Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 31, 2015 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | Community Healthcare Trust Inc | |
Entity Central Index Key | 1,631,569 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 7,596,940 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Real estate properties | ||
Land | $ 10,407 | $ 0 |
Buildings, improvements, and lease intangibles | 90,721 | 0 |
Total real estate properties | 101,128 | 0 |
Less accumulated depreciation | (2,788) | 0 |
Total real estate properties, net | 98,340 | 0 |
Cash and cash equivalents | 16,053 | 2 |
Mortgage note receivable, net | 10,862 | 0 |
Other assets | 1,795 | 0 |
Total assets | 127,050 | 2 |
Liabilities | ||
Revolving credit facility | 0 | 0 |
Accounts payable and accrued liabilities | 1,031 | 0 |
Other liabilities | 1,060 | 0 |
Total liabilities | $ 2,091 | $ 0 |
Commitments and contingencies | ||
Stockholders' Equity | ||
Preferred stock, $0.01 par value; 50,000,000 shares authorized; none outstanding | $ 0 | $ 0 |
Common stock, $0.01 par value; 450,000,000 shares authorized; 7,596,940 and 200,000 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively | 76 | 2 |
Additional paid-in capital | 127,538 | 0 |
Cumulative net loss | (1,576) | 0 |
Cumulative dividends | (1,079) | 0 |
Total stockholders’ equity | 124,959 | 2 |
Total liabilities and stockholders' equity | $ 127,050 | $ 2 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred Stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred Stock, shares outstanding | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, shares authorized | 450,000,000 | 450,000,000 |
Common Stock, shares issued | 7,596,940 | 200,000 |
Common Stock, shares outstanding | 7,596,940 | 200,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Compehrensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2015 | |
REVENUES | ||||
Rental income | $ 2,585 | $ 0 | $ 0 | $ 3,314 |
Tenant reimbursements | 655 | 0 | 0 | 762 |
Revenues | 3,240 | 0 | 0 | 4,076 |
EXPENSES | ||||
Property operating | 751 | 0 | 0 | 889 |
General and administrative | 223 | 0 | 0 | 1,826 |
Depreciation and amortization | 2,211 | 0 | 0 | 2,788 |
Expenses | 3,185 | 0 | 0 | 5,503 |
OTHER INCOME (EXPENSE) | ||||
Interest expense | (140) | 0 | 0 | (181) |
Interest and other income, net | 18 | 0 | 0 | 32 |
Other Income (Expense) | (122) | 0 | 0 | (149) |
NET LOSS | (67) | 0 | 0 | (1,576) |
COMPREHENSIVE LOSS | $ (67) | $ 0 | $ 0 | $ (1,576) |
LOSS PER COMMON SHARE: | ||||
Net loss per common share – Basic (in dollars per share) | $ (0.01) | $ 0 | $ 0 | $ (0.42) |
Net loss per common share – Diluted (in dollars per share) | $ (0.01) | $ 0 | $ 0 | $ (0.42) |
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING-BASIC | 7,511,183 | 200,000 | 200,000 | 3,788,639 |
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING-DILUTED | 7,511,183 | 200,000 | 200,000 | 3,788,639 |
DIVIDENDS DECLARED, PER COMMON SHARE, DURING THE PERIOD | $ 0.142 | $ 0 | $ 0 | $ 0.142 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - 9 months ended Sep. 30, 2015 - USD ($) $ in Thousands | Total | Preferred Stock [Member] | Common Stock [Member] | Additional Paid in Capital [Member] | Cumulative Net Income (Deficit) [Member] | Cumulative Dividends [Member] |
Beginning Balance at Dec. 31, 2014 | $ 2 | $ 0 | $ 2 | $ 0 | $ 0 | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock | 127,516 | 73 | 127,443 | |||
Stock-based compensation | 96 | 1 | 95 | |||
Net loss | (1,576) | (1,576) | ||||
Dividends to common stockholders ($0.142 per share) | (1,079) | (1,079) | ||||
Ending Balance at Sep. 30, 2015 | $ 124,959 | $ 0 | $ 76 | $ 127,538 | $ (1,576) | $ (1,079) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) | 9 Months Ended |
Sep. 30, 2015$ / shares | |
Cumulative Dividends [Member] | |
Dividends to common stockholders, per share (in dollars per share) | $ 0.142 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | 9 Months Ended |
Sep. 30, 2014 | Sep. 30, 2015 | |
OPERATING ACTIVITIES | ||
Net loss | $ 0 | $ (1,576) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 0 | 2,874 |
Stock-based compensation | 0 | 96 |
Straight-line rent receivable | 0 | (64) |
Changes in operating assets and liabilities: | ||
Other assets | 0 | (877) |
Accounts payable and accrued liabilities | 0 | 561 |
Other liabilities | 0 | 455 |
Net cash provided by operating activities | 0 | 1,469 |
INVESTING ACTIVITIES | ||
Acquisitions of real estate | 0 | (100,120) |
Funding of mortgage note receivable | 0 | (10,862) |
Net cash used in investing activities | 0 | (110,982) |
FINANCING ACTIVITIES | ||
Dividends paid | 0 | (1,079) |
Net proceeds from issuance of common stock | 2 | 127,516 |
Debt issuance costs | 0 | (873) |
Net cash provided by financing activities | 2 | 125,564 |
Increase in cash and cash equivalents | 2 | 16,051 |
Cash and cash equivalents, beginning of period | 0 | 2 |
Cash and cash equivalents, end of period | $ 2 | $ 16,053 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Business Overview Community Healthcare Trust Incorporated (the ‘‘Company’’, ‘‘we’’, ‘‘our’’) was organized in the State of Maryland on March 28, 2014. The Company is a fully-integrated healthcare real estate company that owns and acquires real estate properties that are leased to hospitals, doctors, healthcare systems or other healthcare service providers in non-urban markets. The Company conducts its business through an UPREIT structure in which its properties are owned by its operating partnership, either directly or through subsidiaries. The Company is the sole general partner, owning 100% of the operating partnership ("OP") units. In May 2015, the Company completed its initial public offering, issuing 7,187,500 shares of common stock for approximately $ 125.2 million in net proceeds and concurrent private placements to certain officers and directors of 123,683 shares of common stock for approximately $2.3 million in net proceeds. In June 2015, the Company entered into a $ 75.0 million syndicated senior revolving credit facility. Since its initial public offering, as of September 30, 2015 , the Company investments of approximately $112.0 million in 33 real estate properties and mortgages, located in 16 states, totaling approximately 575,000 square feet. Basis of Presentation The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. This interim financial information should be read in conjunction with the financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this report and in the Company’s final prospectus (“Prospectus”) for the Company’s initial public offering, filed with the Securities and Exchange Commission on May 26, 2015 pursuant to Rule 424(b). Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. This interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2015 . Principles of Consolidation Our consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, joint ventures, partnerships and variable interest entities, or VIEs, where the Company controls the operating activities. All material intercompany accounts and transactions have been eliminated. Management must make judgments regarding the Company's level of influence or control over an entity and whether or not the Company is the primary beneficiary of a variable interest entity. Consideration of various factors include, but is not limited to, the Company's ability to direct the activities that most significantly impact the entity's governing body, the size and seniority of the Company's investment, the Company's ability and the rights of other investors to participate in policy making decisions, the Company's ability to replace the manager and/or liquidate the entity. Management's ability to correctly assess its influence or control over an entity when determining the primary beneficiary of a VIE affects the presentation of these entities in the Company's consolidated financial statements. If it is determined that the Company is the primary beneficiary of a VIE, the Company's consolidated financial statements would include the operating results of the VIE rather than the results of the variable interest in the VIE. The Company would depend on the VIE to provide timely financial information and would rely on the interest control of the VIE to provide accurate financial information. Untimely or inaccurate financial information provided to the Company or deficiencies in the VIEs internal controls over financial reporting could impact the Company's consolidated financial statements and its internal control over financial reporting. In September 2015, the Company acquired an $11.0 million mortgage note receivable as disclosed in Note 4. The Company identified the borrower as a VIE, but management determined that the Company was not the primary beneficiary. Jumpstart Our Business Startups Act of 2012 The JOBS Act permits the Company, as an ‘‘emerging growth company,’’ to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. Management has elected to ‘‘opt out’’ of this provision and, as a result, will be required to comply with new or revised accounting standards as required when they are adopted. The decision to opt out of the extended transition period under the JOBS Act is irrevocable. Use of Estimates in the Condensed Consolidated Financial Statements Preparation of the Condensed Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Actual results may materially differ from those estimates. Segment Reporting The Company acquires and owns healthcare-related real estate properties that are leased to hospitals, doctors, healthcare systems or other healthcare service providers in non-urban markets. The Company is managed as one reporting unit, rather than multiple reporting units, for internal reporting purposes and for internal decision-making. Therefore, the Company discloses its operating results in a single segment. Cash and Cash Equivalents Cash and cash equivalents includes short-term investments with original maturities of three months or less when purchased. Real Estate Properties Real estate properties are recorded at cost or at fair value if acquired in a transaction that is a business combination under Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. Cost or fair value at the time of acquisition is allocated between land, buildings, tenant improvements, lease and other intangibles, and personal property, as applicable. Depreciation and amortization of real estate assets and liabilities in place as of September 30, 2015 , is recognized on a straight-line basis over the estimated useful life of the asset. The estimated useful lives at September 30, 2015 are as follows: Buildings and improvements 20 - 30 years Lease intangibles 14 months to 7.8 years Accounting for Acquisitions of Real Estate Properties Real estate properties are recorded at cost or, if acquired through business combination, at fair value. Costs at the time of acquisition, including closing costs for asset purchases, are allocated among land, building, and personal property. In a business combination, we estimate the fair value of acquired tangible assets (consisting of land, building, and improvements) and identified intangible assets and liabilities (consisting of above- and below-market leases, in-place leases, and tenant relationships) based on the evaluation of information and estimates available at that date in accordance with the provisions of ASC 805, Business Combinations , and we allocate the purchase price based on these assessments. We make estimates of the fair value of the tangible and intangible assets and acquired liabilities using information obtained from multiple sources as a result of pre-acquisition due diligence, tax records, and other sources. Based on these estimates, we recognize the acquired assets and liabilities at their estimated fair values. Initial valuations are subject to change until the information is finalized, no later than 12 months from the acquisition date. We expense transaction costs associated with business combinations in the period incurred. In accordance with ASC 805, the fair value of tangible property assets acquired considers the value of the property as if vacant determined by comparable sales and other relevant data. The determination of fair value involves the use of significant judgment