Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 31, 2017 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | Physicians Realty Trust | |
Entity Central Index Key | 1,574,540 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 179,218,618 | |
Operating Partnership | ||
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | Physicians Realty L.P. | |
Entity Central Index Key | 1,583,994 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | No | |
Entity Filer Category | Non-accelerated Filer |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Investment properties: | ||
Land and improvements | $ 204,305 | $ 189,759 |
Building and improvements | 3,255,900 | 2,402,643 |
Tenant improvements | 20,786 | 14,133 |
Acquired lease intangibles | 402,608 | 301,462 |
Gross real estate property | 3,883,599 | 2,907,997 |
Accumulated depreciation | (263,497) | (181,785) |
Net real estate property | 3,620,102 | 2,726,212 |
Real estate loans receivable | 78,944 | 39,154 |
Investment in unconsolidated entities | 2,232 | 2,258 |
Net real estate investments | 3,701,278 | 2,767,624 |
Cash and cash equivalents | 4,924 | 15,491 |
Tenant receivables, net | 8,389 | 9,790 |
Other assets | 123,909 | 95,187 |
Total assets | 3,838,500 | 2,888,092 |
Liabilities: | ||
Credit facility | 382,960 | 643,742 |
Notes payable | 619,793 | 224,330 |
Mortgage debt | 169,464 | 123,083 |
Accounts payable | 6,590 | 4,423 |
Dividends and distributions payable | 43,452 | 32,179 |
Accrued expenses and other liabilities | 51,421 | 42,287 |
Acquired lease intangibles, net | 15,680 | 9,253 |
Total liabilities | 1,289,360 | 1,079,297 |
Redeemable noncontrolling interest - Series A Preferred Units (2016) and partially owned properties | 10,919 | 26,477 |
Equity: | ||
Common shares, $0.01 par value, 500,000,000 common shares authorized, 179,208,786 and 135,966,013 common shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 1,792 | 1,360 |
Additional paid-in capital | 2,732,121 | 1,920,644 |
Accumulated deficit | (282,019) | (197,261) |
Accumulated other comprehensive income | 12,012 | 13,708 |
Total shareholders’ equity | 2,463,906 | 1,738,451 |
Noncontrolling interests: | ||
Operating Partnership | 73,688 | 43,142 |
Partially owned properties | 627 | 725 |
Total noncontrolling interests | 74,315 | 43,867 |
Total equity | 2,538,221 | 1,782,318 |
Total liabilities and equity | 3,838,500 | 2,888,092 |
Operating Partnership | ||
Investment properties: | ||
Land and improvements | 204,305 | 189,759 |
Building and improvements | 3,255,900 | 2,402,643 |
Tenant improvements | 20,786 | 14,133 |
Acquired lease intangibles | 402,608 | 301,462 |
Gross real estate property | 3,883,599 | 2,907,997 |
Accumulated depreciation | (263,497) | (181,785) |
Net real estate property | 3,620,102 | 2,726,212 |
Real estate loans receivable | 78,944 | 39,154 |
Investment in unconsolidated entities | 2,232 | 2,258 |
Net real estate investments | 3,701,278 | 2,767,624 |
Cash and cash equivalents | 4,924 | 15,491 |
Tenant receivables, net | 8,389 | 9,790 |
Other assets | 123,909 | 95,187 |
Total assets | 3,838,500 | 2,888,092 |
Liabilities: | ||
Credit facility | 382,960 | 643,742 |
Notes payable | 619,793 | 224,330 |
Mortgage debt | 169,464 | 123,083 |
Accounts payable | 6,590 | 4,423 |
Dividends and distributions payable | 43,452 | 32,179 |
Accrued expenses and other liabilities | 51,421 | 42,287 |
Acquired lease intangibles, net | 15,680 | 9,253 |
Total liabilities | 1,289,360 | 1,079,297 |
Redeemable noncontrolling interest - Series A Preferred Units (2016) and partially owned properties | 10,919 | 26,477 |
Equity: | ||
General partners’ capital, 179,208,786 and 135,966,013 units issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 2,451,894 | 1,724,743 |
Limited partners’ capital, 5,379,981 and 3,436,207 units issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 73,688 | 43,142 |
Accumulated other comprehensive income | 12,012 | 13,708 |
Total partners’ capital | 2,537,594 | 1,781,593 |
Noncontrolling interests: | ||
Noncontrolling interest - partially owned properties | 627 | 725 |
Total capital | 2,538,221 | 1,782,318 |
Total liabilities and equity | 3,838,500 | 2,888,092 |
Operating Partnership Noncontrolling Interest | ||
Noncontrolling interests: | ||
Total equity | 73,688 | 43,142 |
Partially Owned Properties Noncontrolling Interest | ||
Noncontrolling interests: | ||
Total equity | 627 | 725 |
Partially Owned Properties Noncontrolling Interest | Operating Partnership | ||
Noncontrolling interests: | ||
Total capital | $ 627 | $ 725 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 179,208,786 | 135,966,013 |
Common stock, shares outstanding (in shares) | 179,208,786 | 135,966,013 |
Operating Partnership | ||
General partners' capital account, units issued (in units) | 179,208,786 | 135,966,013 |
General partners' capital account, units outstanding (in units) | 179,208,786 | 135,966,013 |
Limited partners' capital account, units issued (in units) | 5,379,981 | 3,436,207 |
Limited partners' capital account, units outstanding (in units) | 5,379,981 | 3,436,207 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | ||
Revenues: | |||||
Rental revenues | $ 69,408,000 | $ 53,327,000 | $ 186,515,000 | $ 130,378,000 | |
Expense recoveries | 21,102,000 | 14,361,000 | 53,564,000 | 31,816,000 | |
Interest income on real estate loans and other | 2,489,000 | 2,322,000 | 6,185,000 | 5,166,000 | |
Total revenues | 92,999,000 | 70,010,000 | 246,264,000 | 167,360,000 | |
Expenses: | |||||
Interest expense | 11,998,000 | 7,300,000 | 33,285,000 | 15,776,000 | |
General and administrative | 5,860,000 | 4,917,000 | 16,845,000 | 13,964,000 | |
Operating expenses | 27,471,000 | 19,159,000 | 70,079,000 | 43,994,000 | |
Depreciation and amortization | 32,975,000 | 23,969,000 | 89,031,000 | 59,778,000 | |
Acquisition expenses | 2,184,000 | 4,398,000 | 12,831,000 | 11,031,000 | |
Total expenses | 80,488,000 | 59,743,000 | 222,071,000 | 144,543,000 | |
Income before equity in income of unconsolidated entities and gain on sale of investment properties: | 12,511,000 | 10,267,000 | 24,193,000 | 22,817,000 | |
Equity in income of unconsolidated entities | 28,000 | 27,000 | 85,000 | 85,000 | |
Gain on sale of investment properties | 0 | 0 | 5,308,000 | 0 | |
Net income | 12,539,000 | 10,294,000 | 29,586,000 | 22,902,000 | |
Net income attributable to noncontrolling interests: | |||||
Operating Partnership | (362,000) | (255,000) | (823,000) | (629,000) | |
Partially owned properties | [1] | (53,000) | (176,000) | (379,000) | (553,000) |
Net income attributable to controlling interests | 12,124,000 | 9,863,000 | 28,384,000 | 21,720,000 | |
Preferred distributions | (106,000) | (436,000) | (505,000) | (1,421,000) | |
Numerator for earnings per share - basic | $ 12,018,000 | $ 9,427,000 | $ 27,879,000 | $ 20,299,000 | |
Net income per share: | |||||
Basic (in dollars per share) | $ 0.07 | $ 0.07 | $ 0.18 | $ 0.17 | |
Diluted (in dollars per share) | $ 0.07 | $ 0.07 | $ 0.18 | $ 0.16 | |
Weighted average common shares: | |||||
Weighted average number of shares outstanding - basic (in shares) | 177,847,424 | 134,608,396 | 157,542,167 | 122,973,862 | |
Weighted average number of shares outstanding - diluted (in shares) | 183,298,145 | 138,880,787 | 162,480,918 | 127,395,989 | |
Dividends and distributions declared per common share and OP Unit (in dollars per share) | $ 0.230 | $ 0.225 | $ 0.685 | $ 0.675 | |
Net income (loss) attributable to redeemable noncontrolling interest | $ 0 | $ 0 | |||
Operating Partnership | |||||
Revenues: | |||||
Rental revenues | $ 69,408,000 | 53,327,000 | $ 186,515,000 | 130,378,000 | |
Expense recoveries | 21,102,000 | 14,361,000 | 53,564,000 | 31,816,000 | |
Interest income on real estate loans and other | 2,489,000 | 2,322,000 | 6,185,000 | 5,166,000 | |
Total revenues | 92,999,000 | 70,010,000 | 246,264,000 | 167,360,000 | |
Expenses: | |||||
Interest expense | 11,998,000 | 7,300,000 | 33,285,000 | 15,776,000 | |
General and administrative | 5,860,000 | 4,917,000 | 16,845,000 | 13,964,000 | |
Operating expenses | 27,471,000 | 19,159,000 | 70,079,000 | 43,994,000 | |
Depreciation and amortization | 32,975,000 | 23,969,000 | 89,031,000 | 59,778,000 | |
Acquisition expenses | 2,184,000 | 4,398,000 | 12,831,000 | 11,031,000 | |
Total expenses | 80,488,000 | 59,743,000 | 222,071,000 | 144,543,000 | |
Income before equity in income of unconsolidated entities and gain on sale of investment properties: | 12,511,000 | 10,267,000 | 24,193,000 | 22,817,000 | |
Equity in income of unconsolidated entities | 28,000 | 27,000 | 85,000 | 85,000 | |
Gain on sale of investment properties | 0 | 0 | 5,308,000 | 0 | |
Net income | 12,539,000 | 10,294,000 | 29,586,000 | 22,902,000 | |
Net income attributable to noncontrolling interests: | |||||
Partially owned properties | [2] | (53,000) | (176,000) | (379,000) | (553,000) |
Net income attributable to controlling interests | 12,486,000 | 10,118,000 | 29,207,000 | 22,349,000 | |
Preferred distributions | (106,000) | (436,000) | (505,000) | (1,421,000) | |
Numerator for earnings per share - basic | $ 12,380,000 | $ 9,682,000 | $ 28,702,000 | $ 20,928,000 | |
Net income per share: | |||||
Earnings per unit - basic (dollars per share) | $ 0.07 | $ 0.07 | $ 0.18 | $ 0.17 | |
Earnings per unit - diluted (dollars per share) | $ 0.07 | $ 0.07 | $ 0.18 | $ 0.16 | |
