Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 31, 2019 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 001-36007 | |
Entity Registrant Name | PHYSICIANS REALTY TRUST | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 46-2519850 | |
Entity Address, Address Line One | 309 N. Water Street, Suite 500 | |
Entity Address, City or Town | Milwaukee | |
Entity Address, State or Province | WI | |
Entity Address, Postal Zip Code | 53202 | |
City Area Code | 414 | |
Local Phone Number | 367-5600 | |
Title of 12(b) Security | Common stock, $0.01 par value per share | |
Trading Symbol | DOC | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 188,342,348 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001574540 | |
Current Fiscal Year End Date | --12-31 | |
Operating Partnership | ||
Entity Information [Line Items] | ||
Entity File Number | 333-205034-01 | |
Entity Registrant Name | PHYSICIANS REALTY L.P. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 80-0941870 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Shell Company | false | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001583994 | |
Current Fiscal Year End Date | --12-31 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Investment properties: | ||
Land and improvements | $ 226,295 | $ 211,253 |
Building and improvements | 3,715,866 | 3,623,962 |
Tenant improvements | 50,624 | 36,497 |
Acquired lease intangibles | 398,218 | 452,384 |
Gross real estate property | 4,391,003 | 4,324,096 |
Accumulated depreciation | (516,930) | (411,052) |
Net real estate property | 3,874,073 | 3,913,044 |
Right-of-use lease assets, net | 128,490 | |
Real estate loans receivable | 94,211 | 55,659 |
Investments in unconsolidated entities | 1,331 | 1,330 |
Net real estate investments | 4,098,105 | 3,970,033 |
Cash and cash equivalents | 8,724 | 19,161 |
Tenant receivables, net | 8,209 | 8,881 |
Other assets | 132,659 | 144,759 |
Total assets | 4,247,697 | 4,142,834 |
Liabilities: | ||
Credit facility | 512,851 | 457,388 |
Notes payable | 967,573 | 966,961 |
Mortgage debt | 83,801 | 108,504 |
Accounts payable | 6,691 | 3,886 |
Dividends and distributions payable | 45,412 | 43,821 |
Accrued expenses and other liabilities | 70,173 | 76,282 |
Lease liabilities | 63,335 | 0 |
Acquired lease intangibles, net | 6,474 | 13,585 |
Total liabilities | 1,756,310 | 1,670,427 |
Redeemable noncontrolling interest - Series A Preferred Units and partially owned properties | 27,736 | 24,747 |
Equity: | ||
Common shares, $0.01 par value, 500,000,000 common shares authorized, 188,340,416 and 182,416,007 common shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively | 1,883 | 1,824 |
Additional paid-in capital | 2,903,459 | 2,791,555 |
Accumulated deficit | (526,195) | (428,307) |
Accumulated other comprehensive income | 3,137 | 14,433 |
Total shareholders’ equity | 2,382,284 | 2,379,505 |
Noncontrolling interests: | ||
Operating Partnership | 81,052 | 67,477 |
Partially owned properties | 315 | 678 |
Total noncontrolling interests | 81,367 | 68,155 |
Total equity | 2,463,651 | 2,447,660 |
Total liabilities and equity | 4,247,697 | 4,142,834 |
Operating Partnership | ||
Investment properties: | ||
Land and improvements | 226,295 | 211,253 |
Building and improvements | 3,715,866 | 3,623,962 |
Tenant improvements | 50,624 | 36,497 |
Acquired lease intangibles | 398,218 | 452,384 |
Gross real estate property | 4,391,003 | 4,324,096 |
Accumulated depreciation | (516,930) | (411,052) |
Net real estate property | 3,874,073 | 3,913,044 |
Right-of-use lease assets, net | 128,490 | |
Real estate loans receivable | 94,211 | 55,659 |
Investments in unconsolidated entities | 1,331 | 1,330 |
Net real estate investments | 4,098,105 | 3,970,033 |
Cash and cash equivalents | 8,724 | 19,161 |
Tenant receivables, net | 8,209 | 8,881 |
Other assets | 132,659 | 144,759 |
Total assets | 4,247,697 | 4,142,834 |
Liabilities: | ||
Credit facility | 512,851 | 457,388 |
Notes payable | 967,573 | 966,961 |
Mortgage debt | 83,801 | 108,504 |
Accounts payable | 6,691 | 3,886 |
Dividends and distributions payable | 45,412 | 43,821 |
Accrued expenses and other liabilities | 70,173 | 76,282 |
Lease liabilities | 63,335 | |
Acquired lease intangibles, net | 6,474 | 13,585 |
Total liabilities | 1,756,310 | 1,670,427 |
Redeemable noncontrolling interest - Series A Preferred Units and partially owned properties | 27,736 | 24,747 |
Equity: | ||
General partners’ capital, 188,340,416 and 182,416,007 units issued and outstanding as of September 30, 2019 and December 31, 2018, respectively | 2,379,147 | 2,365,072 |
Limited partners’ capital, 6,408,142 and 5,182,784 units issued and outstanding as of September 30, 2019 and December 31, 2018, respectively | 81,052 | 67,477 |
Accumulated other comprehensive income | 3,137 | 14,433 |
Total partners’ capital | 2,463,336 | 2,446,982 |
Noncontrolling interests: | ||
Noncontrolling interest - partially owned properties | 315 | 678 |
Total capital | 2,463,651 | 2,447,660 |
Total liabilities and equity | $ 4,247,697 | $ 4,142,834 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Common stock, shares outstanding (in shares) | 185,315,334 | 182,416,007 |
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) | 185,315,334 | 182,416,007 |
Operating Partnership | ||
General partners' capital account, units issued (in units) | 188,340,416 | 182,416,007 |
General partners' capital account, units outstanding (in units) | 188,340,416 | 182,416,007 |
Limited partners' capital account, units issued (in units) | 6,408,142 | 5,182,784 |
Limited partners' capital account, units outstanding (in units) | 6,408,142 | 5,182,784 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | ||
Revenues: | |||||
Rental revenues | $ 78,820 | $ 224,206 | |||
Rental revenues | $ 76,461 | $ 235,740 | |||
Expense recoveries | 26,295 | 76,508 | |||
Expense recoveries | 23,629 | 72,225 | |||
Interest income on real estate loans and other | 2,478 | 4,938 | 7,150 | 9,275 | |
Total revenues | 107,593 | 105,028 | 307,864 | 317,240 | |
Expenses: | |||||
Interest expense | 16,185 | 16,326 | 48,507 | 49,974 | |
General and administrative | 8,110 | 6,593 | 24,758 | 22,156 | |
Operating expenses | 31,504 | 29,870 | 94,348 | 90,670 | |
Depreciation and amortization | 36,614 | 42,723 | 109,348 | 119,024 | |
Total expenses | 92,413 | 95,512 | 276,961 | 281,824 | |
Income before equity in income of unconsolidated entities and gain on sale of investment properties, net: | 15,180 | 9,516 | 30,903 | 35,416 | |
Equity in income of unconsolidated entities | 30 | 28 | 90 | 85 | |
Gain on sale of investment properties, net | 409 | 14,227 | 3,442 | 11,664 | |
Net income | 15,619 | 23,771 | 34,435 | 47,165 | |
Net income attributable to noncontrolling interests: | |||||
Operating Partnership | (434) | (656) | (939) | (1,300) | |
Net income attributable to noncontrolling interests - partially owned properties | [1] | (136) | (119) | (410) | (374) |
Net income attributable to controlling interest | 15,049 | 22,996 | 33,086 | 45,491 | |
Preferred distributions | (314) | (284) | (892) | (1,055) | |
Net income attributable to common shareholders | $ 14,735 | $ 22,712 | $ 32,194 | $ 44,436 | |
Net income per share: | |||||
Basic (in dollars per share) | $ 0.08 | $ 0.12 | $ 0.17 | $ 0.24 | |
Diluted (in dollars per share) | $ 0.08 | $ 0.12 | $ 0.17 | $ 0.24 | |
Weighted average common shares: | |||||
Weighted average common shares - basic (in shares) | 186,328,500 | 182,076,513 | 184,760,335 | 181,963,693 | |
Weighted average common shares - diluted (in shares) | 191,980,222 | 187,473,230 | 190,489,654 | 187,622,109 | |
Dividends and distributions declared per common share and OP Unit (in dollars per share) | $ 0.23 | $ 0.23 | $ 0.69 | $ 0.69 | |
Operating Partnership | |||||
Revenues: | |||||
Rental revenues | $ 78,820 | $ 224,206 | |||
Rental revenues | $ 76,461 | $ 235,740 | |||
Expense recoveries | 26,295 | 76,508 | |||
Expense recoveries | 23,629 | 72,225 | |||
Interest income on real estate loans and other | 2,478 | 4,938 | 7,150 | 9,275 | |
Total revenues | 107,593 | 105,028 | 307,864 | 317,240 | |
Expenses: | |||||
Interest expense | 16,185 | 16,326 | 48,507 | 49,974 | |
General and administrative | 8,110 | 6,593 | 24,758 | 22,156 | |
Operating expenses | 31,504 | 29,870 | 94,348 | 90,670 | |
Depreciation and amortization | 36,614 | 42,723 | 109,348 | 119,024 | |
Total expenses | 92,413 | 95,512 | 276,961 | 281,824 | |
Income before equity in income of unconsolidated entities and gain on sale of investment properties, net: | 15,180 | 9,516 | 30,903 | 35,416 | |
Equity in income of unconsolidated entities | 30 | 28 | 90 | 85 | |
Gain on sale of investment properties, net | 409 | 14,227 | 3,442 | 11,664 | |
Net income | 15,619 | 23,771 | 34,435 | 47,165 | |
Net income attributable to noncontrolling interests: | |||||
Net income attributable to noncontrolling interests - partially owned properties | [2] | (136) | (119) | (410) | (374) |
Net income attributable to controlling interest | 15,483 | 23,652 | 34,025 | 46,791 | |
Preferred distributions | (314) | (284) | (892) | (1,055) | |
Net income attributable to common shareholders | $ 15,169 | $ 23,368 | $ 33,133 | $ 45,736 | |
Net income per share: | |||||
Earnings per unit - basic (in dollars per share) | $ 0.08 | $ 0.12 | $ 0.17 | $ 0.24 | |
Earnings per unit - diluted (in dollars per share) | $ 0.08 | $ 0.12 | $ 0.17 | $ 0.24 | |
Weighted average common shares: | |||||
Weighted average common units - basic (in shares) | 191,864,611 | 187,367,538 | 190,159,069 | 187,342,453 | |
Weighted average common units - diluted (in shares) | 191,980,222 | 187,473,230 | 190,489,654 | 187,622,109 | |
Distributions declared per common unit (dollars per share) | $ 0.23 | $ 0.23 | $ 0.69 | $ 0.69 | |
[1] | Includes amounts attributable to redeemable noncontrolling interests. | ||||
[2] | Includes amounts attributable to redeemable noncontrolling interests. |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Net income | $ 15,619 | $ 23,771 | $ 34,435 | $ 47,165 |
Other comprehensive (loss) income: | ||||
Change in fair value of interest rate swap agreements, net | (2,262) | 914 | (11,296) | 6,533 |
Total other comprehensive (loss) income | (2,262) | 914 | (11,296) | 6,533 |
Comprehensive income | 13,357 | 24,685 | 23,139 | 53,698 |
Comprehensive income attributable to noncontrolling interests - Operating Partnership | (322) | (679) | (567) | (1,484) |
Comprehensive income attributable to noncontrolling interests - partially owned properties | (136) | (119) | (410) | (374) |
Comprehensive income attributable to common shareholders | 12,899 | 23,887 | 22,162 | 51,840 |
Operating Partnership | ||||
Net income | 15,619 | 23,771 | 34,435 | 47,165 |
Other comprehensive (loss) income: | ||||
Change in fair value of interest rate swap agreements, net | (2,262) | 914 | (11,296) | 6,533 |
Total other comprehensive (loss) income | (2,262) | 914 | (11,296) | 6,533 |
Comprehensive income | 13,357 | 24,685 | 23,139 | 53,698 |
Comprehensive income attributable to noncontrolling interests - partially owned properties | (136) | (119) | (410) | (374) |
Comprehensive income attributable to common shareholders | $ 13,221 | $ 24,566 | $ 22,729 | $ 53,324 |
Consolidated Statement of Equit
Consolidated Statement of Equity - USD ($) $ in Thousands | Total | Par Value | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Shareholders’ Equity | Operating Partnership Noncontrolling Interest | Partially Owned Properties Noncontrolling Interest | Total Noncontrolling Interests |
Balance at Dec. 31, 2017 | $ 2,547,634 | $ 1,814 | $ 2,772,823 | $ (315,417) | $ 13,952 | $ 2,473,172 | $ 73,844 | $ 618 | $ 74,462 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net proceeds from sale of common shares | 5,316 | 3 | 5,313 | 5,316 | |||||
Restricted share award grants, net | 933 | 2 | 872 | 59 | 933 | ||||
Conversion of OP Units | 0 | 126 | 126 | (126) | (126) | ||||
Dividends/distributions declared | (43,126) | (41,910) | (41,910) | (1,216) | (1,216) | ||||
Preferred distributions | (487) | (487) | (487) | ||||||
Distributions | (43) | (43) | (43) | ||||||
Change in market value of Redeemable Noncontrolling Interest | 1,470 | 194 | 1,276 | 1,470 | |||||
Change in fair value of interest rate swap agreements | 4,298 | 4,298 | 4,298 | ||||||
Net income | 11,265 | 10,908 | 10,908 | 313 | 44 | 357 | |||
Adjustment for Noncontrolling Interests ownership in Operating Partnership | 0 | (712) | (712) | 712 | 712 | ||||
Balance at Mar. 31, 2018 | 2,527,260 | 1,819 | 2,778,616 | (345,571) | 18,250 | 2,453,114 | 73,527 | 619 | 74,146 |
Balance at Dec. 31, 2017 | 2,547,634 | 1,814 | 2,772,823 | (315,417) | 13,952 | 2,473,172 | 73,844 | 618 | 74,462 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Change in fair value of interest rate swap agreements | 6,533 | ||||||||
Balance at Sep. 30, 2018 | 2,482,631 | 1,822 | 2,785,797 | (396,127) | 20,485 | 2,411,977 | 69,993 | 661 | 70,654 |
Balance at Mar. 31, 2018 | 2,527,260 | 1,819 | 2,778,616 | (345,571) | 18,250 | 2,453,114 | 73,527 | 619 | 74,146 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net proceeds from sale of common shares | 654 | 654 | 654 | ||||||
Restricted share award grants, net | 2,011 | 1,986 | 25 | 2,011 | |||||
Purchase of OP Units | (303) | (303) | (303) | ||||||
Conversion of OP Units | 0 | 1 | 816 | 817 | (817) | (817) | |||
Dividends/distributions declared | (43,119) | (41,927) | (41,927) | (1,192) | (1,192) | ||||
Preferred distributions | (284) | (284) | (284) | 0 | 0 | ||||
Distributions | (43) | (43) | (43) | ||||||
Change in market value of Redeemable Noncontrolling Interest | (39) | (39) | (39) | ||||||
Change in fair value of interest rate swap agreements | 1,321 | 1,321 | 1,321 | ||||||
Net income | 11,967 | 11,587 | 11,587 | 331 | 49 | 380 | |||
Adjustment for Noncontrolling Interests ownership in Operating Partnership | 0 | (166) | (166) | 166 | 166 | ||||
Balance at Jun. 30, 2018 | 2,499,425 | 1,820 | 2,781,867 | (376,170) | 19,571 | 2,427,088 | 71,712 | 625 | 72,337 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net proceeds from sale of common shares | 2,084 | 2 | 2,082 | 2,084 | |||||
Restricted share award grants, net | 1,767 | 0 | 1,989 | (222) | 1,767 | ||||
Purchase of OP Units | (1,252) | (1,252) | (1,252) | ||||||
Conversion of OP Units | 0 | 0 | 384 | 384 | (384) | (384) | |||
Dividends/distributions declared | (43,141) | (41,973) | (41,973) | (1,168) | (1,168) | ||||
Preferred distributions | (284) | (284) | (284) | ||||||
Distributions | (36) | (36) | (36) | ||||||
Change in market value of Redeemable Noncontrolling Interest | (570) | (96) | (474) | (570) | |||||
Change in fair value of interest rate swap agreements | 914 | 914 | 914 | ||||||
Net income | 23,724 | 22,996 | 22,996 | 656 | 72 | 728 | |||
Adjustment for Noncontrolling Interests ownership in Operating Partnership | 0 | (429) | (429) | 429 | 429 | ||||
Balance at Sep. 30, 2018 | 2,482,631 | 1,822 | 2,785,797 | (396,127) | 20,485 | 2,411,977 | 69,993 | 661 | 70,654 |
Balance at Dec. 31, 2018 | 2,447,660 | 1,824 | 2,791,555 | (428,307) | 14,433 | 2,379,505 | 67,477 | 678 | 68,155 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net proceeds from sale of common shares | 31,020 | 17 | 31,003 | 31,020 | |||||
Restricted share award grants, net | 355 | 2 | 640 | (287) | 355 | ||||
Purchase of OP Units | (105) | (105) | (105) | ||||||
Dividends/distributions declared | (43,694) | (42,536) | (42,536) | (1,158) | (1,158) | ||||
Preferred distributions | (284) | (284) | (284) | ||||||
Distributions | (47) | (47) | (47) | ||||||
Change in market value of Redeemable Noncontrolling Interest | (290) | (290) | 0 | (290) | |||||
Change in fair value of interest rate swap agreements | (3,476) | (3,476) | (3,476) | ||||||
Net income | 11,426 | 11,057 | 11,057 | 305 | 64 | 369 | |||
Adjustment for Noncontrolling Interests ownership in Operating Partnership | 0 | (149) | (149) | 149 | 149 | ||||
Balance at Mar. 31, 2019 | 2,442,326 | 1,843 | 2,822,520 | (460,357) | 10,957 | 2,374,963 | 66,668 | 695 | 67,363 |
Balance at Dec. 31, 2018 | 2,447,660 | 1,824 | 2,791,555 | (428,307) | 14,433 | 2,379,505 | 67,477 | 678 | 68,155 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Change in fair value of interest rate swap agreements | (11,296) | ||||||||
Balance at Sep. 30, 2019 | 2,463,651 | 1,883 | 2,903,459 | (526,195) | 3,137 | 2,382,284 | 81,052 | 315 | 81,367 |
Balance at Mar. 31, 2019 | 2,442,326 | 1,843 | 2,822,520 | (460,357) | 10,957 | 2,374,963 | 66,668 | 695 | 67,363 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net proceeds from sale of common shares | 18,316 | 10 | 18,306 | 18,316 | |||||
Restricted share award grants, net | 2,668 | 2,646 | 22 | 2,668 | |||||
Purchase of OP Units | (717) | (717) | (717) | ||||||
Dividends/distributions declared | (43,912) | (42,674) | (42,674) | (1,238) | (1,238) | ||||
Preferred distributions | (294) | (294) | (294) | ||||||
Issuance of OP Units in connection with acquisition | 6,488 | 6,488 | 6,488 | ||||||
Distributions | (47) | (47) | (47) | ||||||
Change in market value of Redeemable Noncontrolling Interest | (529) | 155 | (684) | (529) | |||||
Buyout of Noncontrolling Interest - partially owned properties | (540) | (122) | (122) | (418) | (418) | ||||
Change in fair value of interest rate swap agreements | (5,558) | (5,558) | (5,558) | ||||||
Net income | 7,242 | 6,980 | 6,980 | 200 | 62 | 262 | |||
Adjustment for Noncontrolling Interests ownership in Operating Partnership | 0 | 1,560 | 1,560 | (1,560) | (1,560) | ||||
Balance at Jun. 30, 2019 | 2,425,443 | 1,853 | 2,845,065 | (497,007) | 5,399 | 2,355,310 | 69,841 | 292 | 70,133 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net proceeds from sale of common shares | 52,094 | 30 | 52,064 | 52,094 | |||||
Restricted share award grants, net | 2,249 | 2,398 | (149) | 2,249 | |||||
Purchase of OP Units | (89) | (89) | (89) | ||||||
Dividends/distributions declared | (44,645) | (43,369) | (43,369) | (1,276) | (1,276) | ||||
Preferred distributions | (314) | (314) | (314) | ||||||
Issuance of OP Units in connection with acquisition | 16,110 | 16,110 | 16,110 | ||||||
Contribution | 572 | ||||||||
Distributions | (40) | (40) | (40) | ||||||
Change in market value of Redeemable Noncontrolling Interest | (441) | (36) | (405) | (441) | |||||
Buyout of Noncontrolling Interest - partially owned properties | (572) | 0 | 0 | (572) | (572) | ||||
Change in fair value of interest rate swap agreements | (2,262) | (2,262) | (2,262) | ||||||
Net income | 15,546 | 15,049 | 15,049 | 434 | 63 | 497 | |||
Adjustment for Noncontrolling Interests ownership in Operating Partnership | 0 | 3,968 | 3,968 | (3,968) | (3,968) | ||||
Balance at Sep. 30, 2019 | $ 2,463,651 | $ 1,883 | $ 2,903,459 | $ (526,195) | $ 3,137 | $ 2,382,284 | $ 81,052 | $ 315 | $ 81,367 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash Flows from Operating Activities: | ||
Net income | $ 34,435 | $ 47,165 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization | 109,348 | 119,024 |
Amortization of deferred financing costs | 1,806 | 1,808 |
Amortization of lease inducements and above/below-market lease intangibles | 3,638 | 3,518 |
Straight-line rental revenue/expense | (6,581) | (17,270) |
Amortization of discount on unsecured senior notes | 449 | 430 |
Amortization of above market assumed debt | (47) | (47) |
Gain on sale of investment properties, net | (3,442) | (11,664) |
Equity in income of unconsolidated entities | (90) | (85) |
Distributions from unconsolidated entities | 89 | 86 |
Change in fair value of derivative | 0 | (17) |
Provision for bad debts | 2,158 | 82 |
Non-cash share compensation | 7,861 | 6,675 |
Net change in fair value of contingent consideration | 0 | (50) |
Change in operating assets and liabilities: | ||
Tenant receivables | (2,399) | 3,891 |
Other assets | (3,808) | (2,799) |
Accounts payable | 2,805 | (7,199) |
Accrued expenses and other liabilities | (6,099) | 1,916 |
Net cash provided by operating activities | 140,123 | 145,464 |
Cash Flows from Investing Activities: | ||
Proceeds on sales of investment properties | 14,819 | 217,222 |
Acquisition of investment properties, net | (90,555) | (242,827) |
Escrowed cash - acquisition deposits/earnest deposits | (1,233) | 2,780 |
Capital expenditures on investment properties | (29,627) | (26,358) |
Issuance of real estate loans receivable | (39,001) | (2,000) |
Repayment of real estate loans receivable | 1,155 | 13,582 |
Issuance of note receivable | 0 | (20,385) |
Leasing commissions | (1,953) | (2,561) |
Lease inducements | (9) | (73) |
Net cash used in investing activities | (146,404) | (60,620) |
Cash Flows from Financing Activities: | ||
Net proceeds from sale of common shares | 101,430 | 8,054 |
Proceeds from credit facility borrowings | 304,000 | 345,000 |
Repayment of credit facility borrowings | (250,000) | (246,000) |
Principal payments on mortgage debt | (24,721) | (51,840) |
Debt issuance costs | (75) | (4,267) |
OP Unit distributions - General Partner | (127,511) | (126,088) |
OP Unit distributions - Limited Partner | (3,562) | (3,640) |
Preferred OP Units distributions - Limited Partner | (862) | (627) |
Contributions from noncontrolling interest | 572 | 0 |
Distributions to noncontrolling interests - partially owned properties | (440) | (396) |
Payments of employee taxes for withheld stock-based compensation shares | (2,076) | (1,749) |
Purchase of Limited Partner Units | (911) | (1,555) |
Net cash used in financing activities | (4,156) | (83,108) |
Net (decrease) increase in cash and cash equivalents | (10,437) | 1,736 |
Cash and cash equivalents, beginning of period | 19,161 | 2,727 |
Cash and cash equivalents, end of period | 8,724 | 4,463 |
Supplemental disclosure of cash flow information - interest paid during the period | 56,965 | 53,370 |
Supplemental disclosure of noncash activity - change in fair value of interest rate swap agreements | (11,296) | 6,533 |
Supplemental disclosure of noncash activity - issuance of OP Units and Series A Preferred Units in connection with acquisitions | 25,200 | 22,651 |
Operating Partnership | ||
Cash Flows from Operating Activities: | ||
Net income | 34,435 | 47,165 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization | 109,348 | 119,024 |
Amortization of deferred financing costs | 1,806 | 1,808 |
Amortization of lease inducements and above/below-market lease intangibles | 3,638 | 3,518 |
Straight-line rental revenue/expense | (6,581) | (17,270) |
Amortization of discount on unsecured senior notes | 449 | 430 |
Amortization of above market assumed debt | (47) | (47) |
Gain on sale of investment properties, net | (3,442) | (11,664) |
Equity in income of unconsolidated entities | (90) | (85) |
Distributions from unconsolidated entities | 89 | 86 |
Change in fair value of derivative | 0 | (17) |
Provision for bad debts | 2,158 | 82 |
Non-cash share compensation | 7,861 | 6,675 |
Net change in fair value of contingent consideration | 0 | (50) |
Change in operating assets and liabilities: | ||
Tenant receivables | (2,399) | 3,891 |
Other assets | (3,808) | (2,799) |
Accounts payable | 2,805 | (7,199) |