and estimation. We value land based on various inputs, which may include real estate tax assessed values, internal analysis of recently acquired and existing comparable properties within our portfolio, or third party appraisals. In recognizing identified intangible assets and liabilities of an acquired property, the value of above-or-below market leases is estimated based on the present value (using an interest rate which reflects 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. In the case of a below-market lease, the Company would also evaluate any renewal options associated with that lease to determine if the intangible should include those periods. The capitalized above-market or below-market lease intangibles are amortized as a reduction or addition to rental income over the estimated remaining term of the respective leases. In determining the value of in-place leases and tenant relationships, 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 property operating expenses, estimates of lost rental revenue during the expected lease-up periods, and costs to execute similar leases, including leasing commissions. The values assigned to in-place leases and tenant relationships are amortized 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. Asset Impairments The Company may need to assess the potential for impairment of identifiable, definite-lived, intangible assets and long-lived assets, including real estate properties, whenever events occur or a change in circumstances indicates that the carrying value might not be fully recoverable. Indicators of impairment may include significant under-performance of an asset relative to historical or expected operating results; significant changes in the Company’s use of assets or the strategy for its overall business; plans to sell an asset before its depreciable life has ended; the expiration of a significant portion of leases in a property; or significant negative economic trends or negative industry trends for the Company or its operators. In addition, the Company’s review for possible impairment may include those assets subject to purchase options and those impacted by casualties, such as tornadoes and hurricanes. If management determines that the carrying value of the Company’s assets may not be fully recoverable based on the existence of any of the factors above, or others, management would measure and record an impairment charge based on the estimated fair value of the property or the estimated fair value less costs to sell the property. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. In calculating fair value, a company must maximize the use of observable market inputs, minimize the use of unobservable market inputs and disclose in the form of an outlined hierarchy the details of such fair value measurements. A hierarchy of valuation techniques is defined to determine whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when available. These inputs have created the following fair value hierarchy: • Level 1 – quoted prices for identical instruments in active markets. • Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and • Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Executed purchase and sale agreements, that are binding agreements, are categorized as level one inputs. Brokerage estimates, letters of intent, or unexecuted purchase and sale agreements are considered to be level three as they are non-binding in nature. Lease Accounting We, as lessor, make a determination with respect to each of our leases whether they should be accounted for as operating leases or capital leases. The classification criteria is based on estimates regarding the fair value of the leased facilities, minimum lease payments, effective cost of funds, the economic useful life of the facilities, the existence of a bargain purchase option, and certain other terms in the lease agreements. We believe all of our leases should be accounted for as operating leases. Payments received under operating leases are accounted for in the consolidated statement of income as rental revenue for actual cash rent collected plus or minus a straight-line adjustment for estimated minimum lease escalators. Assets subject to operating leases are reported as real estate investments in the Condensed Consolidated Balance Sheet. Substantially all of our leases contain fixed or formula-based rent escalators. To the extent that the escalator increases are tied to a fixed index or rate, lease payments are accounted for on a straight-line basis over the life of the lease. Revenue Recognition The Company recognizes rental revenue when it is realized or realizable and earned, in accordance with ASC 840, Leases . There are four criteria that must all be met before a Company may recognize revenue, including persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered (i.e., the tenant has taken possession of and controls the physical use of the leased asset), the price has been fixed or is determinable, and collectability is reasonably assured. ASC 840 also requires that rental revenue, less lease inducements, be recognized on a straight-line basis over the term of the lease. Recognizing rental revenue on a straight-line basis for leases may result in recognizing revenue in amounts more or less than amounts currently due from tenants. If management determines that the collectability of straight-line rents is not reasonably assured, the amount of future revenue recognized may be limited to amounts contractually owed and, where appropriate, establish an allowance for estimated losses. Income received but not yet earned is deferred until such time it is earned. Deferred revenue, included in other liabilities on the Condensed Consolidated Balance Sheets, was approximately $ 277,000 and $ 0 , respectively, at September 30, 2015 and December 31, 2014 . Allowance for Doubtful Accounts and Credit Losses Accounts Receivable Management monitors the aging and collectability of its accounts receivable balances on an ongoing basis. Whenever deterioration in the timeliness of payment from a tenant is noted, management investigates and determines the reason or reasons for the delay. Considering all information gathered, management’s judgment is exercised in determining whether a receivable is potentially uncollectible and, if so, how much or what percentage may be uncollectible. Among the factors management considers in determining collectability are: the type of contractual arrangement under which the receivable was recorded (e.g., triple net lease, gross lease, or other type of agreement); the tenant’s reason for slow payment; industry influences under which the tenant operates; evidence of willingness and ability of the tenant to pay the receivable; credit-worthiness of the tenant; collateral, security deposit, letters of credit or other monies held as security; tenant’s historical payment pattern; other contractual agreements between the tenant and the Company; relationship between the tenant and the Company; the state in which the tenant operates; and the existence of a guarantor and the willingness and ability of the guarantor to pay the receivable. Considering these factors and others, management concludes whether all or some of the aged receivable balance is likely uncollectible. Upon determining that some portion of the receivable is likely uncollectible, the Company will record a provision for bad debts for the amount it expects will be uncollectible. When efforts to collect a receivable are exhausted, the receivable amount is charged off against the allowance. At September 30, 2015 and December 31, 2014 , the Company had no provision for bad debts. Mortgage Note Receivable The Company had one mortgage note receivable outstanding as of September 30, 2015 with a principal balance of $11.0 million, maturing on September 30, 2026. The mortgage note is interest only with a 9.5% interest rate through September 30, 2016. Thereafter, monthly principal and interest payments will be due through the maturity date. The Company evaluates collectibility of its mortgage notes and records allowances on the notes as necessary. A loan is impaired when it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan as scheduled, including both contractual interest and principal payments. This assessment also includes an evaluation of the loan collateral. If a mortgage loan becomes past due, the Company will review the specific circumstances and may discontinue the accrual of interest on the loan. The loan is not returned to accrual status until the debtor has demonstrated the ability to continue debt service in accordance with the contractual terms. Loans placed on non-accrual status will be accounted for on a cash basis, in which income is recognized only upon the receipt of cash, or on a cost-recovery basis, in which all cash receipts reduce the carrying value of the loan, based on the Company's expectation of future collectibility. At September 30, 2015 and December 31, 2014 , there were no mortgage notes on non-accrual status and the Company had not recorded any allowances on its mortgage note receivable. Stock-Based Compensation We have adopted the 2014 Incentive Plan. The 2014 Incentive Plan is intended to attract and retain qualified persons upon whom, in large measure, our sustained progress, growth and profitability depend, to motivate the participants to achieve long-term company goals and to more closely align the participants’ interests with those of our other stockholders by providing them with a proprietary interest in our growth and performance. The two distinct programs under the 2014 Incentive Plan are the Alignment of Interest Program and the Officer Incentive Program. It is anticipated that our executive officers, officers, employees, consultants and non-employee directors will be eligible to participate in the 2014 Incentive Plan. Currently, only the Company’s officers and directors are participants in the 2014 Incentive Plan. The 2014 Incentive Plan currently reserves 7% of the Company’s outstanding common stock for issuance as awards. The 2014 Incentive Plan is administered by the Company’s compensation committee, which interprets the 2014 Incentive Plan and has broad discretion to select the eligible persons to whom awards will be granted, as well as the type, size and terms and conditions of each award, including the number of shares subject to awards and the expiration date of, and the vesting schedule or other restrictions (including, without limitation, restrictive covenants) applicable to, awards. The Company recognizes share-based payments to its officers and directors in its Consolidates Statements of Operations on a straight-line basis over the requisite service period based on the fair value of the award on the measurement date. Organization and Offering Costs Some of the costs related to the Company’s organization, its initial public offering and due diligence related to the initial properties acquired by the Company were incurred by Athena Funding Partners (“AFP”), which is substantially owned and controlled by Timothy G. Wallace, the Company’s Chairman, Chief Executive Officer and President. The Company entered into a formation services agreement with AFP on April 1, 2014, pursuant to which the Company agreed to reimburse the actual costs incurred by AFP only upon the successful completion of the initial public offering. The costs related to the activities prior to the offering were undertaken by AFP on the Company’s behalf, including the Company’s organization, negotiating the property acquisitions, performing due diligence related to the initial properties, performing corporate work in contemplation of the offering and preparing the Prospectus. Costs incurred include expenses such as legal and accounting fees, certain costs related to performing property due diligence, certain property related costs, travel, overhead, office supplies and office rent. The Company reimbursed AFP approximately $ 170,000 and $ 255,000 during the second and third quarters of 2015, respectively. AFP will receive no further compensation for providing such services and funding such costs. Organization costs incurred by the Company were expensed. Offering costs incurred were recorded in stockholders’ equity as a reduction to