Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 31, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | UHT | |
Entity Registrant Name | UNIVERSAL HEALTH REALTY INCOME TRUST | |
Entity Central Index Key | 798,783 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 13,598,144 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Revenues: | |||||
Base rental - UHS facilities | $ 4,066 | $ 4,019 | $ 12,226 | $ 11,916 | |
Base rental - Non-related parties | 9,273 | 8,763 | 27,118 | 26,438 | |
Bonus rental - UHS facilities | 1,118 | 1,085 | 3,557 | 3,453 | |
Tenant reimbursements and other - Non-related parties | 2,168 | 1,620 | 5,984 | 5,523 | |
Tenant reimbursements and other - UHS facilities | 176 | 199 | 603 | 607 | |
Revenues, Total | 16,801 | 15,686 | 49,488 | 47,937 | |
Expenses: | |||||
Depreciation and amortization | 5,893 | 5,424 | 16,872 | 16,817 | |
Advisory fees to UHS | 832 | 708 | 2,380 | 2,067 | |
Other operating expenses | 4,663 | 4,461 | 13,603 | 13,921 | |
Transaction costs | 331 | 477 | 204 | ||
Costs and Expenses, Total | 11,719 | 10,593 | 33,332 | 33,009 | |
Income before equity in income of unconsolidated limited liability companies ("LLCs"), interest expense and gain | 5,082 | 5,093 | 16,156 | 14,928 | |
Equity in income of unconsolidated LLCs | [1] | 1,110 | 561 | 3,396 | 1,826 |
Gain on property exchange | 8,742 | ||||
Interest expense, net | (2,374) | (2,015) | (6,783) | (6,157) | |
Net income | $ 3,818 | $ 3,639 | $ 12,769 | $ 19,339 | |
Basic earnings per share | $ 0.28 | $ 0.27 | $ 0.95 | $ 1.46 | |
Diluted earnings per share | $ 0.28 | $ 0.27 | $ 0.95 | $ 1.45 | |
Weighted average number of shares outstanding - Basic | 13,575 | 13,298 | 13,426 | 13,289 | |
Weighted average number of share equivalents | 4 | 5 | 8 | ||
Weighted average number of shares and equivalents outstanding - Diluted | 13,575 | 13,302 | 13,431 | 13,297 | |
[1] | Our share of net income for the three and nine months ended September 30, 2016 includes approximately $291,000 and $880,000, respectively, of interest income earned by us on an advance made to Arlington Medical Properties, LLC (advance balance payable to us is approximately $21.8 million as of September 30, 2016). There were no advances outstanding during the first nine months of 2015, therefore there was no interest income earned by us for the three and nine months ended September 30, 2015. Also, as mentioned above, effective February 1, 2016, we purchased an additional 10% of the ownership interest in Arlington Medical Properties, LLC thereby increasing our ownership interest to 85%, from 75% previously. |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income | $ 3,818 | $ 3,639 | $ 12,769 | $ 19,339 |
Other comprehensive income/(loss): | ||||
Unrealized losses on interest rate caps | (7) | (15) | (75) | (94) |
Amortization of interest rate cap fees | 23 | 23 | 69 | 69 |
Total other comprehensive income/(loss): | 16 | 8 | (6) | (25) |
Total comprehensive income | $ 3,834 | $ 3,647 | $ 12,763 | $ 19,314 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Real Estate Investments: | ||
Buildings and improvements and construction in progress | $ 517,726 | $ 469,933 |
Accumulated depreciation | (133,929) | (121,161) |
Real Estate Investment Property, Net, Total | 383,797 | 348,772 |
Land | 48,615 | 41,724 |
Net Real Estate Investments | 432,412 | 390,496 |
Investments in and advances to limited liability companies ("LLCs") | 36,765 | 31,597 |
Other Assets: | ||
Cash and cash equivalents | 3,982 | 3,894 |
Base and bonus rent receivable from UHS | 2,256 | 2,116 |
Rent receivable - other | 4,649 | 4,292 |
Intangible assets (net of accumulated amortization of $25.8 million and $25.1 million at September 30, 2016 and December 31, 2015, respectively) | 23,014 | 19,757 |
Deferred charges and other assets, net | 7,311 | 6,351 |
Total Assets | 510,389 | 458,503 |
Liabilities: | ||
Line of credit borrowings | 192,250 | 142,150 |
Mortgage notes payable, non-recourse to us, net | 107,660 | 110,156 |
Accrued interest | 551 | 504 |
Accrued expenses and other liabilities | 10,037 | 6,807 |
Tenant reserves, deposits and prepaid rents | 4,548 | 3,844 |
Total Liabilities | 315,046 | 263,461 |
Equity: | ||
Preferred shares of beneficial interest, $.01 par value; 5,000,000 shares authorized; none issued and outstanding | ||
Common shares, $.01 par value; 95,000,000 shares authorized; issued and outstanding: 2016 - 13,598,082; 2015 - 13,327,020 | 136 | 133 |
Capital in excess of par value | 255,466 | 241,700 |
Cumulative net income | 568,055 | 555,286 |
Cumulative dividends | (628,214) | (601,983) |
Accumulated other comprehensive loss | (100) | (94) |
Total Equity | 195,343 | 195,042 |
Total Liabilities and Equity | $ 510,389 | $ 458,503 |
Condensed Consolidated Balance5
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Statement Of Financial Position [Abstract] | ||
Intangible assets, accumulated amortization | $ 25.8 | $ 25.1 |
Preferred shares of beneficial interest, par value | $ 0.01 | $ 0.01 |
Preferred shares of beneficial interest, shares authorized | 5,000,000 | 5,000,000 |
Preferred shares of beneficial interest, issued | 0 | 0 |
Preferred shares of beneficial interest, outstanding | 0 | 0 |
Common shares, par value | $ 0.01 | $ 0.01 |
Common shares, shares authorized | 95,000,000 | 95,000,000 |
Common shares, issued | 13,598,082 | 13,327,020 |
Common shares, outstanding | 13,598,082 | 13,327,020 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net income | $ 12,769,000 | $ 19,339,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 16,920,000 | 16,884,000 |
Amortization of debt premium | (166,000) | (169,000) |
Stock-based compensation expense | 354,000 | 316,000 |
Gain on property exchange | (8,742,000) | |
Changes in assets and liabilities: | ||
Rent receivable | (497,000) | (311,000) |
Accrued expenses and other liabilities | 203,000 | (278,000) |
Tenant reserves, deposits and prepaid rents | 604,000 | 869,000 |
Accrued interest | 47,000 | (75,000) |
Other, net | (482,000) | (533,000) |
Net cash provided by operating activities | 29,752,000 | 27,300,000 |
Cash flows from investing activities: | ||
Investments in LLCs | (5,454,000) | (418,000) |
Repayments of advances made to LLC | 634,000 | |
Cash distributions in excess of income from LLCs | 318,000 | 168,000 |
Cash distribution of refinancing proceeds from LLCs | 1,045,000 | |
Additions to real estate investments, net | (7,104,000) | (3,667,000) |
Cash received for property exchange | 0 | 2,000,000 |
Deposit on real estate assets | (420,000) | |
Net cash paid for acquisition of properties | (52,193,000) | (16,765,000) |
Cash paid to acquire minority interests in majority-owned LLCs | (2,250,000) | |
Net cash used in investing activities | (64,219,000) | (19,887,000) |
Cash flows from financing activities: | ||
Net borrowings on line of credit | 50,100,000 | 24,600,000 |
Repayments of mortgages and other notes payable | (2,407,000) | (7,383,000) |
Financing costs paid | (307,000) | (1,000,000) |
Dividends paid | (26,231,000) | (25,494,000) |
Partial settlement of dividend equivalent rights | (30,000) | (17,000) |
Issuance of shares of beneficial interest, net | 13,430,000 | 1,671,000 |
Net cash provided by (used in) financing activities | 34,555,000 | (7,623,000) |
Increase/(decrease) in cash and cash equivalents | 88,000 | (210,000) |
Cash and cash equivalents, beginning of period | 3,894,000 | 3,861,000 |
Cash and cash equivalents, end of period | 3,982,000 | 3,651,000 |
Supplemental disclosures of cash flow information: | ||
Interest paid | $ 6,491,000 | 6,052,000 |
Property Exchange Transaction: | ||
Net assets acquired in property exchange | 9,886,000 | |
Net assets relinquished in property exchange | $ (3,144,000) |
General
General | 9 Months Ended |
Sep. 30, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
General | (1) General This Quarterly Report on Form 10-Q is for the quarter ended September 30, 2016. In this Quarterly Report, “we,” “us,” “our” and the “Trust” refer to Universal Health Realty Income Trust and its subsidiaries. In this Quarterly Report on Form 10-Q, the term “revenues” does not include the revenues of the unconsolidated limited liability companies (“LLCs”) in which we have various non-controlling equity interests ranging from 33% to 95%. As of September 30, 2016, we had investments in five jointly-owned LLCs/LPs which own medical office buildings, all of which are accounted for by the equity method (see Note 5). These LLCs are included in our financial statements for all periods presented on an unconsolidated basis since they are not variable interest entities for which we are the primary beneficiary, nor do we hold a controlling voting interest. The financial statements included herein have been prepared by us, without audit, pursuant to the rules and regulations of the SEC and reflect all normal and recurring adjustments which, in our opinion, are necessary to fairly present results for the interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although we believe that the accompanying disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements, the notes thereto and accounting policies included in our Annual Report on Form 10-K for the year ended December 31, 2015. |
Relationship with Universal Hea
Relationship with Universal Health Services, Inc. ("UHS") and Related Party Transactions | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Relationship with Universal Health Services, Inc. ("UHS") and Related Party Transactions | (2) Relationship with Universal Health Services, Inc. (“UHS”) and Related Party Transactions Leases: We commenced operations in 1986 by purchasing properties of certain subsidiaries from UHS and immediately leasing the properties back to the respective subsidiaries. Most of the leases were entered into at the time we commenced operations and provided for initial terms of 13 to 15 years with up to six additional 5-year renewal terms. The current base rentals and lease and rental terms for each facility are provided below. The base rents are paid monthly and each lease also provides for additional or bonus rents which are computed and paid on a quarterly basis based upon a computation that compares current quarter revenue to a corresponding quarter in the base year. These hospital leases with subsidiaries of UHS are unconditionally guaranteed by UHS and are cross-defaulted with one another. The combined revenues generated from the leases on the UHS hospital facilities accounted for approximately 23% and 25% of our consolidated revenues for the three months ended September 30, 2016 and 2015, respectively, and approximately 24% and 25% of our consolidated revenues for the nine months ended September 30, 2016 and 2015, respectively. Including 100% of the revenues generated at the unconsolidated LLCs in which we have various non-controlling equity interests ranging from 33% to 95%, the leases on the UHS hospital facilities accounted for approximately 19% and 20% of the combined consolidated and unconsolidated revenue for the three months ended September 30, 2016 and 2015, respectively, and approximately 20% of the combined consolidated and unconsolidated revenue for each of the nine months ended September 30, 2016 and 2015. In addition, we have seventeen medical office buildings (“MOBs”), including one currently under construction, or free-standing emergency departments (“FEDs”), that are either wholly or jointly-owned by us, and include or will include tenants which are subsidiaries