Accrued expenses and other liabilities | (6,099) | 1,916 |
Net cash provided by operating activities | 140,123 | 145,464 |
Cash Flows from Investing Activities: | ||
Proceeds on sales of investment properties | 14,819 | 217,222 |
Acquisition of investment properties, net | (90,555) | (242,827) |
Escrowed cash - acquisition deposits/earnest deposits | (1,233) | 2,780 |
Capital expenditures on investment properties | (29,627) | (26,358) |
Issuance of real estate loans receivable | (39,001) | (2,000) |
Repayment of real estate loans receivable | 1,155 | 13,582 |
Issuance of note receivable | 0 | (20,385) |
Leasing commissions | (1,953) | (2,561) |
Lease inducements | (9) | (73) |
Net cash used in investing activities | (146,404) | (60,620) |
Cash Flows from Financing Activities: | ||
Net proceeds from sale of common shares | 101,430 | 8,054 |
Proceeds from credit facility borrowings | 304,000 | 345,000 |
Repayment of credit facility borrowings | (250,000) | (246,000) |
Principal payments on mortgage debt | (24,721) | (51,840) |
Debt issuance costs | (75) | (4,267) |
OP Unit distributions - General Partner | (127,511) | (126,088) |
OP Unit distributions - Limited Partner | (3,562) | (3,640) |
Preferred OP Units distributions - Limited Partner | (862) | (627) |
Contributions from noncontrolling interest | 572 | 0 |
Distributions to noncontrolling interests - partially owned properties | (440) | (396) |
Payments of employee taxes for withheld stock-based compensation shares | (2,076) | (1,749) |
Purchase of Limited Partner Units | (911) | (1,555) |
Net cash used in financing activities | (4,156) | (83,108) |
Net (decrease) increase in cash and cash equivalents | (10,437) | 1,736 |
Cash and cash equivalents, beginning of period | 19,161 | 2,727 |
Cash and cash equivalents, end of period | 8,724 | 4,463 |
Supplemental disclosure of cash flow information - interest paid during the period | 56,965 | 53,370 |
Supplemental disclosure of noncash activity - change in fair value of interest rate swap agreements | (11,296) | 6,533 |
Supplemental disclosure of noncash activity - issuance of OP Units and Series A Preferred Units in connection with acquisitions | $ 25,200 | $ 22,651 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Capital - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Jan. 01, 2019 | |
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Cumulative effect of changes in accounting standard | $ (239) | ||||||||
Contributions | $ 572 | ||||||||
Distributions | (40) | $ (47) | $ (47) | $ (36) | $ (43) | $ (43) | |||
Buyout of Noncontrolling Interest - partially owned properties | (572) | (540) | |||||||
Change in fair value of interest rate swap agreements | (2,262) | (5,558) | (3,476) | 914 | 1,321 | 4,298 | $ (11,296) | $ 6,533 | |
Net income | 15,546 | 7,242 | 11,426 | 23,724 | 11,967 | 11,265 | |||
Operating Partnership | |||||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Beginning balance | 2,425,443 | 2,442,326 | 2,447,660 | 2,499,425 | 2,527,260 | 2,547,634 | 2,447,660 | 2,547,634 | |
Cumulative effect of changes in accounting standard | (239) | ||||||||
Net proceeds from sale of Trust common shares and issuance of common units | 52,094 | 18,316 | 31,020 | 2,084 | 654 | 5,316 | |||
Trust restricted share award grants, net | 2,249 | 2,668 | 355 | 1,767 | 2,011 | 933 | |||
Purchase of OP Units | (89) | (717) | (105) | (1,252) | (303) | ||||
Conversion of OP Units | 0 | 0 | 0 | ||||||
OP Units - distributions | (44,645) | (43,912) | (43,694) | (43,141) | (43,119) | (43,126) | |||
Preferred distributions | (314) | (294) | (284) | (284) | (284) | (487) | |||
Issuance of OP Units in connection with acquisitions | 16,110 | 6,488 | |||||||
Contributions | 572 | ||||||||
Distributions | (40) | (47) | (47) | (36) | (43) | (43) | |||
Change in market value of Redeemable Limited Partners | (441) | (529) | (290) | (96) | (39) | 194 | |||
Buyout of Noncontrolling Interest - partially owned properties | (572) | (540) | (474) | 1,276 | |||||
Change in fair value of interest rate swap agreements | (2,262) | (5,558) | (3,476) | 914 | 1,321 | 4,298 | (11,296) | 6,533 | |
Net income | 15,546 | 7,242 | 11,426 | 23,724 | 11,967 | 11,265 | |||
Adjustments for Limited Partners ownership in Operating Partnership | 0 | 0 | 0 | 0 | 0 | 0 | |||
Ending balance | 2,463,651 | 2,425,443 | 2,442,326 | 2,482,631 | 2,499,425 | 2,527,260 | 2,463,651 | 2,482,631 | |
Operating Partnership | Accumulated Other Comprehensive Income | |||||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Beginning balance | 5,399 | 10,957 | 14,433 | 19,571 | 18,250 | 13,952 | 14,433 | 13,952 | |
Buyout of Noncontrolling Interest - partially owned properties | 0 | 0 | |||||||
Change in fair value of interest rate swap agreements | (2,262) | (5,558) | (3,476) | 914 | 1,321 | 4,298 | |||
Ending balance | 3,137 | 5,399 | 10,957 | 20,485 | 19,571 | 18,250 | 3,137 | 20,485 | |
Operating Partnership | General Partner | |||||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Beginning balance | 2,350,033 | 2,364,006 | 2,365,072 | 2,407,517 | 2,434,864 | 2,459,220 | 2,365,072 | 2,459,220 | |
Cumulative effect of changes in accounting standard | (239) | ||||||||
Net proceeds from sale of Trust common shares and issuance of common units | 52,094 | 18,316 | 31,020 | 2,084 | 654 | 5,316 | |||
Trust restricted share award grants, net | 2,249 | 2,668 | 355 | 1,767 | 2,011 | 933 | |||
Conversion of OP Units | 384 | 817 | 126 | ||||||
OP Units - distributions | (43,369) | (42,674) | (42,536) | (41,973) | (41,927) | (41,910) | |||
Preferred distributions | (314) | (294) | (284) | (284) | (284) | (487) | |||
Change in market value of Redeemable Limited Partners | (441) | (529) | (290) | (96) | (39) | 194 | |||
Buyout of Noncontrolling Interest - partially owned properties | 0 | 0 | (474) | 1,276 | |||||
Net income | 15,049 | 6,980 | 11,057 | 22,996 | 11,587 | 10,908 | |||
Adjustments for Limited Partners ownership in Operating Partnership | 3,846 | 1,560 | (149) | (429) | (166) | (712) | |||
Ending balance | 2,379,147 | 2,350,033 | 2,364,006 | 2,391,492 | 2,407,517 | 2,434,864 | 2,379,147 | 2,391,492 | |
Operating Partnership | Limited Partner | |||||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Beginning balance | 69,719 | 66,668 | 67,477 | 71,712 | 73,527 | 73,844 | 67,477 | 73,844 | |
Purchase of OP Units | (89) | (717) | (105) | (1,252) | (303) | ||||
Conversion of OP Units | (384) | (817) | (126) | ||||||
OP Units - distributions | (1,276) | (1,238) | (1,158) | (1,168) | (1,192) | (1,216) | |||
Issuance of OP Units in connection with acquisitions | 16,110 | 6,488 | |||||||
Buyout of Noncontrolling Interest - partially owned properties | 0 | (122) | |||||||
Net income | 434 | 200 | 305 | 656 | 331 | 313 | |||
Adjustments for Limited Partners ownership in Operating Partnership | (3,846) | (1,560) | 149 | 429 | 166 | 712 | |||
Ending balance | 81,052 | 69,719 | 66,668 | 69,993 | 71,712 | 73,527 | 81,052 | 69,993 | |
Operating Partnership | Total Partners’ Capital | |||||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Beginning balance | 2,425,151 | 2,441,631 | 2,446,982 | 2,498,800 | 2,526,641 | 2,547,016 | 2,446,982 | 2,547,016 | |
Cumulative effect of changes in accounting standard | $ (239) | ||||||||
Net proceeds from sale of Trust common shares and issuance of common units | 52,094 | 18,316 | 31,020 | 2,084 | 654 | 5,316 | |||
Trust restricted share award grants, net | 2,249 | 2,668 | 355 | 1,767 | 2,011 | 933 | |||
Purchase of OP Units | (89) | (717) | (105) | (1,252) | (303) | ||||
OP Units - distributions | (44,645) | (43,912) | (43,694) | (43,141) | (43,119) | (43,126) | |||
Preferred distributions | (314) | (294) | (284) | (284) | (284) | (487) | |||
Issuance of OP Units in connection with acquisitions | 16,110 | 6,488 | |||||||
Change in market value of Redeemable Limited Partners | (441) | (529) | (290) | (96) | (39) | 194 | |||
Buyout of Noncontrolling Interest - partially owned properties | 0 | (122) | (474) | 1,276 | |||||
Change in fair value of interest rate swap agreements | (2,262) | (5,558) | (3,476) | 914 | 1,321 | 4,298 | |||
Net income | 15,483 | 7,180 | 11,362 | 23,652 | 11,918 | 11,221 | |||
Ending balance | 2,463,336 | 2,425,151 | 2,441,631 | 2,481,970 | 2,498,800 | 2,526,641 | 2,463,336 | 2,481,970 | |
Partially Owned Properties Noncontrolling Interest | |||||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Distributions | (40) | (47) | (47) | (36) | (43) | (43) | |||
Buyout of Noncontrolling Interest - partially owned properties | (572) | (418) | |||||||
Net income | 63 | 62 | 64 | 72 | 49 | 44 | |||
Partially Owned Properties Noncontrolling Interest | Operating Partnership | |||||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Beginning balance | 292 | 695 | 678 | 625 | 619 | 618 | 678 | 618 | |
Contributions | 572 | ||||||||
Distributions | (40) | (47) | (47) | (36) | (43) | (43) | |||
Buyout of Noncontrolling Interest - partially owned properties | (572) | (418) | |||||||
Net income | 63 | 62 | 64 | 72 | 49 | 44 | |||
Ending balance | $ 315 | $ 292 | $ 695 | $ 661 | $ 625 | $ 619 | $ 315 | $ 661 |
Organization and Business
Organization and Business | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | Organization and Business The Trust was organized in the state of Maryland on April 9, 2013. As of September 30, 2019 , the Trust was authorized to issue up to 500,000,000 common shares of beneficial interest, par value $0.01 per share. The Trust filed a Registration Statement on Form S-11 with the Securities and Exchange Commission (the “Commission”) with respect to a proposed underwritten initial public offering (the “IPO”) and completed the IPO of its common shares and commenced operations on July 24, 2013. The Trust contributed the net proceeds from the IPO to the Operating Partnership. The Trust and the Operating Partnership are managed and operated as one entity, and the Trust has no significant assets other than its investment in 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. Therefore, the assets and liabilities of the Trust and the Operating Partnership are the same. The Trust is a self-managed REIT formed primarily to acquire, selectively develop, own, and manage healthcare properties that are leased to physicians, hospitals, and healthcare delivery systems. ATM Program On August 5, 2016, the Trust and the Operating Partnership entered into separate At Market Issuance Sales Agreements (the “Sales Agreements”) with each of KeyBanc Capital Markets Inc., Credit Agricole Securities (USA) Inc., JMP Securities LLC, Raymond James & Associates, Inc., and Stifel Nicolaus & Company, Incorporated (the “Agents”), pursuant to which the Trust may issue and sell, from time to time, its common shares having an aggregate offering price of up to $300.0 million , through the Agents (the “ATM Program”). In accordance with the Sales Agreements, the Trust may offer and sell its common shares through any of the Agents, from time to time, by any method deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended, which includes sales made directly on the New York Stock Exchange or other existing trading market, or sales made to or through a market maker. With the Trust’s express written consent, sales may also be made in negotiated transactions or any other method permitted by law. During the quarterly periods ended March 31, 2019, June 30, 2019, and September 30, 2019 , 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, 2019 1,681,928 $ 18.61 $ 30,986 Quarterly period ended June 30, 2019 971,000 18.66 17,935 Quarterly period ended September 30, 2019 3,020,711 17.41 52,070 Year to date 5,673,639 $ 17.98 $ 100,991 As of September 30, 2019 , the Trust has $61.7 million remaining available under the ATM Program. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
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, 2019 and 2018 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 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 and the Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2018 , filed with the Commission on February 28, 2019. Principles of Consolidation GAAP requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). ASC 810 broadly defines a VIE as an entity in which either (i) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. The Company identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity. The Company consolidates its investment in a VIE when it determines that it is the VIE’s primary beneficiary. The Company 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 Company performs this analysis on an ongoing basis. For property holding entities not determined to be VIEs, the Company consolidates such entities in which the Operating Partnership owns 100% of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest. All intercompany balances and transactions are eliminated in consolidation. For entities in which the Operating Partnership owns less than 100% of the equity interest, the Operating Partnership 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 Operating Partnership records a noncontrolling interest representing equity held by noncontrolling interests. Noncontrolling Interests The Company presents the portion of any equity it does not own in entities that it controls (and thus consolidates) as noncontrolling interests and classifies such interests as a component of consolidated equity, separate from the Company’s total shareholders’ equity, on the consolidated balance sheets. Operating Partnership: Noncontrolling interests in the Company include OP Units held by other investors. Net income or loss is allocated to noncontrolling interests (limited partners) 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. On April 4, 2019 , the Operating Partnership partially funded a property acquisition by issuing an aggregate of 346,989 OP Units valued at approximately $6.5 million . The acquisition had a total purchase price of approximately $14.8 million . On September 27, 2019 , the Operating Partnership partially funded a property acquisition by issuing an aggregate of 910,032 OP Units valued at approximately $16.1 million . The acquisition had a total purchase price of approximately $34.6 million . As of September 30, 2019 , the Trust held a 96.7% interest in the Operating Partnership. As the sole general partner and the majority interest holder, the Trust consolidates the financial position and results of operations of the Operating Partnership. Holders of OP Units may not transfer their units without the Trust’s prior written consent, as general partner of the Operating Partnership. Beginning on the first anniversary of the issuance of OP Units to the respective holders, OP Unit holders may tender their units for redemption by the Operating Partnership in exchange for cash equal to the market price of the Trust’s common shares at the time of redemption or for unregistered common shares on a one-for- one basis. Such selection to pay cash or issue common shares to satisfy an OP Unit holder’s redemption request is solely within the control of the Trust. Accordingly, the Trust presents the OP Units of the Operating Partnership held by investors other than the Trust as noncontrolling interests within equity in the consolidated balance sheets. Partially Owned Properties: The Trust and Operating Partnership reflect noncontrolling interests in partially owned properties on the balance sheet for the portion of consolidated properties that are not wholly owned by the Company. The earnings or losses from those properties attributable to the noncontrolling interests are reflected as noncontrolling interests in partially owned properties in the consolidated statements of income. On May 6, 2019 , the Operating Partnership acquired the remaining noncontrolling interest associated with a previously acquired medical office portfolio in Minnesota. The Operating Partnership paid approximately $0.5 million as consideration for the redemption. On August 23, 2019 , the Operating Partnership acquired the remaining noncontrolling interest associated with a previously acquired medical office building in Texas. The Operating Partnership paid approximately $0.6 million as consideration for the redemption. Redeemable Noncontrolling Interests - Series A Preferred Units and Partially Owned Properties On February 5, 2015, the Company entered into a Second Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”) which provides for the designation and issuance of the 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 one year from the issuance date. 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 Company classifies the Series A Preferred Units in the mezzanine section of its consolidated balance sheets. The Series A Preferred Units were evaluated for embedded features that should be bifurcated and separately accounted for as a freestanding derivative. The Company determined that the Series A Preferred Units contained features that require bifurcation. The Company records the carrying amount of the redeemable noncontrolling interests, less the value of the embedded derivative, at the greater of the carrying value or redemption value in the consolidated balance sheets. On January 9, 2018, the acquisition of the HealthEast Clinic & Specialty Center (“Hazelwood Medical Commons Transaction”) was partially funded with the issuance of 104,172 Series A Preferred Units, with a value of $22.7 million . 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 sheets. In connection with the Hazelwood Medical Commons Transaction, the Operating Partnership agreed to pay additional purchase consideration under an earn-out agreement with the seller if certain lease-up requirements were achieved before January 8, 2023. On June 19, 2019 , the Operating Partnership funded, with the issuance of 8,529 Series A Preferred Units, an earn-out payment valued at $1.9 million on the date of issuance. On August 1, 2019 , the Operating Partnership funded, with the issuance of 3,409 Series A Preferred Units, a second earn-out payment valued at $0.7 million on the date of issuance. Both of these earn-outs payments were capitalized to the cost basis of the property. As of September 30, 2019 , there were 116,110 Series A Preferred Units outstanding, with an embedded derivative value of $4.5 million . The embedded derivative value is classified in accrued expenses and other liabilities on the consolidated balance sheets. In connection with the Company’s acquisitions of the medical office building, ambulatory surgery center, and hospital located on the Great Falls Hospital campus in Great Falls, Montana, physicians affiliated with the sellers retained non-controlling interests which may, at the holders’ option, be redeemed at any time after May 1, 2023. 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 sheets. The Trust records the carrying amount of the redeemable noncontrolling interests at the greater of the carrying value or redemption value. Dividends and Distributions On September 20, 2019 , the Trust announced that its Board of Trustees authorized and the Trust declared a cash dividend of $0.23 per common share for the quarterly period ended September 30, 2019 . The distribution was paid on October 18, 2019 to common shareholders and OP Unit holders of record as of the close of business on October 3, 2019 . All distributions paid by the Operating Partnership are declared and paid at the same time as dividends are distributed by the Trust to common shareholders. It has been the Operating Partnership’s policy to declare quarterly distributions so as to allow the Trust to comply with applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), governing REITs. The declaration and payment of quarterly distributions remains subject to the review and approval of the Trust’s Board of Trustees. The Company’s shareholders are entitled to reinvest all or a portion of any cash distribution on their shares of the Company’s common stock by participating in the Dividend Reinvestment and Share Purchase Plan (“DRIP”), subject to the terms of the plan. Tax Status of Dividends and Distributions The Company’s distributions of current and accumulated earnings and profits for U.S. federal income tax purposes generally are taxable to shareholders as ordinary income. Distributions in excess of these earnings and profits generally are treated as a non-taxable reduction of the shareholders’ basis in the shares to the extent thereof (non-dividend distributions) and thereafter as taxable gain. Any cash distributions received by an OP Unit holder in respect of its OP Units generally will not be taxable to such OP Unit holder for U.S. federal income tax purposes, to the extent that such distribution does not exceed the OP Unit holder’s basis in its OP Units. Any such distribution will instead reduce the OP Unit holder’s basis in its OP Units (and OP Unit holders will be subject to tax on the taxable income allocated to them by the Operating Partnership in respect of their OP Units when such income is earned by the Operating Partnership, with such income allocation increasing the OP Unit holders’ basis in their OP Units). Purchases of Investment Properties With the adoption of ASU 2017-01 in January 2018, the Company’s acquisitions of investment properties and the majority of its future investments will be accounted for as asset acquisitions and will result in the capitalization of acquisition costs. The purchase price, inclusive of acquisition costs, will be allocated to tangible and intangible assets and liabilities based on their relative fair values. Tangible assets primarily consist of land and buildings and improvements. Intangible assets primarily consist of above- or below-market leases, in place leases, above- or below-market debt assumed, right-of-use assets, and lease liabilities. Any future contingent consideration will be recorded when the contingency is resolved. The determination of the fair value requires the Company to make certain estimates and assumptions. The determination of fair value involves the use of significant judgment and estimation. The Company 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 generally includes the assistance of a third party appraiser. The Company estimates the fair value of an acquired asset on an “as-if-vacant” basis and its value is depreciated in equal amounts over the course of its estimated remaining useful life. The Company 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 an internal analysis of recently acquired and existing comparable properties within the Company’s portfolio. The value of above- or below-market leases is estimated based on the present value (using a discount 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 plus the term of any renewal options that the lessee would be economically compelled to exercise. 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. 