additional paid-in capital. Intangible Assets Intangible assets with indefinite lives are not amortized, but are tested at least annually for impairment. Intangible assets with finite lives are amortized over their respective lives to their estimated residual values and are reviewed for impairment only when impairment indicators are present. Identifiable intangible assets of the Company are generally comprised of in-place lease intangible assets and deferred financing costs. In-place lease intangible assets are amortized on a straight-line basis over the applicable lives of the assets. Deferred financing costs are amortized to interest expense over the term of the related credit facility or other debt instrument using the straight-line method, which approximates amortization under the effective interest method. Contingent Liabilities From time to time, the Company may be subject to loss contingencies arising from legal proceedings and similar matters. Additionally, while the Company maintains comprehensive liability and property insurance with respect to each of its properties, the Company may be exposed to unforeseen losses related to uninsured or under-insured damages. Management will monitor any matter that may present a contingent liability, and, on a quarterly basis, will review any reserves and accruals relating to the liabilities, adjusting provisions as necessary in view of changes in available information. Liabilities for contingencies are first recorded when a loss is determined to be both probable and can be reasonably estimated. Changes in estimates regarding the exposure to a contingent loss will be reflected as adjustments to the related liability in the periods when they occur and will be disclosed in the notes to the Condensed Consolidated Financial Statements. On occasion, the Company may also have acquisitions which include contingent consideration. Accounting for business combinations require the Company to estimate the fair value of any contingent purchase consideration at acquisition. Management will monitor these contingencies on a quarterly basis. Changes in estimates regarding contingent purchase consideration will be reflected as adjustments to the related liability in the periods when they occur and will be disclosed in the notes to the Condensed Consolidated Financial Statements. Federal Income Taxes No provision has been made for federal income taxes. The Company intends at all times to qualify as a real estate investment trust (“REIT”) under Sections 856 and 860 of the Internal Revenue Code of 1986, as amended. The Company must distribute at least 90% per annum of its REIT taxable income to its stockholders (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 generally accepted accounting principles) and meet other requirements to continue to qualify as a real estate investment trust. State Income Taxes The Company must pay certain state income taxes which will generally be included in general and administrative expense on the Company’s Condensed Consolidated Statements of Comprehensive Loss. Sales and Use Taxes The Company must pay sales and use taxes to certain state tax authorities based on rent collected from tenants in properties located in those states. The Company is generally reimbursed for those taxes by those tenants. The Company accounts for the payments to the taxing authority and subsequent reimbursement from the tenant on a net basis, included in tenant reimbursement revenue on the Company’s Condensed Consolidated Statements of Comprehensive Loss. Concentration of Credit Risks Our credit risks primarily relate to cash and cash equivalents and our one mortgage note receivable. Cash and cash equivalents are primarily held in bank accounts and overnight investments. We maintain our bank deposit accounts with large financial institutions in amounts that often exceed federally-insured limits. We have not experienced any losses in such accounts. We invested in one mortgage note during the third quarter of 2015 and have a fixed price purchase option on the secured property through September 30, 2016. See Note 4 for more details. Earnings per Share Basic earnings per common share is calculated using weighted average shares outstanding less issued and outstanding non-vested shares of common stock. Diluted earnings per common share is calculated using weighted average shares outstanding plus the dilutive effect of the non-vested shares of common stock using the treasury stock method and the average stock price during the period. New Accounting Pronouncements Accounting Standards Update No. 2015-16 In September 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments." This standard eliminates the requirement that an acquirer in a business combination account for measurement-period adjustments retrospectively. Instead, an acquirer will recognize measurement-period adjustments, including its effect on earnings and goodwill, in the period in which the amount of the adjustment is determined. This standard is effective for the Company beginning on January 1, 2016 with early adoption permitted. In general, the Company does not believe the adoption of this standard will have a material impact on it results of operations or cash flows. However, in certain cases, this standard could require a Company to record material adjustments upon realization or clarification of certain matters related to previously recorded business combinations. Accounting Standards Update No. 2015-03 In April 2015, the FASB issued ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs." This standard requires debt issuance costs to be reported in the balance sheet as a direct reduction from the face amount of the note in which it is directly related. The SEC staff has indicated that it will not object to an entity deferring and presenting debt issuance costs related to lines-of-credit as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. This standard is effective for the Company beginning on January 1, 2016 with early adoption permitted, on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. Upon transition, the Company is required to comply with the applicable disclosures for a change in an accounting principle. The Company does not expect the adoption of this standard to have a material impact on the Company's consolidated financial position or cash flows. Accounting Standards Update No. 2014-09 In May 2014, the FASB issued ASU No. 2014-09, as amended by ASU No. 2015-14, "Revenue from Contracts with Customers", a comprehensive new revenue recognition standard that supersedes most existing revenue recognition guidance, including sales of real estate. This standard's core principle is that a company will recognize revenue when it transfers goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods and services. However, leasing contracts, representing the major source of the Company's revenues, are not within the scope of the new standard and will continue to be accounted for under existing standards. This new standard is effective for the Company for annual and interim periods beginning on January 1, 2018 with early adoption permitted. The Company has not yet determined the effects on the consolidated financial statements and related notes resulting from the adoption of this new standard. |
Real Estate Investments
Real Estate Investments | 9 Months Ended |
Sep. 30, 2015 | |
Real Estate [Abstract] | |
Real Estate Investments | Real Estate Investments At September 30, 2015 , the Company had investments of approximately $112.0 million in 33 real estate properties, mortgages and corporate property. The following table summarizes the Company's investments. (Dollars in thousands) Number of Facilities Land Buildings, Improvements, and Lease Intangibles Total Accumulated Depreciation Medical office: Georgia 1 $ 366 $ 3,084 $ 3,450 $ 122 Illinois 1 821 8,289 9,110 148 Kansas 2 1,379 10,497 11,876 449 Kentucky 1 484 4,116 4,600 64 Ohio 1 33 3,617 3,650 145 Texas 2 2,493 9,307 11,800 341 8 5,576 38,910 44,486 1,269 Physician clinics: Arizona 1 41 1,594 1,635 65 Florida 3 — 5,950 5,950 66 Kansas 2 1,247 8,081 9,328 217 Pennsylvania 1 330 2,770 3,100 174 Virginia 1 110 1,265 1,375 40 Wisconsin 1 412 2,587 2,999 81 9 2,140 22,247 24,387 643 Ambulatory surgery centers: Arizona 1 227 2,473 2,700 75 Colorado 1 203 2,497 2,700 — Ohio 1 188 1,382 1,570 74 Pennsylvania 1 26 1,424 1,450 26 South Carolina 1 315 1,885 2,200 124 Texas 1 528 4,072 4,600 120 6 1,487 13,733 15,220 419 Dialysis clinics: Colorado 1 259 2,791 3,050 71 Georgia 1 62 1,038 1,100 35 Kentucky 1 193 3,407 3,600 80 Ohio 1 66 1,184 1,250 43 Tennessee 1 28 572 600 12 Texas 1 181 2,444 2,625 50 6 789 11,436 12,225 291 Oncology centers: Alabama 3 415 4,385 4,800 166 3 415 4,385 4,800 166 Corporate property — — 10 10 — Total owned properties 32 $ 10,407 $ 90,721 $ 101,128 $ 2,788 Mortgage note receivable, net 1 — — 10,862 — Total real estate investments 33 $ 10,407 $ 90,721 $ 111,990 $ 2,788 |
Real Estate Leases
Real Estate Leases | 9 Months Ended |
Sep. 30, 2015 | |
Leases [Abstract] | |
Real Estate Leases | Real Estate Leases The Company’s properties are generally leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through 2030. The Company’s leases generally require the lessee to pay minimum rent, with fixed rent renewal terms or increases based on a Consumer Price Index and additional rent, which may include taxes (including property tax), insurance, maintenance and other operating costs associated with the leased property. Future minimum lease payments under the non-cancelable operating leases due the Company for the years ending December 31, as of September 30, 2015 , are as follows (in thousands): 2015 (three months ending December 31) $ 2,612 2016 9,642 2017 7,835 2018 6,086 2019 3,549 2020 and thereafter 10,230 $ 39,954 |
Real Estate Acquisitions
Real Estate Acquisitions | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Real Estate Acquisitions | Real Estate Acquisitions Property Acquisitions During the third quarter of 2015, the Company acquired three real estate properties totaling approximately 71,000 square feet for an aggregate purchase price of approximately $13.1 million, including cash consideration of approximately $13.0 million. Upon acquisition, the properties were approximately 93.6% leased in the aggregate with lease expirations ranging from 2016 through 2024. During the second quarter of 2015, the Company acquired 29 real estate properties totaling approximately 474,000 square feet for an aggregate purchase price of approximately $ 87.5 million, including cash consideration of approximately $ 87.0 million. Upon acquisition, the properties were approximately 92.0% leased in the aggregate with lease expirations ranging from 2015 through 2030. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed in the property acquisitions during 2015. These valuations are preliminary with any changes expected to be finalized no later than 12 months from the date of the acquisition. Estimated Fair Value Estimated Useful Life (In thousands) (In years) Land $ 10,407 Buildings 72,144 20 - 30 Intangibles: At-market lease intangibles 18,304 1.2 - 7.1 Above-market lease intangibles 65 2.6 Below-market lease intangibles (357 ) 6.1 - 7.8 Total intangibles 18,012 Accounts receivable and other assets assumed 19 Accounts payable, accrued liabilities and other liabilities assumed (1) (735 ) Prorated rent and operating expense reimbursement amounts collected (477 ) Expenses paid, including closing costs 636 Total cash consideration $ 100,006 (1) Includes security deposits received, property taxes payable prior to the acquisition, and a tenant improvement allowance. Mortgage Note Receivable During the third quarter of 2015, the Company funded an $ 11.0 million mortgage secured by a 29,890 square foot long-term acute care facility in Louisiana which matures on September 30, 2026. The Company received loan and commitment fees from the transaction totaling $137,500 which have been deferred and will be recognized into income on a straight-line basis through the maturity of the mortgage note. The mortgage loan requires interest only payments to us through September 2016 and has a stated fixed interest rate of 9.5% . Thereafter, monthly principal and interest payments will be due through maturity. The Company has an option to purchase the property through September 30, 2016 for a fixed amount. |