of UHS. Pursuant to the Master Lease Document by and among us and certain subsidiaries of UHS, dated December 24, 1986 (the “Master Lease”), which governs the leases of all hospital properties with subsidiaries of UHS, UHS has the option to renew the leases at the lease terms described below by providing notice to us at least 90 days prior to the termination of the then current term. UHS also has the right to purchase the respective leased facilities at the end of the lease terms or any renewal terms at the appraised fair market value. In addition, the Master Lease, as amended during 2006, includes a change of control provision whereby UHS has the right, upon one month’s notice should a change of control of the Trust occur, to purchase any or all of the three leased hospital properties listed below at their appraised fair market value. Additionally, UHS has rights of first refusal to: (i) purchase the respective leased facilities during and for 180 days after the lease terms at the same price, terms and conditions of any third-party offer, or; (ii) renew the lease on the respective leased facility at the end of, and for 180 days after, the lease term at the same terms and conditions pursuant to any third-party offer. The leases related to the hospital facilities of UHS are guaranteed by UHS and cross-defaulted with one another. In June, 2016, three wholly-owned subsidiaries of UHS provided the required notice to us, exercising the 5-year renewal options on the leases related to our acute care hospitals noted in the table below. The renewals extended the lease terms on these facilities, at existing lease rates, to December, 2021. The table below details the existing lease terms and renewal options for our three acute care hospitals operated by wholly-owned subsidiaries of UHS: Hospital Name Annual Minimum Rent End of Lease Term Renewal Term (years) McAllen Medical Center $ 5,485,000 December, 2021 10 (a) Wellington Regional Medical Center $ 3,030,000 December, 2021 10 (b) Southwest Healthcare System, Inland Valley Campus $ 2,648,000 December, 2021 10 (b) (a) UHS has two 5-year renewal options at existing lease rates (through 2031). (b) UHS has two 5-year renewal options at fair market value lease rates (2022 through 2031). Management cannot predict whether the leases with subsidiaries of UHS, which have renewal options at existing lease rates or fair market value lease rates, or any of our other leases, will be renewed at the end of their lease term. If the leases are not renewed at their current rates or the fair market value lease rates, we would be required to find other operators for those facilities and/or enter into leases on terms potentially less favorable to us than the current leases. In addition, if subsidiaries of UHS exercise their options to purchase the respective leased hospital and FED facilities upon expiration of the lease terms, our future revenues could decrease if we were unable to earn a favorable rate of return on the sale proceeds received, as compared to the rental revenue currently earned pursuant to the these leases. During the first quarter of 2016, we committed to invest up to $21.1 million in the development and construction of the Henderson Medical Plaza, an MOB located on the campus of the Henderson Hospital Medical Center which is owned by a UHS subsidiary and opened in late October, 2016. A ground lease has been executed between the limited liability company that owns the MOB and a subsidiary of UHS, the terms of which include a seventy-five year lease term with two ten-year renewal options at the Lessee’s option at an adjusting lease rate. We have invested $4.6 million in this MOB as of September 30, 2016. The MOB is scheduled to be completed and opened during the first quarter of 2017. Advisory Agreement: UHS of Delaware, Inc. (the “Advisor”), a wholly-owned subsidiary of UHS, serves as Advisor to us under an Advisory Agreement (the “Advisory Agreement”) dated December 24, 1986. Pursuant to the Advisory Agreement, the Advisor is obligated to present an investment program to us, to use its best efforts to obtain investments suitable for such program (although it is not obligated to present any particular investment opportunity to us), to provide administrative services to us and to conduct our day-to-day affairs. All transactions between us and UHS must be approved by the Trustees who are unaffiliated with UHS (the “Independent Trustees”). In performing its services under the Advisory Agreement, the Advisor may utilize independent professional services, including accounting, legal, tax and other services, for which the Advisor is reimbursed directly by us. The Advisory Agreement may be terminated for any reason upon sixty days written notice by us or the Advisor. The Advisory Agreement expires on December 31 of each year; however, it is renewable by us, subject to a determination by the Independent Trustees, that the Advisor’s performance has been satisfactory. In December of 2015, based upon a review of our advisory fee and other general and administrative expenses, as compared to an industry peer group, the Advisory agreement was renewed for 2016 pursuant to the same terms as the Advisory Agreement in place during 2015. The average real estate assets for advisory fee calculation purposes exclude certain items from our consolidated balance sheet such as, among other things, accumulated depreciation, cash and cash equivalents, base and bonus rent receivables, deferred charges and other assets. The advisory fee is payable quarterly, subject to adjustment at year-end based upon our audited financial statements. In addition, the Advisor is entitled to an annual incentive fee equal to 20% of the amount by which cash available for distribution to shareholders for each year, as defined in the Advisory Agreement, exceeds 15% of our equity as shown on our consolidated balance sheet, determined in accordance with generally accepted accounting principles without reduction for return of capital dividends. The Advisory Agreement defines cash available for distribution to shareholders as net cash flow from operations less deductions for, among other things, amounts required to discharge our debt and liabilities and reserves for replacement and capital improvements to our properties and investments. No incentive fees were paid during the first nine months of 2016 or 2015 since the incentive fee requirements were not achieved. Advisory fees incurred and paid (or payable) to UHS amounted to $832,000 and $708,000 for the three months ended September 30, 2016 and 2015, respectively, and were based upon average invested real estate assets of $475 million and $405 million for the three-month periods ended September 30, 2016 and 2015, respectively. Advisory fees incurred and paid (or payable) to UHS amounted to $2.4 million and $2.1 million for the nine months ended September 30, 2016 and 2015, respectively, and were based upon average invested real estate assets of $453 million and $394 million for the nine-month periods ended September 30, 2016 and 2015, respectively. Officers and Employees: Our officers are all employees of a wholly-owned subsidiary of UHS and although as of September 30, 2016 we had no salaried employees, our officers do typically receive annual stock-based compensation awards in the form of restricted stock. In special circumstances, if warranted and deemed appropriate by the Compensation Committee of the Board of Trustees, our officers may also receive one-time special compensation awards in the form of restricted stock and/or cash bonuses. Share Ownership: As of September 30, 2016 and December 31, 2015, UHS owned 5.8% and 5.9%, respectively, of our outstanding shares of beneficial interest. SEC reporting requirements of UHS: UHS is subject to the reporting requirements of the SEC and is required to file annual reports containing audited financial information and quarterly reports containing unaudited financial information. Since the leases on the hospital facilities leased to wholly-owned subsidiaries of UHS comprised approximately 23% and 25% of our consolidated revenues during the three month periods ended September 30, 2016 and 2015, respectively, and comprised approximately 24% and 25% of our consolidated revenues during the nine months ended September 30, 2016 and 2015, respectively, and since a subsidiary of UHS is our Advisor, you are encouraged to obtain the publicly available filings for Universal Health Services, Inc. from the SEC’s website. These filings are the sole responsibility of UHS and are not incorporated by reference herein. |
Dividends and Equity Issuance P
Dividends and Equity Issuance Program | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Dividends and Equity Issuance Program | (3) Dividends and Equity Issuance Program Dividends: We declared and paid dividends of $8.8 million, or $.65 per share, during the third quarter of 2016 and $8.5 million, or $.64 per share, during the third quarter of 2015. We declared and paid dividends of $26.2 million, or $1.945 per share, during the nine-month period ended September 30, 2016 and $25.5 million, or $1.915 per share, during the nine-month period ended September 30, 2015. Equity Issuance Program: During the second quarter of 2016, we recommenced our at-the-market (“ATM”) equity issuance program, pursuant to the terms of which we may sell, from time-to-time, common shares of our beneficial interest up to an aggregate sales price of approximately $23.3 million to or through Merrill Lynch, Pierce, Fenner and Smith, Incorporated (“Merrill Lynch”), as sales agent and/or principal. The common shares were offered pursuant to the Registration Statement filed with the Securities and Exchange Commission, which became effective during the fourth quarter of 2015. Pursuant to the ATM Program, during the first nine months of 2016, there were 249,016 shares issued at an average price of $55.30 per share (all of which were issued during the second quarter), which generated approximately $13.2 million of cash net proceeds (net of approximately $558,000, consisting of compensation of $344,000 to Merrill Lynch, as well as $214,000 of other various fees and expenses). Since inception of this ATM program, we have issued 829,916 shares at an average price of $48.77 per share, which generated approximately $38.8 million of net proceeds (net of approximately $1.7 million, consisting of compensation of $1.0 million to Merrill Lynch as well as $680,000 of other various fees and expenses). |
Acquisitions, Dispositions and