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 Company 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 Company approximates based on the rate it would expect to incur on a replacement instrument on the date of acquisition, and recognizes 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 Company recognizes the acquired assets and assumed liabilities based on 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. With the adoption of ASU 2016-02, the Company has recognized right-of-use assets and corresponding lease liabilities as of January 1, 2019. The right-of-use asset is based upon the recognized lease liabilities, adjusted for previously recognized prepaid lease payments and intangible assets and liabilities. The lease liability is measured at the present value of remaining lease payments of its operating leases for which it is the lessee, including ground, office, and equipment leases, discounted at a rate based on the Company’s incremental borrowing rate. Impairment of Intangible and Long-Lived Assets The Company 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 Company 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 Company 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 Company recognizes an impairment loss at the time it makes any such determination. If the Company 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. With the adoption of ASU 2016-02, Leases, on January 1, 2019, the Company periodically evaluates the right-of-use assets for impairment as detailed above. The Company did no t record any impairment charges in the three and nine month periods ended September 30, 2019 or 2018 . Investments in Unconsolidated Entities The Company 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 Company’s share of the investee’s earnings or losses is included in its consolidated statements of income. 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 twelve mezzanine loans, two construction loans, and two term loans as of September 30, 2019 . Generally, each mezzanine loan is collateralized by an ownership interest in the respective borrower, each term loan is secured by a mortgage of a related medical office building, and the construction loans are secured by mortgages on the land and the improvements as constructed. Interest income on the loans is recognized as earned based on the terms of the loans subject to evaluation of collectability risks and is included in the Company’s consolidated statements of income. On a quarterly basis, the Company evaluates the collectability of its loan portfolio, including related interest income receivable, and establishes a reserve for loan losses, if necessary. No such losses have been recognized during the three and nine months ended September 30, 2019 or 2018 . Rental Revenue Rental revenue is recognized on a straight-line basis over the terms of the related leases when collectability is probable. 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 $70.9 million and $64.2 million as of September 30, 2019 and December 31, 2018 , respectively. If the Company determines that collectability of straight-line rents is not probable, rental revenue is limited to the lease payments collected from the lessee, including any variable lease payments. In accordance with ASU 2016-02, Leases, Topic 842 (“ASC 842”), if the collectability of a lease changes after the commencement date, any difference between lease income that would have been recognized and the lease payments shall be recognized as an adjustment to lease income. On January 1, 2019 the Company adopted ASC 842 and applied the prospective approach consolidating bad debt as an adjustment to rental revenues. Bad debt recognized as an adjustment to rental revenues was $0.2 million and $9.2 million for the three and nine months ended September 30, 2019 , respectively. Net bad debt recoveries of $0.2 million and $0.1 million was recorded in the three and nine months ended September 30, 2018 , respectively, and was reported in operating expenses. 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 on a straight-line basis 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 in the period the applicable expenses are incurred. The reimbursements are recorded gross, as the Company is generally the primary obligor with respect to real estate taxes and purchasing goods and services from third-party suppliers, has discretion in selecting the supplier, and bears the credit risk of tenant reimbursement. The Company 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 Company does not recognize operating expense or expense recoveries. Derivative Instruments When the Company has derivative instruments embedded in other contracts, it records them either as an asset or a liability measured at their fair value unless they qualify for a normal purchase or normal sale exception. When specific hedge accounting criteria are not met or if the Company does not elect to apply for hedge accounting, changes in the Company’s derivative instruments’ fair value are recognized currently in earnings. As a result of the Company’s adoption of ASU 2017-12 as of January 1, 2019, if hedge accounting is applied to a derivative instrument, the entire change in the fair value of its derivatives designated and qualified as cash flow hedges are recorded in accumulated other comprehensive income (“AOCI’) on the consolidated balance sheets and are subsequently reclassified into earnings in the period in which the hedged forecasted transaction affects earnings. To manage interest rate risk for certain of its variable-rate debt, the Company uses interest rate swaps as part of its risk management strategy. These derivatives are designed to mitigate the risk of future interest rate increases by providing a fixed interest rate for a limited, pre-determined period of time. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of September 30, 2019 , the Company had five outstanding interest rate swap contracts that are designated as cash flow hedges of interest rate risk. For presentational purposes, they are shown as one derivative due to the identical nature of their economic terms. Further detail is provided in Note 7 (Derivatives) . 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. Although the Trust continues to qualify for taxation as a REIT, in various instances, the Trust is subject to state and local taxes on its income and property, and federal income and excise taxes on its undistributed income. As discussed in Note 1 (Organization and Business) , the Trust conducts substantially all of its operations through the Operating Partnership. As a partnership, the Operating Partnership generally is not liable for federal income taxes. The income and loss from the operations of the Operating Partnership is included in the tax returns of its partners, including the Trust, who are responsible for reporting their allocable share of the partnership income and loss. Accordingly, no provision for income taxes has been made on the accompanying consolidated financial statements. Tenant Receivables, Net Tenant receivables primarily represent amounts accrued and unpaid from tenants in accordance with the terms of the respective leases, subject to the Company’s revenue recognition policy. The Company reviews receivables monthly and writes-off the remaining balance when, in the opinion of management, collection of substantially all remaining payments is not probable. When the Company determines substantially all remaining lease payments are not probable of collection, it recognizes a reduction of rental revenues and expense recoveries for all outstanding balances, including accrued straight-line rent receivables. Any subsequent receipts are recognized as rental revenues and expense recoveries in the period received. The adoption of ASC 842 resulted in an adjustment to the Company’s opening accumulated deficit balance of $0.2 million , associated with tenant receivables where collection of substantially all operating lease payments is not probable as of January 1, 2019. 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, and the valuation of financial instruments. Actual results could differ from these estimates. Contingent Liabilities Certain of the Company’s acquisitions provide for additional consideration to the seller in the form of an earn-out associated with lease-up contingencies. The Company recognizes the contingent liabilities only if certain parameters or other substantive contingencies are met, at which time the consideration becomes payable. Segment Reporting Under the provision of Codification Topic 280, Segment Reporting , the Company has determined that it has one reportable segment with activities related to leasing and managing healthcare properties. New Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers , which creates a new Topic, Accounting Standards Codification Topic 606. The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company adopted ASU 2014-09 as of January 1, 2018 under the modified retrospective approach. Based on the Company’s assessment, it has identified all of its revenue streams and concluded rental income from leasing arrangements represents a substantial portion of its revenue. Income from leasing arrangements is specifically excluded from Topic 606 and was evaluated with the adoption of ASU 2016-02, Leases . Therefore, the impact of adopting ASU 2014-09 was minimal on the Company’s current recognition and presentation of non-lease revenue. In February 2016, the FASB issued ASU 2016-02, Leases . The update amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The standard provides the option of a modified retrospective transition approach or a cumulative effect for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. In July 2018, the FASB issued ASU 2018-11, Leases, Targeted Improvements . ASU 2018-11 provides entities with a transition method option to not restate comparative periods presented, but to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. In addition, ASU 2018-11 provides entities with a practical expedient allowing lessors to not separate non-lease components from the associated lease components when certain criteria are met. ASU 2016-02 and ASU 2018-11 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. On January 1, 2019 the Company, both as a lessor and a lessee, adopted ASU 2016-02 and ASU 2018-11 using the cumulative-effect transition method. The cumulative effect adjustment to the opening balance of retained earnings was $0.2 million . Upon adoption of the new leasing standard, the Company recognized right-of-use assets and corresponding lease liabilities of $126.7 million and $61.0 million , respectively, on its consolidated balance sheets as of January 1, 2019. The right-of-use asset is based upon the recognized lease liabilities, adjusted for previously recognized prepaid lease payments and intangible assets and liabilities. The lease liability is measured at the present value of remaining lease payments of its operating leases for which it is the lessee, including ground, office, and equipment leases, discounted at a rate based on the Company’s incremental borrowing rate. The Company elected to apply the package of practical expedients applicable to the Company for transition of leases in effect at adoption. This allowed the Company to forgo reassessing (1) whether a contract contains a lease, (2) classification of leases, and (3) whether capitalized cos |
Investment and Disposition Acti
Investment and Disposition Activity | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Investment and Disposition Activity | Investment and Disposition Activity During the nine months ended September 30, 2019 , the Company completed acquisitions of 10 operating healthcare properties located in 4 states for an aggregate purchase price of approximately $105.2 million . In addition, the Company purchased a newly-constructed addition to an existing building owned by the Company in Tennessee for $4.3 million . During the nine months ended September 30, 2019 , the Company also funded $39.0 million of loan transactions, including two construction loans with an aggregate commitment amount of $44.3 million with funding to date of $14.1 million , four mezzanine loans for an aggregate $17.9 million , and one term loan for $7.0 million . The Company paid $3.2 million of additional purchase consideration on 2 properties under earn-out agreements and purchased 2 noncontrolling interests for $1.1 million . These transactions result in total investment activity of approximately $152.8 million for the nine months ended September 30, 2019 . Investment activity for the three months ended September 30, 2019 is summarized below: Property Location Acquisition Date Purchase Price (in thousands) Rockwall II MOB (1) Rockwall, TX July 26, 2019 $ 24,006 Earnout - Hazelwood Medical Commons (2) Maplewood, MN August 1, 2019 740 Shadeland Station Portfolio (2 MOBs) Indianapolis, IN August 2, 2019 23,296 NCI Buyout - Rockwall II MOB (1) Rockwall, TX August 23, 2019 572 Shell Ridge Portfolio (5 MOBs) (3) Walnut Creek, CA September 27, 2019 34,625 Loan Investments Various Various 11,945 $ 95,184 (1) On July 26, 2019 the Company completed the acquisition of a 97.5% interest in Rockwall II MOB . The Company acquired the remaining interest on August 23, 2019 . (2) The Company completed the settlement of an acquisition related earn-out payment upon the execution of a lease. This payment was funded with the issuance of 3,409 Series A Preferred Units and is considered to be additional purchase price. (3) The Operating Partnership partially funded the acquisition by issuing an aggregate of 910,032 OP Units valued at approximately $16.1 million on the date of issuance. The following table summarizes the acquisition date fair values of the assets acquired and the liabilities assumed, which the Company determined using Level 2 and Level 3 inputs (in thousands): 1st Quarter 2nd Quarter 3rd Quarter Total Land $ — $ 5,491 $ 10,466 $ 15,957 Building and improvements 7,587 16,466 64,769 88,822 In-place lease intangibles 434 4,651 7,827 12,912 Above market in-place lease intangibles — — 136 136 Below market in-place lease intangibles — (96 ) — (96 ) Right-of-use asset — — 630 630 Mortgage escrow (3,718 ) — — (3,718 ) Issuance of OP Units — (6,488 ) (16,110 ) (22,598 ) Issuance of Series A Preferred Units — (1,862 ) (740 ) (2,602 ) Net assets acquired $ 4,303 $ 18,162 $ 66,978 $ 89,443 Dispositions During the nine months ended September 30, 2019 , the Company sold 3 medical office facilities for approximately $15.3 million and recognized a net gain on the sale of approximately $3.4 million . The following table summarizes revenues and net income related to the disposed properties for the periods presented (in thousands): Three Months Ended Nine Months Ended 2019 2018 2019 2018 Revenues $ 60 $ 328 $ 540 $ 977 Income before net gain on sale of investment properties $ 9 $ 70 $ 169 $ 209 Gain on sale of investment properties 409 — 3,442 — Net income $ 418 $ 70 $ 3,611 $ 209 |
Intangibles
Intangibles | 9 Months Ended |
Sep. 30, 2019 | |
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, 2019 and December 31, 2018 (in thousands): September 30, 2019 December 31, 2018 Cost Accumulated Amortization Net Cost Accumulated Amortization Net Assets In-place leases $ 351,947 $ (137,246 ) $ 214,701 $ 340,428 $ (111,500 ) $ 228,928 Above-market leases 45,559 (16,799 ) 28,760 45,568 (13,621 ) 31,947 Leasehold interest 712 (287 ) 425 712 (242 ) 470 Below-market ground leases (1) — — — 65,676 (2,194 ) 63,482 Right-of-use lease assets 130,011 (1,521 ) 128,490 — — — Total $ 528,229 $ (155,853 ) $ 372,376 $ 452,384 $ (127,557 ) $ 324,827 Liabilities Below-market leases $ 14,455 $ (7,981 ) $ 6,474 $ 14,654 $ (6,768 ) $ 7,886 Above-market ground leases (1) — — — 5,965 (266 ) 5,699 Lease liabilities 63,697 (362 ) 63,335 — — — Total $ 78,152 $ (8,343 ) $ 69,809 $ 20,619 $ (7,034 ) $ 13,585 (1) Above- and below-market ground leases are included in the right-of-use asset as of January 1, 2019 due to the implementation of ASU 2016-02, Leases . Further detail is provided in Note 2 (Summary of Significant Accounting Policies) . The following is a summary of acquired lease intangible amortization for the three and nine month periods ended September 30, 2019 and 2018 , (in thousands): Three Months Ended Nine Months Ended 2019 2018 2019 2018 Amortization expense related to in-place leases $ 8,890 $ 16,274 $ 27,138 $ 38,251 Decrease of rental income related to above-market leases 1,105 1,075 3,321 3,992 Decrease of rental income related to leasehold interest 15 15 45 44 Increase of rental income related to below-market leases 429 615 1,509 2,109 Decrease of operating expense related to above-market ground leases (1) 35 33 104 104 Increase in operating expense related to below-market ground leases (1) 306 255 913 745 (1) Above- and below-market ground leases are included in the right-of-use asset as of January 1, 2019 due to the implementation of ASU 2016-02, Leases . Further detail is provided in Note 2 (Summary of Significant Accounting Policies) . For the three months ended September 30, 2019 , the Company wrote off in-place lease assets of approximately $0.2 million with accumulated amortization of $0.1 million , for a net loss of approximately $0.1 million . For the nine months ended September 30, 2019 , the Company wrote off in-place lease assets of approximately $1.3 million with accumulated amortization of $0.7 million , for a net loss of approximately $0.6 million . In addition, the Company wrote off below-market lease liabilities of approximately $0.3 million with accumulated amortization of $0.2 million , for a net gain of approximately $0.1 million . Future aggregate net amortization of the acquired lease intangibles as of September 30, 2019 , is as follows (in thousands): Net Decrease in Revenue Net Increase in Expenses 2019 $ (680 ) $ 9,248 2020 (2,728 ) 35,038 2021 (2,658 ) 32,538 2022 (2,207 ) 28,640 2023 (1,915 ) 25,753 Thereafter (12,523 ) 148,639 Total $ (22,711 ) $ 279,856 As of September 30, 2019 , the weighted average amortization period for asset lease intangibles and liability lease intangibles is 25 and 40 years, respectively. The increase in weighted average amortization periods since December 31, 2018 is due to the implementation of ASU 2016-02, Leases. Further detail is provided in Note 2 (Summary of Significant Accounting Policies) . |
Other Assets
Other Assets | 9 Months Ended |
Sep. 30, 2019 | |
Other Assets, Unclassified [Abstract] | |
Other Assets | Other Assets Other assets consisted of the following as of September 30, 2019 and December 31, 2018 (in thousands): September 30, December 31, Straight line rent receivable, net $ 70,877 $ 64,245 Note receivable 21,795 20,628 Lease inducements, net 12,283 13,233 Prepaid expenses 10,237 16,017 Leasing commissions, net 7,400 6,221 Interest rate swap 3,767 15,121 Escrows 1,793 5,534 Other 4,507 3,760 Total $ 132,659 $ 144,759 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Debt The following is a summary of debt as of September 30, 2019 and December 31, 2018 (in thousands): September 30, December 31, Fixed interest mortgage notes (1) $ 77,263 $ 101,832 Variable interest mortgage note (2) 6,677 6,830 Total mortgage debt 83,940 108,662 $850 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.10%, due September 2022 269,000 215,000 $400 million senior unsecured notes bearing fixed interest of 4.30%, due March 2027 400,000 400,000 $350 million senior unsecured notes bearing fixed interest of 3.95%, due January 2028 350,000 350,000 $250 million unsecured term borrowing bearing fixed interest of 2.32%, due June 2023 (3) 250,000 250,000 $150 million senior unsecured notes bearing fixed interest of 4.03% to 4.74%, due January 2023 to 2031 150,000 150,000 $75 million senior unsecured notes bearing fixed interest of 4.09% to 4.24%, due August 2025 to 2027 75,000 75,000 Total principal 1,577,940 1,548,662 Unamortized deferred financing costs (8,229 ) (9,920 ) Unamortized discounts (5,637 ) (6,086 ) Unamortized fair value adjustments 151 197 Total debt $ 1,564,225 $ 1,532,853 (1) Fixed interest mortgage notes bearing interest from 3.00% to 5.50% , due in 2020, 2021, 2022, and 2024, with a weighted average interest rate of 4.44% and 4.26% as of September 30, 2019 and December 31, 2018 , respectively. The notes are collateralized by five properties with a net book value of $170.8 million and $174.2 million as of September 30, 2019 and December 31, 2018 , respectively. (2) Variable interest mortgage note bears variable interest of LIBOR plus 2.75% , for an interest rate of 4.79% and 5.21% as of September 30, 2019 and December 31, 2018 , respectively. The note is due in 2028 and is collateralized by one property with a net book value of $8.7 million as of September 30, 2019 and December 31, 2018 . (3) The Trust’s borrowings under the term loan feature of the Credit Agreement bear interest at a rate which is determined by the Trust’s credit rating, currently equal to LIBOR + 1.25% . The Trust has entered into a pay-fixed receive-variable interest rate swap, fixing the LIBOR component of this rate at 1.07% . On August 7, 2018 , the Operating Partnership, as borrower, and the Trust, as guarantor, executed a Second Amended and Restated Credit Agreement (the “Credit Agreement”) which extended the maturity date of the revolving credit facility under the Credit Agreement to September 18, 2022 and reduced the interest rate margin applicable to borrowings. The Credit Agreement includes unsecured revolving credit facility of $850 million and contains a term loan feature of $250 million , bringing total borrowing capacity to $1.1 billion . The Credit Agreement also 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 $500 million , subject to customary terms and conditions, resulting in a maximum borrowing capacity of $1.6 billion . The revolving credit facility under the Credit Agreement also includes a one -year extension option. Borrowings under the Credit Agreement bear interest on the outstanding principal amount at an adjusted LIBOR rate, which is based on the Trust’s investment grade rating under the Credit Agreement. As of September 30, 2019 , the Trust had an investment grade rating of Baa3 from Moody’s and BBB- from S&P. As such, borrowings under the revolving credit facility of the Credit Agreement accrue interest on the outstanding principal at a rate of LIBOR + 1.10% . The Credit Agreement includes a facility fee equal to 0.25% per annum, which is also determined by the Trust’s investment grade rating. On July 7, 2016, the Operating Partnership borrowed $250.0 million under the 7 -year term loan feature of the Credit Agreement. Pursuant to the Credit Agreement, borrowings under the term loan feature of 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 + 1.25% . The Trust simultaneously entered into a pay-fixed receive-variable rate swap for the full borrowing amount, fixing the LIBOR component of the borrowing rate to 1.07% , for a current all-in fixed rate of 2.32% . Both the borrowing and pay-fixed receive-variable swap have a maturity date of June 10, 2023 . 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 Trust’s investment grade rating as follows: Credit Rating Margin for Revolving Loans: Adjusted LIBOR Rate Loans and Letter of Credit Fee Margin for Revolving Loans: Base Rate Loans Margin for Term Loans: Adjusted LIBOR Rate Loans and Letter of Credit Fee Margin for Term Loans: Base Rate Loans At Least A- or A3 LIBOR + 0.775% — % LIBOR + 0.85% — % At Least BBB+ or Baa1 LIBOR + 0.825% — % LIBOR + 0.90% — % At Least BBB or Baa2 LIBOR + 0.90% — % LIBOR + 1.00% — % At Least BBB- or Baa3 LIBOR + 1.10% 0.10 % LIBOR + 1.25% 0.25 % Below BBB- or Baa3 LIBOR + 1.45% 0.45 % LIBOR + 1.65% 0.65 % 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, grant liens, or make distributions. The Company may, at any time, voluntarily prepay any revolving or term loan under the Credit Agreement in whole or in part without premium or penalty. As of September 30, 2019 , the Company was in compliance with all financial covenants related to the Credit Agreement. The Credit Agreement includes customary representations and warranties by the Trust and the Operating Partnership and imposes customary covenants on the Operating Partnership and the Trust. 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. As of September 30, 2019 , the Company had $269.0 million of borrowings outstanding under its unsecured revolving credit facility and $250.0 million of borrowings outstanding under the term loan feature of the Credit Agreement. The Company also has a letter of credit for $8.5 million with no outstanding balance as of September 30, 2019 . As defined by the Credit Agreement, $572.5 million is available to borrow without adding additional properties to the unencumbered borrowing base of assets. Notes Payable As of September 30, 2019 , the Company had $975.0 million aggregate principal amount of senior notes issued and outstanding by the Operating Partnership, comprised of $15.0 million maturing in 2023, $25.0 million maturing in 2025, $70.0 million maturing in 2026, $425.0 million maturing in 2027, $395.0 million maturing in 2028, and $45.0 million maturing in 2031. Certain properties have mortgage debt that contains financial covenants. As of September 30, 2019 , the Trust was in compliance with all mortgage debt financial covenants. Scheduled principal payments due on debt as of September 30, 2019 , are as follows (in thousands): 2019 $ 482 2020 25,470 2021 8,289 2022 289,818 2023 266,000 Thereafter 987,881 Total Payments $ 1,577,940 As of September 30, 2019 , the Company had total consolidated indebtedness of approximately $1.6 billion . The weighted average interest rate on consolidated indebtedness was 3.74% (based on the 30-day LIBOR rate as of September 30, 2019 , of 2.04% ). For the three month periods ended September 30, 2019 and 2018 , the Company incurred interest expense on its debt, exclusive of deferred financing cost amortization, of $15.6 million and $16.5 million , respectively. For the nine month periods ending September 30, 2019 and 2018 , the Company incurred interest expense on its debt, exclusive of deferred financing cost amortization, of $46.7 million and $50.1 million , respectively. |