Revolving Credit Facility
Revolving Credit Facility | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Revolving Credit Facility | Revolving Credit Facility On June 3, 2015, the Company entered into a $ 75.0 million syndicated senior revolving credit facility (the “Credit Facility”) that matures on June 3, 2018 with two options to extend the facility, subject to the satisfaction of certain conditions, for an additional year each for an extension fee of 0.25% of the aggregate commitments. The Credit Facility also includes an accordion feature that provides the Company with additional capacity, subject to the satisfaction of customary terms and conditions, including obtaining additional commitments from lenders, of up to $ 125.0 million, for a total facility size of up to $ 200.0 million. The Company’s material subsidiaries are guarantors of the obligations under the Credit Facility. The amount available for the Company to borrow from time to time under the Credit Facility is limited according to a borrowing base valuation of certain unencumbered properties owned by subsidiaries of our operating partnership that guarantee the facility. Amounts outstanding under the Credit Facility bear annual interest at a floating rate that is based, at the Company’s option, on either: (i) LIBOR plus 2.50% to 3.00% or (ii) a base rate plus 1.50% to 2.00% , in each case, depending upon the Company’s leverage ratio. In addition, the Company is obligated to pay an annual fee equal to 0.25% of the amount of the unused portion of the Credit Facility if amounts borrowed are greater than 50% of the borrowing capacity under the Credit Facility and 0.35% of the unused portion of the Credit Facility if amounts borrowed are less than or equal to 50% of the borrowing capacity under the Credit Facility. At September 30, 2015 , the Company had not borrowed under the Credit Facility. The Company’s ability to borrow under the Credit Facility is subject to its ongoing compliance with a number of customary affirmative and negative covenants, including limitations with respect to liens, indebtedness, distributions, mergers, consolidations, investments, restricted payments and asset sales, as well as financial maintenance covenants. The Company was in compliance with its financial covenants under its Credit Facility at September 30, 2015 . |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Common Stock The following table provides a reconciliation of the beginning and ending common stock balances for the nine months ended September 30, 2015 and for the period March 28, 2014 (inception) through December 31, 2014: Nine Months Ended September 30, 2015 For the Period March 28, 2014 (inception) through December 31, 2014 Balance, beginning of period 200,000 — Issuance of common stock 7,311,183 200,000 Restricted stock-based awards 85,757 — Balance, end of period 7,596,940 200,000 Equity Offerings On May 27, 2015, the Company completed its initial public offering of 7,187,500 shares of its common stock, par value $ 0.01 per share, at a public offering price of $ 19.00 per share, which includes 937,500 shares of common stock issued in connection with the exercise in full of the underwriters’ option to purchase additional shares. The Company received net proceeds of approximately $ 125.2 million from the offering. In addition, on May 27, 2015, 123,683 shares of common stock, par value $ 0.01 per share, were issued in concurrent private placements to certain directors and officers of the Company. The Company received approximately $ 2.3 million in net proceeds from the concurrent private placements. The offer and sale of these private placement shares were not registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemption from registration under Section 4(a)(2) of the Securities Act as such transactions did not involve a public offering of securities. On March 31, 2014, the Company issued 200,000 shares of common stock to its officers as founder's shares in connection with the formation of the Company. |
Loss Per Common Share
Loss Per Common Share | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Loss Per Common Share | Loss Per Common Share The following table sets forth the computation of basic and diluted loss per common share. Three Months Ended September 30, Nine Months Ended September 30, For the Period March 28, 2014(inception) through September 30, (Dollars in thousands, except per share data) 2015 2014 2015 2014 Net loss $ (67 ) $ — $ (1,576 ) $ — Weighted average Common Shares outstanding Weighted average Common Shares outstanding 7,596,940 200,000 3,828,219 200,000 Unvested restricted stock (85,757 ) — (39,580 ) — Weighted average Common Shares outstanding–Basic 7,511,183 200,000 3,788,639 200,000 Weighted average Common Shares–Basic 7,511,183 200,000 3,788,639 200,000 Dilutive effect of restricted stock — — — — Weighted average Common Shares outstanding –Diluted 7,511,183 200,000 3,788,639 200,000 Basic Loss per Common Share $ (0.01 ) $ — $ (0.42 ) $ — Diluted Loss per Common Share $ (0.01 ) $ — $ (0.42 ) $ — The dilutive effect of 3,723 and 3,372 shares of restricted common stock, respectively, were excluded from the calculation of diluted loss per common share for the three and nine months ended September 30, 2015 , because the effect was anti-dilutive due to the net loss incurred in those periods. |
Incentive Plan
Incentive Plan | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Incentive Plan | Incentive Plan The Company has adopted the 2014 Incentive Plan under which awards may be made in the form of restricted stock or cash. On May 28, 2015, the Company granted 69,125 shares of restricted common stock to its officers, in lieu of salary, that will cliff vest in eight years. On May 28, 2015, the Company also granted its directors 5,264 shares of restricted common stock upon completion of the initial public offering and granted 11,368 shares of restricted common stock to its directors, in lieu of director fees, which will cliff vest in three years. Once shares have been issued, the recipient has the right to receive dividends and the right to vote the shares. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Concurrent Private Placements Concurrently with the completion of the Company’s initial public offering, Timothy G. Wallace, our Chairman, Chief Executive Officer and President, and certain of our officers and directors acquired common stock through concurrent private placements at a price per share equal to the initial public offering price. See Note 6 for further details. Reimbursement of Costs to AFP AFP, which is substantially owned and controlled by Timothy G. Wallace, the Company’s Chairman, Chief Executive Officer and President, advanced or incurred on the Company’s behalf costs related to the activities prior to the offering, including the Company’s organization, negotiating the property acquisitions, performing due diligence related to the initial properties, performing corporate work in contemplation of the offering and preparing the prospectus. Costs incurred included expenses such as legal and accounting fees, certain costs related to performing property due diligence, certain property related costs, travel, overhead, office supplies and office rent. On April 1, 2014, the Company entered into a formation services agreement with AFP pursuant to which the Company agreed to reimburse the actual costs incurred by AFP only upon the successful completion of the initial public offering. The Company reimbursed AFP approximately $ 170,000 and $ 255,000 during the second and third quarters of 2015, respectively. AFP will receive no further compensation for providing such services and funding such costs. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Property Acquisitions Since September 30, 2015, the Company has acquired three real estate properties totaling approximately 56,000 square feet for an aggregate purchase price of approximately $14.7 million , including cash consideration of approximately $14.6 million . Upon acquisition, the properties were 100% leased with lease expiration dates through 2030. Dividend Declared On November 6, 2015, the Company’s Board of Directors declared a quarterly common stock dividend in the amount of $ 0.375 per share. The dividend is payable on December 4, 2015 to stockholders of record on November 20, 2015. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. This interim financial information should be read in conjunction with the financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this report and in the Company’s final prospectus (“Prospectus”) for the Company’s initial public offering, filed with the Securities and Exchange Commission on May 26, 2015 pursuant to Rule 424(b). Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. This interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2015 . |
Principles of Consolidation | Principles of Consolidation Our consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, joint ventures, partnerships and variable interest entities, or VIEs, where the Company controls the operating activities. All material intercompany accounts and transactions have been eliminated. Management must make judgments regarding the Company's level of influence or control over an entity and whether or not the Company is the primary beneficiary of a variable interest entity. Consideration of various factors include, but is not limited to, the Company's ability to direct the activities that most significantly impact the entity's governing body, the size and seniority of the Company's investment, the Company's ability and the rights of other investors to participate in policy making decisions, the Company's ability to replace the manager and/or liquidate the entity. Management's ability to correctly assess its influence or control over an entity when determining the primary beneficiary of a VIE affects the presentation of these entities in the Company's consolidated financial statements. If it is determined that the Company is the primary beneficiary of a VIE, the Company's consolidated financial statements would include the operating results of the VIE rather than the results of the variable interest in the VIE. The Company would depend on the VIE to provide timely financial information and would rely on the interest control of the VIE to provide accurate financial information. Untimely or inaccurate financial information provided to the Company or deficiencies in the VIEs internal controls over financial reporting could impact the Company's consolidated financial statements and its internal control over financial reporting. |
Use of Estimates in the Condensed Consolidated Financial Statements | Use of Estimates in the Condensed Consolidated Financial Statements Preparation of the Condensed Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Actual results may materially differ from those estimates. |
Segment Reporting | Segment Reporting The Company acquires and owns healthcare-related real estate properties that are leased to hospitals, doctors, healthcare systems or other healthcare service providers in non-urban markets. The Company is managed as one reporting unit, rather than multiple reporting units, for internal reporting purposes and for internal decision-making. Therefore, the Company discloses its operating results in a single segment. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents includes short-term investments with original maturities of three months or less when purchased. |