Acquisitions, Dispositions and New Construction | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Acquisitions, Dispositions and New Construction | (4) Acquisitions, Dispositions and New Construction Nine Months Ended September 30, 2016: Acquisition: During the nine months ended September 30, 2016, we spent $52.2 million to: • purchase the Frederick Memorial Hospital Crestwood, an MOB located in Frederick, Maryland, during the third quarter for approximately $24.3 million. The property, which consists of approximately 62,300 rentable square feet, is fully occupied pursuant to the terms of triple-net leases with an average remaining lease term of approximately twelve years at the time of acquisition. • purchase the Chandler Corporate Center III located in Chandler, Arizona, during the second quarter for approximately $18.0 million. The property, which consists of 82,000 rentable square feet, is currently 92% occupied by one tenant pursuant to the terms of a twelve year escalating triple-net lease, with a ten year fair-market value renewal option. The lease had a remaining lease term of approximately 11.3 years at the time of acquisition. • purchase the Madison Professional Office Building located in Madison, Alabama, during the first quarter for approximately $10.1 million (including $150,000 deposit made in 2015). This multi-tenant property consists of approximately 30,100 rentable square feet and is fully occupied with an average remaining lease term of approximately 6.2 years at the time of acquisition. The aggregate purchase price for these acquisitions was allocated to the assets acquired and liabilities assumed consisting of tangible property and intangible assets and liabilities, based on the fair value estimated or finalized at acquisition as detailed in the table below. Final allocations of the total purchase price for allocations currently estimated will be recorded during the fourth quarter of 2016, pursuant to a third-party appraisal and will be based upon the fair value at acquisition. While they are not expected to be materially different than those shown, any material adjustments to the estimates will be reflected, retroactively, as of the date of acquisition. Previous reported estimated purchase price allocations that have been finalized in the third quarter did not have a material impact on our consolidated financial statements The intangible assets include the value of in-place leases at the properties at the time of acquisition as well as the above market lease values. The value of the in-place leases will be amortized over the average remaining lease terms of approximately 6 to 12 years at the time of acquisition. The above/below market leases, which are reflected below as intangible assets/below-market intangibles will be amortized over the remaining term of the respective leases. The estimated aggregate allocation is as follows: Land $6,891 Buildings and improvements 39,647 Intangible assets 7,094 Below-market intangibles (1,289) Deposit……………………………………………………………………………………….. (150) Net cash paid $52,193 For these properties acquired during 2016, we recorded aggregate net revenue of approximately $723,000 and $1.1 million during the three and nine month periods ended September 30, 2016, respectively, since the date of acquisition. The aggregate net losses generated by these properties since the date of acquisition, including the cost of borrowings and advisory fee expenses was approximately $47,000 and $134,000 during the three and nine month periods ended September 30, 2016, respectively. Assuming the 2016 acquisitions occurred on January 1, 2015, our pro forma net revenues for the three and nine months ended September 30, 2015, would have been approximately $16.4 million and $50.1 million, respectively, and our pro forma net income for the three and nine months ended September 30, 2015, would have been approximately $3.4 million, or $.25 per diluted share, and $18.7 million, or $1.40 per diluted share, respectively. The Chandler Corporate Center III was not operational during the first nine months of 2015. Assuming these acquisitions occurred on January 1, 2016, our pro forma net revenues for the three and nine months ended September 30, 2016, would have been approximately $17.2 million and $51.7 million, respectively, and the aggregate effect on our net income for the three and nine months ended September 30, 2016 was not material. New Construction: During the first quarter of 2016, we committed to invest up to $21.1 million in the development and construction of the Henderson Medical Plaza, an MOB located on the campus of the Henderson Hospital Medical Center which is owned by a UHS subsidiary and opened in late October, 2016. A ground lease has been executed between the limited liability company that owns the MOB and a subsidiary of UHS, the terms of which include a seventy-five year lease term with two ten-year renewal options at the Lessee’s option at an adjusting lease rate. We have invested $4.6 million on the development and construction for this MOB as of September 30, 2016. The MOB is scheduled to be completed and opened during the first quarter of 2017. Dispositions: There were no divestitures during the first nine months of 2016. Nine Months Ended September 30, 2015: Property Exchange Transaction: In May, 2015, in exchange for the real property of Sheffield Medical Building (“Sheffield”), a 73,446 square foot medical office building (“MOB”) located in Atlanta, Georgia, we received $2 million in cash and the real property of two MOBs located in Sandy Springs and Vinings, Georgia, from an unrelated third party. In connection with the two MOBs acquired in this transaction, triple net, master lease agreements applicable to 100% of the combined 36,700 rentable square feet of these properties were executed with the counterparty. These master lease agreements have initial terms of 15 years and provide for 3% annual rent increases. We recorded an $8.7 million gain which is included in our Condensed Consolidated Statements of Income for the nine-month period ended September 30, 2015, representing the difference between recorded net book value of Sheffield and the fair values of the properties exchanged, combined with the cash proceeds received. Acquisitions: In February, 2015, we purchased the Haas Medical Office Park, two single story buildings having an aggregate of approximately 16,000 rentable square feet, located in Ottumwa, Iowa, for approximately $4.1 million. In January and February of 2015, we purchased from wholly-owned subsidiaries of UHS, the real property of two newly-constructed and recently opened FEDs located in Weslaco and Mission, Texas, for an aggregate acquisition cost of approximately $12.8 million. Each FED consists of approximately 13,600 square feet and is operated by wholly-owned subsidiaries of UHS. In connection with these acquisitions, ten-year lease agreements with six 5-year renewal terms were executed with UHS for each FED. In connection with the lease agreements, the lessee shall have the option to purchase the leased property upon the expiration of the fixed term and each five-year extended term at the fair market value at that time. Dispositions: There were no divestitures during the first nine months of 2015. |
Summarized Financial Informatio
Summarized Financial Information of Equity Affiliates | 9 Months Ended |
Sep. 30, 2016 | |
Equity Method Investments And Joint Ventures [Abstract] | |
Summarized Financial Information of Equity Affiliates | (5) Summarized Financial Information of Equity Affiliates In accordance with the Financial Accounting Standards Board’s (“FASB”) standards and guidance relating to accounting for investments and real estate ventures, we account for our unconsolidated investments in LLCs/LPs which we do not control using the equity method of accounting. The third-party members in these investments have equal voting rights with regards to issues such as, but not limited to: (i) divestiture of property; (ii) annual budget approval, and; (iii) financing commitments. These investments, which represent 33% to 95% non-controlling ownership interests, are recorded initially at our cost and subsequently adjusted for our net equity in the net income, cash contributions to, and distributions from, the investments. Pursuant to certain agreements, allocations of sales proceeds and profits and losses of some of the LLC investments may be allocated disproportionately as compared to ownership interests after specified preferred return rate thresholds have been satisfied. At September 30, 2016, we have non-controlling equity investments or commitments in five jointly-owned LLCs/LPs which own MOBs. As of September 30, 2016, we accounted for these LLCs/LPs on an unconsolidated basis pursuant to the equity method since they are not variable interest entities and we do not have a controlling voting interest. The majority of these entities are joint-ventures between us and non-related parties that manage and hold minority ownership interests in the entities. Each entity is generally self-sustained from a cash flow perspective and generates sufficient cash flow to meet its operating cash flow requirements and service the third-party debt (if applicable) that is non-recourse to us. Although there is typically no ongoing financial support required from us to these entities since they are cash-flow sufficient, we may, from time to time, provide funding for certain purposes such as, but not limited to, significant capital expenditures, leasehold improvements and debt financing. Although we are not obligated to do so, if approved by us at our sole discretion, additional cash fundings are typically advanced as equity or member loans. These entities maintain property insurance on the properties. Effective February 1, 2016, we purchased an additional 10% ownership interest in the Arlington Medical Properties, LLC from the third-party minority member, subject to certain agreed upon terms and conditions. Including this additional ownership interest, we currently own 85% of this LLC which is accounted for on an unconsolidated basis pursuant to the equity method. The following property table represents the five LLCs in which we own a noncontrolling interest and were accounted for under the equity method as of September 30, 2016: Name of LLC/LP Ownership Property Owned by LLC Suburban Properties 33 % St. Matthews Medical Plaza II Brunswick Associates (a.) 74 % Mid Coast Hospital MOB Arlington Medical Properties (b.) 85 % Saint Mary’s Professional Office Building Grayson Properties (c.) 95 % Texoma Medical Plaza FTX MOB Phase II (d.) 95 % Forney Medical Plaza II (a.) This LLC has a third-party term loan, which is non-recourse to us, of $8.7 million outstanding as of September 30, 2016. (b.) We have funded $5.2 million in equity as of September 30, 2016 and are committed to invest an additional $623,000. During the fourth quarter of 2015, we advanced this LLC a member loan, the funds of which were utilized to repay its $22.8 million outstanding third-party mortgage loan on its scheduled maturity date. The terms of the member loan are similar to those in place pursuant to the third-party mortgage loan that was repaid. Additionally, pursuant to the terms and conditions of an agreement executed in February, 2016, we purchased an additional 10% of the ownership interest in this LLC from the existing third-party member for approximately $4.8 million in cash, thereby increasing our ownership interest to 85%. (c.) We have funded $2.8 million in equity as of September 30, 2016, and are committed to fund an additional $100,000. This building is on the campus of a UHS hospital and has tenants that include subsidiaries of UHS. This LLC has a third-party term loan, which is non-recourse to us, of $14.5 million outstanding as of September 30, 2016. (d.) We have committed to invest up to $2.5 million in equity and debt financing, of which $2.1 million has been funded as of September 30, 2016. This LLC has a third-party term loan, which is non-recourse to us, of $5.3 million outstanding as of September 30, 2016. Below are the condensed combined statements of income (unaudited) for the LLCs accounted for under the equity method at September 30, 2016 and 2015. Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 (amounts in thousands) (amounts in thousands) Revenues $ 3,776 $ 3,638 $ 11,437 $ 10,799 Operating expenses 1,329 1,461 4,025 4,194 Depreciation and amortization 646 634 1,910 1,788 Interest, net 636 656 1,928 1,907 Net income $ 1,165 $ 887 $ 3,574 $ 2,910 Our share of net income (a.) $ 1,110 $ 561 $ 3,396 $ 1,826 (a.) Our share of net income for the three and nine months ended September 30, 2016 includes approximately $291,000 and $880,000, respectively, of interest income earned by us on an advance made to Arlington Medical Properties, LLC (advance balance payable to us is approximately $21.8 million as of September 30, 2016). There were no advances outstanding during the first nine months of 2015, therefore there was no interest income earned by us for the three and nine months ended September 30, 2015. Also, as mentioned above, effective February 1, 2016, we purchased an additional 10% of the ownership interest in Arlington Medical Properties, LLC thereby increasing our ownership interest to 85%, from 75% previously. Below are the condensed combined balance sheets (unaudited) for the five above-mentioned LLCs in which we hold noncontrolling ownership interests and that were accounted for under the equity method as of September 30, 2016 and December 31, 2015: September 30, 2016 December 31, 2015 (amounts in thousands) Net property, including CIP $ 61,317 $ 61,668 Other assets 5,343 5,264 Total assets $ 66,660 $ 66,932 Liabilities $ 2,832 $ 2,538 Mortgage notes payable, non-recourse to us 28,497 28,895 Advances payable to us 21,855 22,489 Equity 13,476 13,010 Total liabilities and equity $ 66,660 $ 66,932 Our share of equity in and advances to LLCs reflected as: Investments in LLCs $ 14,910 $ 9,108 Advances to LLCs 21,855 22,489 Investments in and advances to LLCs before amounts included in accrued expenses and other liabilities 36,765 31,597 Amounts included in accrued expenses and other liabilities (1,771 ) (1,105 ) Our share of equity in and advances to LLCs, net $ 34,994 $ 30,492 As of September 30, 2016, and December 31, 2015, aggregate principal amounts due on mortgage notes payable by unconsolidated LLCs, which are accounted for under the equity method and are non-recourse to us, are as follows (amounts in thousands): Mortgage Loan Balance (a.) Name of LLC/LP 9/30/2016 12/31/2015 Maturity Date FTX MOB Phase II $ 5,333 $ 5,427 August, 2017 Grayson Properties 14,496 14,670 September, 2021 Brunswick Associates 8,668 8,798 December, 2024 $ 28,497 $ 28,895 (a.) All mortgage loans require monthly principal payments through maturity and include a balloon principal payment upon maturity. Pursuant to the operating and/or partnership agreements of the five LLCs/LPs in which we continue to hold non-controlling ownership interests, the third-party member and/or the Trust, at any time, potentially subject to certain conditions, have the right to make an offer (“Offering Member”) to the other member(s) (“Non-Offering Member”) in which it either agrees to: (i) sell the entire ownership interest of the Offering Member to the Non-Offering Member (“Offer to Sell”) at a price as determined by the Offering Member (“Transfer Price”), or; (ii) purchase the entire ownership interest of the Non-Offering Member (“Offer to Purchase”) at the equivalent proportionate Transfer Price. The Non-Offering Member has 60 to 90 days to either: (i) purchase the entire ownership interest of the Offering Member at the Transfer Price, or; (ii) sell its entire ownership interest to the Offering Member at the equivalent proportionate Transfer Price. The closing of the transfer must occur within 60 to 90 days of the acceptance by the Non-Offering Member. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2016 | |
New Accounting Pronouncements And Changes In Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | (6) Recent Accounting Pronouncements In August, 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, which adds or clarifies guidance of the classification of certain cash receipts and payments in the statement of cash flows with the intent to alleviate diversity in practice for classifying various types of cash flows. This ASU is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted. We are currently evaluating the impact of this ASU on our statement of cash flows. In February 2016, the FASB In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, an update to the accounting standard relating to the presentation of debt issuance costs. Under the new guidance, debt issuance costs related to a recognized debt liability will be presented on the balance sheet as a direct deduction from the debt liability. In the event that there is not an associated debt liability recorded in the consolidated financial statements, the debt issuance costs will continue to be recorded on the consolidated balance sheet as an asset until the debt liability is recorded. The new standard became effective for the Trust on January 1, 2016. The adoption of this guidance did not have a material impact on our consolidated financial position or results of operations as the update only related to changes in financial statement presentation. In February 2015, the FASB issued ASU No. 2015-02, Consolidation – Amendments to the Consolidation Analysis, which amends the current consolidation guidance affecting both the variable interest entity (“VIE”) and voting interest entity (“VOE”) consolidation models. The standard does not add or remove any of the characteristics in determining if an entity is a VIE or VOE, but rather enhances the way the Company assesses some of these characteristics. The new standard became effective for the Trust on January 1, 2016 and did not have a material impact on our consolidated financial position or results of operations as none of its existing consolidation conclusions were changed. In 2014, the FASB issued ASU 2014-09, Revenue From Contracts With Customers |
Debt and Financial Instruments
Debt and Financial Instruments | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Debt and Financial Instruments | (7) Debt and Financial Instruments Debt: Management routinely monitors and analyzes the Trust’s capital structure in an effort to maintain the targeted balance among capital resources including the level of borrowings pursuant to our $250 million revolving credit facility, the level of borrowings pursuant to non-recourse mortgage debt secured by the real property of our properties and our level of equity including consideration of additional equity issuances pursuant to our ATM equity issuance program. This ongoing analysis considers factors such as the current debt market and interest rate environment, the current/projected occupancy and financial performance of our properties, the current loan-to-value ratio of our properties, the Trust’s current stock price, the capital resources required for anticipated acquisitions and the expected capital to be generated by anticipated divestitures. This analysis, together with consideration of the Trust’s current balance of revolving credit facility borrowings, non-recourse mortgage borrowings and equity, assists management in deciding which capital resource to utilize when events such as refinancing of specific debt components occur or additional funds are required to finance the Trust’s growth. On March 27, 2015, we entered into a $185 million revolving credit agreement (“Credit Agreement”) which was amended on May 24, 2016 to, among other things, increase the borrowing capacity to $250 million. The amended Credit Agreement, which is scheduled to mature in March, 2019, includes a $40 million sub limit for letters of credit and a $20 million sub limit for swingline/short-term loans. The Credit Agreement also provides a one-time option to extend the maturity date for an additional one year period, and an option to increase the total facility borrowing capacity up to an additional $50 million, subject to lender agreement. Borrowings under the Credit Agreement are guaranteed by certain subsidiaries of the Trust. In addition, borrowings under the Credit Agreement are secured by first priority security interests in and liens on all equity interests in the Trust’s wholly-owned subsidiaries. Borrowings made pursuant to the Credit Agreement will bear interest, at our option, at one, two, three, or six month LIBOR plus an applicable margin ranging from 1.50% to 2.00% or at the Base Rate plus an applicable margin ranging from 0.50% to 1.00%. The Credit Agreement defines “Base Rate” as the greatest of: (a) the administrative agent’s prime rate; (b) the federal funds effective rate plus 1/2 of 1%, and; (c) one month LIBOR plus 1%. A commitment fee of 0.20% to 0.40% (depending on our total leverage ratio) will be charged on the average unused portion of the revolving credit commitments. The margins over LIBOR, Base Rate and the commitment fee are based upon our ratio of debt to total capital. At September 30, 2016, the applicable margin over the LIBOR rate was 1.625%, the margin over the Base Rate was 0.625%, and the commitment fee was 0.25%. At September 30, 2016, we had $192.3 million of outstanding borrowings and $2.7 million of letters of credit outstanding under our Credit Agreement. We had $55.0 million of available borrowing capacity, net of the outstanding borrowings and letters of credit outstanding as of September 30, 2016. There are no compensating balance requirements. The Credit Agreement contains customary affirmative and negative covenants, including limitations on certain indebtedness, liens, acquisitions and other investments, fundamental changes, asset dispositions and dividends and other distributions. The Credit Agreement also contains restrictive covenants regarding the Trust’s ratio of total debt to total assets, the fixed charge coverage ratio, the ratio of total secured debt to total asset value, the ratio of total unsecured debt to total unencumbered asset value, and minimum tangible net worth, as well as customary events of default, the occurrence of which may trigger an acceleration of amounts outstanding under the Credit Agreement. We are in compliance with all of the covenants at September 30, 2016. We also believe that we would remain in compliance if the full amount of our commitment was borrowed. The following table includes a summary of the required compliance ratios, giving effect to the covenants contained in the Credit Agreement (dollar amounts in thousands): Covenant September 30, 2016 Tangible net worth $ 125,000 $ 172,329 Total leverage < 60% 47.8 % Secured leverage < 30% 17.6 % Unencumbered leverage < 60% 48.7 % Fixed charge coverage > 1.50x 3.7x As indicated on the following table, we have fourteen mortgages, all of which are non-recourse to us, included on our condensed consolidated balance sheet as of September 30, 2016, with a combined outstanding balance of $107.8 million, excluding net debt premium of $132,000 and net of net financing fees of $321,000 (amounts in thousands): Facility Name Outstanding Balance (in Interest Rate Maturity Date Summerlin Hospital Medical Office Building III floating rate mortgage loan (b.) $ 10,462 3.77 % December, 2016 Peace Health fixed rate mortgage loan (b.) 20,434 5.64 % April, 2017 Auburn Medical II floating rate mortgage loan (b.) 6,783 3.27 % April, 2017 Medical Center of Western Connecticut fixed rate mortgage loan (b.) 4,568 6.00 % June, 2017 Summerlin Hospital Medical Office Building II fixed rate mortgage loan (b.) 11,175 5.50 % October, 2017 Phoenix Children’s East Valley Care Center fixed rate mortgage loan 6,239 5.88 % December, 2017 Centennial Hills Medical Office Building floating rate mortgage loan 10,116 3.77 % January, 2018 