Derivatives
Derivatives | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Instrument Detail [Abstract] | |
Derivatives | Derivatives In the normal course of business, a variety of financial instruments are used to manage or hedge interest rate risk. The Company has implemented ASC 815, Derivatives and Hedging ("ASC 815"), which establishes accounting and reporting standards requiring that all derivatives, including certain derivative instruments embedded in other contracts, be recorded as either an asset or a liability measured at their fair value unless they qualify for a normal purchase or normal sales exception. When specific hedge accounting criteria are not met, ASC 815 requires that changes in a derivative’s fair value be recognized currently in earnings. Changes in the fair market values of the Company’s derivative instruments are recorded in the consolidated statements of income if such derivatives do not qualify for, or the Company does not elect to apply for, hedge accounting. As a result of the Company’s adoption of ASU 2017-12 as of January 1, 2019, the entire change in the fair value of its derivatives designated and qualified as cash flow hedges are recorded in AOCI on the consolidated balance sheets and are subsequently reclassified into earnings in the period in which the hedged forecasted transaction affects earnings. Additionally, as a result of the adoption ASU 2017-12, the Company no longer discloses the ineffective portion of the change in fair value of its derivatives financial instruments designated as hedges. To manage interest rate risk for certain of its variable-rate debt, the Company uses interest rate swaps as part of its risk management strategy. These derivatives are designed to mitigate the risk of future interest rate increases by providing a fixed interest rate for a limited, pre-determined period of time. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of September 30, 2019 , the Company had five outstanding interest rate swap contracts that are designated as cash flow hedges of interest rate risk. For presentational purposes, they are shown as one derivative due to the identical nature of their economic terms. The following table summarizes the location and aggregate fair value of the interest rate swaps on the Company’s consolidated balance sheets (in thousands): Total notional amount $ 250,000 Effective fixed interest rate (1) 2.32 % Effective date 7/7/2016 Maturity date 6/10/2023 Asset balance at September 30, 2019 (included in Other assets) $ 3,767 Asset balance at December 31, 2018 (included in Other assets) $ 15,121 (1) 1.07% effective swap rate plus 1.25% |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 9 Months Ended |
Sep. 30, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Accrued Expenses and Other Liabilities | Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following as of September 30, 2019 and December 31, 2018 (in thousands): September 30, December 31, Real estate taxes payable $ 23,481 $ 21,043 Prepaid rent 15,145 18,745 Accrued interest 5,801 16,038 Accrued expenses 4,943 5,122 Embedded derivative 4,492 3,673 Accrued incentive compensation 3,773 1,323 Security deposits 3,480 3,118 Tenant improvement allowance 2,541 2,784 Contingent consideration 753 753 Other 5,764 3,683 Total $ 70,173 $ 76,282 |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation | Stock-based Compensation The Company follows ASC 718, Compensation - Stock Compensation (“ASC 718”), in accounting for its share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee’s requisite service period. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized when incurred. Share-based payments classified as liability awards are marked to fair value at each reporting period. Any common shares issued pursuant to the Company's incentive equity compensation and employee stock purchase plans will result in the Operating Partnership issuing OP Units to the Trust on a one-for-one basis, with the Operating Partnership receiving the net cash proceeds of such issuances. Certain of the Company’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 Company’s determination of the amount of stock compensation expense requires judgment in estimating the probability of achievement of these performance targets. 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 Committee of the Board of Trustees. On August 7, 2014, at the Annual Meeting of Shareholders of Physicians Realty Trust, the Trust’s shareholders approved an amendment to the 2013 Plan to increase the number of common shares authorized for issuance under the 2013 Plan by 1,850,000 common shares, for a total of 2,450,000 common shares authorized for issuance. On April 30, 2019 , at the Annual Meeting of Shareholders of Physicians Realty Trust, the Trust’s shareholders approved the Amended and Restated Physicians Realty Trust 2013 Equity Incentive Plan. The amendment increased the number of common shares authorized for issuance under the 2013 Plan by 4,550,000 common shares, for a total of 7,000,000 common shares authorized for issuance. The 2013 Plan term was also extended to 2029. Restricted Common Shares Restricted common shares granted under the 2013 Plan are eligible for dividends as well as the right to vote. In the nine month period ended September 30, 2019 , the Trust granted a total of 194,413 restricted common shares with a total value of $3.5 million to its officers and certain of its employees, which have a vesting period of one to three years . A summary of the status of the Trust’s non-vested restricted common shares as of September 30, 2019 and changes during the nine month period then ended follow: Common Shares Weighted Average Grant Date Fair Value Non-vested at December 31, 2018 225,139 $ 15.29 Granted 194,413 17.80 Vested (200,104 ) 15.13 Forfeited (2,015 ) 17.08 Non-vested at September 30, 2019 217,433 $ 17.67 For all service awards, the Company records compensation expense for the entire award on a straight-line basis over the requisite service period. For the three month periods ending September 30, 2019 and 2018 , the Company recognized non-cash share compensation of $0.9 million and $0.8 million , respectively. For the nine month periods ended September 30, 2019 and 2018 , the Company recognized non-cash share compensation of $2.5 million and $2.3 million , respectively. Unrecognized compensation expense at September 30, 2019 was $2.0 million . Restricted Share Units In March 2019 , under the 2013 Plan, the Trust granted restricted share units at a target level of 229,884 to its officers and certain of its employees and 41,925 to its trustees, which are subject to certain performance, timing, and market conditions and three -year and two -year service periods for officers/employees and trustees, 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 50% of the restricted share units issued to officers and certain employees in 2019 vest based on two certain market conditions. The market conditions were valued with the assistance of independent valuation specialists. The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair values of $29.60 and $35.70 per unit for the March 2019 grant using the following assumptions: Volatility 21.8 % Dividend assumption reinvested Expected term in years 2.83 years Risk-free rate 2.53 % Share price (per share) $ 17.89 The remaining 50% of the restricted share units issued to officers and certain employees, and 100% of restricted share units issued to trustees, vest based upon certain performance or timing conditions. With respect to the performance conditions of the March 2019 grant, the grant date fair value of $17.89 per unit was based on the share price at the date of grant. The combined weighted average grant date fair value of the March 2019 restricted share units issued to officers and certain employees is $25.27 per unit. The following is a summary of the activity in the Trust’s restricted share units during the nine months ended September 30, 2019 : Executive Awards Trustee Awards Restricted Share Units Weighted Average Grant Date Fair Value Restricted Share Weighted Non-vested at December 31, 2018 533,155 $ 22.66 67,158 $ 16.01 Granted 229,884 25.27 41,925 17.89 Vested (104,553 ) (1) 26.33 (41,786 ) 16.75 Forfeited (3,734 ) 23.08 — — Non-vested at September 30, 2019 654,752 $ 22.99 67,297 $ 16.72 (1) Restricted units vested by Company executives in 2019 resulted in the issuance of 87,805 common shares, less 35,265 common shares withheld to cover minimum withholding tax obligations, for multiple employees. For the three month periods ending September 30, 2019 and 2018 , the Company recognized non-cash share compensation of $1.7 million and $1.2 million , respectively. For the nine month periods ending September 30, 2019 and 2018 , the Trust recognized non-cash share restricted unit compensation expense of $5.3 million and $4.3 million , respectively. Unrecognized compensation expense at September 30, 2019 was $7.6 million . |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2019 | |
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 Company 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. As part of the Company’s acquisition process, Level 3 inputs are used to measure the fair value of the assets acquired and liabilities assumed. The Company’s derivative instruments as of September 30, 2019 consist of one embedded derivative as detailed in the Redeemable Noncontrolling Interests - Series A Preferred Units and Partially Owned Properties section of Note 2 ( Summary of Significant Accounting Policies ) and five interest rate swaps. For presentational purposes, the Company’s interest rate swaps are shown as a single derivative due to the identical nature of their economic terms, as detailed in the Derivative Instruments section of Note 2 (Summary of Significant Accounting Policies) and Note 7 (Derivatives) . Neither the embedded derivative nor the interest rate swaps are traded on an exchange. The Company’s derivative assets and 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 Company measures its derivatives at fair value on a recurring basis. The fair values are based on Level 2 inputs described above. The Company considers its own credit risk, as well as the credit risk of its counterparties, when evaluating the fair value of its derivatives. The Company 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 assets measured at fair value as of September 30, 2019 . 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 Company’s financial instruments (in thousands): September 30, December 31, Carrying Amount Fair Value Carrying Amount Fair Value Assets: Real estate loans receivable $ 94,211 $ 95,655 $ 55,659 $ 54,782 Notes receivable $ 21,795 $ 21,795 $ 20,628 $ 20,628 Derivative assets $ 3,767 $ 3,767 $ 15,121 $ 15,121 Liabilities: Credit facility $ (519,000 ) $ (519,000 ) $ (465,000 ) $ (465,000 ) Notes payable $ (975,000 ) $ (1,020,857 ) $ (975,000 ) $ (914,918 ) Mortgage debt $ (84,091 ) $ (86,205 ) $ (108,859 ) $ (107,131 ) Derivative liabilities $ (4,492 ) $ (4,492 ) $ (3,673 ) $ (3,673 ) |
Tenant Operating Leases
Tenant Operating Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Tenant Operating Leases | Tenant Operating Leases The Company is a lessor of medical office buildings and other healthcare facilities. Leases have expirations from 2019 through 2039 . As of September 30, 2019 , the future minimum rental payments on non-cancelable leases, exclusive of expense recoveries, were as follows (in thousands): 2019 $ 74,965 2020 298,480 2021 294,013 2022 283,932 2023 273,513 Thereafter 1,285,817 Total $ 2,510,720 |
Rent Expense
Rent Expense | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Rent Expense | Rent Expense The Company leases the rights to parking structures at three of its properties, the air space above one property, and the land upon which 80 of its properties are located from third party land owners pursuant to separate leases. In addition, the Company has 11 corporate leases, primarily for office space. The Company’s leases include both fixed and variable rental payments and may also include escalation clauses and renewal options. These leases have terms of up to 88 years remaining, excluding extension options, with a weighted average remaining term of 44 years. Effective January 1, 2019, the Company adopted ASC 842, Leases which requires the operating leases mentioned above to be included in right-of-use lease assets, net on the Company’s September 30, 2019 consolidated balance sheets, which represents the Company’s right to use the underlying asset for the lease term. The Company’s obligation to make the lease payments are included in lease liabilities on the Company’s September 30, 2019 consolidated balance sheets. Based on the present value of the lease payments for the remaining lease term of the Company’s existing leases, the Company recognized right-of-use assets of approximately $126.7 million and lease liabilities for operating leases of approximately $61.0 million on January 1, 2019. Operating lease right-of-use assets and liabilities commencing or renewing after January 1, 2019 are recognized at commencement or renewal date based on the present value of lease payments over the lease term. As of September 30, 2019 , total right-of-use assets and operating lease liabilities, net of accumulated amortization, were approximately $128.5 million and $63.3 million , respectively. The Company has entered into various short-term operating leases, primarily for office spaces, with an initial term of twelve months or less. These leases are not recorded on the Company's consolidated balance sheets. Because the rate implicit in each lease is not readily determinable, the Company uses a rate based on its incremental borrowing rate to determine the present value of the lease payments. The weighted average discount rate was 4.3% as of September 30, 2019 . There are no operating leases that have not yet commenced that would have a significant impact on its consolidated balance sheets. As of September 30, 2019 , the future minimum lease obligations under non-cancelable parking, air, ground, and corporate leases, were as follows (in thousands): 2019 $ 708 2020 3,121 2021 3,108 2022 3,079 2023 3,066 Thereafter 144,557 Total undiscounted lease payments $ 157,639 Less: Interest (94,304 ) Present value of lease liabilities $ 63,335 Lease costs consisted of the following for the three and nine months ended September 30, 2019 (in thousands): Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Operating lease cost $ 437 $ 1,365 Variable lease cost 249 724 Total lease cost $ 686 $ 2,089 |
Credit Concentration
Credit Concentration | 9 Months Ended |
Sep. 30, 2019 | |
Concentration Risks, Types, No Concentration Percentage [Abstract] | |
Credit Concentration | Credit Concentration The Company uses annualized base rent (“ABR”) as its credit concentration metric. ABR is calculated by multiplying contractual base rent for the month ended September 30, 2019 by 12, excluding the impact of concessions and straight-line rent. The following table summarizes certain information about the Company’s top five tenant credit concentrations as of September 30, 2019 (in thousands): Tenant Total ABR Percent of ABR CommonSpirit - CHI - Nebraska $ 16,744 5.6 % CommonSpirit - CHI - KentuckyOne 13,956 4.6 % Northside Hospital 13,175 4.4 % Baylor Scott and White Health 7,770 2.6 % US Oncology 7,546 2.5 % Remaining portfolio 240,661 80.3 % Total $ 299,852 100.0 % ABR collected from the Company’s top five tenant relationships comprises 19.7% of its total ABR for the period ending September 30, 2019 . Total ABR from CommonSpirit Health affiliated tenants totals 20.1% , including the affiliates disclosed above. Financial statements of CommonSpirit Health, the parent of the subsidiaries and affiliates of the entities party to master lease agreements, are publicly available on the CommonSpirit Health website (www.commonspirit.org). Information included on the CommonSpirit Health website is not incorporated by reference within this Quarterly Report on Form 10-Q. The following table summarizes certain information about the Company’s top five geographic concentrations as of September 30, 2019 (in thousands): State Total ABR Percent of ABR Texas $ 50,603 16.9 % Georgia 25,915 8.6 % Indiana 21,337 7.1 % Nebraska 18,061 6.0 % Minnesota 17,429 5.8 % Other 166,507 55.6 % Total $ 299,852 100.0 % |
Earnings Per Share and Earnings
Earnings Per Share and Earnings Per Unit | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share and Earnings Per Unit | Earnings Per Share and Earnings Per Unit For the three and nine months ended September 30, 2018 , total restricted share units of 600,313 were excluded from the computation of diluted earnings per share and diluted earnings per unit as their impact would have been anti-dilutive. 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 2019 2018 2019 2018 Numerator for earnings per share - basic: Net income $ 15,619 $ 23,771 $ 34,435 $ 47,165 Net income attributable to noncontrolling interests: Operating Partnership (434 ) (656 ) (939 ) (1,300 ) Partially owned properties (136 ) (119 ) (410 ) (374 ) Preferred distributions (314 ) (284 ) (892 ) (1,055 ) Numerator for earnings per share - basic $ 14,735 $ 22,712 $ 32,194 $ 44,436 Numerator for earnings per share - diluted: Numerator for earnings per share - basic $ 14,735 $ 22,712 $ 32,194 $ 44,436 Operating Partnership net income 434 656 939 1,300 Numerator for earnings per share - diluted $ 15,169 $ 23,368 $ 33,133 $ 45,736 Denominator for earnings per share - basic and diluted: Weighted average number of shares outstanding - basic 186,328,500 182,076,513 184,760,335 181,963,693 Effect of dilutive securities: Noncontrolling interest - Operating Partnership units 5,536,111 5,291,025 5,398,734 5,378,760 Restricted common shares 79,779 105,692 89,470 80,272 Restricted share units 35,832 — 241,115 199,384 Denominator for earnings per share - diluted: 191,980,222 187,473,230 190,489,654 187,622,109 Earnings per share - basic $ 0.08 $ 0.12 $ 0.17 $ 0.24 Earnings per share - diluted $ 0.08 $ 0.12 $ 0.17 $ 0.24 The following table shows the amounts used in computing the Operating Partnership’s basic and diluted earnings per unit (in thousands, except unit and per unit data): Three Months Ended Nine Months Ended 2019 2018 2019 2018 Numerator for earnings per unit - basic and diluted: Net income $ 15,619 $ 23,771 $ 34,435 $ 47,165 Net income attributable to noncontrolling interests - partially owned properties (136 ) (119 ) (410 ) (374 ) Preferred distributions (314 ) (284 ) (892 ) (1,055 ) Numerator for earnings per unit - basic and diluted $ 15,169 $ 23,368 $ 33,133 $ 45,736 Denominator for earnings per unit - basic and diluted: Weighted average number of units outstanding - basic 191,864,611 187,367,538 190,159,069 187,342,453 Effect of dilutive securities: Restricted common shares 79,779 105,692 89,470 80,272 Restricted share units 35,832 — 241,115 199,384 Denominator for earnings per unit - diluted 191,980,222 187,473,230 190,489,654 187,622,109 Earnings per unit - basic $ 0.08 $ 0.12 $ 0.17 $ 0.24 Earnings per unit - diluted $ 0.08 $ 0.12 $ 0.17 $ 0.24 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On October 15, 2019 , the Company closed on the acquisition of a medical office facility in Manchester, Connecticut for approximately $11.3 million . On October 23, 2019 , the Company completed a term loan in the amount of $47.0 million that is secured by a deed of trust on a newly constructed medical office building located in Fort Worth, Texas . The loan bears interest at the rate of 6.0% per year. On October 31, 2019 , the Company acquired a 49% membership interest in MedCore Realty Eden Hill, LLC for approximately $8.9 million . The joint venture owns a medical office facility in Dover, Delaware. On October 31, 2019 , the Company sold the Foundation El Paso Surgical Hospital in El Paso, Texas for approximately $32.0 million . The Company provided financing to the buyer for approximately $27.6 million in the form of a two year term loan. The loan bears interest at a rate of 8.0% per year for the first thirteen months, and increases to 10.0% thereafter. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation GAAP requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). ASC 810 broadly defines a VIE as an entity in which either (i) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. The Company identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity. The Company consolidates its investment in a VIE when it determines that it is the VIE’s primary beneficiary. The Company 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 Company performs this analysis on an ongoing basis. For property holding entities not determined to be VIEs, the Company consolidates such entities in which the Operating Partnership owns 100% of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest. All intercompany balances and transactions are eliminated in consolidation. For entities in which the Operating Partnership owns less than 100% |