Weighted average limited partnership units outstanding, basic (in shares) | 183,227,405 | 183,227,405 | 162,205,324 | 162,205,324 | |
Weighted average common shares: | |||||
Weighted average limited partnership units outstanding, basic (in shares) | 183,227,405 | 138,227,384 | 162,205,324 | 126,751,876 | |
Denominator for earnings per unit - diluted (in shares) | 183,298,145 | 183,298,145 | 162,480,918 | 162,480,918 | |
Denominator for earnings per unit - diluted (in shares) | 183,298,145 | 138,880,787 | 162,480,918 | 127,395,989 | |
Distributions declared per common unit | $ 0.230 | $ 0.225 | $ 0.685 | $ 0.675 | |
Net income (loss) attributable to redeemable noncontrolling interest | $ 0 | ||||
[1] | Includes amounts attributable to redeemable noncontrolling interests. No such adjustments are required for the three and nine months ended September 30, 2016 | ||||
[2] | Includes amounts attributable to redeemable noncontrolling interests. No such adjustments are required for the three and nine months ended September 30, 2016 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Net income | $ 12,539 | $ 10,294 | $ 29,586 | $ 22,902 |
Other Comprehensive Income [Abstract] | ||||
Change in fair value of interest rate swap agreements | (916) | 652 | (1,696) | 652 |
Total other comprehensive income | (916) | 652 | (1,696) | 652 |
Comprehensive income | 11,623 | 10,946 | 27,890 | 23,554 |
Comprehensive income attributable to noncontrolling interests - Operating Partnership | (339) | (272) | (774) | (646) |
Comprehensive income attributable to noncontrolling interests - partially owned properties | (53) | (176) | (379) | (553) |
Comprehensive income attributable to common shareholders | 11,231 | 10,498 | 26,737 | 22,355 |
Operating Partnership | ||||
Net income | 12,539 | 10,294 | 29,586 | 22,902 |
Other Comprehensive Income [Abstract] | ||||
Change in fair value of interest rate swap agreements | (916) | 652 | (1,696) | 652 |
Total other comprehensive income | (916) | 652 | (1,696) | 652 |
Comprehensive income | 11,623 | 10,946 | 27,890 | 23,554 |
Comprehensive income attributable to noncontrolling interests - partially owned properties | (53) | (176) | (379) | (553) |
Comprehensive income attributable to common shareholders | $ 11,570 | $ 10,770 | $ 27,511 | $ 23,001 |
Consolidated Statement of Equit
Consolidated Statement of Equity - 9 months ended Sep. 30, 2017 - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | AOCI Including Portion Attributable to Noncontrolling Interest | Parent | Operating Partnership Noncontrolling Interest | Partially Owned Properties Noncontrolling Interest | Noncontrolling Interest | Operating Partnership | Operating PartnershipPartially Owned Properties Noncontrolling Interest |
Balance at Dec. 31, 2016 | $ 1,782,318 | $ 1,360 | $ 1,920,644 | $ (197,261) | $ 13,708 | $ 1,738,451 | $ 43,142 | $ 725 | $ 43,867 | ||
Stockholders' Equity Attributable to Parent [Abstract] | |||||||||||
Net proceeds from sale of common shares | 804,453 | 430 | 804,023 | 804,453 | |||||||
Restricted share award grants, net | 1,920 | 2 | 2,391 | (473) | 1,920 | ||||||
Purchase of OP Units | (3,757) | (3,757) | (3,757) | ||||||||
Conversion of OP Units | 783 | 783 | (783) | (783) | |||||||
Dividends/distributions declared | (115,799) | (112,164) | (112,164) | (3,635) | (3,635) | ||||||
Preferred distributions | (505) | (505) | (505) | ||||||||
Issuance of OP Units in connection with acquisitions | 44,259 | 44,259 | 44,259 | ||||||||
Contributions | 47 | 47 | 47 | $ 47 | $ 47 | ||||||
Distributions | (266) | (266) | (266) | (266) | (266) | ||||||
Buyout of Noncontrolling Interests - partially owned properties | (2,105) | (2,800) | (2,800) | 719 | (24) | 695 | (2,105) | (24) | |||
Change in fair value of interest rate cap agreements | (1,696) | (1,696) | (1,696) | (1,696) | |||||||
Net income | 29,352 | 28,384 | 28,384 | 823 | 145 | 968 | $ 29,352 | $ 145 | |||
Adjustment for Noncontrolling Interests ownership in Operating Partnership | 7,080 | 7,080 | (7,080) | (7,080) | |||||||
Balance at Sep. 30, 2017 | $ 2,538,221 | $ 1,792 | $ 2,732,121 | $ (282,019) | $ 12,012 | $ 2,463,906 | $ 73,688 | $ 627 | $ 74,315 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash Flows from Operating Activities: | ||
Net income | $ 29,586 | $ 22,902 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization | 89,031 | 59,778 |
Amortization of deferred financing costs | 1,731 | 1,796 |
Amortization of lease inducements and above/below market lease intangibles | 3,780 | 2,994 |
Straight-line rental revenue/expense | (11,168) | (12,156) |
Amortization of discount on unsecured senior notes | 177 | 0 |
Amortization of above market assumed debt | (163) | (177) |
Gain on sale of investment properties | (5,308) | 0 |
Equity in income of unconsolidated entities | (85) | (85) |
Distributions from unconsolidated entities | 112 | 82 |
Change in fair value of derivative | 160 | (67) |
Provision for bad debts | (297) | 152 |
Non-cash share compensation | 4,976 | 3,497 |
Net change in fair value of contingent consideration | 4 | (840) |
Change in operating assets and liabilities: | ||
Tenant receivables | (754) | (7,543) |
Other assets | (541) | (6,320) |
Accounts payable | 2,167 | 1,578 |
Accrued expenses and other liabilities | 14,834 | 23,832 |
Net cash provided by operating activities | 128,242 | 89,423 |
Cash Flows from Investing Activities: | ||
Proceeds on sales of investment properties | 18,150 | 0 |
Acquisition of investment properties, net | (916,270) | (1,044,601) |
Escrowed cash - acquisition / earnest deposits | (25,271) | 0 |
Capital expenditures on existing investment properties | (14,819) | (8,665) |
Real estate loans receivable | (38,844) | (8,153) |
Repayment of note receivable | 16,423 | 4,118 |
Repayment of real estate loan receivable | 1,507 | 4,500 |
Leasing commissions | (1,184) | (707) |
Lease inducements | (2,508) | (4,870) |
Net cash used in investing activities | (962,816) | (1,058,378) |
Cash Flows from Financing Activities: | ||
Net proceeds from sale of common shares | 804,453 | 764,292 |
Proceeds from credit facility borrowings | 627,000 | 921,000 |
Payment on credit facility borrowings | (889,000) | (860,000) |
Proceeds from issuance of mortgage debt | 61,000 | 21,500 |
Proceeds from issuance of senior unsecured notes | 396,108 | 225,000 |
Principal payments on mortgage debt | (40,999) | (1,646) |
Debt issuance costs | (1,129) | (4,693) |
Dividends paid - shareholders | (101,846) | (74,515) |
Distributions to noncontrolling interest - Operating Partnership | (3,154) | (2,410) |
Preferred distributions paid - OP Unit holder | (519) | (1,115) |
Contributions from noncontrolling interest | 47 | 0 |
Distributions to noncontrolling interest - partially owned properties | (1,653) | (450) |
Other financing activities | (2,583) | 0 |
Purchase of Series A Preferred Units | (19,961) | (9,756) |
Purchase of OP Units | (3,757) | (2,999) |
Net cash provided by financing activities | 824,007 | 974,208 |
Net (decrease) increase in cash and cash equivalents | (10,567) | 5,253 |
Cash and cash equivalents, beginning of period | 15,491 | 3,143 |
Cash and cash equivalents, end of period | 4,924 | 8,396 |
Supplemental disclosure of cash flow information - interest paid during the period | 33,307 | 6,971 |
Supplemental disclosure of noncash activity - change in fair value of interest rate swap agreements | (1,696) | 652 |
Supplemental disclosure of noncash activity - assumed debt | 26,379 | 0 |
Supplemental disclosure of noncash activity - issuance of OP Units in connection with acquisitions | 44,978 | 6,769 |
Supplemental disclosure of noncash activity - contingent consideration | 0 | 156 |
Operating Partnership | ||
Cash Flows from Operating Activities: | ||
Net income | 29,586 | 22,902 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization | 89,031 | 59,778 |
Amortization of deferred financing costs | 1,731 | 1,796 |
Amortization of lease inducements and above/below market lease intangibles | 3,780 | 2,994 |
Straight-line rental revenue/expense | (11,168) | (12,156) |
Amortization of discount on unsecured senior notes | 177 | 0 |
Amortization of above market assumed debt | (163) | (177) |
Gain on sale of investment properties | (5,308) | 0 |
Equity in income of unconsolidated entities | (85) | (85) |
Distributions from unconsolidated entities | 112 | 82 |
Change in fair value of derivative | 160 | (67) |
Provision for bad debts | (297) | 152 |
Non-cash share compensation | 4,976 | 3,497 |
Net change in fair value of contingent consideration | 4 | (840) |
Change in operating assets and liabilities: | ||
Tenant receivables | (754) | (7,543) |
Other assets | (541) | (6,320) |
Accounts payable | 2,167 | 1,578 |
Accrued expenses and other liabilities | 14,834 | 23,832 |
Net cash provided by operating activities | 128,242 | 89,423 |
Cash Flows from Investing Activities: | ||
Proceeds on sales of investment properties | 18,150 | 0 |
Acquisition of investment properties, net | (916,270) | (1,044,601) |
Escrowed cash - acquisition / earnest deposits | (25,271) | 0 |
Capital expenditures on existing investment properties | (14,819) | (8,665) |
Real estate loans receivable | (38,844) | (8,153) |
Repayment of note receivable | 16,423 | 4,118 |
Repayment of real estate loan receivable | 1,507 | 4,500 |
Leasing commissions | (1,184) | (707) |