Sparks Medical Building/Vista Medical Terrace floating rate mortgage loan 4,260 3.77 % February, 2018 Rosenberg Children’s Medical Plaza fixed rate mortgage loan 8,190 4.85 % May, 2018 Vibra Hospital-Corpus Christi fixed rate mortgage loan 2,746 6.50 % July, 2019 700 Shadow Lane and Goldring MOBs fixed rate mortgage loan 6,294 4.54 % June, 2022 BRB Medical Office Building fixed rate mortgage loan 6,362 4.27 % December, 2022 Desert Valley Medical Center fixed rate mortgage loan 5,114 3.62 % January, 2023 Tuscan Professional Building fixed rate mortgage loan 5,106 5.56 % June, 2025 Total $ 107,849 (a.) All mortgage loans require monthly principal payments through maturity and either fully amortize or include a balloon principal payment upon maturity. (b.) This loan is scheduled to mature within the next twelve months, at which time we will decide whether to refinance pursuant to a new mortgage loan or by utilizing borrowings under our Credit Agreement. The mortgages are secured by the real property of the buildings as well as property leases and rents. The mortgages have a combined fair value of approximately $110 million as of September 30, 2016. Changes in market rates on our fixed rate debt impacts the fair value of debt, but it has no impact on interest incurred or cash flow. At December 31, 2015, we had fourteen mortgages, all of which were non-recourse to us, included in our consolidated balance sheet. The combined outstanding balance of these fourteen mortgages was $110.3 million (excluding net debt premium of $298,000 and net of net financing fees of $398,000), and had a combined fair value of approximately $112 million. Financial Instruments: During the third quarter of 2013, we entered into an interest rate cap on a total notional amount of $10 million whereby we paid a premium of $136,000. During the first quarter of 2014, we entered into two additional interest rate cap agreements on a total notional amount of $20 million whereby we paid premiums of $134,500. In exchange for the premium payments, the counterparties agreed to pay us the difference between 1.50% and one-month LIBOR if one-month LIBOR rises above 1.50% during the term of the cap. From inception through September 30, 2016, no payments have been made to us by the counterparties pursuant to the terms of these caps which expire in January, 2017. During the second quarter of 2016, we entered into an interest rate cap on the total notional amount of $30 million whereby we paid a premium of $115,000. In exchange for the premium payment, the counterparties agreed to pay us the difference between 1.50% and one-month LIBOR if one-month LIBOR rises above 1.50% during the term of the cap. This interest rate cap becomes effective in January, 2017, coinciding with the expiration of the above-mentioned interest rate caps and expires in March, 2019. During the third quarter of 2016, we entered into an additional interest rate cap agreement on a total notional amount of $30 million whereby we paid a premium of $55,000. In exchange for the premium payment, the counterparties agreed to pay us the difference between 1.5% and one-month LIBOR if one-month LIBOR rises above 1.5% during the term of the cap. This interest rate cap became effective in October, 2016 and expires in March, 2019. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment Reporting | (8) Segment Reporting Our primary business is investing in and leasing healthcare and human service facilities through direct ownership or through joint ventures, which aggregate into a single reportable segment. We actively manage our portfolio of healthcare and human service facilities and may from time to time make decisions to sell lower performing properties not meeting our long-term investment objectives. The proceeds of sales are typically reinvested in new developments or acquisitions, which we believe will meet our planned rate of return. It is our intent that all healthcare and human service facilities will be owned or developed for investment purposes. Our revenue and net income are generated from the operation of our investment portfolio. Our portfolio is located throughout the United States, however, we do not distinguish or group our operations on a geographical basis for purposes of allocating resources or measuring performance. We review operating and financial data for each property on an individual basis; therefore, we define an operating segment as our individual properties. Individual properties have been aggregated into one reportable segment based upon their similarities with regard to both the nature and economics of the facilities, tenants and operational processes, as well as long-term average financial performance. |
Relationship with Universal H15
Relationship with Universal Health Services, Inc. ("UHS") and Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Existing Lease Terms and Renewal Options for Each of UHS Hospital Facilities | The table below details the existing lease terms and renewal options for our three acute care hospitals operated by wholly-owned subsidiaries of UHS: Hospital Name Annual Minimum Rent End of Lease Term Renewal Term (years) McAllen Medical Center $ 5,485,000 December, 2021 10 (a) Wellington Regional Medical Center $ 3,030,000 December, 2021 10 (b) Southwest Healthcare System, Inland Valley Campus $ 2,648,000 December, 2021 10 (b) (a) UHS has two 5-year renewal options at existing lease rates (through 2031). (b) UHS has two 5-year renewal options at fair market value lease rates (2022 through 2031). |
Acquisitions, Dispositions an16
Acquisitions, Dispositions and New Construction (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Allocation of Purchase Price to Assets Acquired and Liabilities Assumed | The estimated aggregate allocation is as follows: Land $6,891 Buildings and improvements 39,647 Intangible assets 7,094 Below-market intangibles (1,289) Deposit……………………………………………………………………………………….. (150) Net cash paid $52,193 |
Summarized Financial Informat17
Summarized Financial Information of Equity Affiliates (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Equity Method Investments And Joint Ventures [Abstract] | |
Limited Liability Companies Accounted for Under Equity Method | The following property table represents the five LLCs in which we own a noncontrolling interest and were accounted for under the equity method as of September 30, 2016: Name of LLC/LP Ownership Property Owned by LLC Suburban Properties 33 % St. Matthews Medical Plaza II Brunswick Associates (a.) 74 % Mid Coast Hospital MOB Arlington Medical Properties (b.) 85 % Saint Mary’s Professional Office Building Grayson Properties (c.) 95 % Texoma Medical Plaza FTX MOB Phase II (d.) 95 % Forney Medical Plaza II (a.) This LLC has a third-party term loan, which is non-recourse to us, of $8.7 million outstanding as of September 30, 2016. (b.) We have funded $5.2 million in equity as of September 30, 2016 and are committed to invest an additional $623,000. During the fourth quarter of 2015, we advanced this LLC a member loan, the funds of which were utilized to repay its $22.8 million outstanding third-party mortgage loan on its scheduled maturity date. The terms of the member loan are similar to those in place pursuant to the third-party mortgage loan that was repaid. Additionally, pursuant to the terms and conditions of an agreement executed in February, 2016, we purchased an additional 10% of the ownership interest in this LLC from the existing third-party member for approximately $4.8 million in cash, thereby increasing our ownership interest to 85%. (c.) We have funded $2.8 million in equity as of September 30, 2016, and are committed to fund an additional $100,000. This building is on the campus of a UHS hospital and has tenants that include subsidiaries of UHS. This LLC has a third-party term loan, which is non-recourse to us, of $14.5 million outstanding as of September 30, 2016. (d.) We have committed to invest up to $2.5 million in equity and debt financing, of which $2.1 million has been funded as of September 30, 2016. This LLC has a third-party term loan, which is non-recourse to us, of $5.3 million outstanding as of September 30, 2016. |
Condensed Combined Statements of Income (Unaudited) for Limited Liability Companies Accounted for Under Equity Method | Below are the condensed combined statements of income (unaudited) for the LLCs accounted for under the equity method at September 30, 2016 and 2015. Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 (amounts in thousands) (amounts in thousands) Revenues $ 3,776 $ 3,638 $ 11,437 $ 10,799 Operating expenses 1,329 1,461 4,025 4,194 Depreciation and amortization 646 634 1,910 1,788 Interest, net 636 656 1,928 1,907 Net income $ 1,165 $ 887 $ 3,574 $ 2,910 Our share of net income (a.) $ 1,110 $ 561 $ 3,396 $ 1,826 (a.) Our share of net income for the three and nine months ended September 30, 2016 includes approximately $291,000 and $880,000, respectively, of interest income earned by us on an advance made to Arlington Medical Properties, LLC (advance balance payable to us is approximately $21.8 million as of September 30, 2016). There were no advances outstanding during the first nine months of 2015, therefore there was no interest income earned by us for the three and nine months ended September 30, 2015. Also, as mentioned above, effective February 1, 2016, we purchased an additional 10% of the ownership interest in Arlington Medical Properties, LLC thereby increasing our ownership interest to 85%, from 75% previously. |
Condensed Combined Balance Sheets (Unaudited) for LLCs Accounted for Under Equity Method | Below are the condensed combined balance sheets (unaudited) for the five above-mentioned LLCs in which we hold noncontrolling ownership interests and that were accounted for under the equity method as of September 30, 2016 and December 31, 2015: September 30, 2016 December 31, 2015 (amounts in thousands) Net property, including CIP $ 61,317 $ 61,668 Other assets 5,343 5,264 Total assets $ 66,660 $ 66,932 Liabilities $ 2,832 $ 2,538 Mortgage notes payable, non-recourse to us 28,497 28,895 Advances payable to us 21,855 22,489 Equity 13,476 13,010 Total liabilities and equity $ 66,660 $ 66,932 Our share of equity in and advances to LLCs reflected as: Investments in LLCs $ 14,910 $ 9,108 Advances to LLCs 21,855 22,489 Investments in and advances to LLCs before amounts included in accrued expenses and other liabilities 36,765 31,597 Amounts included in accrued expenses and other liabilities (1,771 ) (1,105 ) Our share of equity in and advances to LLCs, net $ 34,994 $ 30,492 |
Aggregate Principal Amounts due on Mortgage and Construction Notes Payable by Unconsolidated LLC's Accounted Under Equity Method | As of September 30, 2016, and December 31, 2015, aggregate principal amounts due on mortgage notes payable by unconsolidated LLCs, which are accounted for under the equity method and are non-recourse to us, are as follows (amounts in thousands): Mortgage Loan Balance (a.) Name of LLC/LP 9/30/2016 12/31/2015 Maturity Date FTX MOB Phase II $ 5,333 $ 5,427 August, 2017 Grayson Properties 14,496 14,670 September, 2021 Brunswick Associates 8,668 8,798 December, 2024 $ 28,497 $ 28,895 (a.) All mortgage loans require monthly principal payments through maturity and include a balloon principal payment upon maturity. |
Debt and Financial Instruments