Noncontrolling Interests | Noncontrolling Interests The Company presents the portion of any equity it does not own in entities that it controls (and thus consolidates) as noncontrolling interests and classifies such interests as a component of consolidated equity, separate from the Company’s total shareholders’ equity, on the consolidated balance sheets. Operating Partnership: Noncontrolling interests in the Company include OP Units held by other investors. Net income or loss is allocated to noncontrolling interests (limited partners) 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. On April 4, 2019 , the Operating Partnership partially funded a property acquisition by issuing an aggregate of 346,989 OP Units valued at approximately $6.5 million . The acquisition had a total purchase price of approximately $14.8 million . On September 27, 2019 , the Operating Partnership partially funded a property acquisition by issuing an aggregate of 910,032 OP Units valued at approximately $16.1 million . The acquisition had a total purchase price of approximately $34.6 million . As of September 30, 2019 , the Trust held a 96.7% interest in the Operating Partnership. As the sole general partner and the majority interest holder, the Trust consolidates the financial position and results of operations of the Operating Partnership. Holders of OP Units may not transfer their units without the Trust’s prior written consent, as general partner of the Operating Partnership. Beginning on the first anniversary of the issuance of OP Units to the respective holders, OP Unit holders may tender their units for redemption by the Operating Partnership in exchange for cash equal to the market price of the Trust’s common shares at the time of redemption or for unregistered common shares on a one-for- one basis. Such selection to pay cash or issue common shares to satisfy an OP Unit holder’s redemption request is solely within the control of the Trust. Accordingly, the Trust presents the OP Units of the Operating Partnership held by investors other than the Trust as noncontrolling interests within equity in the consolidated balance sheets. Partially Owned Properties: The Trust and Operating Partnership reflect noncontrolling interests in partially owned properties on the balance sheet for the portion of consolidated properties that are not wholly owned by the Company. The earnings or losses from those properties attributable to the noncontrolling interests are reflected as noncontrolling interests in partially owned properties in the consolidated statements of income. On May 6, 2019 , the Operating Partnership acquired the remaining noncontrolling interest associated with a previously acquired medical office portfolio in Minnesota. The Operating Partnership paid approximately $0.5 million as consideration for the redemption. On August 23, 2019 , the Operating Partnership acquired the remaining noncontrolling interest associated with a previously acquired medical office building in Texas. The Operating Partnership paid approximately $0.6 million as consideration for the redemption. Redeemable Noncontrolling Interests - Series A Preferred Units and Partially Owned Properties On February 5, 2015, the Company entered into a Second Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”) which provides for the designation and issuance of the 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 one year from the issuance date. 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 Company classifies the Series A Preferred Units in the mezzanine section of its consolidated balance sheets. The Series A Preferred Units were evaluated for embedded features that should be bifurcated and separately accounted for as a freestanding derivative. The Company determined that the Series A Preferred Units contained features that require bifurcation. The Company records the carrying amount of the redeemable noncontrolling interests, less the value of the embedded derivative, at the greater of the carrying value or redemption value in the consolidated balance sheets. |
Dividends and Distributions | Dividends and Distributions On September 20, 2019 , the Trust announced that its Board of Trustees authorized and the Trust declared a cash dividend of $0.23 per common share for the quarterly period ended September 30, 2019 . The distribution was paid on October 18, 2019 to common shareholders and OP Unit holders of record as of the close of business on October 3, 2019 . All distributions paid by the Operating Partnership are declared and paid at the same time as dividends are distributed by the Trust to common shareholders. It has been the Operating Partnership’s policy to declare quarterly distributions so as to allow the Trust to comply with applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), governing REITs. The declaration and payment of quarterly distributions remains subject to the review and approval of the Trust’s Board of Trustees. The Company’s shareholders are entitled to reinvest all or a portion of any cash distribution on their shares of the Company’s common stock by participating in the Dividend Reinvestment and Share Purchase Plan (“DRIP”), subject to the terms of the plan. Tax Status of Dividends and Distributions The Company’s distributions of current and accumulated earnings and profits for U.S. federal income tax purposes generally are taxable to shareholders as ordinary income. Distributions in excess of these earnings and profits generally are treated as a non-taxable reduction of the shareholders’ basis in the shares to the extent thereof (non-dividend distributions) and thereafter as taxable gain. Any cash distributions received by an OP Unit holder in respect of its OP Units generally will not be taxable to such OP Unit holder for U.S. federal income tax purposes, to the extent that such distribution does not exceed the OP Unit holder’s basis in its OP Units. Any such distribution will instead reduce the OP Unit holder’s basis in its OP Units (and OP Unit holders will be subject to tax on the taxable income allocated to them by the Operating Partnership in respect of their OP Units when such income is earned by the Operating Partnership, with such income allocation increasing the OP Unit holders’ basis in their OP Units). |
Purchase of Investment Properties | Purchases of Investment Properties With the adoption of ASU 2017-01 in January 2018, the Company’s acquisitions of investment properties and the majority of its future investments will be accounted for as asset acquisitions and will result in the capitalization of acquisition costs. The purchase price, inclusive of acquisition costs, will be allocated to tangible and intangible assets and liabilities based on their relative fair values. Tangible assets primarily consist of land and buildings and improvements. Intangible assets primarily consist of above- or below-market leases, in place leases, above- or below-market debt assumed, right-of-use assets, and lease liabilities. Any future contingent consideration will be recorded when the contingency is resolved. The determination of the fair value requires the Company to make certain estimates and assumptions. The determination of fair value involves the use of significant judgment and estimation. The Company 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 generally includes the assistance of a third party appraiser. The Company estimates the fair value of an acquired asset on an “as-if-vacant” basis and its value is depreciated in equal amounts over the course of its estimated remaining useful life. The Company 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 an internal analysis of recently acquired and existing comparable properties within the Company’s portfolio. The value of above- or below-market leases is estimated based on the present value (using a discount 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 plus the term of any renewal options that the lessee would be economically compelled to exercise. 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. 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 Company 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 Company approximates based on the rate it would expect to incur on a replacement instrument on the date of acquisition, and recognizes 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 Company recognizes the acquired assets and assumed liabilities based on 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. With the adoption of ASU 2016-02, the Company has recognized right-of-use assets and corresponding lease liabilities as of January 1, 2019. The right-of-use asset is based upon the recognized lease liabilities, adjusted for previously recognized prepaid lease payments and intangible assets and liabilities. The lease liability is measured at the present value of remaining lease payments of its operating leases for which it is the lessee, including ground, office, and equipment leases, discounted at a rate based on the Company’s incremental borrowing rate. |
Impairment of Intangible and Long-Lived Assets | Impairment of Intangible and Long-Lived Assets The Company 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 Company 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 Company 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 Company recognizes an impairment loss at the time it makes any such determination. If the Company 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. With the adoption of ASU 2016-02, Leases, on January 1, 2019, the Company periodically evaluates the right-of-use assets for impairment as detailed above. |
Investments in Unconsolidated Entities | Investments in Unconsolidated Entities The Company 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 Company’s share of the investee’s earnings or losses is included in its consolidated statements of income. 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 twelve mezzanine loans, two construction loans, and two term loans as of September 30, 2019 |
Rental Revenue | Rental Revenue Rental revenue is recognized on a straight-line basis over the terms of the related leases when collectability is probable. 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 $70.9 million and $64.2 million as of September 30, 2019 and December 31, 2018 , respectively. If the Company determines that collectability of straight-line rents is not probable, rental revenue is limited to the lease payments collected from the lessee, including any variable lease payments. In accordance with ASU 2016-02, Leases, Topic 842 (“ASC 842”), if the collectability of a lease changes after the commencement date, any difference between lease income that would have been recognized and the lease payments shall be recognized as an adjustment to lease income. On January 1, 2019 the Company adopted ASC 842 and applied the prospective approach consolidating bad debt as an adjustment to rental revenues. Bad debt recognized as an adjustment to rental revenues was $0.2 million and $9.2 million for the three and nine months ended September 30, 2019 , respectively. Net bad debt recoveries of $0.2 million and $0.1 million was recorded in the three and nine months ended September 30, 2018 , respectively, and was reported in operating expenses. 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 on a straight-line basis 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 in the period the applicable expenses are incurred. The reimbursements are recorded gross, as the Company is generally the primary obligor with respect to real estate taxes and purchasing goods and services from third-party suppliers, has discretion in selecting the supplier, and bears the credit risk of tenant reimbursement. The Company 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 Company does not recognize operating expense or expense recoveries. |
Derivative Instruments | Derivative Instruments When the Company has derivative instruments embedded in other contracts, it records them either as an asset or a liability measured at their fair value unless they qualify for a normal purchase or normal sale exception. When specific hedge accounting criteria are not met or if the Company does not elect to apply for hedge accounting, changes in the Company’s derivative instruments’ fair value are recognized currently in earnings. As a result of the Company’s adoption of ASU 2017-12 as of January 1, 2019, if hedge accounting is applied to a derivative instrument, the entire change in the fair value of its derivatives designated and qualified as cash flow hedges are recorded in accumulated other comprehensive income (“AOCI’) on the consolidated balance sheets and are subsequently reclassified into earnings in the period in which the hedged forecasted transaction affects earnings. To manage interest rate risk for certain of its variable-rate debt, the Company uses interest rate swaps as part of its risk management strategy. These derivatives are designed to mitigate the risk of future interest rate increases by providing a fixed interest rate for a limited, pre-determined period of time. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of September 30, 2019 , the Company had five |
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. Although the Trust continues to qualify for taxation as a REIT, in various instances, the Trust is subject to state and local taxes on its income and property, and federal income and excise taxes on its undistributed income. As discussed in Note 1 (Organization and Business) , the Trust conducts substantially all of its operations through the Operating Partnership. As a partnership, the Operating Partnership generally is not liable for federal income taxes. The income and loss from the operations of the Operating Partnership is included in the tax returns of its partners, including the Trust, who are responsible for reporting their allocable share of the partnership income and loss. Accordingly, no provision for income taxes has been made on the accompanying consolidated financial statements. |
Tenant Receivables, Net | Tenant Receivables, Net Tenant receivables primarily represent amounts accrued and unpaid from tenants in accordance with the terms of the respective leases, subject to the Company’s revenue recognition policy. The Company reviews receivables monthly and writes-off the remaining balance when, in the opinion of management, collection of substantially all remaining payments is not probable. When the Company determines substantially all remaining lease payments are not probable of collection, it recognizes a reduction of rental revenues and expense recoveries for all outstanding balances, including accrued straight-line rent receivables. Any subsequent receipts are recognized as rental revenues and expense recoveries in the period received. The adoption of ASC 842 resulted in an adjustment to the Company’s opening accumulated deficit balance of $0.2 million , associated with tenant receivables where collection of substantially all operating lease payments is not probable as of January 1, 2019. |
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, and the valuation of financial instruments. Actual results could differ from these estimates. |
Contingent Liabilities | Contingent Liabilities Certain of the Company’s acquisitions provide for additional consideration to the seller in the form of an earn-out associated with lease-up contingencies. The Company recognizes the contingent liabilities only if certain parameters or other substantive contingencies are met, at which time the consideration becomes payable. |
Segment Reporting | Segment Reporting Under the provision of Codification Topic 280, Segment Reporting , the Company has determined that it has one reportable segment with activities related to leasing and managing healthcare properties. |
New Accounting Pronouncements | New Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers , which creates a new Topic, Accounting Standards Codification Topic 606. The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company adopted ASU 2014-09 as of January 1, 2018 under the modified retrospective approach. Based on the Company’s assessment, it has identified all of its revenue streams and concluded rental income from leasing arrangements represents a substantial portion of its revenue. Income from leasing arrangements is specifically excluded from Topic 606 and was evaluated with the adoption of ASU 2016-02, Leases . Therefore, the impact of adopting ASU 2014-09 was minimal on the Company’s current recognition and presentation of non-lease revenue. In February 2016, the FASB issued ASU 2016-02, Leases . The update amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The standard provides the option of a modified retrospective transition approach or a cumulative effect for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. In July 2018, the FASB issued ASU 2018-11, Leases, Targeted Improvements . ASU 2018-11 provides entities with a transition method option to not restate comparative periods presented, but to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. In addition, ASU 2018-11 provides entities with a practical expedient allowing lessors to not separate non-lease components from the associated lease components when certain criteria are met. ASU 2016-02 and ASU 2018-11 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. On January 1, 2019 the Company, both as a lessor and a lessee, adopted ASU 2016-02 and ASU 2018-11 using the cumulative-effect transition method. The cumulative effect adjustment to the opening balance of retained earnings was $0.2 million . Upon adoption of the new leasing standard, the Company recognized right-of-use assets and corresponding lease liabilities of $126.7 million and $61.0 million , respectively, on its consolidated balance sheets as of January 1, 2019. The right-of-use asset is based upon the recognized lease liabilities, adjusted for previously recognized prepaid lease payments and intangible assets and liabilities. The lease liability is measured at the present value of remaining lease payments of its operating leases for which it is the lessee, including ground, office, and equipment leases, discounted at a rate based on the Company’s incremental borrowing rate. The Company elected to apply the package of practical expedients applicable to the Company for transition of leases in effect at adoption. This allowed the Company to forgo reassessing (1) whether a contract contains a lease, (2) classification of leases, and (3) whether capitalized costs associated with a lease meet the definition of “initial direct costs” under ASC 842. As a lessee, this allowed the Company to continue to account for its existing ground and office space leases as operating leases, however, after January 1, 2019, any new or renewed ground leases may be classified as financing leases. Additionally, the Company adopted the comparative period practical expedient which allowed the reporting for comparative periods prior to adoption to continue to be presented in the financial statements in accordance with previous lease accounting guidance. As a lessee, the Company adopted the short-term leases practical expedient which allowed the Company not to capitalize short-term leases within its lease liabilities and right-of-use assets. Additionally, the Company elected the practical expedient allowing lessors to not separate non-lease components from the associated lease components when certain criteria are met. The Company elected this lessor practical expedient on various underlying assets including, among other things, land and building, and recognizes, measures, presents, and discloses revenue from its lease arrangements based upon the predominant component, which is determined to be the lease component, under the new ASC 842 guidance. As a lessor, the Company will continue to show its expense recoveries separate from its rental revenues for transparency purposes. The Company has not elected the hindsight practical expedient, which would allow the use of hindsight in determining the lease term and impairment of the right-of-use assets as of the implementation date. The adoption of the ASC 842 guidance did not have a material effect on the Company’s results of operations. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which changes the impairment model for most financial instruments by requiring companies to recognize an allowance for expected losses, rather than incur losses as required currently by the other-than-temporary impairment model. ASU 2016-13 will apply to most financial assets measured at amortized cost and certain other instruments, including certain receivables, loans, held-to-maturity debt securities, net investments in leases, and off-balance-sheet credit exposures (e.g., loan commitments). ASU 2016-13 requires that financial statement assets measured at an amortized cost be presented at the net amount expected to be collected through an allowance for credit losses that is deducted from the amortized cost basis. ASU 2018-19 also clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of these receivables should be accounted for in accordance with Topic 842, Leases. ASU 2016-13 is effective for reporting periods beginning after December 15, 2019, with early adoption permitted, and will be applied as a cumulative adjustment to retained earnings as of January 1, 2020. We are continuing to assess the potential effect that the adoption of ASU 2016-13 will have on our consolidated financial statements. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities , which expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. It also includes certain targeted improvements to simplify the application of current guidance related to hedge accounting. The Company adopted ASU 2017-12 on January 1, 2019 using the modified retrospective approach. The cumulative effect of the ineffectiveness for the year ended December 31, 2018 was immaterial, therefore no adjustment was made to beginning retained earnings. Additionally, as a result of the adoption, the Company no longer separately discloses the amount of the ineffective portion of the change in fair value of its derivative financial instruments. The entire change in the fair value of its derivatives designated and qualified as cash flow hedges are recorded in AOCI on the consolidated balance sheets and are subsequently reclassified into earnings in the period in which the hedged forecasted transaction affects earnings. In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments for nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The amendments simplify several aspects of the accounting for nonemployee transactions by stipulating that the existing accounting guidance for share-based payments to employees, accounted for under ASC Topic 718, Compensation - Stock Compensation , will also apply to nonemployee share-based transactions, accounted for under ASC Topic 505, Equity. The Company adopted ASU 2018-07 on the effective date, January 1, 2019, with no material impact on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement; Changes to the Disclosure Requirements for Fair Value Measurements , which modifies the disclosure requirements on fair value measurements in Topic 820 as follows: (a) disclosure removals: (i) the amount of and reasons for transfers between Level 1 and Level 2; (ii) the policy for timing of transfers between levels; and (iii) the valuation process for Level 3 fair value measurements; (b) disclosure modifications: (i) no requirement to disclose the timing of liquidation unless the investee has communicated the timing to the reporting entity or announced the timing publicly; and (ii) for Level 3 fair value measurements, a narrative description of measurement uncertainty at the reporting date, not the sensitivity to future changes; and (c) disclosure additions: (i) for recurring Level 3 measurements, disclose the changes in unrealized gains and losses for the period included in OCI and the statement of comprehensive income; and (ii) for Level 3 fair value measurements in the table of significant input, disclose the range and weighted average of the significant unobservable inputs and the way it is calculated. The Company will adopt ASU 2018-13 as of the effective date, January 1, 2020, and will consider all level inputs but it does not anticipate a material impact to its consolidated financial statements. |