Lease inducements | (2,508) | (4,870) |
Net cash used in investing activities | (962,816) | (1,058,378) |
Cash Flows from Financing Activities: | ||
Net proceeds from sale of common shares | 804,453 | 764,292 |
Proceeds from credit facility borrowings | 627,000 | 921,000 |
Payment on credit facility borrowings | (889,000) | (860,000) |
Proceeds from issuance of mortgage debt | 61,000 | 21,500 |
Proceeds from issuance of senior unsecured notes | 396,108 | 225,000 |
Principal payments on mortgage debt | (40,999) | (1,646) |
Debt issuance costs | (1,129) | (4,693) |
Dividends paid - shareholders | (101,846) | (74,515) |
Distributions to noncontrolling interest - Operating Partnership | (3,154) | (2,410) |
Preferred distributions paid - OP Unit holder | (519) | (1,115) |
Contributions from noncontrolling interest | 47 | 0 |
Distributions to noncontrolling interest - partially owned properties | (1,653) | (450) |
Other financing activities | (2,583) | 0 |
Purchase of Series A Preferred Units | (19,961) | (9,756) |
Purchase of OP Units | (3,757) | (2,999) |
Net cash provided by financing activities | 824,007 | 974,208 |
Net (decrease) increase in cash and cash equivalents | (10,567) | 5,253 |
Cash and cash equivalents, beginning of period | 15,491 | 3,143 |
Cash and cash equivalents, end of period | 4,924 | 8,396 |
Supplemental disclosure of cash flow information - interest paid during the period | 33,307 | 6,971 |
Supplemental disclosure of noncash activity - change in fair value of interest rate swap agreements | (1,696) | 652 |
Supplemental disclosure of noncash activity - assumed debt | 26,379 | 0 |
Supplemental disclosure of noncash activity - issuance of OP Units in connection with acquisitions | 44,978 | 6,769 |
Supplemental disclosure of noncash activity - contingent consideration | $ 0 | $ 156 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Capital Statement $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Partners' Capital [Abstract] | |
Contributions | $ 47 |
Distributions | (266) |
Buyout of Noncontrolling Interest - partially owned properties | (2,105) |
Change in fair value of interest rate cap agreements | (1,696) |
Net income | 29,352 |
Operating Partnership | |
Partners' Capital [Abstract] | |
Beginning balance | 1,782,318 |
Net proceeds from sale of common shares | 804,453 |
Restricted share award grants, net | 1,920 |
Purchase of OP Units | (3,757) |
Conversion of OP Units | 0 |
OP Units - distributions | (115,799) |
Preferred distributions | (505) |
Issuance of OP Units in connection with acquisitions | 44,259 |
Contributions | 47 |
Distributions | (266) |
Buyout of Noncontrolling Interest - partially owned properties | (2,105) |
Change in fair value of interest rate cap agreements | (1,696) |
Net income | 29,352 |
Adjustments for Limited Partners ownership in Operating Partnership | 0 |
Ending balance | 2,538,221 |
Operating Partnership | AOCI Attributable to Parent | |
Partners' Capital [Abstract] | |
Beginning balance | 13,708 |
Change in fair value of interest rate cap agreements | (1,696) |
Ending balance | 12,012 |
Operating Partnership | General Partner | |
Partners' Capital [Abstract] | |
Beginning balance | 1,724,743 |
Net proceeds from sale of common shares | 804,453 |
Conversion of OP Units | 783 |
OP Units - distributions | (112,164) |
Preferred distributions | (505) |
Issuance of OP Units in connection with acquisitions | 0 |
Buyout of Noncontrolling Interest - partially owned properties | (2,800) |
Net income | 28,384 |
Adjustments for Limited Partners ownership in Operating Partnership | 7,080 |
Ending balance | 2,451,894 |
Operating Partnership | Limited Partner | |
Partners' Capital [Abstract] | |
Beginning balance | 43,142 |
Purchase of OP Units | (3,757) |
Conversion of OP Units | (783) |
OP Units - distributions | (3,635) |
Issuance of OP Units in connection with acquisitions | 44,259 |
Buyout of Noncontrolling Interest - partially owned properties | 719 |
Net income | 823 |
Adjustments for Limited Partners ownership in Operating Partnership | (7,080) |
Ending balance | 73,688 |
Operating Partnership | Partners' Capital | |
Partners' Capital [Abstract] | |
Beginning balance | 1,781,593 |
Net proceeds from sale of common shares | 804,453 |
Purchase of OP Units | (3,757) |
OP Units - distributions | (115,799) |
Preferred distributions | (505) |
Issuance of OP Units in connection with acquisitions | 44,259 |
Buyout of Noncontrolling Interest - partially owned properties | (2,081) |
Change in fair value of interest rate cap agreements | (1,696) |
Net income | 29,207 |
Ending balance | 2,537,594 |
Partially Owned Properties Noncontrolling Interest | |
Partners' Capital [Abstract] | |
Contributions | 47 |
Distributions | (266) |
Buyout of Noncontrolling Interest - partially owned properties | (24) |
Net income | 145 |
Partially Owned Properties Noncontrolling Interest | Operating Partnership | |
Partners' Capital [Abstract] | |
Beginning balance | 725 |
Issuance of OP Units in connection with acquisitions | 0 |
Contributions | 47 |
Distributions | (266) |
Buyout of Noncontrolling Interest - partially owned properties | (24) |
Net income | 145 |
Ending balance | $ 627 |
Organization and Business
Organization and Business | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | Organization and Business Physicians Realty Trust (the “Trust”) was organized in the state of Maryland on April 9, 2013. As of September 30, 2017 , the Trust was authorized to issue up to 500,000,000 common shares of beneficial interest, par value $0.01 per share (“common shares”). The Trust filed a Registration Statement on Form S-11 with the Securities and Exchange Commission (the “Commission”) with respect to a proposed underwritten initial public offering (the “IPO”) and completed the IPO of its common shares and commenced operations on July 24, 2013. The Trust contributed the net proceeds from the IPO to Physicians Realty L.P. ( the “Operating Partnership”), and is the sole general partner of the Operating Partnership. The Trust and the Operating Partnership are managed and operated as one entity. The Trust has no significant assets other than its investment in the Operating Partnership. The Trust’s operations are conducted through the Operating Partnership and wholly-owned and majority-owned subsidiaries of the Operating Partnership. The Trust, as the general partner of the Operating Partnership, controls the Operating Partnership and consolidates the assets, liabilities, and results of operations of the Operating Partnership. Therefore, the assets and liabilities of the Trust and the Operating Partnership are the same. The Trust is a self-managed real estate investment trust (“REIT”) formed primarily to acquire, selectively develop, own, and manage healthcare properties that are leased to physicians, hospitals, and healthcare delivery systems. Equity Offerings In March 2017, the Trust completed a follow-on public offering of 17,250,000 common shares of beneficial interest, including 2,250,000 common shares issued upon exercise of the underwriters’ overallotment option, resulting in net proceeds to it of approximately $300.8 million . The Trust contributed the net proceeds of this offering to the Operating Partnership in exchange for 17,250,000 OP Units, and the Operating Partnership used the net proceeds of the public offering to repay borrowings under its unsecured revolving credit facility and for general corporate purposes, including working capital and funding acquisitions. In July 2017, the Trust completed a follow-on public offering of 21,500,000 common shares of beneficial interest, including 1,500,000 common shares issued upon partial exercise of the underwriters’ option to purchase additional shares, resulting in net proceeds to it of approximately $420.7 million . The Trust contributed the net proceeds of this offering to the Operating Partnership in exchange for 21,500,000 OP Units, and the Operating Partnership used the net proceeds of the public offering to repay borrowings under its unsecured revolving credit facility and for general corporate purposes, including working capital and funding acquisitions. ATM Program On August 5, 2016, the Trust and the Operating Partnership entered into separate At Market Issuance Sales Agreements (the “Sales Agreements”) with each of KeyBanc Capital Markets Inc., Credit Agricole Securities (USA) Inc., JMP Securities LLC, Raymond James & Associates, Inc., and Stifel Nicolaus & Company, Incorporated (the “Agents”), pursuant to which the Trust may issue and sell, from time to time, its common shares having an aggregate offering price of up to $300 million , through the Agents (the “ATM Program”). In accordance with the Sales Agreements, the Trust may offer and sell its common shares through any of the Agents, from time to time, by any method deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended, which includes sales made directly on the New York Stock Exchange or other existing trading market, or sales made to or through a market maker. With the Trust’s express written consent, sales may also be made in negotiated transactions or any other method permitted by law. During the quarterly periods ended March 31, 2017, June 30, 2017 and September 30, 2017 , the Trust’s issuance and sale of common shares pursuant to the ATM Program is as follows (in thousands, except common shares