Real Estate Properties/Accounting for Acquisitions of Real Estate Properties | Accounting for Acquisitions of Real Estate Properties Real estate properties are recorded at cost or, if acquired through business combination, at fair value. Costs at the time of acquisition, including closing costs for asset purchases, are allocated among land, building, and personal property. In a business combination, we estimate the fair value of acquired tangible assets (consisting of land, building, and improvements) and identified intangible assets and liabilities (consisting of above- and below-market leases, in-place leases, and tenant relationships) based on the evaluation of information and estimates available at that date in accordance with the provisions of ASC 805, Business Combinations , and we allocate the purchase price based on these assessments. We make estimates of the fair value of the tangible and intangible assets and acquired liabilities using information obtained from multiple sources as a result of pre-acquisition due diligence, tax records, and other sources. Based on these estimates, we recognize the acquired assets and liabilities at their estimated fair values. Initial valuations are subject to change until the information is finalized, no later than 12 months from the acquisition date. We expense transaction costs associated with business combinations in the period incurred. In accordance with ASC 805, the fair value of tangible property assets acquired considers the value of the property as if vacant determined by comparable sales and other relevant data. The determination of fair value involves the use of significant judgment and estimation. We value land based on various inputs, which may include real estate tax assessed values, internal analysis of recently acquired and existing comparable properties within our portfolio, or third party appraisals. In recognizing identified intangible assets and liabilities of an acquired property, the value of above-or-below market leases is estimated based on the present value (using an interest rate which reflects 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. In the case of a below-market lease, the Company would also evaluate any renewal options associated with that lease to determine if the intangible should include those periods. The capitalized above-market or below-market lease intangibles are amortized as a reduction or addition to rental income over the estimated remaining term of the respective leases. In determining the value of in-place leases and tenant relationships, 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 property operating expenses, estimates of lost rental revenue during the expected lease-up periods, and costs to execute similar leases, including leasing commissions. The values assigned to in-place leases and tenant relationships are amortized 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. Real Estate Properties Real estate properties are recorded at cost or at fair value if acquired in a transaction that is a business combination under Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. Cost or fair value at the time of acquisition is allocated between land, buildings, tenant improvements, lease and other intangibles, and personal property, as applicable. |
Asset Impairment | Asset Impairments The Company may need to assess the potential for impairment of identifiable, definite-lived, intangible assets and long-lived assets, including real estate properties, whenever events occur or a change in circumstances indicates that the carrying value might not be fully recoverable. Indicators of impairment may include significant under-performance of an asset relative to historical or expected operating results; significant changes in the Company’s use of assets or the strategy for its overall business; plans to sell an asset before its depreciable life has ended; the expiration of a significant portion of leases in a property; or significant negative economic trends or negative industry trends for the Company or its operators. In addition, the Company’s review for possible impairment may include those assets subject to purchase options and those impacted by casualties, such as tornadoes and hurricanes. If management determines that the carrying value of the Company’s assets may not be fully recoverable based on the existence of any of the factors above, or others, management would measure and record an impairment charge based on the estimated fair value of the property or the estimated fair value less costs to sell the property. |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. In calculating fair value, a company must maximize the use of observable market inputs, minimize the use of unobservable market inputs and disclose in the form of an outlined hierarchy the details of such fair value measurements. A hierarchy of valuation techniques is defined to determine whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when available. These inputs have created the following fair value hierarchy: • Level 1 – quoted prices for identical instruments in active markets. • Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and • Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Executed purchase and sale agreements, that are binding agreements, are categorized as level one inputs. Brokerage estimates, letters of intent, or unexecuted purchase and sale agreements are considered to be level three as they are non-binding in nature. |
Lease Accounting | Lease Accounting We, as lessor, make a determination with respect to each of our leases whether they should be accounted for as operating leases or capital leases. The classification criteria is based on estimates regarding the fair value of the leased facilities, minimum lease payments, effective cost of funds, the economic useful life of the facilities, the existence of a bargain purchase option, and certain other terms in the lease agreements. We believe all of our leases should be accounted for as operating leases. Payments received under operating leases are accounted for in the consolidated statement of income as rental revenue for actual cash rent collected plus or minus a straight-line adjustment for estimated minimum lease escalators. Assets subject to operating leases are reported as real estate investments in the Condensed Consolidated Balance Sheet. Substantially all of our leases contain fixed or formula-based rent escalators. To the extent that the escalator increases are tied to a fixed index or rate, lease payments are accounted for on a straight-line basis over the life of the lease. |
Revenue Recognition | Revenue Recognition The Company recognizes rental revenue when it is realized or realizable and earned, in accordance with ASC 840, Leases . There are four criteria that must all be met before a Company may recognize revenue, including persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered (i.e., the tenant has taken possession of and controls the physical use of the leased asset), the price has been fixed or is determinable, and collectability is reasonably assured. ASC 840 also requires that rental revenue, less lease inducements, be recognized on a straight-line basis over the term of the lease. Recognizing rental revenue on a straight-line basis for leases may result in recognizing revenue in amounts more or less than amounts currently due from tenants. If management determines that the collectability of straight-line rents is not reasonably assured, the amount of future revenue recognized may be limited to amounts contractually owed and, where appropriate, establish an allowance for estimated losses. Income received but not yet earned is deferred until such time it is earned. Deferred revenue, included in other liabilities on the Condensed Consolidated Balance Sheets, was approximately $ 277,000 and $ 0 , respectively, at September 30, 2015 and December 31, 2014 . |
Allowance for Doubtful Accounts and Credit Losses | Allowance for Doubtful Accounts and Credit Losses Accounts Receivable Management monitors the aging and collectability of its accounts receivable balances on an ongoing basis. Whenever deterioration in the timeliness of payment from a tenant is noted, management investigates and determines the reason or reasons for the delay. Considering all information gathered, management’s judgment is exercised in determining whether a receivable is potentially uncollectible and, if so, how much or what percentage may be uncollectible. Among the factors management considers in determining collectability are: the type of contractual arrangement under which the receivable was recorded (e.g., triple net lease, gross lease, or other type of agreement); the tenant’s reason for slow payment; industry influences under which the tenant operates; evidence of willingness and ability of the tenant to pay the receivable; credit-worthiness of the tenant; collateral, security deposit, letters of credit or other monies held as security; tenant’s historical payment pattern; other contractual agreements between the tenant and the Company; relationship between the tenant and the Company; the state in which the tenant operates; and the existence of a guarantor and the willingness and ability of the guarantor to pay the receivable. Considering these factors and others, management concludes whether all or some of the aged receivable balance is likely uncollectible. Upon determining that some portion of the receivable is likely uncollectible, the Company will record a provision for bad debts for the amount it expects will be uncollectible. When efforts to collect a receivable are exhausted, the receivable amount is charged off against the allowance. At September 30, 2015 and December 31, 2014 , the Company had no provision for bad debts. Mortgage Note Receivable The Company had one mortgage note receivable outstanding as of September 30, 2015 with a principal balance of $11.0 million, maturing on September 30, 2026. The mortgage note is interest only with a 9.5% interest rate through September 30, 2016. Thereafter, monthly principal and interest payments will be due through the maturity date. The Company evaluates collectibility of its mortgage notes and records allowances on the notes as necessary. A loan is impaired when it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan as scheduled, including both contractual interest and principal payments. This assessment also includes an evaluation of the loan collateral. If a mortgage loan becomes past due, the Company will review the specific circumstances and may discontinue the accrual of interest on the loan. The loan is not returned to accrual status until the debtor has demonstrated the ability to continue debt service in accordance with the contractual terms. Loans placed on non-accrual status will be accounted for on a cash basis, in which income is recognized only upon the receipt of cash, or on a cost-recovery basis, in which all cash receipts reduce the carrying value of the loan, based on the Company's expectation of future collectibility. At September 30, 2015 and December 31, 2014 , there were no mortgage notes on non-accrual status and the Company had not recorded any allowances on its mortgage note receivable. |
Stock-based Compensation | Stock-Based Compensation We have adopted the 2014 Incentive Plan. The 2014 Incentive Plan is intended to attract and retain qualified persons upon whom, in large measure, our sustained progress, growth and profitability depend, to motivate the participants to achieve long-term company goals and to more closely align the participants’ interests with those of our other stockholders by providing them with a proprietary interest in our growth and performance. The two distinct programs under the 2014 Incentive Plan are the Alignment of Interest Program and the Officer Incentive Program. It is anticipated that our executive officers, officers, employees, consultants and non-employee directors will be eligible to participate in the 2014 Incentive Plan. Currently, only the Company’s officers and directors are participants in the 2014 Incentive Plan. The 2014 Incentive Plan currently reserves 7% of the Company’s outstanding common stock for issuance as awards. The 2014 Incentive Plan is administered by the Company’s compensation committee, which interprets the 2014 Incentive Plan and has broad discretion to select the eligible persons to whom awards will be granted, as well as the type, size and terms and conditions of each award, including the number of shares subject to awards and the expiration date of, and the vesting schedule or other restrictions (including, without limitation, restrictive covenants) applicable to, awards. The Company recognizes share-based payments to its officers and directors in its Consolidates Statements of Operations on a straight-line basis over the requisite service period based on the fair value of the award on the measurement date. |