Organization and Business (Tabl
Organization and Business (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Issuance and sale of stock | During the quarterly periods ended March 31, 2019, June 30, 2019, and September 30, 2019 , 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, 2019 1,681,928 $ 18.61 $ 30,986 Quarterly period ended June 30, 2019 971,000 18.66 17,935 Quarterly period ended September 30, 2019 3,020,711 17.41 52,070 Year to date 5,673,639 $ 17.98 $ 100,991 |
Investment and Disposition Ac_2
Investment and Disposition Activity (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Real estate held for sale | Investment activity for the three months ended September 30, 2019 is summarized below: Property Location Acquisition Date Purchase Price (in thousands) Rockwall II MOB (1) Rockwall, TX July 26, 2019 $ 24,006 Earnout - Hazelwood Medical Commons (2) Maplewood, MN August 1, 2019 740 Shadeland Station Portfolio (2 MOBs) Indianapolis, IN August 2, 2019 23,296 NCI Buyout - Rockwall II MOB (1) Rockwall, TX August 23, 2019 572 Shell Ridge Portfolio (5 MOBs) (3) Walnut Creek, CA September 27, 2019 34,625 Loan Investments Various Various 11,945 $ 95,184 (1) On July 26, 2019 the Company completed the acquisition of a 97.5% interest in Rockwall II MOB . The Company acquired the remaining interest on August 23, 2019 . (2) The Company completed the settlement of an acquisition related earn-out payment upon the execution of a lease. This payment was funded with the issuance of 3,409 Series A Preferred Units and is considered to be additional purchase price. (3) The Operating Partnership partially funded the acquisition by issuing an aggregate of 910,032 OP Units valued at approximately $16.1 million 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 Company determined using Level 2 and Level 3 inputs (in thousands): 1st Quarter 2nd Quarter 3rd Quarter Total Land $ — $ 5,491 $ 10,466 $ 15,957 Building and improvements 7,587 16,466 64,769 88,822 In-place lease intangibles 434 4,651 7,827 12,912 Above market in-place lease intangibles — — 136 136 Below market in-place lease intangibles — (96 ) — (96 ) Right-of-use asset — — 630 630 Mortgage escrow (3,718 ) — — (3,718 ) Issuance of OP Units — (6,488 ) (16,110 ) (22,598 ) Issuance of Series A Preferred Units — (1,862 ) (740 ) (2,602 ) Net assets acquired $ 4,303 $ 18,162 $ 66,978 $ 89,443 |
Schedule of revenues and net income related to disposed properties | The following table summarizes revenues and net income related to the disposed properties for the periods presented (in thousands): Three Months Ended Nine Months Ended 2019 2018 2019 2018 Revenues $ 60 $ 328 $ 540 $ 977 Income before net gain on sale of investment properties $ 9 $ 70 $ 169 $ 209 Gain on sale of investment properties 409 — 3,442 — Net income $ 418 $ 70 $ 3,611 $ 209 |
Intangibles (Tables)
Intangibles (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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, 2019 and December 31, 2018 (in thousands): September 30, 2019 December 31, 2018 Cost Accumulated Amortization Net Cost Accumulated Amortization Net Assets In-place leases $ 351,947 $ (137,246 ) $ 214,701 $ 340,428 $ (111,500 ) $ 228,928 Above-market leases 45,559 (16,799 ) 28,760 45,568 (13,621 ) 31,947 Leasehold interest 712 (287 ) 425 712 (242 ) 470 Below-market ground leases (1) — — — 65,676 (2,194 ) 63,482 Right-of-use lease assets 130,011 (1,521 ) 128,490 — — — Total $ 528,229 $ (155,853 ) $ 372,376 $ 452,384 $ (127,557 ) $ 324,827 Liabilities Below-market leases $ 14,455 $ (7,981 ) $ 6,474 $ 14,654 $ (6,768 ) $ 7,886 Above-market ground leases (1) — — — 5,965 (266 ) 5,699 Lease liabilities 63,697 (362 ) 63,335 — — — Total $ 78,152 $ (8,343 ) $ 69,809 $ 20,619 $ (7,034 ) $ 13,585 (1) Above- and below-market ground leases are included in the right-of-use asset as of January 1, 2019 due to the implementation of ASU 2016-02, Leases . Further detail is provided in Note 2 (Summary of Significant Accounting Policies) . |
Summary of the carrying amount of acquired lease intangibles | The following is a summary of acquired lease intangible amortization for the three and nine month periods ended September 30, 2019 and 2018 , (in thousands): Three Months Ended Nine Months Ended 2019 2018 2019 2018 Amortization expense related to in-place leases $ 8,890 $ 16,274 $ 27,138 $ 38,251 Decrease of rental income related to above-market leases 1,105 1,075 3,321 3,992 Decrease of rental income related to leasehold interest 15 15 45 44 Increase of rental income related to below-market leases 429 615 1,509 2,109 Decrease of operating expense related to above-market ground leases (1) 35 33 104 104 Increase in operating expense related to below-market ground leases (1) 306 255 913 745 (1) Above- and below-market ground leases are included in the right-of-use asset as of January 1, 2019 due to the implementation of ASU 2016-02, Leases . Further detail is provided in Note 2 (Summary of Significant Accounting Policies) . |
Schedule of future amortization of the acquired lease intangibles | Future aggregate net amortization of the acquired lease intangibles as of September 30, 2019 , is as follows (in thousands): Net Decrease in Revenue Net Increase in Expenses 2019 $ (680 ) $ 9,248 2020 (2,728 ) 35,038 2021 (2,658 ) 32,538 2022 (2,207 ) 28,640 2023 (1,915 ) 25,753 Thereafter (12,523 ) 148,639 Total $ (22,711 ) $ 279,856 |
Other Assets (Tables)
Other Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Other Assets, Unclassified [Abstract] | |
Schedule of other assets | Other assets consisted of the following as of September 30, 2019 and December 31, 2018 (in thousands): September 30, December 31, Straight line rent receivable, net $ 70,877 $ 64,245 Note receivable 21,795 20,628 Lease inducements, net 12,283 13,233 Prepaid expenses 10,237 16,017 Leasing commissions, net 7,400 6,221 Interest rate swap 3,767 15,121 Escrows 1,793 5,534 Other 4,507 3,760 Total $ 132,659 $ 144,759 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of debt | The following is a summary of debt as of September 30, 2019 and December 31, 2018 (in thousands): September 30, December 31, Fixed interest mortgage notes (1) $ 77,263 $ 101,832 Variable interest mortgage note (2) 6,677 6,830 Total mortgage debt 83,940 108,662 $850 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.10%, due September 2022 269,000 215,000 $400 million senior unsecured notes bearing fixed interest of 4.30%, due March 2027 400,000 400,000 $350 million senior unsecured notes bearing fixed interest of 3.95%, due January 2028 350,000 350,000 $250 million unsecured term borrowing bearing fixed interest of 2.32%, due June 2023 (3) 250,000 250,000 $150 million senior unsecured notes bearing fixed interest of 4.03% to 4.74%, due January 2023 to 2031 150,000 150,000 $75 million senior unsecured notes bearing fixed interest of 4.09% to 4.24%, due August 2025 to 2027 75,000 75,000 Total principal 1,577,940 1,548,662 Unamortized deferred financing costs (8,229 ) (9,920 ) Unamortized discounts (5,637 ) (6,086 ) Unamortized fair value adjustments 151 197 Total debt $ 1,564,225 $ 1,532,853 (1) Fixed interest mortgage notes bearing interest from 3.00% to 5.50% , due in 2020, 2021, 2022, and 2024, with a weighted average interest rate of 4.44% and 4.26% as of September 30, 2019 and December 31, 2018 , respectively. The notes are collateralized by five properties with a net book value of $170.8 million and $174.2 million as of September 30, 2019 and December 31, 2018 , respectively. (2) Variable interest mortgage note bears variable interest of LIBOR plus 2.75% , for an interest rate of 4.79% and 5.21% as of September 30, 2019 and December 31, 2018 , respectively. The note is due in 2028 and is collateralized by one property with a net book value of $8.7 million as of September 30, 2019 and December 31, 2018 . (3) The Trust’s borrowings under the term loan feature of the Credit Agreement bear interest at a rate which is determined by the Trust’s credit rating, currently equal to LIBOR + 1.25% . The Trust has entered into a pay-fixed receive-variable interest rate swap, fixing the LIBOR component of this rate at 1.07% . |
Schedule of adjusted LIBOR rate loans and interest rates based on credit rating | 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 Trust’s investment grade rating as follows: Credit Rating Margin for Revolving Loans: Adjusted LIBOR Rate Loans and Letter of Credit Fee Margin for Revolving Loans: Base Rate Loans Margin for Term Loans: Adjusted LIBOR Rate Loans and Letter of Credit Fee Margin for Term Loans: Base Rate Loans At Least A- or A3 LIBOR + 0.775% — % LIBOR + 0.85% — % At Least BBB+ or Baa1 LIBOR + 0.825% — % LIBOR + 0.90% — % At Least BBB or Baa2 LIBOR + 0.90% — % LIBOR + 1.00% — % At Least BBB- or Baa3 LIBOR + 1.10% 0.10 % LIBOR + 1.25% 0.25 % Below BBB- or Baa3 LIBOR + 1.45% 0.45 % LIBOR + 1.65% 0.65 % |
Schedule of principal payments due on debt | Scheduled principal payments due on debt as of September 30, 2019 , are as follows (in thousands): 2019 $ 482 2020 25,470 2021 8,289 2022 289,818 2023 266,000 Thereafter 987,881 Total Payments $ 1,577,940 |
Derivatives (Tables)
Derivatives (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Instrument Detail [Abstract] | |
Schedule of interest rate derivatives | The following table summarizes the location and aggregate fair value of the interest rate swaps on the Company’s consolidated balance sheets (in thousands): Total notional amount $ 250,000 Effective fixed interest rate (1) 2.32 % Effective date 7/7/2016 Maturity date 6/10/2023 Asset balance at September 30, 2019 (included in Other assets) $ 3,767 Asset balance at December 31, 2018 (included in Other assets) $ 15,121 (1) 1.07% effective swap rate plus 1.25% spread per Credit Agreement. |
Accrued Expenses and Other Li_2
Accrued Expenses and Other Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of accrued expenses and other liabilities | Accrued expenses and other liabilities consisted of the following as of September 30, 2019 and December 31, 2018 (in thousands): September 30, December 31, Real estate taxes payable $ 23,481 $ 21,043 Prepaid rent 15,145 18,745 Accrued interest 5,801 16,038 Accrued expenses 4,943 5,122 Embedded derivative 4,492 3,673 Accrued incentive compensation 3,773 1,323 Security deposits 3,480 3,118 Tenant improvement allowance 2,541 2,784 Contingent consideration 753 753 Other 5,764 3,683 Total $ 70,173 $ 76,282 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [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, 2019 and changes during the nine month period then ended follow: Common Shares Weighted Average Grant Date Fair Value Non-vested at December 31, 2018 225,139 $ 15.29 Granted 194,413 17.80 Vested (200,104 ) 15.13 Forfeited (2,015 ) 17.08 Non-vested at September 30, 2019 217,433 $ 17.67 |
Schedule of weighted average grant date fair value assumptions | The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair values of $29.60 and $35.70 per unit for the March 2019 grant using the following assumptions: Volatility 21.8 % Dividend assumption reinvested Expected term in years 2.83 years Risk-free rate 2.53 % Share price (per share) $ 17.89 |
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, 2019 : Executive Awards Trustee Awards Restricted Share Units Weighted Average Grant Date Fair Value Restricted Share Weighted Non-vested at December 31, 2018 533,155 $ 22.66 67,158 $ 16.01 Granted 229,884 25.27 41,925 17.89 Vested (104,553 ) (1) 26.33 (41,786 ) 16.75 Forfeited (3,734 ) 23.08 — — Non-vested at September 30, 2019 654,752 $ 22.99 67,297 $ 16.72 (1) Restricted units vested by Company executives in 2019 resulted in the issuance of 87,805 common shares, less 35,265 common shares withheld to cover minimum withholding tax obligations, for multiple employees. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of other financial instruments | The following table presents the fair value of the Company’s financial instruments (in thousands): September 30, December 31, Carrying Amount Fair Value Carrying Amount Fair Value Assets: Real estate loans receivable $ 94,211 $ 95,655 $ 55,659 $ 54,782 Notes receivable $ 21,795 $ 21,795 $ 20,628 $ 20,628 Derivative assets $ 3,767 $ 3,767 $ 15,121 $ 15,121 Liabilities: Credit facility $ (519,000 ) $ (519,000 ) $ (465,000 ) $ (465,000 ) Notes payable $ (975,000 ) $ (1,020,857 ) $ (975,000 ) $ (914,918 ) Mortgage debt $ (84,091 ) $ (86,205 ) $ (108,859 ) $ (107,131 ) Derivative liabilities $ (4,492 ) $ (4,492 ) $ (3,673 ) $ (3,673 ) |
Tenant Operating Leases (Tables
Tenant Operating Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Lessor, operating lease, payments to be received, maturity | As of September 30, 2019 , the future minimum rental payments on non-cancelable leases, exclusive of expense recoveries, were as follows (in thousands): 2019 $ 74,965 2020 298,480 2021 294,013 2022 283,932 2023 273,513 Thereafter 1,285,817 Total $ 2,510,720 |
Rent Expense (Tables)
Rent Expense (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Schedule of future minimum lease obligations under non-cancelable ground leases | As of September 30, 2019 , the future minimum lease obligations under non-cancelable parking, air, ground, and corporate leases, were as follows (in thousands): 2019 $ 708 2020 3,121 2021 3,108 2022 3,079 2023 3,066 Thereafter 144,557 Total undiscounted lease payments $ 157,639 Less: Interest (94,304 ) Present value of lease liabilities $ 63,335 |
Lease cost | Lease costs consisted of the following for the three and nine months ended September 30, 2019 (in thousands): Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Operating lease cost $ 437 $ 1,365 Variable lease cost 249 724 Total lease cost $ 686 $ 2,089 |
Credit Concentration (Tables)
Credit Concentration (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Concentration Risks, Types, No Concentration Percentage [Abstract] | |
Schedules of concentration of risk, by risk factor | The following table summarizes certain information about the Company’s top five geographic concentrations as of September 30, 2019 (in thousands): State Total ABR Percent of ABR Texas $ 50,603 16.9 % Georgia 25,915 8.6 % Indiana 21,337 7.1 % Nebraska 18,061 6.0 % Minnesota 17,429 5.8 % Other 166,507 55.6 % Total $ 299,852 100.0 % September 30, 2019 (in thousands): Tenant Total ABR Percent of ABR CommonSpirit - CHI - Nebraska $ 16,744 5.6 % CommonSpirit - CHI - KentuckyOne 13,956 4.6 % Northside Hospital 13,175 4.4 % Baylor Scott and White Health 7,770 2.6 % US Oncology 7,546 2.5 % Remaining portfolio 240,661 80.3 % Total $ 299,852 100.0 % |
Earnings Per Share and Earnin_2
Earnings Per Share and Earnings Per Unit (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of amounts used in computing basic and diluted 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 2019 2018 2019 2018 Numerator for earnings per share - basic: Net income $ 15,619 $ 23,771 $ 34,435 $ 47,165 Net income attributable to noncontrolling interests: Operating Partnership (434 ) (656 ) (939 ) (1,300 ) Partially owned properties (136 ) (119 ) (410 ) (374 ) Preferred distributions (314 ) (284 ) (892 ) (1,055 ) Numerator for earnings per share - basic $ 14,735 $ 22,712 $ 32,194 $ 44,436 Numerator for earnings per share - diluted: Numerator for earnings per share - basic $ 14,735 $ 22,712 $ 32,194 $ 44,436 Operating Partnership net income 434 656 939 1,300 Numerator for earnings per share - diluted $ 15,169 $ 23,368 $ 33,133 $ 45,736 Denominator for earnings per share - basic and diluted: Weighted average number of shares outstanding - basic 186,328,500 182,076,513 184,760,335 181,963,693 Effect of dilutive securities: Noncontrolling interest - Operating Partnership units 5,536,111 5,291,025 5,398,734 5,378,760 Restricted common shares 79,779 105,692 89,470 80,272 Restricted share units 35,832 — 241,115 199,384 Denominator for earnings per share - diluted: 191,980,222 187,473,230 190,489,654 187,622,109 Earnings per share - basic $ 0.08 $ 0.12 $ 0.17 $ 0.24 Earnings per share - diluted $ 0.08 $ 0.12 $ 0.17 $ 0.24 The following table shows the amounts used in computing the Operating Partnership’s basic and diluted earnings per unit (in thousands, except unit and per unit data): Three Months Ended Nine Months Ended 2019 2018 2019 2018 Numerator for earnings per unit - basic and diluted: Net income $ 15,619 $ 23,771 $ 34,435 $ 47,165 Net income attributable to noncontrolling interests - partially owned properties (136 ) (119 ) (410 ) (374 ) Preferred distributions (314 ) (284 ) (892 ) (1,055 ) Numerator for earnings per unit - basic and diluted $ 15,169 $ 23,368 $ 33,133 $ 45,736 Denominator for earnings per unit - basic and diluted: Weighted average number of units outstanding - basic 191,864,611 187,367,538 190,159,069 187,342,453 Effect of dilutive securities: Restricted common shares 79,779 105,692 89,470 80,272 Restricted share units 35,832 — 241,115 199,384 Denominator for earnings per unit - diluted 191,980,222 187,473,230 190,489,654 187,622,109 Earnings per unit - basic $ 0.08 $ 0.12 $ 0.17 $ 0.24 Earnings per unit - diluted $ 0.08 $ 0.12 $ 0.17 $ 0.24 |
Organization and Business - Add
Organization and Business - Additional Information (Details) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
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 - ATM
Organization and Business - ATM Program (Details) - Private Placement - 2016 ATM Program - USD ($) | Aug. 05, 2016 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2019 |
Maximum | |||||
Class of Stock [Line Items] | |||||
Aggregate offering price of common stock | $ 300,000,000 | ||||
Operating Partnership | |||||
Class of Stock [Line Items] | |||||
Common shares sold (in shares) | 3,020,711 | 971,000 | 1,681,928 | 5,673,639 | |
Weighted average price (in dollars per share) | $ 17.41 | $ 18.66 | $ 18.61 | $ 17.98 | |
Net proceeds | $ 52,070,000 | $ 17,935,000 | $ 30,986,000 | $ 100,991,000 | |
Sale of stock, remaining authorized amount | $ 61,700,000 | $ 61,700,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Principles of Consolidation (Details) | 9 Months Ended |
Sep. 30, 2019 | |
Business Acquisition [Line Items] | |
Ownership interest in consolidated subsidiaries (as a percent) | 100.00% |
Physicians Realty Trust | |
Business Acquisition [Line Items] | |
Ownership interest in consolidated subsidiaries (as a percent) | 100.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Noncontrolling Interests (Details) $ / shares in Units, $ in Thousands | Sep. 27, 2019USD ($)shares | Aug. 23, 2019USD ($) | Aug. 01, 2019USD ($)shares | Jun. 19, 2019USD ($)shares | May 06, 2019USD ($) | Apr. 04, 2019USD ($)shares | Jan. 09, 2018shares | Feb. 05, 2015$ / shares | Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($)shares | Jan. 09, 2019USD ($) | Dec. 31, 2018USD ($) |
Business Acquisition [Line Items] | ||||||||||||
Number of units issued for funding purchase price (in shares) | shares | 346,989 | 104,172 | ||||||||||
Business acquisition, equity interest issued or issuable, value assigned | $ 6,500 | |||||||||||
Consideration transferred | $ 34,600 | $ 95,184 | $ 1,100 | |||||||||
Unit conversion ratio | 1 | |||||||||||
Embedded derivative | 4,492 | $ 4,492 | $ 3,673 | |||||||||
Rockwall II MOB | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Consideration transferred | $ 14,800 | |||||||||||
Shell Ridge Portfolio (5 MOBs) | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Number of units issued for funding purchase price (in shares) | shares | 910,032 | |||||||||||
Business acquisition, equity interest issued or issuable, value assigned | $ 16,100 | |||||||||||
Consideration transferred | $ 34,625 | |||||||||||
Shadeland Station Portfolio | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Consideration transferred | $ 500 | |||||||||||
NCI Buyout - Medical office Building Texas | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Consideration transferred | $ 600 | |||||||||||
HealthEast Clinic & Specialty Center | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Number of units issued for funding purchase price (in shares) | shares | 116,110 | |||||||||||
Business acquisition, equity interest issued or issuable, value assigned | $ 22,700 | |||||||||||
Embedded derivative | $ 4,500 | $ 4,500 | ||||||||||
Earn-out Investments | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Number of units issued for funding purchase price (in shares) | shares | 3,409 | 8,529 | ||||||||||
Business acquisition, equity interest issued or issuable, value assigned | $ 700 | $ 1,900 | ||||||||||
Consideration transferred | $ 3,200 | |||||||||||
Series A Preferred Units | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Cumulative preferred return | 5.00% | |||||||||||
Redeemable noncontrolling interest, equity, preferred, redemption shares in exchange | 1 | |||||||||||
Redemption value (in dollars per share) | $ / shares | $ 200 | |||||||||||