and price): Common shares sold Weighted average price Net proceeds Quarterly period ended March 31, 2017 — $ — $ — Quarterly period ended June 30, 2017 4,150,000 20.07 82,440 Quarterly period ended September 30, 2017 — — — Year to date 4,150,000 $ 20.07 $ 82,440 As of October 31, 2017 , the Trust has $216.7 million |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies The accompanying unaudited consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the periods ended September 30, 2017 and 2016 pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited financial statements included in the Trust’s and the Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2016 , filed with the Commission on February 24, 2017. Principles of Consolidation GAAP requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). ASC 810 broadly defines a VIE as an entity in which either (i) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. We identify the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity. We consolidate our investment in a VIE when we determine that we are the VIE’s primary beneficiary. We may change our original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary. We perform this analysis on an ongoing basis. For property holding entities not determined to be VIEs, we consolidate such entities in which the Operating Partnership owns 100% of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest. All intercompany balances and transactions are eliminated in consolidation. For entities in which the Operating Partnership owns less than 100% of the equity interest, the Operating Partnership consolidates the property if it has the direct or indirect ability to control the entities’ activities based upon the terms of the respective entities’ ownership agreements. For these entities, the Operating Partnership records a noncontrolling interest representing equity held by noncontrolling interests. Noncontrolling Interests The Company presents the portion of any equity it does not own in entities that it controls (and thus consolidates) as noncontrolling interests and classifies such interests as a component of consolidated equity, separate from the Company’s total shareholders’ equity, on the consolidated balance sheets. Operating Partnership: Net income or loss is allocated to noncontrolling interests (limited partners) based on their respective ownership percentage of the Operating Partnership. The ownership percentage is calculated by dividing the number of OP Units held by the noncontrolling interests by the total OP Units held by the noncontrolling interests and the Trust. Issuance of additional common shares and OP Units changes the ownership interests of both the noncontrolling interests and the Trust. Such transactions and the related proceeds are treated as capital transactions. During the three months ended March 31, 2017, the Operating Partnership partially funded a property acquisition by issuing an aggregate of 2,247,817 OP Units valued at approximately $44.3 million . The acquisition had a total purchase price of approximately $78.6 million . In addition, on January 31, 2017, the Operating Partnership redeemed the noncontrolling interest in a joint venture between the Operating Partnership and Medical Center of New Albany I, LLC, an Ohio limited liability company. As consideration, the Operating Partnership paid approximately $2.1 million in cash and issued 38,641 OP Units, representing an aggregate $2.8 million . No acquisitions were funded through the issuance of OP units during the three months ended June 30, 2017 or September 30, 2017 . Noncontrolling interests in the Company include OP Units held by other investors. As of September 30, 2017 , the Trust held a 97.1% interest in the Operating Partnership. As the sole general partner and the majority interest holder, the Trust consolidates the financial position and results of operations of the Operating Partnership. Holders of OP Units may not transfer their OP Units without the Trust’s prior written consent, as general partner of the Operating Partnership. Beginning on the first anniversary of the issuance of OP Units, OP Unit holders may tender their units for redemption by the Operating Partnership in exchange for cash equal to the market price of the Trust’s common shares at the time of redemption or for unregistered common shares on a one-for-one basis. Such selection to pay cash or issue common shares to satisfy an OP Unit holder’s redemption request is solely within the control of the Trust. Accordingly, the Trust presents the OP Units of the Operating Partnership held by investors other than the Trust as noncontrolling interests within equity in the consolidated balance sheets. Partially Owned Properties: The Trust and Operating Partnership reflect noncontrolling interests in partially owned properties on the balance sheet for the portion of consolidated properties that are not wholly owned by the Company. The earnings or losses from those properties attributable to the noncontrolling interests are reflected as noncontrolling interests in partially owned properties in the consolidated statements of income. Redeemable Noncontrolling Interests - Series A Preferred Units and Partially Owned Properties On February 5, 2015, the Company entered into a Second Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”) which provides for the designation and issuance of the newly designated Series A Participating Redeemable Preferred Units of the Operating Partnership (“Series A Preferred Units”). Series A Preferred Units have priority over all other partnership interests of the Operating Partnership with respect to distributions and liquidation. Holders of Series A Preferred Units are entitled to a 5% cumulative return and upon redemption, the receipt of one common share and $200 . The holders of the Series A Preferred Units have agreed not to cause the Operating Partnership to redeem their Series A Preferred Units prior to one year from the issuance date. In addition, Series A Preferred Units are redeemable at the option of the holders which redemption obligation may be satisfied, at the Trust’s option, in cash or registered common shares. Instruments that require settlement in registered common shares may not be classified in permanent equity as it is not always completely within an issuer’s control to deliver registered common shares. Due to the redemption rights associated with the Series A Preferred Units, the Company classifies the Series A Preferred Units in the mezzanine section of the consolidated balance sheets. The Series A Preferred Units were evaluated for embedded features that should be bifurcated and separately accounted for as a freestanding derivative. The Company determined that the Series A Preferred Units contained features that require bifurcation. The Company records the carrying amount of the redeemable noncontrolling interests, less the value of the embedded derivative, at the greater of the carrying value or redemption value in the consolidated balance sheets. On February 5, 2015, the acquisition of a medical office building located in Minnetonka, Minnesota (the “Minnetonka MOB”) was partially funded with the issuance of 44,685 Series A Preferred Units which were valued at $9.7 million . On December 17, 2015, the acquisition of a medical office building located in Nashville, Tennessee (the “Nashville MOB”) was partially funded with the issuance of 91,236 Series A Preferred Units which were valued at $19.7 million . On April 1, 2016, the Series A Preferred Units issued in conjunction with the Minnetonka MOB acquisition were redeemed for a total value of $9.8 million . The fair value of the embedded derivative associated with the previously outstanding Series A Preferred Units was $2.7 million which was derecognized in the course of the redemption. On January 12, 2017, the Series A Preferred Units issued in conjunction with the Nashville MOB acquisition were redeemed for a total value of $20.0 million . The fair value of the embedded derivative associated with the previously outstanding Series A Preferred Units was $5.6 million which was derecognized in the course of the redemption. As of September 30, 2017 , no Series A Preferred Units are outstanding. In connection with the acquisition of the Minnetonka MOB, the Trust received a $5 million equity investment from a third party, effective March 1, 2015. This investment earns a 15% cumulative preferred return. At any point subsequent to the third anniversary of the investment, the holder can require the Trust to redeem the instrument at a price for which the investor will realize a 15% internal rate of return. Due to the redemption provision, which is outside of the control of the Trust, the Trust classifies the investment in the mezzanine section of its consolidated balance sheet. The Trust records the carrying amount of the redeemable noncontrolling interests at the greater of the carrying value or redemption value. In connection with the acquisition on December 29, 2015 of a medical office building located on the campus of the Great Falls Clinic and Hospital in Great Falls, Montana (the “Great Falls Clinic”), physicians affiliated with the seller retained a non-controlling interest which may, at the holders’ option, be redeemed at any time. Due to the redemption provision, which is outside of