Organization and Offering Costs | Organization and Offering Costs Some of the costs related to the Company’s organization, its initial public offering and due diligence related to the initial properties acquired by the Company were incurred by Athena Funding Partners (“AFP”), which is substantially owned and controlled by Timothy G. Wallace, the Company’s Chairman, Chief Executive Officer and President. The Company entered into a formation services agreement with AFP on April 1, 2014, pursuant to which the Company agreed to reimburse the actual costs incurred by AFP only upon the successful completion of the initial public offering. The costs related to the activities prior to the offering were undertaken by AFP on the Company’s behalf, including the Company’s organization, negotiating the property acquisitions, performing due diligence related to the initial properties, performing corporate work in contemplation of the offering and preparing the Prospectus. Costs incurred include expenses such as legal and accounting fees, certain costs related to performing property due diligence, certain property related costs, travel, overhead, office supplies and office rent. The Company reimbursed AFP approximately $ 170,000 and $ 255,000 during the second and third quarters of 2015, respectively. AFP will receive no further compensation for providing such services and funding such costs. Organization costs incurred by the Company were expensed. Offering costs incurred were recorded in stockholders’ equity as a reduction to additional paid-in capital. |
Intangible Assets | Intangible Assets Intangible assets with indefinite lives are not amortized, but are tested at least annually for impairment. Intangible assets with finite lives are amortized over their respective lives to their estimated residual values and are reviewed for impairment only when impairment indicators are present. Identifiable intangible assets of the Company are generally comprised of in-place lease intangible assets and deferred financing costs. In-place lease intangible assets are amortized on a straight-line basis over the applicable lives of the assets. Deferred financing costs are amortized to interest expense over the term of the related credit facility or other debt instrument using the straight-line method, which approximates amortization under the effective interest method. |
Contingent Liabilities | Contingent Liabilities From time to time, the Company may be subject to loss contingencies arising from legal proceedings and similar matters. Additionally, while the Company maintains comprehensive liability and property insurance with respect to each of its properties, the Company may be exposed to unforeseen losses related to uninsured or under-insured damages. Management will monitor any matter that may present a contingent liability, and, on a quarterly basis, will review any reserves and accruals relating to the liabilities, adjusting provisions as necessary in view of changes in available information. Liabilities for contingencies are first recorded when a loss is determined to be both probable and can be reasonably estimated. Changes in estimates regarding the exposure to a contingent loss will be reflected as adjustments to the related liability in the periods when they occur and will be disclosed in the notes to the Condensed Consolidated Financial Statements. On occasion, the Company may also have acquisitions which include contingent consideration. Accounting for business combinations require the Company to estimate the fair value of any contingent purchase consideration at acquisition. Management will monitor these contingencies on a quarterly basis. Changes in estimates regarding contingent purchase consideration will be reflected as adjustments to the related liability in the periods when they occur and will be disclosed in the notes to the Condensed Consolidated Financial Statements. |
Federal Income Taxes, State Income Taxes, Sales and Use Taxes | Federal Income Taxes No provision has been made for federal income taxes. The Company intends at all times to qualify as a real estate investment trust (“REIT”) under Sections 856 and 860 of the Internal Revenue Code of 1986, as amended. The Company must distribute at least 90% per annum of its REIT taxable income to its stockholders (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 generally accepted accounting principles) and meet other requirements to continue to qualify as a real estate investment trust. State Income Taxes The Company must pay certain state income taxes which will generally be included in general and administrative expense on the Company’s Condensed Consolidated Statements of Comprehensive Loss. Sales and Use Taxes The Company must pay sales and use taxes to certain state tax authorities based on rent collected from tenants in properties located in those states. The Company is generally reimbursed for those taxes by those tenants. The Company accounts for the payments to the taxing authority and subsequent reimbursement from the tenant on a net basis, included in tenant reimbursement revenue on the Company’s Condensed Consolidated Statements of Comprehensive Loss. |
Concentration of Credit Risk | Concentration of Credit Risks Our credit risks primarily relate to cash and cash equivalents and our one mortgage note receivable. Cash and cash equivalents are primarily held in bank accounts and overnight investments. We maintain our bank deposit accounts with large financial institutions in amounts that often exceed federally-insured limits. We have not experienced any losses in such accounts. |
Earnings Per Share | Earnings per Share Basic earnings per common share is calculated using weighted average shares outstanding less issued and outstanding non-vested shares of common stock. Diluted earnings per common share is calculated using weighted average shares outstanding plus the dilutive effect of the non-vested shares of common stock using the treasury stock method and the average stock price during the period. |
New Accounting Pronouncements | New Accounting Pronouncements Accounting Standards Update No. 2015-16 In September 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments." This standard eliminates the requirement that an acquirer in a business combination account for measurement-period adjustments retrospectively. Instead, an acquirer will recognize measurement-period adjustments, including its effect on earnings and goodwill, in the period in which the amount of the adjustment is determined. This standard is effective for the Company beginning on January 1, 2016 with early adoption permitted. In general, the Company does not believe the adoption of this standard will have a material impact on it results of operations or cash flows. However, in certain cases, this standard could require a Company to record material adjustments upon realization or clarification of certain matters related to previously recorded business combinations. Accounting Standards Update No. 2015-03 In April 2015, the FASB issued ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs." This standard requires debt issuance costs to be reported in the balance sheet as a direct reduction from the face amount of the note in which it is directly related. The SEC staff has indicated that it will not object to an entity deferring and presenting debt issuance costs related to lines-of-credit as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. This standard is effective for the Company beginning on January 1, 2016 with early adoption permitted, on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. Upon transition, the Company is required to comply with the applicable disclosures for a change in an accounting principle. The Company does not expect the adoption of this standard to have a material impact on the Company's consolidated financial position or cash flows. Accounting Standards Update No. 2014-09 In May 2014, the FASB issued ASU No. 2014-09, as amended by ASU No. 2015-14, "Revenue from Contracts with Customers", a comprehensive new revenue recognition standard that supersedes most existing revenue recognition guidance, including sales of real estate. This standard's core principle is that a company will recognize revenue when it transfers goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods and services. However, leasing contracts, representing the major source of the Company's revenues, are not within the scope of the new standard and will continue to be accounted for under existing standards. This new standard is effective for the Company for annual and interim periods beginning on January 1, 2018 with early adoption permitted. The Company has not yet determined the effects on the consolidated financial statements and related notes resulting from the adoption of this new standard. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Schedule of property, plant, and equipment estimated useful lives | The estimated useful lives at September 30, 2015 are as follows: Buildings and improvements 20 - 30 years Lease intangibles 14 months to 7.8 years |
Real Estate Investments (Tables
Real Estate Investments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Real Estate [Abstract] | |
Schedule of real estate property investments | At September 30, 2015 , the Company had investments of approximately $112.0 million in 33 real estate properties, mortgages and corporate property. The following table summarizes the Company's investments. (Dollars in thousands) Number of Facilities Land Buildings, Improvements, and Lease Intangibles Total Accumulated Depreciation Medical office: Georgia 1 $ 366 $ 3,084 $ 3,450 $ 122 Illinois 1 821 8,289 9,110 148 Kansas 2 1,379 10,497 11,876 449 Kentucky 1 484 4,116 4,600 64 Ohio 1 33 3,617 3,650 145 Texas 2 2,493 9,307 11,800 341 8 5,576 38,910 44,486 1,269 Physician clinics: Arizona 1 41 1,594 1,635 65 Florida 3 — 5,950 5,950 66 Kansas 2 1,247 8,081 9,328 217 Pennsylvania 1 330 2,770 3,100 174 Virginia 1 110 1,265 1,375 40 Wisconsin 1 412 2,587 2,999 81 9 2,140 22,247 24,387 643 Ambulatory surgery centers: Arizona 1 227 2,473 2,700 75 Colorado 1 203 2,497 2,700 — Ohio 1 188 1,382 1,570 74 Pennsylvania 1 26 1,424 1,450 26 South Carolina 1 315 1,885 2,200 124 Texas 1 528 4,072 4,600 120 6 1,487 13,733 15,220 419 Dialysis clinics: Colorado 1 259 2,791 3,050 71 Georgia 1 62 1,038 1,100 35 Kentucky 1 193 3,407 3,600 80 Ohio 1 66 1,184 1,250 43 Tennessee 1 28 572 600 12 Texas 1 181 2,444 2,625 50 6 789 11,436 12,225 291 Oncology centers: Alabama 3 415 4,385 4,800 166 3 415 4,385 4,800 166 Corporate property — — 10 10 — Total owned properties 32 $ 10,407 $ 90,721 $ 101,128 $ 2,788 Mortgage note receivable, net 1 — — 10,862 — Total real estate investments 33 $ 10,407 $ 90,721 $ 111,990 $ 2,788 |
Real Estate Leases (Tables)
Real Estate Leases (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Leases [Abstract] | |
Schedule of future minimum lease payments for operating leases | Future minimum lease payments under the non-cancelable operating leases due the Company for the years ending December 31, as of September 30, 2015 , are as follows (in thousands): 2015 (three months ending December 31) $ 2,612 2016 9,642 2017 7,835 2018 6,086 2019 3,549 2020 and thereafter 10,230 $ 39,954 |
Real Estate Acquisitions (Table
Real Estate Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Schedule of assets acquired and liabilities assumed | The following table summarizes the estimated fair values of the assets acquired and liabilities assumed in the property acquisitions during 2015. These valuations are preliminary with any changes expected to be finalized no later than 12 months from the date of the acquisition. Estimated Fair Value Estimated Useful Life (In thousands) (In years) Land $ 10,407 Buildings 72,144 20 - 30 Intangibles: At-market lease intangibles 18,304 1.2 - 7.1 Above-market lease intangibles 65 2.6 Below-market lease intangibles (357 ) 6.1 - 7.8 Total intangibles 18,012 Accounts receivable and other assets assumed 19 Accounts payable, accrued liabilities and other liabilities assumed (1) (735 ) Prorated rent and operating expense reimbursement amounts collected (477 ) Expenses paid, including closing costs 636 Total cash consideration $ 100,006 (1) Includes security deposits received, property taxes payable prior to the acquisition, and a tenant improvement allowance. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Schedule of reconciliation of common stock | The following table provides a reconciliation of the beginning and ending common stock balances for the nine months ended September 30, 2015 and for the period March 28, 2014 (inception) through December 31, 2014: Nine Months Ended September 30, 2015 For the Period March 28, 2014 (inception) through December 31, 2014 Balance, beginning of period 200,000 — Issuance of common stock 7,311,183 200,000 Restricted stock-based awards 85,757 — Balance, end of period 7,596,940 200,000 |
