Effect of dilutive securities, Restricted shares and RSU | 123,343 | 194,640 | ||
Restricted Share Units | ||||
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract] | ||||
Effect of dilutive securities, Restricted shares and RSU | 116,801 | 129,690 |
Subsequent Events (Details)
Subsequent Events (Details) $ / shares in Units, $ in Thousands | Nov. 02, 2015USD ($) | Oct. 30, 2015USD ($) | Oct. 19, 2015USD ($)$ / sharesshares | Oct. 16, 2015USD ($) | Oct. 13, 2015USD ($)ft² | Jan. 21, 2015$ / sharesshares | Nov. 02, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jul. 31, 2015ft² | Mar. 26, 2015ft² |
Subsequent events | |||||||||||||
Common shares sold | shares | 18,975,000 | ||||||||||||
Common share price (in dollars per share) | $ / shares | $ 16.40 | ||||||||||||
Purchase price | $ 297,131 | ||||||||||||
Shares issued upon exercise of the underwriters' overallotment option | shares | 2,475,000 | ||||||||||||
Number of partnership units issued | shares | 18,975,000 | ||||||||||||
Operating Partnership | |||||||||||||
Subsequent events | |||||||||||||
Purchase price | $ 11,200 | $ 11,300 | $ 10,000 | ||||||||||
Medical Building | |||||||||||||
Subsequent events | |||||||||||||
Area of property (in square feet) | ft² | 26,783 | 20,329 | |||||||||||
Subsequent events | |||||||||||||
Subsequent events | |||||||||||||
Common shares sold | shares | 15,812,500 | ||||||||||||
Common share price (in dollars per share) | $ / shares | $ 15 | ||||||||||||
Shares issued upon exercise of the underwriters' overallotment option | shares | 2,062,500 | ||||||||||||
Proceeds from Issuance of Common Stock | $ 226,300 | ||||||||||||
Number of partnership units issued | shares | 15,812,500 | ||||||||||||
Subsequent events | Operating Partnership | |||||||||||||
Subsequent events | |||||||||||||
Purchase price | $ 53,455 | ||||||||||||
Subsequent events | Medical office building condominium unit | Operating Partnership | AL & FL | |||||||||||||
Subsequent events | |||||||||||||
Purchase price | $ 23,805 | ||||||||||||
Area of property (in square feet) | ft² | 240,000 | ||||||||||||
Subsequent events | Medical Building | Operating Partnership | Kansas City, MO | |||||||||||||
Subsequent events | |||||||||||||
Purchase price | $ 4,500 | ||||||||||||
Subsequent events | Medical Building | Operating Partnership | Johnstown, CO | |||||||||||||
Subsequent events | |||||||||||||
Purchase price | $ 9,100 | ||||||||||||
Subsequent events | Medical Building | Operating Partnership | Waldorf, MD | |||||||||||||
Subsequent events | |||||||||||||
Purchase price | $ 11,550 | ||||||||||||
Subsequent events | Medical Building | Operating Partnership | Great Falls, MT | |||||||||||||
Subsequent events | |||||||||||||
Purchase price | $ 4,500 | ||||||||||||
Amount of agreement to acquire a building | $ 26,300 |