the control of the Trust, the Trust classifies the investment in the mezzanine section of its consolidated balance sheet. The Trust records the carrying amount of the redeemable noncontrolling interests at the greater of the carrying value or redemption value. In the three months ended September 30, 2017 , Great Falls Clinic redeemed for cash $1.1 million of its non-controlling interest. Dividends and Distributions On September 21, 2017 , the Trust announced that its Board of Trustees authorized and the Trust declared a cash dividend of $0.23 per common share for the quarterly period ended September 30, 2017 . The distribution was paid on October 18, 2017 to common shareholders and OP Unit holders of record as of the close of business on October 3, 2017 . All distributions paid by the Operating Partnership are declared and paid at the same time as dividends are distributed by the Trust to common shareholders. It has been the Operating Partnership’s policy to declare quarterly distributions so as to allow the Trust to comply with applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), governing REITs. The declaration and payment of quarterly distributions remains subject to the review and approval of the Trust’s Board of Trustees. Our shareholders are entitled to reinvest all or a portion of any cash distribution on their common shares by participating in our Dividend Reinvestment and Share Purchase Plan (“DRIP”), subject to the terms of the plan. Tax Status of Dividends and Distributions Our distributions of current and accumulated earnings and profits for U.S. federal income tax purposes generally are taxable to shareholders as ordinary income. Distributions in excess of these earnings and profits generally are treated as a non-taxable reduction of the shareholders’ basis in the shares to the extent thereof (non-dividend distributions) and thereafter as taxable gain. Any cash distributions received by an OP Unit holder in respect of its OP Units generally will not be taxable to such OP Unit holder for U.S. federal income tax purposes, to the extent that such distribution does not exceed the OP Unit holder’s basis in its OP Units. Any such distribution will instead reduce the OP Unit holder’s basis in its OP Units (and OP Unit holders will be subject to tax on the taxable income allocated to them by the Operating Partnership in respect of their OP Units when such income is earned by the Operating Partnership, with such income allocation increasing the OP Unit holders’ basis in their OP Units). Purchases of Investment Properties A property acquired not subject to an existing lease is treated as an asset acquisition and recorded at its purchase price, inclusive of acquisition costs, allocated between the acquired tangible and intangible assets and assumed liabilities based upon their relative fair values at the date of acquisition. A property acquired with an existing lease is accounted for as a business combination pursuant to the acquisition method in accordance with ASC Topic 805, Business Combinations (“ASC 805”), and assets acquired and liabilities assumed, including identified intangible assets and liabilities, are recorded at fair value. The determination of fair value involves the use of significant judgment and estimation. The Company makes estimates of the fair value of the tangible and intangible acquired assets and assumed liabilities using information obtained from multiple sources as a result of pre-acquisition due diligence and generally includes the assistance of a third party appraiser. The Company estimates the fair value of buildings acquired on an “as-if-vacant” basis and depreciates the building value over the estimated remaining life of the building. The Company determines the allocated value of other fixed assets, such as site improvements, based upon the replacement cost and depreciates such value over the assets’ estimated remaining useful lives as determined at the applicable acquisition date. The fair value of land is determined either by considering the sales prices of similar properties in recent transactions or based on internal analyses of recently acquired and existing comparable properties within the Company’s portfolio. In recognizing identified intangible assets and liabilities in connection with a business combination, the value of above or below-market leases is estimated based on the present value (using an interest rate which reflected the risks associated with the leases acquired) of the difference between contractual amounts to be received pursuant to the leases and management’s estimate of market lease rates measured over a period equal to the estimated remaining term of the lease. The capitalized above-market or below-market lease intangibles are amortized as a reduction or addition to rental income over the estimated remaining term of the respective leases plus the term of any renewal options that the lessee would be economically compelled to exercise. In determining the value of in-place leases, management considers current market conditions and costs to execute similar leases in arriving at an estimate of the carrying costs during the expected lease-up period from vacant to existing occupancy. In estimating carrying costs, management includes real estate taxes, insurance, other operating expenses, estimates of lost rental revenue during the expected lease-up periods, and costs to execute similar leases, including leasing commissions, tenant improvements, legal, and other related costs based on current market demand. The values assigned to in-place leases are amortized to amortization expense over the estimated remaining term of the lease. If a lease terminates prior to its scheduled expiration, all unamortized costs related to that lease are written off, net of any required lease termination payments. The Company calculates the fair value of any long-term debt assumed by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings, which the Company approximates based on the rate it would expect to incur on a replacement instrument on the date of acquisition, and recognizes any fair value adjustments related to long-term debt as effective yield adjustments over the remaining term of the instrument. Based on these estimates, the Company recognizes the acquired assets and assumed liabilities at their estimated fair values, which are generally determined using Level 3 inputs, such as market rental rates, capitalization rates, discount rates, or other available market data. Initial valuations are subject to change until the information is finalized, no later than 12 months from the acquisition date. The Company expenses transaction costs associated with acquisitions accounted for as business combinations in the period incurred. Impairment of Intangible and Long-Lived Assets The Company periodically evaluates its long-lived assets, primarily consisting of investments in real estate, for impairment indicators or whenever events or changes in circumstances indicate that the recorded amount of an asset may not be fully recoverable. If indicators of impairment are present, the Company evaluates the carrying value of the related real estate properties in relation to the undiscounted expected future cash flows of the underlying operations. In performing this evaluation, management considers market conditions and current intentions with respect to holding or disposing of the real estate property. The Company adjusts the net book value of real estate properties to fair value if the sum of the expected future undiscounted cash flows, including sales proceeds, is less than book value. The Company recognizes an impairment loss at the time it makes any such determination. If the Company determines that an asset is impaired, the impairment to be recognized is measured as the amount by which the recorded amount of the asset exceeds its fair value. Fair value is typically determined using a discounted future cash flow analysis or other acceptable valuation techniques, which are based, in turn, upon Level 3 inputs, such as revenue and expense growth rates, capitalization rates, discount rates, or other available market data. The Company did not record impairment charges in the three and nine month periods ended September 30, 2017 and 2016 . Assets Held for Sale and Discontinued Operations The Company may sell properties from time to time for various reasons, including favorable market conditions. The Company classifies certain long-lived assets as held for sale once the criteria, as defined by GAAP, has been met. Long-lived assets to be disposed of are reported at the lower of their carrying amount or fair value minus cost to sell, and are no longer depreciated. No properties were classified as held for sale as of September 30, 2017 . Investments in Unconsolidated Entities The Company reports investments in unconsolidated entities over whose operating and financial policies it has the ability to exercise significant influence under the equity method of accounting. Under this method of accounting, the Company’s share of the investee’s earnings or losses is included in its consolidated statements of income. The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the equity interest. Real Estate Loans Receivable Real estate loans receivable consists of eleven mezzanine loans and two term loans as of September 30, 2017 . Generally, each mezzanine loan is collateralized by an ownership interest in the respective borrower, while the two term loans are secured by equity interests in two medical office building developments, respectively. Interest income on the loans is recognized as earned based on the terms of the loans, subject to evaluation of collectability risks, and is included in the Company’s consolidated statements of income. On a quarterly basis, the Company evaluates the collectability of its loan portfolio, including related interest income receivable, and establishes a reserve for loan losses, if necessary. No such losses have been recognized to date. Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand and short-term investments with maturities of three or fewer months from the date of purchase. The Company is subject to concentrations of credit risk as a result of its temporary cash investments. The Company places its temporary cash investments with high credit quality financial institutions in order to mitigate this risk. Escrow Reserves The Company is required to maintain various escrow reserves on certain notes payable to cover future property taxes and insurance and tenant improvements costs as defined in each loan agreement. The total reserves as of September 30, 2017 and December 31, 2016 are $1.7 million and $4.3 million , respectively, which are included in other assets in the consolidated balance sheets. Deferred Costs Deferred costs consist primarily of fees paid to obtain financing and costs associated with the origination of long-term leases on real estate properties. After the purchase of a property, lease commissions incurred to extend in-place leases or generate new leases are added to deferred lease costs. Deferred lease costs are included as a component of other assets and are amortized on a straight-line basis over the terms of their respective agreements. Deferred financing costs are shown as a direct reduction from the related debt liability. The Company amortizes deferred financing costs as a component of interest expense over the terms of the related borrowings using a method that approximates a level yield. Rental Revenue Rental revenue is recognized on a straight-line basis over the terms of the related leases when collectability is reasonably assured. Recognizing rental revenue on a straight-line basis for leases may result in recognizing revenue for amounts more or less than amounts currently due from tenants. Amounts recognized in excess of amounts currently due from tenants, net of related allowances, are included in other assets and were approximately $42.5 million and $32.0 million as of September 30, 2017 and December 31, 2016 , respectively. If the Company determines that collectability of straight-line rents is not reasonably assured, the Company limits future recognition to amounts contractually owed and, where appropriate, establishes an allowance for estimated losses. Allowances recognized against straight line rent were approximately $4.7 million and $0.6 million as of September 30, 2017 and December 31, 2016 , respectively. Rental revenue is adjusted by amortization of lease inducements and above or below market rents on certain leases. Lease inducements and above or below market rents are amortized over the remaining life of the lease. Expense Recoveries Expense recoveries relate to tenant reimbursement of real estate taxes, insurance, and other operating expenses that are recognized as expense recovery revenue in the period the applicable expenses are incurred. The reimbursements are recorded at gross, as the Company is generally the primary obligor with respect to real estate taxes and purchasing goods and services from third-party suppliers, has discretion in selecting the supplier, and bears the credit risk of tenant reimbursement. The Company has certain tenants with absolute net leases. Under these lease agreements, the tenant is responsible for operating and building expenses. For absolute net leases, the Company does not recognize expense recoveries. Derivative Instruments When the Company has derivative instruments embedded in other contracts, it records them either as an asset or a liability measured at their fair value unless they qualify for a normal purchase or normal sale exception. When specific hedge accounting criteria are not met, changes in the Company’s derivative instruments’ fair value are recognized currently in earnings. Changes in the fair market values of the Company’s derivative instruments are recorded in the consolidated statements of income if the derivative instruments do not qualify for, or the Company does not elect to apply for, hedge accounting. If hedge accounting is applied to a derivative instrument, such changes are reported in accumulated other comprehensive income within the consolidated statement of equity, exclusive of ineffectiveness amounts, which are recognized as adjustments to net income. To manage interest rate risk for certain of its variable-rate debt, the Company uses interest rate swaps as part of its risk management strategy. These derivatives are designed to mitigate the risk of future interest rate increases by providing a fixed interest rate for a limited, pre-determined period of time. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of September 30, 2017 , the Company had five outstanding interest rate swap contracts that are designated as cash flow hedges of interest rate risk. For presentational purposes, they are shown as one derivative due to the identical nature of their economic terms. Further detail is provided in Note 7 (Derivatives) . The effective portion of the change in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (“AOCI”) on the consolidated balance sheets and is subsequently reclassified into earnings as interest expense for the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. For the nine months ended September 30, 2017 , the Company recognized a $0.2 million loss as a result of hedge ineffectiveness. Hedge ineffectiveness was insignificant for the three months ended September 30, 2017 and for the three and nine months ended September 30, 2016 . The Company expects hedge ineffectiveness to be insignificant in the next 12 months. Income Taxes The Trust elected to be taxed as a REIT for federal tax purposes commencing with the filing of its tax return for the short taxable year ending December 31, 2013. The Trust had no taxable income prior to electing REIT status. To qualify as a REIT, the Trust must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income to its shareholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Trust generally will not be subject to federal income tax to the extent it distributes qualifying dividends to its shareholders. If the Trust fails to qualify as a REIT in any taxable year, it will be subject to federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost, unless the Internal Revenue Service grants the Trust relief under certain statutory provisions. Such an event could materially adversely affect the Trust’s net income and net cash available for distribution to shareholders. However, the Trust intends to continue to operate in such a manner as to continue qualifying for treatment as a REIT. Although the Trust continues to qualify for taxation as a REIT, in various instances, the Trust is subject to state and local taxes on its income and property, and federal income and excise taxes on its undistributed income. As discussed in Note 1 (Organization and Business) , the Trust conducts substantially all of its operations through the Operating Partnership. As a partnership, the Operating Partnership generally is not liable for federal income taxes. The income and loss from the operations of the Operating Partnership is included in the tax returns of its partners, including the Trust, who are responsible for reporting their allocable share of the partnership income and loss. Accordingly, no provision for income taxes has been made on the accompanying consolidated financial statements. Tenant Receivables, Net Tenant accounts receivable are stated net of the applicable allowance. Rental payments under these contracts are primarily due monthly. The Company assesses the collectability of tenant receivables, including straight-line rent receivables, and defers recognition of revenue if collectability is not reasonably assured. The Company bases its assessment of the collectability of rent receivables on several factors, including, among other things, payment history, the financial strength of the tenant, and current economic conditions. If management’s evaluation of these factors indicates it is probable that the Company will be unable to recover the full value of the receivable, the Company provides a reserve against the portion of the receivable that it estimates may not be recovered. At September 30, 2017 and December 31, 2016 , the allowance for doubtful accounts was $1.2 million and $2.4 million , respectively. Management Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the amounts of revenue and expenses reported in the period. Significant estimates are made for the fair value assessments with respect to purchase price allocations, impairment assessments, and the valuation of financial instruments. Actual results could differ from these estimates. Contingent Liabilities