Loss Per Common Share (Tables)
Loss Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | The following table sets forth the computation of basic and diluted loss per common share. Three Months Ended September 30, Nine Months Ended September 30, For the Period March 28, 2014(inception) through September 30, (Dollars in thousands, except per share data) 2015 2014 2015 2014 Net loss $ (67 ) $ — $ (1,576 ) $ — Weighted average Common Shares outstanding Weighted average Common Shares outstanding 7,596,940 200,000 3,828,219 200,000 Unvested restricted stock (85,757 ) — (39,580 ) — Weighted average Common Shares outstanding–Basic 7,511,183 200,000 3,788,639 200,000 Weighted average Common Shares–Basic 7,511,183 200,000 3,788,639 200,000 Dilutive effect of restricted stock — — — — Weighted average Common Shares outstanding –Diluted 7,511,183 200,000 3,788,639 200,000 Basic Loss per Common Share $ (0.01 ) $ — $ (0.42 ) $ — Diluted Loss per Common Share $ (0.01 ) $ — $ (0.42 ) $ — |
Summary of Significant Accoun25
Summary of Significant Accounting Policies - Business Overview (Details) ft² in Thousands, $ in Thousands | 1 Months Ended | 9 Months Ended | ||
May. 31, 2015USD ($)shares | Sep. 30, 2015USD ($)ft²statereal_estate_propertyshares | Dec. 31, 2014shares | Jun. 03, 2015USD ($) | |
Accounting Policies [Abstract] | ||||
General partner ownership | 100.00% | |||
Value of real estate property investments and mortgages | $ 111,990 | |||
Number of real estate properties | real_estate_property | 33 | |||
Number of states in which real estate investments are in | state | 16 | |||
Area of real estate property (in square feet) | ft² | 575 | |||
Subsidiary, Sale of Stock [Line Items] | ||||
Shares of common stock issued | shares | 7,311,183 | 200,000 | ||
Net proceeds from initial public offering | $ 125,200 | |||
Net proceeds from private placement | $ 2,300 | |||
IPO [Member] | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Shares of common stock issued | shares | 7,187,500 | |||
Private Placement [Member] | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Shares of common stock issued | shares | 123,683 | |||
Senior Revolving Credit Facility [Member] | Line of Credit [Member] | Revolving Credit Facility [Member] | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Maximum borrowing capacity | $ 75,000 |
Summary of Significant Accoun26
Summary of Significant Accounting Policies - Consolidation and Segments (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($)reporting_unit | |
Accounting Policies [Abstract] | |
Number of reporting units | 1 |
Mortgage Receivable [Member] | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Mortgage note receivable | $ | $ 11 |
Summary of Significant Accoun27
Summary of Significant Accounting Policies - Real Estate Properties and Mortgage Note Receivable (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Mortgage Receivable [Member] | |
Real Estate Properties [Line Items] | |
Mortgage note receivable | $ 11 |
Stated fixed interest rate percentage | 9.50% |
Building and improvements [Member] | Minimum [Member] | |
Real Estate Properties [Line Items] | |
Estimated useful life (in years) | 20 years |
Building and improvements [Member] | Maximum [Member] | |
Real Estate Properties [Line Items] | |
Estimated useful life (in years) | 30 years |
Lease intangibles [Member] | Minimum [Member] | |
Real Estate Properties [Line Items] | |
Estimated useful life (in years) | 14 months |
Lease intangibles [Member] | Maximum [Member] | |
Real Estate Properties [Line Items] | |
Estimated useful life (in years) | 7 years 9 months 18 days |
Summary of Significant Accoun28
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Other Liabilities [Member] | ||
Deferred Revenue Arrangement [Line Items] | ||
Deferred revenue | $ 277 | $ 0 |
Summary of Significant Accoun29
Summary of Significant Accounting Policies - Share-Based Compensation (Details) - 2014 Incentive Plan [Member] | 9 Months Ended |
Sep. 30, 2015program | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of programs under plan | 2 |
Common Stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Percentage of shares reserved for future issuance | 7.00% |
Summary of Significant Accoun30
Summary of Significant Accounting Policies - Organization and Offering Costs (Details) $ in Thousands | 3 Months Ended | |
Sep. 30, 2015USD ($)mortgage_note_receivable | Jun. 30, 2015USD ($) | |
Related Party Transaction [Line Items] | ||
Number of mortgage note receivables | 1 | |
Number of mortgage notes invested in | 1 | |
Chairman, Chief Executive Officer and President [Member] | AFP [Member] | Reimbursement of Costs Incurred Associated with Initial Public Offering [Member] | ||
Related Party Transaction [Line Items] | ||
Reimbursement | $ | $ 255 | $ 170 |
Real Estate Investments - Addit
Real Estate Investments - Additional Information (Details) ft² in Thousands, $ in Thousands | Sep. 30, 2015USD ($)ft²statereal_estate_property | Jun. 30, 2015ft² | Dec. 31, 2014USD ($) |
Real Estate [Abstract] | |||
Value of real estate property investments and mortgages | $ 111,990 | ||
Value of real estate property investments | $ 101,128 | $ 0 | |
Number of real estate properties | real_estate_property | 33 | ||
Number of states in which real estate investments are in | state | 16 | ||
Area of real estate property (in square feet) | ft² | 71 | 474 |
Real Estate Investments - Sched
Real Estate Investments - Schedule of Real Estate Property Investments (Details) $ in Thousands | Sep. 30, 2015USD ($)mortgage_note_receivablereal_estate_property | Dec. 31, 2014USD ($) |
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 33 | |
Land | $ 10,407 | $ 0 |
Buildings, Improvements, and Lease Intangibles | 90,721 | 0 |
Total real estate properties | 101,128 | 0 |
Accumulated Depreciation | $ 2,788 | 0 |
Number of mortgage note receivables | mortgage_note_receivable | 1 | |
Mortgage note receivable, net | $ 10,862 | $ 0 |
Value of real estate property investments and mortgages | $ 111,990 | |
Medical office [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 8 | |
Land | $ 5,576 | |
Buildings, Improvements, and Lease Intangibles | 38,910 | |
Total real estate properties | 44,486 | |
Accumulated Depreciation | $ 1,269 | |
Medical office [Member] | Georgia [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 1 | |
Land | $ 366 | |
Buildings, Improvements, and Lease Intangibles | 3,084 | |
Total real estate properties | 3,450 | |
Accumulated Depreciation | $ 122 | |
Medical office [Member] | Illinois [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 1 | |
Land | $ 821 | |
Buildings, Improvements, and Lease Intangibles | 8,289 | |
Total real estate properties | 9,110 | |
Accumulated Depreciation | $ 148 | |
Medical office [Member] | Kansas [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 2 | |
Land | $ 1,379 | |
Buildings, Improvements, and Lease Intangibles | 10,497 | |
Total real estate properties | 11,876 | |
Accumulated Depreciation | $ 449 | |
Medical office [Member] | Kentucky [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 1 | |
Land | $ 484 | |
Buildings, Improvements, and Lease Intangibles | 4,116 | |
Total real estate properties | 4,600 | |
Accumulated Depreciation | $ 64 | |
Medical office [Member] | Ohio [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 1 | |
Land | $ 33 | |
Buildings, Improvements, and Lease Intangibles | 3,617 | |
Total real estate properties | 3,650 | |
Accumulated Depreciation | $ 145 | |
Medical office [Member] | Texas [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 2 | |
Land | $ 2,493 | |
Buildings, Improvements, and Lease Intangibles | 9,307 | |
Total real estate properties | 11,800 | |
Accumulated Depreciation | $ 341 | |
Physician clinics [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 9 | |
Land | $ 2,140 | |
Buildings, Improvements, and Lease Intangibles | 22,247 | |
Total real estate properties | 24,387 | |
Accumulated Depreciation | $ 643 | |
Physician clinics [Member] | Arizona [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 1 | |
Land | $ 41 | |
Buildings, Improvements, and Lease Intangibles | 1,594 | |
Total real estate properties | 1,635 | |
Accumulated Depreciation | $ 65 | |
Physician clinics [Member] | Florida [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 3 | |
Land | $ 0 | |
Buildings, Improvements, and Lease Intangibles | 5,950 | |
Total real estate properties | 5,950 | |
Accumulated Depreciation | $ 66 | |
Physician clinics [Member] | Kansas [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 2 | |
Land | $ 1,247 | |
Buildings, Improvements, and Lease Intangibles | 8,081 | |
Total real estate properties | 9,328 | |
Accumulated Depreciation | $ 217 | |
Physician clinics [Member] | Pennsylvania [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 1 | |
Land | $ 330 | |
Buildings, Improvements, and Lease Intangibles | 2,770 | |
Total real estate properties | 3,100 | |
Accumulated Depreciation | $ 174 | |
Physician clinics [Member] | Virginia [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 1 | |
Land | $ 110 | |
Buildings, Improvements, and Lease Intangibles | 1,265 | |
Total real estate properties | 1,375 | |
Accumulated Depreciation | $ 40 | |
Physician clinics [Member] | Wisconsin [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 1 | |
Land | $ 412 | |
Buildings, Improvements, and Lease Intangibles | 2,587 | |
Total real estate properties | 2,999 | |
Accumulated Depreciation | $ 81 | |
Ambulatory surgery centers [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 6 | |
Land | $ 1,487 | |
Buildings, Improvements, and Lease Intangibles | 13,733 | |
Total real estate properties | 15,220 | |
Accumulated Depreciation | $ 419 | |
Ambulatory surgery centers [Member] | Arizona [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 1 | |
Land | $ 227 | |
Buildings, Improvements, and Lease Intangibles | 2,473 | |
Total real estate properties | 2,700 | |
Accumulated Depreciation | $ 75 | |
Ambulatory surgery centers [Member] | Colorado [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 1 | |
Land | $ 203 | |
Buildings, Improvements, and Lease Intangibles | 2,497 | |
Total real estate properties | 2,700 | |
Accumulated Depreciation | $ 0 | |
Ambulatory surgery centers [Member] | Ohio [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 1 | |
Land | $ 188 | |
Buildings, Improvements, and Lease Intangibles | 1,382 | |
Total real estate properties | 1,570 | |
Accumulated Depreciation | $ 74 | |
Ambulatory surgery centers [Member] | Pennsylvania [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 1 | |
Land | $ 26 | |
Buildings, Improvements, and Lease Intangibles | 1,424 | |
Total real estate properties | 1,450 | |
Accumulated Depreciation | $ 26 | |
Ambulatory surgery centers [Member] | South Carolina [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 1 | |
Land | $ 315 | |
Buildings, Improvements, and Lease Intangibles | 1,885 | |
Total real estate properties | 2,200 | |
Accumulated Depreciation | $ 124 | |
Ambulatory surgery centers [Member] | Texas [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 1 | |
Land | $ 528 | |
Buildings, Improvements, and Lease Intangibles | 4,072 | |
Total real estate properties | 4,600 | |
Accumulated Depreciation | $ 120 | |
Dialysis clinics [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 6 | |
Land | $ 789 | |
Buildings, Improvements, and Lease Intangibles | 11,436 | |
Total real estate properties | 12,225 | |
Accumulated Depreciation | $ 291 | |
Dialysis clinics [Member] | Colorado [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 1 | |