Debt and Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Summary of Required Compliance Ratios Giving Effect to New Covenants in Credit Agreement | The following table includes a summary of the required compliance ratios, giving effect to the covenants contained in the Credit Agreement (dollar amounts in thousands): Covenant September 30, 2016 Tangible net worth $ 125,000 $ 172,329 Total leverage < 60% 47.8 % Secured leverage < 30% 17.6 % Unencumbered leverage < 60% 48.7 % Fixed charge coverage > 1.50x 3.7x |
Outstanding Mortgages, Excluding Net Debt Premium | Facility Name Outstanding Balance (in Interest Rate Maturity Date Summerlin Hospital Medical Office Building III floating rate mortgage loan (b.) $ 10,462 3.77 % December, 2016 Peace Health fixed rate mortgage loan (b.) 20,434 5.64 % April, 2017 Auburn Medical II floating rate mortgage loan (b.) 6,783 3.27 % April, 2017 Medical Center of Western Connecticut fixed rate mortgage loan (b.) 4,568 6.00 % June, 2017 Summerlin Hospital Medical Office Building II fixed rate mortgage loan (b.) 11,175 5.50 % October, 2017 Phoenix Children’s East Valley Care Center fixed rate mortgage loan 6,239 5.88 % December, 2017 Centennial Hills Medical Office Building floating rate mortgage loan 10,116 3.77 % January, 2018 Sparks Medical Building/Vista Medical Terrace floating rate mortgage loan 4,260 3.77 % February, 2018 Rosenberg Children’s Medical Plaza fixed rate mortgage loan 8,190 4.85 % May, 2018 Vibra Hospital-Corpus Christi fixed rate mortgage loan 2,746 6.50 % July, 2019 700 Shadow Lane and Goldring MOBs fixed rate mortgage loan 6,294 4.54 % June, 2022 BRB Medical Office Building fixed rate mortgage loan 6,362 4.27 % December, 2022 Desert Valley Medical Center fixed rate mortgage loan 5,114 3.62 % January, 2023 Tuscan Professional Building fixed rate mortgage loan 5,106 5.56 % June, 2025 Total $ 107,849 (a.) All mortgage loans require monthly principal payments through maturity and either fully amortize or include a balloon principal payment upon maturity. (b.) This loan is scheduled to mature within the next twelve months, at which time we will decide whether to refinance pursuant to a new mortgage loan or by utilizing borrowings under our Credit Agreement. |
General - Additional Informatio
General - Additional Information (Detail) | Sep. 30, 2016Property |
5 Unconsolidated Limited Liability Companies | Minimum | |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |
Non-controlling equity interest, ownership percentage | 33.00% |
5 Unconsolidated Limited Liability Companies | Maximum | |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |
Non-controlling equity interest, ownership percentage | 95.00% |
Medical office buildings | Limited Liability Companies | |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |
Number of real estate investments | 5 |
Relationship with Universal H20
Relationship with Universal Health Services, Inc. ("UHS") and Related Party Transactions - Additional Information (Detail) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Jun. 30, 2016SubsidiaryTime | Sep. 30, 2016USD ($)Time | Mar. 31, 2016USD ($)Time | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)PropertyTime | Sep. 30, 2015USD ($) | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | |||||||
Advisory fee | $ 832,000 | $ 708,000 | $ 2,380,000 | $ 2,067,000 | |||
Minimum | 5 Unconsolidated Limited Liability Companies | |||||||
Related Party Transaction [Line Items] | |||||||
Non-controlling equity interest, ownership percentage | 33.00% | 33.00% | |||||
Maximum | 5 Unconsolidated Limited Liability Companies | |||||||
Related Party Transaction [Line Items] | |||||||
Non-controlling equity interest, ownership percentage | 95.00% | 95.00% | |||||
Universal Health Services, Inc | |||||||
Related Party Transaction [Line Items] | |||||||
Number of term renewal options | Time | 6 | 6 | |||||
Additional renewal terms | 5 years | ||||||
Number of medical office buildings and free standing emergency departments | Property | 17 | ||||||
Number of medical office buildings under construction | Property | 1 | ||||||
Option to renew lease, notice period prior to termination date of current term | 90 days | ||||||
Period to purchase respective leased facilities at same price after lease terms | 180 days | ||||||
Renewal period of respective leased facilities at same price after lease terms | 180 days | ||||||
Number of wholly-owned subsidiaries | Subsidiary | 3 | ||||||
Extended lease terms at existing lease rates | 2021-12 | ||||||
Number of renewal options at existing lease rates | Time | 3 | ||||||
Percentage ownership of outstanding shares | 5.80% | 5.80% | 5.90% | ||||
Universal Health Services, Inc | Henderson Medical Plaza | |||||||
Related Party Transaction [Line Items] | |||||||
Number of term renewal options | Time | 2 | ||||||
Additional renewal terms | 10 years | ||||||
Maximum amount of investment for development and construction | $ 21,100,000 | ||||||
Ground lease agreement period | 75 years | ||||||
Amount invested in MOB under construction | $ 4,600,000 | $ 4,600,000 | |||||
Universal Health Services, Inc | Customer Concentration Risk | Revenues | |||||||
Related Party Transaction [Line Items] | |||||||
Percentage of revenues generated from leases | 23.00% | 25.00% | 24.00% | 25.00% | |||
Universal Health Services, Inc | Customer Concentration Risk | Combined consolidated and unconsolidated revenue | |||||||
Related Party Transaction [Line Items] | |||||||
Percentage of revenues generated from leases | 19.00% | 20.00% | 20.00% | 20.00% | |||
Universal Health Services, Inc | Minimum | |||||||
Related Party Transaction [Line Items] | |||||||
Initial lease terms | 13 years | ||||||
Universal Health Services, Inc | Maximum | |||||||
Related Party Transaction [Line Items] | |||||||
Initial lease terms | 15 years | ||||||
Universal Health Services of Delaware Inc | |||||||
Related Party Transaction [Line Items] | |||||||
Annual incentive fee to Advisor as percentage of cash available for distribution | 20.00% | 20.00% | |||||
Incentive fees | $ 0 | $ 0 | |||||
Advisory fee | $ 832,000 | $ 708,000 | 2,400,000 | 2,100,000 | |||
Average invested real estate assets | $ 475,000,000 | $ 405,000,000 | $ 453,000,000 | $ 394,000,000 | |||
Universal Health Services of Delaware Inc | Minimum | |||||||
Related Party Transaction [Line Items] | |||||||
Percentage of equity to be exceeded for incentive distribution | 15.00% | 15.00% |
Existing Lease Terms and Renewa
Existing Lease Terms and Renewal Options for Each of UHS Hospital Facilities (Detail) | 9 Months Ended | |
Sep. 30, 2016USD ($) | ||
McAllen Medical Center | ||
Operating Leased Assets [Line Items] | ||
Annual Minimum Rent | $ 5,485,000 | |
End of Lease Term | 2021-12 | |
Renewal Term (years) | 10 years | [1] |
Wellington Regional Medical Center | ||
Operating Leased Assets [Line Items] | ||
Annual Minimum Rent | $ 3,030,000 | |
End of Lease Term | 2021-12 | |
Renewal Term (years) | 10 years | [2] |
Southwest Healthcare System, Inland Valley Campus | ||
Operating Leased Assets [Line Items] | ||
Annual Minimum Rent | $ 2,648,000 | |
End of Lease Term | 2021-12 | |
Renewal Term (years) | 10 years | [2] |
[1] | UHS has two 5-year renewal options at existing lease rates (through 2031). | |
[2] | UHS has two 5-year renewal options at fair market value lease rates (2022 through 2031). |
Existing Lease Terms and Rene22
Existing Lease Terms and Renewal Options for Each of UHS Hospital Facilities (Parenthetical) (Detail) - Universal Health Services, Inc | 1 Months Ended | 9 Months Ended |
Jun. 30, 2016Time | Sep. 30, 2016TimeRenewalOption | |
Operating Leased Assets [Line Items] | ||
Number of renewal options at existing lease rates | 3 | |
McAllen Medical Center | ||
Operating Leased Assets [Line Items] | ||
Number of renewal options at existing lease rates | 2 | |
Renewal options term at existing lease rates | 5 years | |
Renewal options at existing lease rates expiration year | 2,031 | |
Wellington Regional Medical Center And Southwest Healthcare System | ||
Operating Leased Assets [Line Items] | ||
Number of renewal options at fair market value lease rates | RenewalOption | 2 | |
Renewal options term at fair market value lease rates | 5 years | |
Wellington Regional Medical Center And Southwest Healthcare System | Minimum | ||
Operating Leased Assets [Line Items] | ||
Renewal options at fair market value lease rates expiration year | 2,022 | |
Wellington Regional Medical Center And Southwest Healthcare System | Maximum | ||
Operating Leased Assets [Line Items] | ||
Renewal options at fair market value lease rates expiration year | 2,031 |
Dividends and Equity Issuance23
Dividends and Equity Issuance Program - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | 36 Months Ended | |||
Sep. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | |
Dividends and Equity Issuance [Line Items] | ||||||
Dividends declared and paid | $ 8,800,000 | $ 8,500,000 | $ 26,231,000 | $ 25,494,000 | ||
Declared and paid dividends, per share | $ 0.65 | $ 0.64 | $ 1.945 | $ 1.915 | ||
Securities, aggregate sales price | $ 23,300,000 | |||||
At-The-Market (ATM) Equity Issuance Program | ||||||
Dividends and Equity Issuance [Line Items] | ||||||
Share issued | 249,016 | 249,016 | 829,916 | |||
Average sale price per share | $ 55.30 | $ 55.30 | $ 48.77 | |||
Net cash proceeds from stock issued | $ 13,200,000 | $ 38,800,000 | ||||
Payment of stock issuance cost | 558,000 | 1,700,000 | ||||
Payments for stock issuance | 344,000 | 1,000,000 | ||||
At-The-Market (ATM) Equity Issuance Program | Other Expense | ||||||
Dividends and Equity Issuance [Line Items] | ||||||
Payments for stock issuance | $ 214,000 | $ 680,000 |
Acquisitions, Dispositions an24
Acquisitions, Dispositions and New Construction - Additional Information (Detail) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
May 31, 2015USD ($)ft²Property | Feb. 28, 2015USD ($)ft²Building | Feb. 28, 2015USD ($)ft²Property | Sep. 30, 2016USD ($)ft²Time | Jun. 30, 2016USD ($)ft² | Mar. 31, 2016USD ($)ft²Time | Sep. 30, 2015USD ($)$ / shares | Sep. 30, 2016USD ($)ft²Time | Sep. 30, 2015USD ($)$ / shares | Dec. 31, 2015USD ($) | |
Business Acquisitions And Dispositions [Line Items] | ||||||||||
Total cash paid | $ 52,200,000 | |||||||||
Deposits on real estate assets | 420,000 | |||||||||
Business combination recorded aggregate net revenue | $ 723,000 | 1,100,000 | ||||||||
Business combination aggregate net losses generated by properties including cost of borrowings and advisory fee expenses | 47,000 | 134,000 | ||||||||
Business acquisition, pro forma net revenues | $ 17,200,000 | $ 16,400,000 | 51,700,000 | $ 50,100,000 | ||||||
Business Acquisition, pro forma net income | $ 3,400,000 | $ 18,700,000 | ||||||||
Business Acquisition, pro forma diluted per share | $ / shares | $ 0.25 | $ 1.40 | ||||||||
Cash received for property exchange transaction | $ 0 | $ 2,000,000 | ||||||||
Gain on property exchange | 8,742,000 | |||||||||
Universal Health Services, Inc | ||||||||||
Business Acquisitions And Dispositions [Line Items] | ||||||||||
Number of term renewal options | Time | 6 | 6 | ||||||||
Additional renewal terms | 5 years | |||||||||
Henderson Medical Plaza | Universal Health Services, Inc | ||||||||||
Business Acquisitions And Dispositions [Line Items] | ||||||||||
Maximum amount of investment for development and construction | $ 21,100,000 | |||||||||
Amount invested in MOB under construction | $ 4,600,000 | $ 4,600,000 | ||||||||
Ground lease agreement period | 75 years | |||||||||
Number of term renewal options | Time | 2 | |||||||||