The Company records liabilities for contingent consideration (included in accrued expenses and other liabilities on its consolidated balance sheets) at fair value as of the acquisition date and reassesses the fair value at the end of each reporting period, with any changes being recognized in earnings. Increases or decreases in the fair value of contingent consideration can result from changes in discount periods, discount rates, and probabilities that contingencies will be met. Reclassifications Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the previously reported consolidated balance sheets or consolidated statements of income. Segment Reporting Under the provision of Codification Topic 280, Segment Reporting , the Company has determined that it has one reportable segment with activities related to leasing and managing healthcare properties. New Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers , which creates a new Topic, Accounting Standards Codification Topic 606. The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This standard is effective for interim or annual periods beginning after December 15, 2017 and allows for either full retrospective or modified retrospective adoption. Early adoption of this standard is permitted for reporting periods beginning after December 15, 2016. The Company anticipates that adoption of ASU 2014-09 will take place on January 1, 2018 via the modified retrospective approach. Under the full retrospective method, the standard would be applied retrospectively to all reporting periods represented on the financial |
Acquisitions and Dispositions
Acquisitions and Dispositions | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Acquisitions and Dispositions | Acquisitions and Dispositions During the nine months ended September 30, 2017 , the Company completed acquisitions of 29 operating healthcare properties, 2 condominium units, and 1 parking deck located in 15 states for an aggregate purchase price of approximately $984.0 million . In addition, the Company completed $38.8 million of loan transactions and $3.9 million of noncontrolling interest buyouts, resulting in total investment activity of approximately $1.0 billion . Investment activity for the three months ended September 30, 2017 is summarized below: Property (1) Location Acquisition Date Purchase Price (in thousands) Clearview Cancer Institute (2) Huntsville, AL August 4, 2017 $ 53,250 Northside Cherokee/Towne Lake MOB (2) Atlanta, GA August 15, 2017 37,127 HonorHealth Mesa MOB (2) Mesa, AZ August 15, 2017 4,800 2017 CHI Portfolio - Tranche 2 (5 MOBs) (2) AR, MN, NE, TX August 24, 2017 & August 31, 2017 33,694 NCI Buyout - Great Falls Clinic (4) Great Falls, MT September 21, 2017 1,061 Legends Park MOB & ASC (2) Midland, TX September 27, 2017 30,000 Loan Investments (3) Various Various 30,251 $ 190,183 (1) “MOB” means medical office building and “ASC” means ambulatory surgery center. (2) The Company accounted for three of these facilities as asset acquisitions and capitalized total acquisition costs of $ 0.1 million . The remaining six facilities were accounted for as business combinations pursuant to the acquisition method, with acquisition expense totaling $2.2 million , which includes costs related to properties pursued but not acquired. (3) Loan investments listed here include two separate transactions at a weighted average interest rate of 8.0% . (4) The Company acquired an additional 3.2% interest in the Great Falls Clinic joint venture from the predecessor owner, increasing the Company’s total interest to 85.0% . For the three months ended September 30, 2017 , the Company recorded revenues and net income from its 2017 acquisitions of $18.5 million and $5.2 million , respectively. For the nine months ended September 30, 2017 , the Company recorded revenues and net income from its 2017 acquisitions of $25.8 million and $3.0 million , respectively. The following table summarizes the acquisition date fair values of the assets acquired and the liabilities assumed, which the Company determined using Level 2 and Level 3 inputs (in thousands): 1st Quarter 2nd Quarter 3rd Quarter Total Land $ 14,190 $ 5,662 $ 5,004 $ 24,856 Building and improvements 187,239 537,952 134,305 859,496 In-place lease intangible 27,670 38,766 19,233 85,669 Above market in-place lease intangible 13,406 2,815 550 16,771 Below market in-place lease intangible (757 ) (2,097 ) (705 ) (3,559 ) Above market in-place ground lease — (4,172 ) (448 ) (4,620 ) Below market in-place ground lease 1,042 3,245 1,471 5,758 Receivables 480 (46 ) — 434 Debt assumed (26,379 ) — — (26,379 ) Issuance of OP Units (44,978 ) — — (44,978 ) Net assets acquired $ 171,913 $ 582,125 $ 159,410 $ 913,448 For acquisitions classified as a business combination, preliminary allocations are subject to revision within the measurement period, not to exceed one year from the date of the acquisitions. Dispositions On February 23, 2017, the Company executed an agreement to sell a portfolio of four medical office buildings located in Georgia (the “Georgia Portfolio”), representing an aggregate 80,292 square feet, for approximately $18.2 million . On April 7, 2017, the Company closed on the sale of the Georgia Portfolio for a gain of $5.3 million . The following table summarizes revenues and net income related to the Georgia Portfolio for the periods presented (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Revenues — 425 438 1,259 Income before gain on sale of investment properties: — 112 87 308 Gain on sale of investment properties — — 5,303 — Net income — 112 5,390 308 On August 15, 2017, the Company completed the disposition of land with a carrying value of $7.7 million in a sale-leaseback at the Peachtree Dunwoody Medical Center. The Company entered into a 90 year term ground lease at closing with all rent prepaid in consideration of the full present value of rent owed. There was no gain or loss recognized as a result of this transaction. Unaudited Pro Forma Financial Information Physicians Realty Trust The following table illustrates the pro forma consolidated revenue, net income, and earnings per share as if the Company had acquired the 2017 acquisitions as of January 1, 2016 (in thousands, except share and per share amounts): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Revenue $ 95,623 $ 89,349 $ 283,152 $ 230,026 Net income 13,174 15,799 37,179 28,509 Net income available to common shareholders 12,635 14,772 35,251 25,743 Earnings per share - basic $ 0.07 $ 0.08 $ 0.22 $ 0.16 Earnings per share - diluted $ 0.07 $ 0.08 $ 0.22 $ 0.16 Weighted average number of shares outstanding - basic 177,847,424 177,847,424 157,542,167 157,542,167 Weighted average number of shares outstanding - diluted 183,298,145 183,298,145 162,480,918 162,480,918 Physicians Realty L.P. The following table illustrates the pro forma consolidated revenue, net income, and earnings per share as if the Company had acquired the 2017 acquisitions as of January 1, 2016 (in thousands, except unit and per unit amounts): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Revenue $ 95,623 $ 89,349 $ 283,152 $ 230,026 Net income 13,174 15,799 37,179 28,509 Net income available to common unitholders 13,015 15,187 36,295 26,535 Earnings per unit - basic $ 0.07 $ 0.08 $ 0.22 $ 0.16 Earnings per unit - diluted $ 0.07 $ 0.08 $ 0.22 $ 0.16 Weighted average number of units outstanding - basic 183,227,405 183,227,405 162,205,324 162,205,324 Weighted average number of units outstanding - diluted 183,298,145 183,298,145 162,480,918 162,480,918 |
Intangibles
Intangibles | 9 Months Ended |
Sep. 30, 2017 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
Intangibles | Intangibles The following is a summary of the carrying amount of intangible assets and liabilities as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Cost Accumulated Amortization Net Cost Accumulated Amortization Net Assets In-place leases $ 301,293 $ (75,354 ) $ 225,939 $ 222,394 $ (55,605 ) $ 166,789 Above market leases 51,967 (10,613 ) 41,354 35,478 (6,909 ) 28,569 Leasehold interest 712 (168 ) 544 712 (124 ) 588 Below market ground leases 48,636 (1,120 ) 47,516 42,878 (539 ) 42,339 Total $ 402,608 $ (87,255 ) $ 315,353 $ 301,462 $ (63,177 ) $ 238,285 Liabilities Below market leases $ 13,741 $ (3,933 ) $ 9,808 $ 10,297 $ (2,345 ) $ 7,952 Above market ground leases 5,965 (93 ) 5,872 1,345 (44 ) 1,301 Total $ 19,706 $ (4,026 ) $ 15,680 $ 11,642 $ (2,389 ) $ 9,253 The following is a summary of the acquired lease intangible amortization for the three and nine month periods ended September 30, 2017 and 2016 , respectively (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Amortization expense related to in-place leases $ 9,453 $ 7,420 $ 26,520 $ 19,855 Decrease of rental income related to above-market leases 1,335 1,276 3,987 3,322 Decrease of rental income related to leasehold interest 15 15 44 45 Increase of rental income related to below-market leases 623 670 1,704 1,218 Decrease of operating expense related to above market ground leases 34 8 49 17 Increase in operating expense related to below market ground leases 208 158 581 299 For the three months ended September 30, 2017 , the Company wrote-off in-place lease intangible assets of approximately $0.4 million with accumulated amortization of $0.1 million , for a net loss of approximately $0.3 million to rental income from intangible amortization. For the nine months ended September 30, 2017 , the Company wrote-off in-place lease intangible assets of approximately $3.1 million with accumulated amortization of $1.9 million as well as certain above market lease intangible assets and below market lease intangible liabilities. Intangible write-offs for the nine months ended September 30, 2017 resulted in an aggregate net loss of approximately $1.3 million to rental income from intangible amortization. Future aggregate net amortization of the acquired lease intangibles as of September 30, 2017 , is as follows (in thousands): Net Decrease in Revenue Net Increase in Expenses 2017 $ (762 ) $ 9,336 2018 (2,849 ) 34,468 2019 (2,960 ) 30,335 2020 (3,087 ) 27,858 2021 (3,206 ) 26,380 Thereafter (19,226 ) 139,206 Total $ (32,090 ) $ 267,583 As of September 30, 2017 , the weighted average amortization period for asset lease intangibles and liability lease intangibles are 17 and 20 |