Land | $ 259 | |
Buildings, Improvements, and Lease Intangibles | 2,791 | |
Total real estate properties | 3,050 | |
Accumulated Depreciation | $ 71 | |
Dialysis clinics [Member] | Georgia [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 1 | |
Land | $ 62 | |
Buildings, Improvements, and Lease Intangibles | 1,038 | |
Total real estate properties | 1,100 | |
Accumulated Depreciation | $ 35 | |
Dialysis clinics [Member] | Kentucky [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 1 | |
Land | $ 193 | |
Buildings, Improvements, and Lease Intangibles | 3,407 | |
Total real estate properties | 3,600 | |
Accumulated Depreciation | $ 80 | |
Dialysis clinics [Member] | Ohio [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 1 | |
Land | $ 66 | |
Buildings, Improvements, and Lease Intangibles | 1,184 | |
Total real estate properties | 1,250 | |
Accumulated Depreciation | $ 43 | |
Dialysis clinics [Member] | Tennessee [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 1 | |
Land | $ 28 | |
Buildings, Improvements, and Lease Intangibles | 572 | |
Total real estate properties | 600 | |
Accumulated Depreciation | $ 12 | |
Dialysis clinics [Member] | Texas [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 1 | |
Land | $ 181 | |
Buildings, Improvements, and Lease Intangibles | 2,444 | |
Total real estate properties | 2,625 | |
Accumulated Depreciation | $ 50 | |
Oncology centers [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 3 | |
Land | $ 415 | |
Buildings, Improvements, and Lease Intangibles | 4,385 | |
Total real estate properties | 4,800 | |
Accumulated Depreciation | $ 166 | |
Oncology centers [Member] | Alabama [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 3 | |
Land | $ 415 | |
Buildings, Improvements, and Lease Intangibles | 4,385 | |
Total real estate properties | 4,800 | |
Accumulated Depreciation | $ 166 | |
Corporate property [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 0 | |
Land | $ 0 | |
Buildings, Improvements, and Lease Intangibles | 10 | |
Total real estate properties | 10 | |
Accumulated Depreciation | $ 0 | |
Total Properties [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Facilities | real_estate_property | 32 | |
Land | $ 10,407 | |
Buildings, Improvements, and Lease Intangibles | 90,721 | |
Total real estate properties | 101,128 | |
Accumulated Depreciation | $ 2,788 |
Real Estate Leases (Details)
Real Estate Leases (Details) $ in Thousands | Sep. 30, 2015USD ($) |
Leases [Abstract] | |
2015 (three months ending December 31) | $ 2,612 |
2,016 | 9,642 |
2,017 | 7,835 |
2,018 | 6,086 |
2,019 | 3,549 |
2020 and thereafter | 10,230 |
Total | $ 39,954 |
Real Estate Acquisitions (Detai
Real Estate Acquisitions (Details) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2015USD ($)ft²real_estate_property | Jun. 30, 2015USD ($)ft²real_estate_property | Sep. 30, 2015USD ($)ft² | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Number of real estate properties acquired | real_estate_property | 3 | 29 | |
Area of real estate property (in square feet) | ft² | 71,000 | 474,000 | 71,000 |
Aggregate purchase price | $ 13,100,000 | $ 87,500,000 | |
Cash consideration | $ 13,000,000 | $ 87,000,000 | $ 100,006,000 |
Percentage of properties that were leased at acquisition | 93.60% | 92.00% | |
Mortgage Receivable [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Mortgage loan receivable | $ 11,000,000 | 11,000,000 | |
Loan and commitment fees received | $ 137,500 | $ 137,500 | |
Stated fixed interest rate percentage | 9.50% | 9.50% | |
Louisiana [Member] | Long-Term Acute Care Facility [Member] | Mortgage Receivable [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Area of real estate property (in square feet) | ft² | 29,890 | 29,890 |
Real Estate Acquisitions - Asse
Real Estate Acquisitions - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2015 | Jun. 30, 2015 | Sep. 30, 2015 | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets [Abstract] | |||
Land | $ 10,407 | $ 10,407 | |
Buildings | 72,144 | 72,144 | |
Intangibles: | |||
Below-market lease intangibles | (357) | (357) | |
Total intangibles | 18,012 | 18,012 | |
Accounts receivable and other assets assumed | 19 | 19 | |
Accounts payable, accrued liabilities and other liabilities assumed | (735) | (735) | |
Prorated rent and operating expense reimbursement amounts collected | (477) | ||
Expenses paid, including closing costs | 636 | ||
Total cash consideration | 13,000 | $ 87,000 | 100,006 |
At Market Leases [Member] | |||
Intangibles: | |||
Lease intangibles | 18,304 | 18,304 | |
Above Market Leases [Member] | |||
Intangibles: | |||
Lease intangibles | $ 65 | $ 65 | |
Estimated useful life (in years) | 2 years 7 months 6 days | ||
Minimum [Member] | |||
Intangibles: | |||
Below-market lease estimated useful (in years) | 6 years 1 month 6 days | ||
Minimum [Member] | At Market Leases [Member] | |||
Intangibles: | |||
Estimated useful life (in years) | 1 year 2 months 12 days | ||
Maximum [Member] | |||
Intangibles: | |||
Below-market lease estimated useful (in years) | 7 years 9 months 18 days | ||
Maximum [Member] | At Market Leases [Member] | |||
Intangibles: | |||
Estimated useful life (in years) | 7 years 1 month 6 days | ||
Building [Member] | Minimum [Member] | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets [Abstract] | |||
Estimated useful life (in years) | 20 years | ||
Building [Member] | Maximum [Member] | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets [Abstract] | |||
Estimated useful life (in years) | 30 years |
Revolving Credit Facility (Deta
Revolving Credit Facility (Details) - Line of Credit [Member] | Jun. 03, 2015USD ($) |
Senior Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Maximum borrowing capacity | $ 75,000,000 |
Extension fee percentage | 0.25% |
Additional borrowing capacity | $ 125,000,000 |
Total borrowing capacity after additional capacity | $ 200,000,000 |
Senior Revolving Credit Facility, Unused Borrowing Capacity Rate 1 [Member] | Revolving Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Percentage of unused portion fee | 0.25% |
Percentage of borrowing capacity outstanding | 50.00% |
Senior Revolving Credit Facility, Unused Borrowing Capacity Rate 2 [Member] | Revolving Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Percentage of unused portion fee | 0.35% |
Percentage of borrowing capacity outstanding | 50.00% |
LIBOR [Member] | Minimum [Member] | Senior Revolving Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Basis spread on variable rate | 2.50% |
LIBOR [Member] | Maximum [Member] | Senior Revolving Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Basis spread on variable rate | 3.00% |
Base Rate [Member] | Minimum [Member] | Senior Revolving Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Basis spread on variable rate | 1.50% |
Base Rate [Member] | Maximum [Member] | Senior Revolving Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Basis spread on variable rate | 2.00% |
Stockholders' Equity - Reconcil
Stockholders' Equity - Reconciliation of Common Stock (Details) - shares | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Balance, beginning of period (in shares) | 200,000 | 0 |
Issuance of common stock (in shares) | 7,311,183 | 200,000 |
Restricted stock-based awards (in shares) | 85,757 | 0 |
Balance, end of period (in shares) | 7,596,940 | 200,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | May. 27, 2015 | Mar. 31, 2014 | May. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 |
Class of Stock [Line Items] | |||||
Shares of common stock issued | 7,311,183 | 200,000 | |||
Par value of common stock (in dollars per share) | $ 0.01 | $ 0.01 | |||
Net proceeds from initial public offering | $ 125.2 | ||||
Net proceeds from private placement | $ 2.3 | ||||
IPO [Member] | |||||
Class of Stock [Line Items] | |||||
Shares of common stock issued | 7,187,500 | ||||
Private Placement [Member] | |||||
Class of Stock [Line Items] | |||||
Shares of common stock issued | 123,683 | ||||
Common Stock [Member] | |||||
Class of Stock [Line Items] | |||||
Net proceeds from initial public offering | $ 125.2 | ||||
Common Stock [Member] | Officers [Member] | |||||
Class of Stock [Line Items] | |||||
Shares of common stock issued | 200,000 | ||||
Common Stock [Member] | IPO [Member] | |||||
Class of Stock [Line Items] | |||||
Shares of common stock issued | 7,187,500 | ||||
Par value of common stock (in dollars per share) | $ 0.01 | ||||
Public offering price (in dollars per share) | $ 19 | ||||
Common Stock [Member] | Over-Allotment Option [Member] | |||||
Class of Stock [Line Items] | |||||
Shares of common stock issued | 937,500 | ||||
Common Stock [Member] | Private Placement [Member] | |||||
Class of Stock [Line Items] | |||||
Shares of common stock issued | 123,683 | ||||
Par value of common stock (in dollars per share) | $ 0.01 | ||||
Net proceeds from private placement | $ 2.3 |
Loss Per Common Share (Details)
Loss Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2015 | |
Earnings Per Share [Abstract] | ||||
Net loss | $ (67) | $ 0 | $ 0 | $ (1,576) |
Weighted average Common Shares outstanding | ||||
Weighted average Common Shares outstanding (in shares) | 7,596,940 | 200,000 | 200,000 | 3,828,219 |
Unvested restricted stock (in shares) | (85,757) | 0 | 0 | (39,580) |
Weighted average Common Shares outstanding–Basic (in shares) | 7,511,183 | 200,000 | 200,000 | 3,788,639 |
Weighted average Common Shares–Basic (in shares) | 7,511,183 | 200,000 | 200,000 | 3,788,639 |
Dilutive effect of restricted stock (in shares) | 0 | 0 | 0 | 0 |
Weighted average Common Shares outstanding –Diluted (in shares) | 7,511,183 | 200,000 | 200,000 | 3,788,639 |
Basic Loss per Common Share (in dollars per share) | $ (0.01) | $ 0 | $ 0 | $ (0.42) |
Diluted Loss per Common Share (in dollars per share) | $ (0.01) | $ 0 | $ 0 | $ (0.42) |
Loss Per Common Share - Antidil
Loss Per Common Share - Antidilutive Securities (Details) - shares | 3 Months Ended | 9 Months Ended |
Sep. 30, 2015 | Sep. 30, 2015 | |
Restricted Common Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities excluded from earnings per share (in shares) | 3,723 | 3,372 |
Incentive Plan (Details)
Incentive Plan (Details) - 2014 Incentive Plan [Member] - Restricted Common Stock [Member] | May. 28, 2015shares |
Officers [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Restricted common stock granted (in shares) | 69,125 |
Vesting period (in years) | 8 years |
Directors [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Restricted common stock granted (in shares) | 5,264 |
Vesting period (in years) | 3 years |
Shares granted in lieu of director fees (in shares) | 11,368 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2015 | Jun. 30, 2015 | |
AFP [Member] | Chairman, Chief Executive Officer and President [Member] | Reimbursement of Costs Incurred Associated with Initial Public Offering [Member] | ||
Related Party Transaction [Line Items] | ||
Reimbursement | $ 255 | $ 170 |
Subsequent Events (Details)
Subsequent Events (Details) $ / shares in Units, ft² in Thousands, $ in Thousands | Nov. 06, 2015$ / shares | Oct. 01, 2015USD ($)ft²real_estate_property | Sep. 30, 2015USD ($)ft²real_estate_property$ / shares | Jun. 30, 2015USD ($)ft²real_estate_property | Sep. 30, 2014$ / shares | Sep. 30, 2014$ / shares | Sep. 30, 2015USD ($)ft²$ / shares |
Subsequent Event [Line Items] | |||||||
Number of real estate properties acquired | real_estate_property | 3 | 29 | |||||
Area of real estate property (in square feet) | ft² | 71 | 474 | 71 | ||||
Purchase price to acquire building | $ 13,100 | $ 87,500 | |||||
Cash consideration | $ 13,000 | $ 87,000 | $ 100,006 | ||||
Percentage of building that were leased at acquisition | 93.60% | 92.00% | |||||
Dividend declared (in dollars per share) | $ / shares | $ 0.142 | $ 0 | $ 0 | $ 0.142 | |||
Subsequent Event [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Number of real estate properties acquired | real_estate_property | 3 | ||||||
Area of real estate property (in square feet) | ft² | 56 | ||||||
Purchase price to acquire building | $ 14,700 | ||||||
Cash consideration | $ 14,600 | ||||||
Percentage of building that were leased at acquisition | 100.00% | ||||||
Dividend declared (in dollars per share) | $ / shares | $ 0.375 |