Additional renewal terms | 10 years | |||||||||
Sheffield Medical Building | ||||||||||
Business Acquisitions And Dispositions [Line Items] | ||||||||||
Net rentable area | ft² | 36,700 | |||||||||
Cash received for property exchange transaction | $ 2,000,000 | |||||||||
Area of disposed building | ft² | 73,446 | |||||||||
Number of assets acquired | Property | 2 | |||||||||
Percentage of rentable area covered by the agreement | 100.00% | |||||||||
Lease agreement period | 15 years | |||||||||
Percentage of annual rent increase | 3.00% | |||||||||
Gain on property exchange | 8,700,000 | |||||||||
Minimum | ||||||||||
Business Acquisitions And Dispositions [Line Items] | ||||||||||
Acquired intangible assets include in-place leases amortization period | 6 years | |||||||||
Maximum | ||||||||||
Business Acquisitions And Dispositions [Line Items] | ||||||||||
Acquired intangible assets include in-place leases amortization period | 12 years | |||||||||
Frederick Memorial Hospital Crestwood | ||||||||||
Business Acquisitions And Dispositions [Line Items] | ||||||||||
Total purchase price | $ 24,300,000 | |||||||||
Net rentable area | ft² | 62,300 | 62,300 | ||||||||
Frederick Memorial Hospital Crestwood | Lease Agreements | ||||||||||
Business Acquisitions And Dispositions [Line Items] | ||||||||||
Renewal Term (years) | 12 years | |||||||||
Chandler Corporate Center III | ||||||||||
Business Acquisitions And Dispositions [Line Items] | ||||||||||
Total purchase price | $ 18,000,000 | |||||||||
Net rentable area | ft² | 82,000 | |||||||||
Occupied percentage of property | 92.00% | |||||||||
Lease rent escalation period | 12 years | |||||||||
Lessor Leasing Arrangements, Operating Leases, Renewal Term | 10 years | |||||||||
Chandler Corporate Center III | Lease Agreements | ||||||||||
Business Acquisitions And Dispositions [Line Items] | ||||||||||
Renewal Term (years) | 11 years 3 months 18 days | |||||||||
Madison Professional Office Building | ||||||||||
Business Acquisitions And Dispositions [Line Items] | ||||||||||
Total purchase price | $ 10,100,000 | |||||||||
Net rentable area | ft² | 30,100 | |||||||||
Deposits on real estate assets | $ 150,000 | |||||||||
Madison Professional Office Building | Lease Agreements | ||||||||||
Business Acquisitions And Dispositions [Line Items] | ||||||||||
Renewal Term (years) | 6 years 2 months 12 days | |||||||||
Haas Medical Office Park | ||||||||||
Business Acquisitions And Dispositions [Line Items] | ||||||||||
Total purchase price | $ 4,100,000 | |||||||||
Net rentable area | ft² | 16,000 | 16,000 | ||||||||
Number of Buildings purchased | Building | 2 | |||||||||
Wholly Owned Subsidiaries Of U H S Real Property Of Two Newly Constructed And Recently Opened F E Ds Located In Weslaco And Mission Texas | ||||||||||
Business Acquisitions And Dispositions [Line Items] | ||||||||||
Total purchase price | $ 12,800,000 | |||||||||
Additional renewal terms | 5 years | |||||||||
Cash received for property exchange transaction | $ 0 | |||||||||
Number of real properties purchased | Property | 2 | |||||||||
Lease agreement period | 10 years | |||||||||
Wholly Owned Subsidiaries Of U H S Real Property Of Two Newly Constructed And Recently Opened F E Ds Located In Weslaco And Mission Texas | Recently Opened Free Standing Emergency Departments | Weslaco | ||||||||||
Business Acquisitions And Dispositions [Line Items] | ||||||||||
Area of acquired building | ft² | 13,600 | 13,600 | ||||||||
Wholly Owned Subsidiaries Of U H S Real Property Of Two Newly Constructed And Recently Opened F E Ds Located In Weslaco And Mission Texas | Recently Opened Free Standing Emergency Departments | Mission | ||||||||||
Business Acquisitions And Dispositions [Line Items] | ||||||||||
Area of acquired building | ft² | 13,600 | 13,600 |
Allocation of Purchase Price to
Allocation of Purchase Price to Assets Acquired and Liabilities Assumed (Detail) $ in Thousands | Sep. 30, 2016USD ($) |
Business Combinations [Abstract] | |
Land | $ 6,891 |
Buildings and improvements | 39,647 |
Intangible assets | 7,094 |
Below-market intangibles | (1,289) |
Deposit | (150) |
Net cash paid | $ 52,193 |
Summarized Financial Informat26
Summarized Financial Information of Equity Affiliates - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2016Property | |
Limited Liability Companies | Medical office buildings | |
Schedule Of Equity Method Investments [Line Items] | |
Number of real estate investments | 5 |
Minimum | |
Schedule Of Equity Method Investments [Line Items] | |
Number of days for Non-Offering Member either to purchase or sell its entire ownership interest to or from Offering Member | 60 days |
Maximum | |
Schedule Of Equity Method Investments [Line Items] | |
Number of days for Non-Offering Member either to purchase or sell its entire ownership interest to or from Offering Member | 90 days |
5 Unconsolidated Limited Liability Companies / Limited Partner | Minimum | |
Schedule Of Equity Method Investments [Line Items] | |
Non-controlling equity interest, ownership percentage | 33.00% |
5 Unconsolidated Limited Liability Companies / Limited Partner | Maximum | |
Schedule Of Equity Method Investments [Line Items] | |
Non-controlling equity interest, ownership percentage | 95.00% |
Arlington Medical Properties | |
Schedule Of Equity Method Investments [Line Items] | |
Non-controlling equity interest, ownership percentage | 85.00% |
Percentage of minority ownership purchased from third-party members | 10.00% |
Limited Liability Companies Acc
Limited Liability Companies Accounted for Under Equity Method (Detail) | 9 Months Ended | |
Sep. 30, 2016 | ||
Arlington Medical Properties | ||
Schedule Of Equity Method Investments [Line Items] | ||
Ownership | 85.00% | |
Equity Method Investments | Suburban Properties | ||
Schedule Of Equity Method Investments [Line Items] | ||
Ownership | 33.00% | |
Property Owned by LLC | St. Matthews Medical Plaza II | |
Equity Method Investments | Brunswick Associates | ||
Schedule Of Equity Method Investments [Line Items] | ||
Ownership | 74.00% | [1] |
Property Owned by LLC | Mid Coast Hospital MOB | [1] |
Equity Method Investments | Arlington Medical Properties | ||
Schedule Of Equity Method Investments [Line Items] | ||
Ownership | 85.00% | [2] |
Property Owned by LLC | Saint Mary’s Professional Office Building | [2] |
Equity Method Investments | Grayson Properties | ||
Schedule Of Equity Method Investments [Line Items] | ||
Ownership | 95.00% | [3] |
Property Owned by LLC | Texoma Medical Plaza | [3] |
Equity Method Investments | FTX MOB Phase II limited partnership | ||
Schedule Of Equity Method Investments [Line Items] | ||
Ownership | 95.00% | [4] |
Property Owned by LLC | Forney Medical Plaza II | [4] |
[1] | This LLC has a third-party term loan, which is non-recourse to us, of $8.7 million outstanding as of September 30, 2016. | |
[2] | We have funded $5.2 million in equity as of September 30, 2016 and are committed to invest an additional $623,000. During the fourth quarter of 2015, we advanced this LLC a member loan, the funds of which were utilized to repay its $22.8 million outstanding third-party mortgage loan on its scheduled maturity date. The terms of the member loan are similar to those in place pursuant to the third-party mortgage loan that was repaid. Additionally, pursuant to the terms and conditions of an agreement executed in February, 2016, we purchased an additional 10% of the ownership interest in this LLC from the existing third-party member for approximately $4.8 million in cash, thereby increasing our ownership interest to 85%. | |
[3] | We have funded $2.8 million in equity as of September 30, 2016, and are committed to fund an additional $100,000. This building is on the campus of a UHS hospital and has tenants that include subsidiaries of UHS. This LLC has a third-party term loan, which is non-recourse to us, of $14.5 million outstanding as of September 30, 2016. | |
[4] | We have committed to invest up to $2.5 million in equity and debt financing, of which $2.1 million has been funded as of September 30, 2016. This LLC has a third-party term loan, which is non-recourse to us, of $5.3 million outstanding as of September 30, 2016. |
Limited Liability Companies A28
Limited Liability Companies Accounted for Under Equity Method (Parenthetical) (Detail) - USD ($) | 3 Months Ended | 9 Months Ended |
Dec. 31, 2015 | Sep. 30, 2016 | |
Brunswick Associates | ||
Schedule Of Equity Method Investments [Line Items] | ||
Third-party term loan | $ 8,700,000 | |
Arlington Medical Properties | ||
Schedule Of Equity Method Investments [Line Items] | ||
Committed investment in equity and debt financing, funded | 5,200,000 | |
Commitment to investment | $ 623,000 | |
Proceeds from Lines of Credit | $ 22,800,000 | |
Percentage of minority ownership purchased from third-party members | 10.00% | |
Business acquisition additional consideration | $ 4,800,000 | |
Cash payment made purchased addition of ownership interest | 85.00% | |
Grayson Properties | ||
Schedule Of Equity Method Investments [Line Items] | ||
Third-party term loan | $ 14,500,000 | |
Committed investment in equity and debt financing, funded | 2,800,000 | |
Commitment to investment | 100,000 | |
FTX MOB Phase II limited partnership | ||
Schedule Of Equity Method Investments [Line Items] | ||
Third-party term loan | 5,300,000 | |
Committed investment in equity and debt financing, funded | 2,100,000 | |
Commitment to investment | $ 2,500,000 |
Condensed Combined Statement of
Condensed Combined Statement of Income for Limited Liabilities Accounted for under Equity Method (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Equity Method Investments And Joint Ventures [Abstract] | |||||
Revenues | $ 3,776 | $ 3,638 | $ 11,437 | $ 10,799 | |
Operating expenses | 1,329 | 1,461 | 4,025 | 4,194 | |
Depreciation and amortization | 646 | 634 | 1,910 | 1,788 | |
Interest, net | 636 | 656 | 1,928 | 1,907 | |
Net income | 1,165 | 887 | 3,574 | 2,910 | |
Our share of net income | [1] | $ 1,110 | $ 561 | $ 3,396 | $ 1,826 |
[1] | Our share of net income for the three and nine months ended September 30, 2016 includes approximately $291,000 and $880,000, respectively, of interest income earned by us on an advance made to Arlington Medical Properties, LLC (advance balance payable to us is approximately $21.8 million as of September 30, 2016). There were no advances outstanding during the first nine months of 2015, therefore there was no interest income earned by us for the three and nine months ended September 30, 2015. Also, as mentioned above, effective February 1, 2016, we purchased an additional 10% of the ownership interest in Arlington Medical Properties, LLC thereby increasing our ownership interest to 85%, from 75% previously. |
Condensed Combined Statement 30
Condensed Combined Statement of Income for Limited Liabilities Accounted for under Equity Method (Parenthetical) (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Schedule Of Equity Method Investments [Line Items] | |||||
Advances payable to us | $ 21,855,000 | $ 21,855,000 | $ 22,489,000 | ||
Arlington Medical Properties | |||||
Schedule Of Equity Method Investments [Line Items] | |||||
Interest income earned on various advances made to LLCs | 291,000 | $ 0 | 880,000 | $ 0 | |
Advances payable to us | $ 21,800,000 | $ 21,800,000 | |||
Percentage of minority ownership purchased from third-party members | 10.00% | 10.00% | |||
Cash payment made purchased addition of ownership interest | 85.00% | 75.00% |
Condensed Combined Balance Shee