Period in which preferred units will be redeemable | 1 year | |||||||||||
Physicians Realty Trust | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Percentage of interest held | 96.70% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Dividends and Distributions (Details) - $ / shares | Sep. 20, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 |
Accounting Policies [Abstract] | |||||
Dividends and distributions declared per common share and OP Unit (in dollars per share) | $ 0.23 | $ 0.23 | $ 0.23 | $ 0.69 | $ 0.69 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Impairment (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Accounting Policies [Abstract] | ||||
Impairment charges | $ 0 | $ 0 | $ 0 | $ 0 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Real Estate Loans Receivable (Details) | Sep. 30, 2019mezzanine_loan |
Mezzanine Loan Receivable | |
Property, Plant and Equipment [Line Items] | |
Number of mezzanine loans collateralized | 12 |
Construction Loans | |
Property, Plant and Equipment [Line Items] | |
Number of mezzanine loans collateralized | 2 |
Term Loan Receivable | |
Property, Plant and Equipment [Line Items] | |
Number of mezzanine loans collateralized | 2 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Rental Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | |||||
Straight line rent receivable, net | $ 70,877 | $ 70,877 | $ 64,245 | ||
Allowance for loan and lease loss, recovery of bad debts | $ 200 | $ 200 | $ 9,200 | $ 100 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Derivative Instruments (Details) | Sep. 30, 2019instruments |
Cash Flow Hedging | Interest Rate Swap | |
Derivative [Line Items] | |
Outstanding interest rate swap contracts designated as cash flow hedges | 5,000 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Tenant Receivables Net (Details) $ in Thousands | Jan. 01, 2019USD ($) |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cumulative effect of changes in accounting standards | $ (239) |
ASU 2016-02 | Retained Earnings | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cumulative effect of changes in accounting standards | $ 200 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Segment Reporting (Details) | 9 Months Ended |
Sep. 30, 2019segment | |
Accounting Policies [Abstract] | |
Number of reportable segments | 1 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - New Accounting Pronouncements (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Cumulative effect of changes in accounting standard | $ (239) | ||
Right-of-use lease assets, net | $ 128,490 | ||
Lease liabilities | $ 63,335 | $ 0 | |
ASU 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Right-of-use lease assets, net | 126,700 | ||
Lease liabilities | 61,000 | ||
Retained Earnings | ASU 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Cumulative effect of changes in accounting standard | $ 200 |
Investment and Disposition Ac_3
Investment and Disposition Activity - Narrative (Details) $ in Thousands | Sep. 27, 2019USD ($) | Sep. 30, 2019USD ($)construction_loanstateshealthcarepropertymezzanine_loanbuyouts | Sep. 30, 2019USD ($)construction_loanstateshealthcarepropertymezzanine_loanbuyouts | Sep. 30, 2018USD ($) |
Noncash or Part Noncash Acquisitions [Line Items] | ||||
Building and improvements | $ 90,555 | $ 242,827 | ||
Long-term debt | 39,001 | $ 2,000 | ||
Consideration transferred | $ 34,600 | $ 95,184 | $ 1,100 | |
Number of noncontrolling interest buyouts | buyouts | 2 | 2 | ||
Payments for loans receivable and payments to acquire real estate | $ 152,800 | $ 152,800 | ||
Construction Loans | ||||
Noncash or Part Noncash Acquisitions [Line Items] | ||||
Notes receivable, face amount | $ 44,300 | $ 44,300 | ||
Number of mezzanine loans collateralized | construction_loan | 2 | 2 | ||
Long-term debt | $ 14,100 | |||
Real Estate Loan | ||||
Noncash or Part Noncash Acquisitions [Line Items] | ||||
Number of mezzanine loans collateralized | mezzanine_loan | 4 | 4 | ||
Long-term debt | $ 17,900 | |||
Term Loan | ||||
Noncash or Part Noncash Acquisitions [Line Items] | ||||
Notes receivable, face amount | $ 7,000 | $ 7,000 | ||
Number of mezzanine loans collateralized | construction_loan | 1 | 1 | ||
Two Healthcare Properties Acquired in 2019 | ||||
Noncash or Part Noncash Acquisitions [Line Items] | ||||
Number of operating healthcare properties | healthcareproperty | 10 | 10 | ||
Number of states in which operating healthcare properties and land parcel located | states | 4 | 4 | ||
Asset acquisition, consideration transferred | $ 105,200 | |||
Building and improvements | 4,300 | |||
Loan Investments | ||||
Noncash or Part Noncash Acquisitions [Line Items] | ||||
Notes receivable, face amount | $ 39,000 | $ 39,000 | ||
Consideration transferred | $ 11,945 | |||
Earn-out Investments | ||||
Noncash or Part Noncash Acquisitions [Line Items] | ||||
Number of operating healthcare properties | healthcareproperty | 2 | 2 | ||
Consideration transferred | $ 3,200 |
Investment and Disposition Ac_4
Investment and Disposition Activity - Summary of Investment Activity (Details) - USD ($) $ in Thousands | Sep. 27, 2019 | Aug. 23, 2019 | Aug. 02, 2019 | Aug. 01, 2019 | Jul. 26, 2019 | Jun. 19, 2019 | Apr. 04, 2019 | Jan. 09, 2018 | Sep. 30, 2019 | Sep. 30, 2019 |
Business Acquisition [Line Items] | ||||||||||
Consideration transferred | $ 34,600 | $ 95,184 | $ 1,100 | |||||||
Number of units issued for funding purchase price (in shares) | 346,989 | 104,172 | ||||||||
Business acquisition, equity interest issued or issuable, value assigned | $ 6,500 | |||||||||
Rockwall II MOB | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Consideration transferred | $ 24,006 | |||||||||
Business acquisition, percentage of voting interests acquired | 97.50% | |||||||||
Earnout - Hazelwood Medical Commons | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Consideration transferred | $ 740 | |||||||||
Shadeland Station Portfolio (2 MOBs) | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Consideration transferred | $ 23,296 | |||||||||
NCI Buyout - Rockwall II MOB | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Consideration transferred | $ 572 | |||||||||
Shell Ridge Portfolio (5 MOBs) | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Consideration transferred | $ 34,625 | |||||||||
Number of units issued for funding purchase price (in shares) | 910,032 | |||||||||
Business acquisition, equity interest issued or issuable, value assigned | $ 16,100 | |||||||||
Loan Investments | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Consideration transferred | $ 11,945 | |||||||||
Earn-out Investments | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Consideration transferred | $ 3,200 | |||||||||
Number of units issued for funding purchase price (in shares) | 3,409 | 8,529 | ||||||||
Business acquisition, equity interest issued or issuable, value assigned | $ 700 | $ 1,900 |
Investment and Disposition Ac_5
Investment and Disposition Activity - Summary of Acquisition Date Fair Values (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 | Apr. 04, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Business Acquisition [Line Items] | |||||
Land | $ 226,295 | $ 211,253 | |||
Building and improvements | 3,715,866 | 3,623,962 | |||
Above market in-place lease intangibles | 398,218 | $ 452,384 | |||
Issuance of Series A Preferred Units | $ (6,500) | ||||
Total Asset Acquisitions | |||||
Business Acquisition [Line Items] | |||||
Land | 15,957 | ||||
Building and improvements | 88,822 | ||||
Mortgage escrow | (3,718) | ||||
Issuance of OP Units | (22,598) | ||||
Issuance of Series A Preferred Units | (2,602) | ||||
Net assets acquired | 89,443 | ||||
Total Asset Acquisitions | In-place lease intangibles | |||||
Business Acquisition [Line Items] | |||||
In-place lease intangibles | 12,912 | ||||
Total Asset Acquisitions | Above-market leases | |||||
Business Acquisition [Line Items] | |||||
Above market in-place lease intangibles | 136 | ||||
Total Asset Acquisitions | Below market in-place lease intangibles | |||||
Business Acquisition [Line Items] | |||||
Below market in-place lease intangibles | (96) | ||||
Total Asset Acquisitions | Below-market ground leases | |||||
Business Acquisition [Line Items] | |||||
Right-of-use asset | 630 | ||||
1st Quarter | |||||
Business Acquisition [Line Items] | |||||
Land | $ 0 | ||||
Building and improvements | 7,587 | ||||
Mortgage escrow | (3,718) | ||||
Issuance of OP Units | 0 | ||||
Issuance of Series A Preferred Units | 0 | ||||
Net assets acquired | 4,303 | ||||
1st Quarter | In-place lease intangibles | |||||
Business Acquisition [Line Items] | |||||
In-place lease intangibles | 434 | ||||
1st Quarter | Above-market leases | |||||
Business Acquisition [Line Items] | |||||
Above market in-place lease intangibles | 0 | ||||
1st Quarter | Below market in-place lease intangibles | |||||
Business Acquisition [Line Items] | |||||
Below market in-place lease intangibles | 0 | ||||
1st Quarter | Below-market ground leases | |||||
Business Acquisition [Line Items] | |||||
Right-of-use asset | $ 0 | ||||
2nd Quarter | |||||
Business Acquisition [Line Items] | |||||
Land | $ 5,491 | ||||
Building and improvements | 16,466 | ||||
Mortgage escrow | 0 | ||||
Issuance of OP Units | (6,488) | ||||
Issuance of Series A Preferred Units | (1,862) | ||||
Net assets acquired | 18,162 | ||||
2nd Quarter | In-place lease intangibles | |||||
Business Acquisition [Line Items] | |||||
In-place lease intangibles | 4,651 | ||||
2nd Quarter | Above-market leases | |||||
Business Acquisition [Line Items] | |||||
Above market in-place lease intangibles | 0 | ||||
2nd Quarter | Below market in-place lease intangibles | |||||
Business Acquisition [Line Items] | |||||
Below market in-place lease intangibles | (96) | ||||
2nd Quarter | Below-market ground leases | |||||
Business Acquisition [Line Items] | |||||
Right-of-use asset | $ 0 | ||||
3rd Quarter | |||||
Business Acquisition [Line Items] | |||||
Land | 10,466 | ||||
Building and improvements | 64,769 | ||||
Mortgage escrow | 0 | ||||
Issuance of OP Units | (16,110) | ||||
Issuance of Series A Preferred Units | (740) | ||||
Net assets acquired | 66,978 | ||||
3rd Quarter | In-place lease intangibles | |||||
Business Acquisition [Line Items] | |||||
In-place lease intangibles | 7,827 | ||||
3rd Quarter | Above-market leases | |||||
Business Acquisition [Line Items] | |||||
Above market in-place lease intangibles | 136 | ||||
3rd Quarter | Below market in-place lease intangibles | |||||
Business Acquisition [Line Items] | |||||
Below market in-place lease intangibles | 0 | ||||
3rd Quarter | Below-market ground leases | |||||
Business Acquisition [Line Items] | |||||
Right-of-use asset | $ 630 |
Investment and Disposition Ac_6
Investment and Disposition Activity - Disposition Narrative (Details) - Dispositions Second Quarter 2019 - Disposal Group, Disposed of by Sale, Not Discontinued Operations $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($)buildings | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)buildings | Sep. 30, 2018USD ($) | |
Business Acquisition [Line Items] | ||||
Number of medical office buildings | buildings | 3 | 3 | ||
Proceeds from divestiture of businesses | $ 15,300 | |||
Gain (loss) on sale of investment properties | $ 409 | $ 0 | $ 3,442 | $ 0 |
Investment and Disposition Ac_7
Investment and Disposition Activity - Summary of Revenues and Net Income Related to Disposed Properties (Details) - Dispositions Second Quarter 2019 - Disposal Group, Disposed of by Sale, Not Discontinued Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Business Acquisition [Line Items] | ||||
Revenues | $ 60 | $ 328 | $ 540 | $ 977 |
Income before net gain on sale of investment properties | 9 | 70 | 169 | 209 |
Gain on sale of investment properties | 409 | 0 | 3,442 | 0 |
Net income | $ 418 | $ 70 | $ 3,611 | $ 209 |
Intangibles - Summary of Carryi
Intangibles - Summary of Carrying Amount of Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Cost | $ 528,229 | $ 452,384 |
Accumulated Amortization | (155,853) | (127,557) |
Net | 372,376 | 324,827 |
Liabilities | ||
Below-market and Above-market ground leases, net | 6,474 | 13,585 |
Lease liability, cost | 63,697 | 0 |
Lease liability, accumulated amortization | (362) | 0 |
Lease liability | 63,335 | 0 |
Cost | 78,152 | 20,619 |
Accumulated Amortization | (8,343) | (7,034) |
Net | 69,809 | 13,585 |
In-place leases | ||
Assets | ||
Cost | 351,947 | 340,428 |
Accumulated Amortization | (137,246) | (111,500) |
Net | 214,701 | 228,928 |
Above-market leases | ||
Assets | ||
Cost | 45,559 | 45,568 |
Accumulated Amortization | (16,799) | (13,621) |
Net | 28,760 | 31,947 |
Leasehold interest | ||
Assets | ||
Cost | 712 | 712 |
Accumulated Amortization | (287) | (242) |
Net | 425 | 470 |
Below-market ground leases | ||
Assets | ||
Cost | 0 | 65,676 |
Accumulated Amortization | 0 | (2,194) |
Net | 0 | 63,482 |
Right-of-use lease assets | ||
Assets | ||
Cost | 130,011 | 0 |
Accumulated Amortization | (1,521) | 0 |
Net | 128,490 | 0 |
Below-market leases | ||
Liabilities | ||
Below-market and Above-market ground leases, cost | 14,455 | 14,654 |
Below-market and Above-market ground leases, accumulated amortization | (7,981) | (6,768) |
Below-market and Above-market ground leases, net | 6,474 | 7,886 |
Above-market ground leases | ||
Liabilities | ||
Below-market and Above-market ground leases, cost | 0 | 5,965 |
Below-market and Above-market ground leases, accumulated amortization | 0 | (266) |
Below-market and Above-market ground leases, net | $ 0 | $ 5,699 |
Intangibles - Summary of Acquir
Intangibles - Summary of Acquired Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Amortization expense related to in-place leases | ||||
Intangibles | ||||
Amortization expense related to in-place leases | $ 8,890 | $ 16,274 | $ 27,138 | $ 38,251 |
Decrease of rental income related to above-market leases | ||||
Intangibles | ||||
Decrease of rental income | 1,105 | 1,075 | 3,321 | 3,992 |
Decrease of rental income related to leasehold interest | ||||
Intangibles | ||||
Decrease of rental income | 15 | 15 | 45 | 44 |
Increase of rental income related to below-market leases | ||||
Intangibles | ||||
Increase of rental income related to below-market leases | 429 | 615 | 1,509 | 2,109 |
Decrease of operating expense related to above-market ground leases | ||||
Intangibles | ||||
Decrease (increase) of operating expense | 35 | 33 | 104 | 104 |
Increase in operating expense related to below-market ground leases | ||||
Intangibles | ||||
Decrease (increase) of operating expense | $ 306 | $ 255 | $ 913 | $ 745 |
Intangibles - Additional Inform
Intangibles - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Intangibles | ||
Weighted average amortization period for lease intangibles | 25 years | |
Weighted average amortization period for lease intangible liability | 40 years | |
In-place lease intangibles | ||
Intangibles | ||
Impairment of intangible assets, gross | $ 0.2 | $ 1.3 |
Impairment of intangible assets, accumulated amortization | 0.1 | 0.7 |
Impairment of intangible assets | $ (0.1) | 0.6 |
Below-market leases | ||
Intangibles | ||
Impairment of intangible assets, gross | 0.3 | |
Impairment of intangible assets, accumulated amortization | 0.2 | |
Impairment of intangible assets | $ (0.1) |
Intangibles - Future Aggregate
Intangibles - Future Aggregate Net Amortization of Acquired Lease Intangibles (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Net Decrease in Revenue | |
2019 | $ (680) |
2020 | (2,728) |
2021 | (2,658) |
2022 | (2,207) |
2023 | (1,915) |
Thereafter | (12,523) |
Total | (22,711) |
Net Increase in Expenses | |
2019 | 9,248 |
2020 | 35,038 |
2021 | 32,538 |
2022 | 28,640 |
2023 | 25,753 |
Thereafter | 148,639 |
Total | $ 279,856 |
Other Assets - Schedule of Othe
Other Assets - Schedule of Other Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Other Assets, Unclassified [Abstract] | ||
Straight line rent receivable, net | $ 70,877 | $ 64,245 |
Note receivable | 21,795 | 20,628 |
Lease inducements, net | 12,283 | 13,233 |
Prepaid expenses | 10,237 | 16,017 |
Leasing commissions, net | 7,400 | 6,221 |
Interest rate swap | 3,767 | 15,121 |
Escrows | 1,793 | 5,534 |
Other | 4,507 | 3,760 |
Total | $ 132,659 | $ 144,759 |
Debt - Summary of Debt (Details
Debt - Summary of Debt (Details) | 9 Months Ended | |
Sep. 30, 2019USD ($)healthcareproperty | Dec. 31, 2018USD ($) | |
Debt | ||
Long-term debt, gross | $ 1,577,940,000 | $ 1,548,662,000 |
Unamortized deferred financing costs | (8,229,000) | (9,920,000) |
Unamortized discounts | (5,637,000) | (6,086,000) |
Unamortized fair value adjustments | 151,000 | 197,000 |
Total debt | $ 1,564,225,000 | 1,532,853,000 |
2018 Credit Agreement Amendment | London Interbank Offered Rate (LIBOR) | ||
Debt | ||
Reference rate (as a percent) | 1.10% | |
Mortgages | ||
Debt | ||
Long-term debt, gross | $ 83,940,000 | 108,662,000 |
Mortgages | Fixed interest rate mortgage notes | ||
Debt | ||
Long-term debt, gross | $ 77,263,000 | $ 101,832,000 |
Weighted average interest rate | 4.44% | 4.26% |
Pledged assets separately reported real estate pledged as collateral number | healthcareproperty | 5 | |
Pledged assets, not separately reported, real estate | $ 170,800,000 | $ 174,200,000 |
Mortgages | Fixed interest rate mortgage notes | Minimum | ||
Debt | ||
Interest rate (as a percent) | 3.00% | |
Mortgages | Fixed interest rate mortgage notes | Maximum | ||
Debt | ||
Interest rate (as a percent) | 5.50% | |
Mortgages | Variable interest mortgage note | ||
Debt | ||
Long-term debt, gross | $ 6,677,000 | $ 6,830,000 |
Weighted average interest rate | 4.79% | 5.21% |
Pledged assets separately reported real estate pledged as collateral number | healthcareproperty | 1 | |
Pledged assets, not separately reported, real estate | $ 8,700,000 | $ 8,700,000 |
Mortgages | Variable interest mortgage note | London Interbank Offered Rate (LIBOR) | Maximum | ||
Debt | ||
Reference rate (as a percent) | 2.75% | |
Revolving credit facility | $850 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.10%, due September 2022 | ||
Debt | ||
Long-term debt, gross | $ 269,000,000 | 215,000,000 |
Debt instrument, face amount | $ 850,000,000 | |
Reference rate (as a percent) | 1.10% | |
Senior notes | ||
Debt | ||
Total debt | $ 975,000,000 | |
Senior notes | $400 million senior unsecured notes bearing fixed interest of 4.30%, due March 2027 | ||
Debt | ||
Long-term debt, gross | 400,000,000 | 400,000,000 |
Debt instrument, face amount | $ 400,000,000 | |
Interest rate (as a percent) | 4.30% | |
Senior notes | $350 million senior unsecured notes bearing fixed interest of 3.95%, due January 2028 | ||
Debt | ||
Long-term debt, gross | $ 350,000,000 | 350,000,000 |
Debt instrument, face amount | $ 350,000,000 | |
Interest rate (as a percent) | 3.95% | |
Senior notes | $150 million senior unsecured notes bearing fixed interest of 4.03% to 4.74%, due January 2023 to 2031 | ||
Debt | ||
Long-term debt, gross | $ 150,000,000 | 150,000,000 |
Debt instrument, face amount | $ 150,000,000 | |
Senior notes | $150 million senior unsecured notes bearing fixed interest of 4.03% to 4.74%, due January 2023 to 2031 | Minimum | ||
Debt | ||
Interest rate (as a percent) | 4.03% | |
Senior notes | $150 million senior unsecured notes bearing fixed interest of 4.03% to 4.74%, due January 2023 to 2031 | Maximum | ||
Debt | ||
Interest rate (as a percent) | 4.74% | |
Senior notes | $75 million senior unsecured notes bearing fixed interest of 4.09% to 4.24%, due August 2025 to 2027 | ||
Debt | ||
Long-term debt, gross | $ 75,000,000 | 75,000,000 |
Debt instrument, face amount | $ 75,000,000 | |
Senior notes | $75 million senior unsecured notes bearing fixed interest of 4.09% to 4.24%, due August 2025 to 2027 | Minimum | ||
Debt | ||
Interest rate (as a percent) | 4.09% | |
Senior notes | $75 million senior unsecured notes bearing fixed interest of 4.09% to 4.24%, due August 2025 to 2027 | Maximum | ||
Debt | ||
Interest rate (as a percent) | 4.24% | |
Unsecured Debt | $850 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.10%, due September 2022 | London Interbank Offered Rate (LIBOR) | ||
Debt | ||
Reference rate (as a percent) | 1.10% | |
Unsecured Debt | $250 million unsecured term borrowing bearing fixed interest of 2.32%, due June 2023 | ||
Debt | ||
Long-term debt, gross | $ 250,000,000 | $ 250,000,000 |
Debt instrument, face amount | $ 250,000,000 | |
Interest rate (as a percent) | 2.32% | |
Unsecured Debt | $250 million unsecured term borrowing bearing fixed interest of 2.32%, due June 2023 | London Interbank Offered Rate (LIBOR) | ||
Debt | ||
Reference rate (as a percent) | 1.25% | |
Unsecured Debt | 2018 Credit Agreement Amendment | London Interbank Offered Rate (LIBOR) | ||
Debt | ||
Reference rate (as a percent) | 1.25% |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) | Jul. 07, 2016 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | Aug. 07, 2018 |
Debt | |||||||||
Long-term debt | $ 1,564,225,000 | $ 1,564,225,000 | $ 1,532,853,000 | ||||||
Long-term debt, gross | 1,577,940,000 | 1,577,940,000 | $ 1,548,662,000 | ||||||
Interest expense, debt | 15,600,000 | $ 16,500,000 | $ 46,700,000 | $ 50,100,000 | |||||
2018 Credit Agreement Amendment | |||||||||
Debt | |||||||||
Current borrowing capacity | $ 1,100,000,000 | ||||||||
Maximum borrowing capacity as a percentage of maximum principal amount | 10.00% | ||||||||
Accordion feature, increase limit | $ 500,000,000 | ||||||||
Maximum borrowing capacity under accordion feature | 1,600,000,000 | ||||||||
Unused fee (as a percent) | 0.25% | ||||||||
2018 Credit Agreement Amendment | London Interbank Offered Rate (LIBOR) | |||||||||
Debt | |||||||||
Reference rate (as a percent) | 1.10% | ||||||||
Revolving credit facility | |||||||||
Debt | |||||||||
Current borrowing capacity | $ 572,500,000 | $ 572,500,000 | |||||||
Term of extension option | 1 year | ||||||||
Amount outstanding | $ 269,000,000 | 269,000,000 | |||||||
Term Loan | |||||||||
Debt | |||||||||
Amount outstanding | $ 250,000,000 | 250,000,000 | $ 250,000,000 | ||||||
Term Loan | 2018 Credit Agreement Amendment | |||||||||
Debt | |||||||||
Current borrowing capacity | 250,000,000 | ||||||||
Debt instrument, term | 7 years | ||||||||
Unsecured Debt | 2018 Credit Agreement Amendment | London Interbank Offered Rate (LIBOR) | |||||||||
Debt | |||||||||
Reference rate (as a percent) | 1.25% | ||||||||
Letter of Credit | |||||||||
Debt | |||||||||
Current borrowing capacity | 8,500,000 | $ 8,500,000 | |||||||
Amount outstanding | 0 | 0 | |||||||
Senior notes | |||||||||
Debt | |||||||||
Long-term debt | 975,000,000 | 975,000,000 | |||||||
Senior notes | Senior Notes Due 2023 | |||||||||
Debt | |||||||||
Long-term debt | 15,000,000 | 15,000,000 | |||||||
Senior notes | Senior Notes Due 2025 | |||||||||
Debt | |||||||||
Long-term debt | 25,000,000 | 25,000,000 | |||||||
Senior notes | Senior Notes Due 2026 | |||||||||
Debt | |||||||||
Long-term debt | 70,000,000 | 70,000,000 | |||||||
Senior notes | Senior Notes Due 2027 | |||||||||
Debt | |||||||||
Long-term debt | 425,000,000 | 425,000,000 | |||||||