Condensed Combined Balance Sheets of Limited Liabilities Accounted for under Equity Method (Detail) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Equity Method Investments And Joint Ventures [Abstract] | ||
Net property, including CIP | $ 61,317 | $ 61,668 |
Other assets | 5,343 | 5,264 |
Total assets | 66,660 | 66,932 |
Liabilities | 2,832 | 2,538 |
Mortgage notes payable, non-recourse to us | 28,497 | 28,895 |
Advances payable to us | 21,855 | 22,489 |
Equity | 13,476 | 13,010 |
Total liabilities and equity | 66,660 | 66,932 |
Our share of equity in and advances to LLCs reflected as: | ||
Investments in LLCs | 14,910 | 9,108 |
Advances to LLCs | 21,855 | 22,489 |
Investments in and advances to LLCs before amounts included in accrued expenses and other liabilities | 36,765 | 31,597 |
Amounts included in accrued expenses and other liabilities | (1,771) | (1,105) |
Our share of equity in and advances to LLCs, net | $ 34,994 | $ 30,492 |
Aggregate Principal Amounts Due
Aggregate Principal Amounts Due on Mortgage Notes Payable by Unconsolidated LLCs, Accounted Under Equity Method (Detail) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2016 | Dec. 31, 2015 | ||
Schedule Of Equity Method Investments [Line Items] | |||
Mortgage Loan Balance | $ 28,497 | $ 28,895 | |
Equity Method Investments | |||
Schedule Of Equity Method Investments [Line Items] | |||
Mortgage Loan Balance | [1] | 28,497 | 28,895 |
Equity Method Investments | FTX MOB Phase II | |||
Schedule Of Equity Method Investments [Line Items] | |||
Mortgage Loan Balance | [1] | $ 5,333 | 5,427 |
Maturity Date | 2017-08 | ||
Equity Method Investments | Grayson Properties | |||
Schedule Of Equity Method Investments [Line Items] | |||
Mortgage Loan Balance | [1] | $ 14,496 | 14,670 |
Maturity Date | 2021-09 | ||
Equity Method Investments | Brunswick Associates | |||
Schedule Of Equity Method Investments [Line Items] | |||
Mortgage Loan Balance | [1] | $ 8,668 | $ 8,798 |
Maturity Date | 2024-12 | ||
[1] | All mortgage loans require monthly principal payments through maturity and include a balloon principal payment upon maturity. |
Debt and Financial Instrument33
Debt and Financial Instruments - Additional Information (Detail) | Sep. 30, 2016USD ($)MortgageLoanDerivative | Mar. 27, 2015USD ($)Option | Sep. 30, 2016USD ($)MortgageLoanDerivative | Jun. 30, 2016USD ($)Derivative | Mar. 31, 2014USD ($)Derivative | Sep. 30, 2013USD ($)Derivative | Sep. 30, 2016USD ($)MortgageLoanDerivative | May 24, 2016USD ($) | Dec. 31, 2015USD ($)MortgageLoan | |||
Debt Instrument [Line Items] | ||||||||||||
Outstanding borrowings under credit agreement | $ 192,250,000 | $ 192,250,000 | $ 192,250,000 | $ 142,150,000 | ||||||||
Outstanding borrowings under letter of credit | 2,700,000 | 2,700,000 | 2,700,000 | |||||||||
Available borrowing capacity | $ 55,000,000 | $ 55,000,000 | $ 55,000,000 | |||||||||
Number of non-recourse mortgages | MortgageLoan | 14 | 14 | 14 | 14 | ||||||||
Balance of Non Recourse Mortgages | $ 107,849,000 | [1] | $ 107,849,000 | [1] | $ 107,849,000 | [1] | $ 110,300,000 | |||||
Mortgage and other notes payable, non-recourse to us, debt premium | 132,000,000 | 132,000,000 | 132,000,000 | 298,000 | ||||||||
Financing fees net | 321,000,000 | 321,000,000 | 321,000,000 | 398,000 | ||||||||
Mortgage loan fair value | $ 110,000,000 | $ 110,000,000 | $ 110,000,000 | $ 112,000,000 | ||||||||
Interest Rate Cap | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Number of interest rate cap agreements | Derivative | 1 | 1 | 1 | 2 | 1 | 1 | ||||||
Notional amount | $ 30,000,000 | $ 30,000,000 | $ 30,000,000 | $ 20,000,000 | $ 10,000,000 | $ 30,000,000 | ||||||
Premium paid | $ 55,000 | $ 115,000 | $ 134,500 | $ 136,000 | ||||||||
Expiration date of interest rate cap | Mar. 31, 2019 | Mar. 31, 2019 | Jan. 31, 2017 | Jan. 31, 2017 | ||||||||
LIBOR | Interest Rate Cap | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Derivative instruments, LIBOR rate | 1.50% | 1.50% | 1.50% | 1.50% | 1.50% | 1.50% | ||||||
Credit Agreement | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Outstanding borrowing | $ 185,000,000 | $ 250,000,000 | ||||||||||
Unsecured revolving amended credit agreement terminated date | 2019-03 | |||||||||||
Number of additional one year extension options | Option | 1 | |||||||||||
Proceeds from Lines of Credit | $ 50,000,000 | |||||||||||
Credit facility, Interest Rate Terms | One, two, three, or six month LIBOR plus an applicable margin ranging from 1.50% to 2.00% or at the Base Rate plus an applicable margin ranging from 0.50% to 1.00%. | |||||||||||
Base rate description | The greatest of: (a) the administrative agent’s prime rate; (b) the federal funds effective rate plus 1/2 of 1%, and; (c) one month LIBOR plus 1%. | |||||||||||
Fee payable on unused portion of commitment | 0.25% | |||||||||||
Credit Agreement | LIBOR | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Margin points added to the reference rate | 1.625% | |||||||||||
Credit Agreement | Base Rate | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Margin points added to the reference rate | 0.625% | |||||||||||
Credit Agreement | Swingline/Short-Term Loans | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Outstanding borrowing | 20,000,000 | |||||||||||
Credit Agreement | Letters of Credit | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Outstanding borrowing | $ 40,000,000 | |||||||||||
Minimum | Credit Agreement | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Fee payable on unused portion of commitment | 0.20% | |||||||||||
Minimum | Credit Agreement | LIBOR | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Margin points added to the reference rate | 1.50% | |||||||||||
Margin points added to the base rate | 1.00% | |||||||||||
Minimum | Credit Agreement | Base Rate | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Margin points added to the reference rate | 0.50% | |||||||||||
Minimum | Credit Agreement | Federal Funds Effective Rate | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Margin points added to the base rate | 0.50% | |||||||||||
Maximum | Credit Agreement | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Fee payable on unused portion of commitment | 0.40% | |||||||||||
Maximum | Credit Agreement | LIBOR | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Margin points added to the reference rate | 2.00% | |||||||||||
Maximum | Credit Agreement | Base Rate | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Margin points added to the reference rate | 1.00% | |||||||||||
[1] | All mortgage loans require monthly principal payments through maturity and either fully amortize or include a balloon principal payment upon maturity. |
Summary of Required Compliance
Summary of Required Compliance Ratios in Connection with Terms of Credit Agreement (Detail) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Debt Instrument [Line Items] | |
Covenant, Tangible net worth | $ 125,000 |
Tangible net worth | $ 172,329 |
Total leverage | 47.80% |
Secured leverage | 17.60% |
Unencumbered leverage | 48.70% |
Fixed charge coverage | 3.70% |
Maximum | |
Debt Instrument [Line Items] | |
Covenant, Total leverage | 60.00% |
Covenant, Secured leverage | 30.00% |
Covenant, Unencumbered leverage | 60.00% |
Minimum | |
Debt Instrument [Line Items] | |
Covenant, Fixed charge coverage | 1.50% |
Summary of Outstanding Mortgage
Summary of Outstanding Mortgages, Excluding Net Debt Premium (Detail) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2016 | Dec. 31, 2015 | |||
Debt Instrument [Line Items] | ||||
Outstanding Balance | $ 107,849 | [1] | $ 110,300 | |
Summerlin Hospital Medical Office Building III floating rate mortgage loan | ||||
Debt Instrument [Line Items] | ||||
Outstanding Balance | [1],[2] | $ 10,462 | ||
Debt Instrument Interest Rate Stated Percentage | [2] | 3.77% | ||
Maturity Date | [2] | 2016-12 | ||
Peace Health fixed rate mortgage loan | ||||
Debt Instrument [Line Items] | ||||
Outstanding Balance | [1],[2] | $ 20,434 | ||
Debt Instrument Interest Rate Stated Percentage | [2] | 5.64% | ||
Maturity Date | [2] | 2017-04 | ||
Auburn Medical II floating rate mortgage loan | ||||
Debt Instrument [Line Items] | ||||
Outstanding Balance | [1],[2] | $ 6,783 | ||
Debt Instrument Interest Rate Stated Percentage | [2] | 3.27% | ||
Maturity Date | [2] | 2017-04 | ||
Medical Center of Western Connecticut fixed rate mortgage loan | ||||
Debt Instrument [Line Items] | ||||
Outstanding Balance | [1],[2] | $ 4,568 | ||
Debt Instrument Interest Rate Stated Percentage | [2] | 6.00% | ||
Maturity Date | [2] | 2017-06 | ||
Summerlin Hospital Medical Office Building II fixed rate mortgage loan | ||||
Debt Instrument [Line Items] | ||||
Outstanding Balance | [1] | $ 11,175 | ||
Debt Instrument Interest Rate Stated Percentage | 5.50% | |||
Maturity Date | 2017-10 | |||
Phoenix Children's East Valley Care Center Fixed Rate Mortgage Loan | ||||
Debt Instrument [Line Items] | ||||
Outstanding Balance | [1] | $ 6,239 | ||
Debt Instrument Interest Rate Stated Percentage | 5.88% | |||
Maturity Date | 2017-12 | |||
Centennial Hills Medical Office Building floating rate mortgage loan | ||||
Debt Instrument [Line Items] | ||||
Outstanding Balance | [1] | $ 10,116 | ||
Debt Instrument Interest Rate Stated Percentage | 3.77% | |||
Maturity Date | 2018-01 | |||
Sparks Medical Building/Vista Medical Terrace Floating Rate Mortgage Loan | ||||
Debt Instrument [Line Items] | ||||
Outstanding Balance | [1] | $ 4,260 | ||
Debt Instrument Interest Rate Stated Percentage | 3.77% | |||
Maturity Date | 2018-02 | |||
Rosenberg Children's Medical Plaza Fixed Rate Mortgage Loan | ||||
Debt Instrument [Line Items] | ||||
Outstanding Balance | [1] | $ 8,190 | ||
Debt Instrument Interest Rate Stated Percentage | 4.85% | |||
Maturity Date | 2018-05 | |||
Vibra Hospital-Corpus Christi fixed rate mortgage loan | ||||
Debt Instrument [Line Items] | ||||
Outstanding Balance | [1] | $ 2,746 | ||
Debt Instrument Interest Rate Stated Percentage | 6.50% | |||
Maturity Date | 2019-07 | |||
700 Shadow Lane and Goldring MOBs fixed rate mortgage loan | ||||
Debt Instrument [Line Items] | ||||
Outstanding Balance | [1] | $ 6,294 | ||
Debt Instrument Interest Rate Stated Percentage | 4.54% | |||
Maturity Date | 2022-06 | |||
BRB Medical Office Building fixed rate mortgage loan | ||||
Debt Instrument [Line Items] | ||||
Outstanding Balance | [1] | $ 6,362 | ||
Debt Instrument Interest Rate Stated Percentage | 4.27% | |||
Maturity Date | 2022-12 | |||
Desert Valley Medical Center Floating Rate Mortgage Loan | ||||
Debt Instrument [Line Items] | ||||
Outstanding Balance | [1] | $ 5,114 | ||
Debt Instrument Interest Rate Stated Percentage | 3.62% | |||
Maturity Date | 2023-01 | |||
Tuscan Professional Building fixed rate mortgage loan | ||||
Debt Instrument [Line Items] | ||||
Outstanding Balance | [1] | $ 5,106 | ||
Debt Instrument Interest Rate Stated Percentage | 5.56% | |||
Maturity Date | 2025-06 | |||
[1] | All mortgage loans require monthly principal payments through maturity and either fully amortize or include a balloon principal payment upon maturity. | |||
[2] | This loan is scheduled to mature within the next twelve months, at which time we will decide whether to refinance pursuant to a new mortgage loan or by utilizing borrowings under our Credit Agreement. |
Segment Reporting - Additional
Segment Reporting - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2016Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 1 |