Senior notes | Senior Notes Due 2028 | |||||||||
Debt | |||||||||
Long-term debt | 395,000,000 | 395,000,000 | |||||||
Senior notes | Senor Notes Due 2031 | |||||||||
Debt | |||||||||
Long-term debt | $ 45,000,000 | $ 45,000,000 | |||||||
Interest Rate Swap | Unsecured Debt | London Interbank Offered Rate (LIBOR) | |||||||||
Debt | |||||||||
Effective fixed interest rate (as a percent) | 1.07% | 1.07% | 2.32% | ||||||
Interest rate (as a percent) | 2.32% | ||||||||
Maximum | Revolving credit facility | 2018 Credit Agreement Amendment | |||||||||
Debt | |||||||||
Current borrowing capacity | $ 850,000,000 | ||||||||
Operating Partnership | Revolving credit facility | |||||||||
Debt | |||||||||
Interest rate at end of period (as a percent) | 3.74% | ||||||||
Operating Partnership | Revolving credit facility | London Interbank Offered Rate (LIBOR) | |||||||||
Debt | |||||||||
Reference rate (as a percent) | 2.04% |
Debt - Trust Investment Grade R
Debt - Trust Investment Grade Rating (Details) | 9 Months Ended |
Sep. 30, 2019 | |
At Least A- or A3 | Adjusted LIBOR rate loans and letter of credit | London Interbank Offered Rate (LIBOR) | |
Debt | |
Reference rate (as a percent) | 0.775% |
At Least A- or A3 | Adjusted LIBOR rate term loans and letter of credit | London Interbank Offered Rate (LIBOR) | |
Debt | |
Reference rate (as a percent) | 0.85% |
At Least BBB or Baa1 | Adjusted LIBOR rate loans and letter of credit | London Interbank Offered Rate (LIBOR) | |
Debt | |
Reference rate (as a percent) | 0.825% |
At Least BBB or Baa1 | Adjusted LIBOR rate term loans and letter of credit | London Interbank Offered Rate (LIBOR) | |
Debt | |
Reference rate (as a percent) | 0.90% |
At Least BBB or Baa2 | Adjusted LIBOR rate loans and letter of credit | London Interbank Offered Rate (LIBOR) | |
Debt | |
Reference rate (as a percent) | 0.90% |
At Least BBB or Baa2 | Adjusted LIBOR rate term loans and letter of credit | London Interbank Offered Rate (LIBOR) | |
Debt | |
Reference rate (as a percent) | 1.00% |
At Least BBB- or Baa3 | Adjusted LIBOR rate loans and letter of credit | London Interbank Offered Rate (LIBOR) | |
Debt | |
Reference rate (as a percent) | 1.10% |
At Least BBB- or Baa3 | Adjusted LIBOR rate term loans and letter of credit | London Interbank Offered Rate (LIBOR) | |
Debt | |
Reference rate (as a percent) | 1.25% |
Below BBB- or Baa3 | Adjusted LIBOR rate loans and letter of credit | London Interbank Offered Rate (LIBOR) | |
Debt | |
Reference rate (as a percent) | 1.45% |
Below BBB- or Baa3 | Adjusted LIBOR rate term loans and letter of credit | London Interbank Offered Rate (LIBOR) | |
Debt | |
Reference rate (as a percent) | 1.65% |
Margin for Revolving Loans: Base Rate Loans | At Least A- or A3 | Base rate loans | Base rate | |
Debt | |
Reference rate (as a percent) | 0.00% |
Margin for Revolving Loans: Base Rate Loans | At Least BBB or Baa1 | Base rate loans | Base rate | |
Debt | |
Reference rate (as a percent) | 0.00% |
Margin for Revolving Loans: Base Rate Loans | At Least BBB or Baa2 | Base rate loans | Base rate | |
Debt | |
Reference rate (as a percent) | 0.00% |
Margin for Revolving Loans: Base Rate Loans | At Least BBB- or Baa3 | Base rate loans | Base rate | |
Debt | |
Reference rate (as a percent) | 0.10% |
Margin for Revolving Loans: Base Rate Loans | Below BBB- or Baa3 | Base rate loans | Base rate | |
Debt | |
Reference rate (as a percent) | 0.45% |
Margin for Term Loans: Base Rate Loans | At Least A- or A3 | Base rate loans | Base rate | |
Debt | |
Reference rate (as a percent) | 0.00% |
Margin for Term Loans: Base Rate Loans | At Least BBB or Baa1 | Base rate loans | Base rate | |
Debt | |
Reference rate (as a percent) | 0.00% |
Margin for Term Loans: Base Rate Loans | At Least BBB or Baa2 | Base rate loans | Base rate | |
Debt | |
Reference rate (as a percent) | 0.00% |
Margin for Term Loans: Base Rate Loans | At Least BBB- or Baa3 | Base rate loans | Base rate | |
Debt | |
Reference rate (as a percent) | 0.25% |
Margin for Term Loans: Base Rate Loans | Below BBB- or Baa3 | Base rate loans | Base rate | |
Debt | |
Reference rate (as a percent) | 0.65% |
Debt - Scheduled Principal Paym
Debt - Scheduled Principal Payments (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
2019 | $ 482 | |
2020 | 25,470 | |
2021 | 8,289 | |
2022 | 289,818 | |
2023 | 266,000 | |
Thereafter | 987,881 | |
Total Payments | $ 1,577,940 | $ 1,548,662 |
Derivatives - Additional Inform
Derivatives - Additional Information (Details) | Sep. 30, 2019instruments |
Cash Flow Hedging | Interest Rate Swap | |
Derivative [Line Items] | |
Outstanding interest rate swap contracts designated as cash flow hedges | 5,000 |
Derivatives - Location and Aggr
Derivatives - Location and Aggregate Fair Value of Interest Rate Swaps (Details) - USD ($) $ in Thousands | 9 Months Ended | ||||
Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | Jul. 07, 2016 | |
Derivative [Line Items] | |||||
Total notional amount | $ 250,000 | ||||
Effective date | Jul. 7, 2016 | ||||
Maturity date | Jun. 10, 2023 | ||||
Interest Rate Swap | Carrying Amount | |||||
Derivative [Line Items] | |||||
Asset balance (included in Other assets) | $ 3,767 | $ 15,121 | |||
London Interbank Offered Rate (LIBOR) | 2018 Credit Agreement Amendment | |||||
Derivative [Line Items] | |||||
Reference rate (as a percent) | 1.10% | ||||
Unsecured Debt | London Interbank Offered Rate (LIBOR) | 2018 Credit Agreement Amendment | |||||
Derivative [Line Items] | |||||
Reference rate (as a percent) | 1.25% | ||||
Unsecured Debt | London Interbank Offered Rate (LIBOR) | Interest Rate Swap | |||||
Derivative [Line Items] | |||||
Effective fixed interest rate (as a percent) | 1.07% | 2.32% | 1.07% |
Accrued Expenses and Other Li_3
Accrued Expenses and Other Liabilities - Schedule of Accrued Expense and Other Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Other Liabilities Disclosure [Abstract] | ||
Real estate taxes payable | $ 23,481 | $ 21,043 |
Prepaid rent | 15,145 | 18,745 |
Accrued interest | 5,801 | 16,038 |
Accrued expenses | 4,943 | 5,122 |
Embedded derivative | 4,492 | 3,673 |
Accrued incentive compensation | 3,773 | 1,323 |
Security deposits | 3,480 | 3,118 |
Tenant improvement allowance | 2,541 | 2,784 |
Contingent consideration | 753 | 753 |
Other | 5,764 | 3,683 |
Total | $ 70,173 | $ 76,282 |
Stock-based Compensation - Addi
Stock-based Compensation - Additional Information (Details) - Restricted common shares - 2013 Plan - shares | Apr. 30, 2019 | Aug. 07, 2014 | Dec. 31, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Maximum number of shares authorized (in shares) | 7,000,000 | 2,450,000 | 600,000 |
Increase in number of common shares authorized for issuance (in shares) | 4,550,000 | 1,850,000 |
Stock-based Compensation - Rest
Stock-based Compensation - Restricted Common Shares (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Non-cash share compensation | $ 7,861 | $ 6,675 | ||
2013 Plan | Restricted common shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 194,413 | |||
Grant date value | $ 3,500 | |||
Non-cash share compensation | $ 900 | $ 800 | 2,500 | $ 2,300 |
Unrecognized compensation expense | $ 2,000 | $ 2,000 | ||
Minimum | 2013 Plan | Restricted common shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 1 year | |||
Maximum | 2013 Plan | Restricted common shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years |
Stock-based Compensation - Summ
Stock-based Compensation - Summary of the Status of the Trust's Non-Vested Restricted Common Shares (Details) - 2013 Plan - Restricted common shares | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Common Shares | |
Non-vested at the beginning of the period (in shares) | shares | 225,139 |
Granted (in shares) | shares | 194,413 |
Vested (in shares) | shares | (200,104) |
Forfeited (in shares) | shares | (2,015) |
Non-vested at the end of the period (in shares) | shares | 217,433 |
Weighted Average Grant Date Fair Value | |
Non-vested at beginning of period (in dollars per share) | $ / shares | $ 15.29 |
Granted (in dollars per share) | $ / shares | 17.80 |
Vested (in dollars per share) | $ / shares | 15.13 |
Forfeited (in dollars per share) | $ / shares | 17.08 |
Non-vested at end of period (in dollars per share) | $ / shares | $ 17.67 |
Stock-based Compensation - Re_2
Stock-based Compensation - Restricted Share Units (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Non-cash share compensation | $ 7,861 | $ 6,675 | ||||
2013 Plan | Restricted share units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Non-cash share compensation | $ 1,700 | $ 1,200 | 5,300 | $ 4,300 | ||
Unrecognized compensation expense | $ 7,600 | $ 7,600 | ||||
2013 Plan | Performance based restricted stock units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in dollars per share) | $ 25.27 | |||||
Performance conditions grant date fair value (in dollars per share) | $ 17.89 | |||||
Officers and Certain Employees | 2013 Plan | Restricted share units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in shares) | 229,884 | |||||
Vesting period | 3 years | |||||
Officers and Certain Employees | 2013 Plan | Market Based Restricted Stock Units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 50.00% | |||||
Granted (in dollars per share) | $ 29.60 | |||||
Officers and Certain Employees | 2013 Plan | Performance based restricted stock units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 50.00% | |||||
Percentage of restricted share units issued to trustees | 100.00% | |||||
Trustees | 2013 Plan | Restricted share units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in shares) | 41,925 | |||||
Vesting period | 2 years | |||||
Director | 2013 Plan | Restricted share units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of dividend equivalent included in each award (in shares) | 1 | 1 | ||||
Market Condition Number Two | 2013 Plan | Market Based Restricted Stock Units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in dollars per share) | $ 35.70 |
Stock-based Compensation - Re_3
Stock-based Compensation - Restricted Share Assumptions (Details) - 2013 Plan - Restricted share units (RSUs) | 1 Months Ended |
Mar. 31, 2019$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Volatility | 21.80% |
Expected term in years | 2 years 9 months 29 days |
Risk-free rate | 2.53% |
Share price (per share) | $ 17.89 |
Stock-based Compensation - Su_2
Stock-based Compensation - Summary of Activity in the Trust's Restricted Share Units (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Weighted Average Grant Date Fair Value | ||
Common stock, shares issued (in shares) | 185,315,334 | 182,416,007 |
2013 Plan | Executive Awards | ||
Restricted Share Units | ||
Non-vested at the beginning of the period (in shares) | 533,155 | |
Granted (in shares) | 229,884 | |
Vested (in shares) | (104,553) | |
Forfeited (in shares) | (3,734) | |
Non-vested at the end of the period (in shares) | 654,752 | |
Weighted Average Grant Date Fair Value | ||
Non-vested at beginning of period (in dollars per share) | $ 22.66 | |
Granted (in dollars per share) | 25.27 | |
Vested (in dollars per share) | 26.33 | |
Forfeited (in dollars per share) | 23.08 | |
Non-vested at end of period (in dollars per share) | $ 22.99 | |
Common stock, shares issued (in shares) | 87,805 | |
Share-based payment arrangement, shares withheld for tax withholding obligation | 35,265 | |
2013 Plan | Trustee Awards | ||
Restricted Share Units | ||
Non-vested at the beginning of the period (in shares) | 67,158 | |
Granted (in shares) | 41,925 | |
Vested (in shares) | (41,786) | |
Forfeited (in shares) | 0 | |
Non-vested at the end of the period (in shares) | 67,297 | |
Weighted Average Grant Date Fair Value | ||
Non-vested at beginning of period (in dollars per share) | $ 16.01 | |
Granted (in dollars per share) | 17.89 | |
Vested (in dollars per share) | 16.75 | |
Forfeited (in dollars per share) | 0 | |
Non-vested at end of period (in dollars per share) | $ 16.72 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) | Sep. 30, 2019USD ($)instruments |
Fair value, measurements, nonrecurring | |
Fair value of other financial instruments | |
Assets subject to impairment fair value disclosure | $ | $ 0 |
Cash Flow Hedging | Interest Rate Swap | |
Fair value of other financial instruments | |
Outstanding interest rate swap contracts designated as cash flow hedges | instruments | 5,000 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Company's Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Assets: | ||
Note receivable | $ 21,795 | $ 20,628 |
Liabilities: | ||
Credit facility | (512,851) | (457,388) |
Notes payable | (967,573) | (966,961) |
Carrying Amount | ||
Assets: | ||
Real estate loans receivable | 94,211 | 55,659 |
Note receivable | 21,795 | 20,628 |
Liabilities: | ||
Credit facility | (519,000) | (465,000) |
Notes payable | (975,000) | (975,000) |
Mortgage debt | (84,091) | (108,859) |
Carrying Amount | Interest Rate Swap | ||
Assets: | ||
Derivative assets | 3,767 | 15,121 |
Carrying Amount | Embedded Derivative Financial Instruments | ||
Liabilities: | ||
Derivative liabilities | (4,492) | (3,673) |
Fair Value | ||
Assets: | ||
Real estate loans receivable | 95,655 | 54,782 |
Note receivable | 21,795 | 20,628 |
Liabilities: | ||
Credit facility | (519,000) | (465,000) |
Notes payable | (1,020,857) | (914,918) |
Mortgage debt | (86,205) | (107,131) |
Fair Value | Interest Rate Swap | ||
Assets: | ||
Derivative assets | 3,767 | 15,121 |
Fair Value | Embedded Derivative Financial Instruments | ||
Liabilities: | ||
Derivative liabilities | $ (4,492) | $ (3,673) |
Tenant Operating Leases - Sched
Tenant Operating Leases - Schedule of Future Minimum Rental Payments (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Future minimum rental payments on non-cancelable leases | |
2019 | $ 74,965 |
2020 | 298,480 |
2021 | 294,013 |
2022 | 283,932 |
2023 | 273,513 |
Thereafter | 1,285,817 |
Total | $ 2,510,720 |
Rent Expense - Additional Infor
Rent Expense - Additional Information (Details) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2019USD ($)properties | Jan. 01, 2019USD ($) | Dec. 31, 2018USD ($) | |
Operating Leased Assets [Line Items] | |||
Number of properties subject to parking lease | properties | 3 | ||
Number of properties subject to air space lease | properties | 1 | ||
Number of properties subject to ground leases | properties | 80 | ||
Number of office space leases | properties | 11 | ||
Maximum lease terms | 88 years | ||
Operating lease, weighted average remaining lease term | 44 years | ||
Right-of-use lease assets, net | $ | $ 128,490 | ||
Lease liabilities | $ | $ 63,335 | $ 0 | |
Operating lease, weighted average discount rate, percent | 4.30% | ||
ASU 2016-02 | |||
Operating Leased Assets [Line Items] | |||
Right-of-use lease assets, net | $ | $ 126,700 | ||
Lease liabilities | $ | $ 61,000 |
Rent Expense - Schedule of Futu
Rent Expense - Schedule of Future Minimum Lease Obligations (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Future minimum lease obligations under non-cancelable parking, air, and ground leases | ||
2019 | $ 708 | |
2020 | 3,121 | |
2021 | 3,108 | |
2022 | 3,079 | |
2023 | 3,066 | |
Thereafter | 144,557 | |
Total undiscounted lease payments | 157,639 | |
Less: Interest | (94,304) | |
Present value of lease liabilities | $ 63,335 | $ 0 |
Rent Expense - Lease Cost (Deta
Rent Expense - Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Leases [Abstract] | ||
Operating lease cost | $ 437 | $ 1,365 |
Variable lease cost | 249 | 724 |
Total lease cost | $ 686 | $ 2,089 |
Credit Concentration - Schedule
Credit Concentration - Schedule of ABR (Annualized Base Rent) (Details) - Sales Revenue, Services, Net $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($)Rate | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ 299,852 |
Percent of ABR (annualized base rent) | Rate | 100.00% |
Customer Concentration Risk | CommonSpirit - CHI - Nebraska | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ 16,744 |
Percent of ABR (annualized base rent) | 5.60% |
Customer Concentration Risk | CommonSpirit - CHI - KentuckyOne | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ 13,956 |
Percent of ABR (annualized base rent) | 4.60% |
Customer Concentration Risk | Northside Hospital | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ 13,175 |
Percent of ABR (annualized base rent) | 4.40% |
Customer Concentration Risk | Baylor Scott and White Health | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ 7,770 |
Percent of ABR (annualized base rent) | 2.60% |
Customer Concentration Risk | US Oncology | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ 7,546 |
Percent of ABR (annualized base rent) | 2.50% |
Customer Concentration Risk | Remaining portfolio | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ 240,661 |
Percent of ABR (annualized base rent) | Rate | 80.30% |
Geographic Concentration Risk | Texas | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ 50,603 |
Percent of ABR (annualized base rent) | 16.90% |
Geographic Concentration Risk | Georgia | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ 25,915 |
Percent of ABR (annualized base rent) | 8.60% |
Geographic Concentration Risk | Indiana | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ 21,337 |
Percent of ABR (annualized base rent) | 7.10% |
Geographic Concentration Risk | Nebraska | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ 18,061 |
Percent of ABR (annualized base rent) | 6.00% |
Geographic Concentration Risk | Minnesota | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ 17,429 |
Percent of ABR (annualized base rent) | 5.80% |
Geographic Concentration Risk | Other | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ 166,507 |
Percent of ABR (annualized base rent) | 55.60% |
Credit Concentration - Addition
Credit Concentration - Additional Information (Details) - Sales Revenue, Services, Net | 9 Months Ended |
Sep. 30, 2019Rate | |
Concentration Risk [Line Items] | |
Percent of ABR (annualized base rent) | 100.00% |
Top five tenant relationships | |
Concentration Risk [Line Items] | |
Percent of ABR (annualized base rent) | 19.70% |
CHI Portfolio | |
Concentration Risk [Line Items] | |
Percent of ABR (annualized base rent) | 20.10% |
Earnings Per Share and Earnin_3
Earnings Per Share and Earnings Per Unit - Schedule of Earnings Per Share and Earnings Per Unit (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | ||
Earnings Per Share | |||||
Antidilutive securities excluded from computation of earnings per share, amount | 600,313 | 600,313 | |||
Numerator for earnings per share - basic: | |||||
Net income | $ 15,619 | $ 23,771 | $ 34,435 | $ 47,165 | |
Net income attributable to noncontrolling interests: | |||||
Operating Partnership | (434) | (656) | (939) | (1,300) | |
Partially owned properties | [1] | (136) | (119) | (410) | (374) |
Preferred distributions | (314) | (284) | (892) | (1,055) | |
Net income attributable to common shareholders | 14,735 | 22,712 | 32,194 | 44,436 | |
Numerator for earnings per share - diluted: | |||||
Numerator for earnings per share - basic | 14,735 | 22,712 | 32,194 | 44,436 | |
Operating Partnership net income | 434 | 656 | 939 | 1,300 | |
Numerator for earnings per share - diluted | $ 15,169 | $ 23,368 | $ 33,133 | $ 45,736 | |
Denominator for earnings per share - basic and diluted: | |||||
Weighted average number of shares outstanding - basic (in shares) | 186,328,500 | 182,076,513 | 184,760,335 | 181,963,693 | |
Effect of dilutive securities: | |||||
Noncontrolling interest - Operating Partnership units (in shares) | 5,536,111 | 5,291,025 | 5,398,734 | 5,378,760 | |
Denominator for earnings per share - diluted (in shares) | 191,980,222 | 187,473,230 | 190,489,654 | 187,622,109 | |
Earnings per share - basic (in dollars per share) | $ 0.08 | $ 0.12 | $ 0.17 | $ 0.24 | |
Earnings per share - diluted (in dollars per share) | $ 0.08 | $ 0.12 | $ 0.17 | $ 0.24 | |
Restricted common shares | |||||
Effect of dilutive securities: | |||||
Effect of dilutive securities, restricted shares and RSUs (in shares) | 79,779 | 105,692 | 89,470 | 80,272 | |
Restricted share units | |||||
Effect of dilutive securities: | |||||
Effect of dilutive securities, restricted shares and RSUs (in shares) | 35,832 | 0 | 241,115 | 199,384 | |
Operating Partnership | |||||
Numerator for earnings per share - basic: | |||||
Net income | $ 15,619 | $ 23,771 | $ 34,435 | $ 47,165 | |
Net income attributable to noncontrolling interests: | |||||
Partially owned properties | [2] | (136) | (119) | (410) | (374) |
Preferred distributions | (314) | (284) | (892) | (1,055) | |
Net income attributable to common shareholders | 15,169 | 23,368 | 33,133 | 45,736 | |
Numerator for earnings per share - diluted: | |||||
Numerator for earnings per share - basic | $ 15,169 | $ 23,368 | $ 33,133 | $ 45,736 | |
Denominator for earnings per unit - basic and diluted: | |||||
Weighted average number of units outstanding - basic (in shares) | 191,864,611 | 187,367,538 | 190,159,069 | 187,342,453 | |
Effect of dilutive securities: | |||||
Denominator for earnings per unit - diluted (in shares) | 191,980,222 | 187,473,230 | 190,489,654 | 187,622,109 | |
Earnings per unit - basic (in dollars per share) | $ 0.08 | $ 0.12 | $ 0.17 | $ 0.24 | |
Earnings per unit - diluted (in dollars per share) | $ 0.08 | $ 0.12 | $ 0.17 | $ 0.24 | |
Operating Partnership | Restricted common shares | |||||
Effect of dilutive securities: | |||||
Effect of dilutive securities, restricted shares and RSUs (in shares) | 79,779 | 105,692 | 89,470 | 80,272 | |
Operating Partnership | Restricted share units | |||||
Effect of dilutive securities: | |||||
Effect of dilutive securities, restricted shares and RSUs (in shares) | 35,832 | 0 | 241,115 | 199,384 | |
[1] | Includes amounts attributable to redeemable noncontrolling interests. | ||||
[2] | Includes amounts attributable to redeemable noncontrolling interests. |
Subsequent Events - Narrative (
Subsequent Events - Narrative (Details) - Subsequent Event - USD ($) | Oct. 31, 2019 | Oct. 15, 2019 | Oct. 23, 2019 |
Term Loan | |||
Subsequent Event [Line Items] | |||
Debt instrument, face amount | $ 47,000,000 | ||
Interest rate (as a percent) | 6.00% | ||
Foundation El Paso Surgical Hospital, El Paso, Texas | Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||
Subsequent Event [Line Items] | |||
Proceeds from divestiture of businesses | $ 32,000,000 | ||
Notes receivable, face amount | $ 27,600,000 | ||
Receivable rate | 8.00% | ||
Interest rate, after thirteen months (as a percent) | 10.00% | ||
Term of receivable | 2 years | ||
Medcore Realty Eden Hill, LLC | |||
Subsequent Event [Line Items] | |||
Ownership in joint venture | 49.00% | ||
Payments to acquire interest in joint venture | $ 8,900,000 | ||
Medical Office Facility Manchester, Connecticut | |||
Subsequent Event [Line Items] | |||
Payments to acquire productive assets | $ 11,300,000 |
Uncategorized Items - a10q2019q
Label | Element | Value |
Additional Paid-in Capital [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (239,000) |
Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (239,000) |