Other Assets
Other Assets | 9 Months Ended |
Sep. 30, 2017 | |
Other Assets, Unclassified [Abstract] | |
Other Assets | Other Assets Other assets consisted of the following as of September 30, 2017 and December 31, 2016 (in thousands): September 30, December 31, Straight line rent receivable, net $ 42,510 $ 32,018 Note receivable — 16,618 Interest rate swap 12,760 13,881 Lease inducements, net 14,962 13,255 Prepaid expenses 19,858 8,928 Escrows 1,666 4,334 Leasing commissions, net 2,857 1,858 Earnest deposits 26,770 1,500 Other 2,526 2,795 Total $ 123,909 $ 95,187 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt The following is a summary of debt as of September 30, 2017 and December 31, 2016 (in thousands): September 30, December 31, Fixed interest mortgage notes $ 140,971 (1) $ 90,185 (2) Variable interest mortgage notes 28,603 (3) 33,009 (4) Total mortgage debt 169,574 123,194 $850 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.20%, due September 2020 139,000 401,000 $400 million senior unsecured notes bearing fixed interest of 4.30%, due March 2027 400,000 — $250 million unsecured term borrowing bearing fixed interest of 2.87%, due June 2023 (5) 250,000 250,000 $150 million senior unsecured notes bearing fixed interest of 4.03% to 4.74%, due January 2023 to 2031 150,000 150,000 $75 million senior unsecured notes bearing fixed interest of 4.09% to 4.24%, due August 2025 to 2027 75,000 75,000 Total principal 1,183,574 999,194 Unamortized deferred financing costs (7,917 ) (8,477 ) Unamortized discount (3,715 ) — Unamortized fair value adjustment 275 438 Total debt $ 1,172,217 $ 991,155 (1) Fixed interest mortgage notes, bearing interest from 3.00% to 5.50% , with a weighted average interest rate of 4.41% , and due in 2018, 2019, 2020, 2021, 2022, and 2024 collateralized by 8 properties with a net book value of $216.9 million . (2) Fixed interest mortgage notes, bearing interest from 4.71% to 6.58% , with a weighted average interest rate of 5.44% , and due in 2017, 2018, 2019, 2020, 2021, 2022, and 2032 collateralized by 11 properties with a net book value of $156.7 million . (3) Variable interest mortgage notes, bearing variable interest of LIBOR plus 2.25% to 3.25% , with a weighted average interest rate of 4.24% and due in 2018, collateralized by 3 properties with a net book value of $39.7 million . (4) Variable interest mortgage notes, bearing variable interest of LIBOR plus 2.25% to 3.25% , with a weighted average interest rate of 3.68% and due in 2017 and 2018, collateralized by 4 properties with a net book value of $45.6 million . (5) The Trust’s borrowings under the term loan feature of the Credit Agreement bear interest at a rate which is determined by the Trust’s credit rating, currently equal to LIBOR + 1.80% . The Trust has entered into a pay-fixed receive-variable interest rate swap, fixing the LIBOR component of this rate at 1.07% . On June 10, 2016, the Operating Partnership, as borrower, and the Trust entered into an amended and restated Credit Agreement with KeyBank National Association, as administrative agent, KeyBanc Capital Markets Inc., BMO Capital Markets, and Citizens Bank N.A., as joint lead arrangers and co-book runners, BMO Capital Markets and Citizens Bank N.A., as co-syndication agents, and the lenders party thereto (the “Credit Agreement”) which increased the maximum principal amount available under an unsecured revolving credit facility from $750 million to $850 million . The Credit Agreement contains a 7 -year term loan feature allowing the Operating Partnership to borrow in a single drawing up to $250 million , increasing the borrowing capacity to an aggregate $1.1 billion . The Credit Agreement also includes a swingline loan commitment for up to 10% of the maximum principal amount and provides an accordion feature allowing the Trust to increase borrowing capacity by up to an additional $500 million , subject to customary terms and conditions, resulting in a maximum borrowing capacity of $1.6 billion . On July 7, 2016, the Operating Partnership borrowed $250.0 million under the 7 -year term loan feature of the Credit Agreement. Borrowings under the term loan feature of the Credit Agreement bear interest on the outstanding principal amount at a rate which is determined by the Trust’s credit rating, currently equal to LIBOR + 1.80% . The Trust simultaneously entered into a pay-fixed receive-variable rate swap for the full borrowing amount, fixing the LIBOR component of the borrowing rate to 1.07% , for an all-in fixed rate of 2.87% . Both the borrowing and pay-fixed receive-variable swap have a maturity date of June 10, 2023 . The Credit Agreement has a maturity date of September 18, 2020 and includes a one year extension option. Borrowings under the Credit Agreement bear interest on the outstanding principal amount at an adjusted LIBOR rate, which is based on the Trust’s investment grade rating under the Credit Agreement. As of September 30, 2017 , the Trust had an investment grade rating of Baa3 from Moody’s and BBB- from S&P. As such, borrowings under the revolving credit facility of the Credit Agreement accrued interest on the outstanding principal at a rate of LIBOR plus 1.20% . The Credit Agreement includes a facility fee equal to 0.25% per annum, which is also determined by the Trust’s investment grade rating. The Credit Agreement contains financial covenants that, among other things, require compliance with leverage and coverage ratios and maintenance of minimum tangible net worth, as well as covenants that may limit the Trust’s and the Operating Partnership’s ability to incur additional debt or make distributions. The Company may, at any time, voluntarily prepay any revolving or swingline loan under the Credit Agreement in whole or in part without premium or penalty. Prepayments of term borrowings require payment of premiums of up to 2.0% of the amount of prepayment, dependent on the date of such prepayment. As of September 30, 2017 , the Company was in compliance with all financial covenants related to the Credit Agreement. The Credit Agreement includes customary representations and warranties by the Trust and the Operating Partnership, and imposes customary covenants on the Operating Partnership and the Trust. The Credit Agreement also contains customary events of default, and if an event of default occurs and continues, the Operating Partnership is subject to certain actions by the administrative agent, including without limitation, the acceleration of repayment of all amounts outstanding under the Credit Agreement. The Credit Agreement provides for revolving credit and term loans to the Trust and the Operating Partnership. Base Rate Loans, Adjusted LIBOR Rate Loans, and Letters of Credit (each, as defined in the Credit Agreement) will be subject to interest rates, based upon the Trust’s investment grade rating as follows: Credit Rating Margin for Revolving Loans: Adjusted LIBOR Rate Loans and Letter of Credit Fee Margin for Revolving Loans: Base Rate Loans Margin for Term Loans: Adjusted LIBOR Rate Loans and Letter of Credit Fee Margin for Term Loans: Base Rate Loans At Least A- or A3 LIBOR + 0.85% — % LIBOR + 1.40% 0.40 % At Least BBB+ or BAA1 LIBOR + 0.90% — % LIBOR + 1.45% 0.45 % At Least BBB or BAA2 LIBOR + 1.00% 0.10 % LIBOR + 1.55% 0.55 % At Least BBB- or BAA3 LIBOR + 1.20% 0.20 % LIBOR + 1.80% 0.80 % Below BBB- or BAA3 LIBOR + 1.55% 0.60 % LIBOR + 2.25% 1.25 % As of September 30, 2017 , the company had $139.0 million of borrowings outstanding under its unsecured revolving credit facility, and $250.0 million of borrowings outstanding under the term loan feature of the Credit Agreement. The Company also issued a letter of credit for $17.0 million as of September 30, 2017 with no outstanding balance as of September 30, 2017 . As defined by the Credit Agreement, $694.0 million is available to borrow without adding additional properties to the unencumbered borrowing base of assets. On January 7, 2016, the Operating Partnership issued and sold $150.0 million aggregate principal amount of senior notes, comprised of (i) $15.0 million aggregate principal amount of 4.03% Senior Notes, Series A, due January 7, 2023, (ii) $45.0 million aggregate principal amount of 4.43% Senior Notes, Series B, due January 7, 2026, (iii) $45.0 million aggregate principal amount of 4.57% Senior Notes, Series C, due January 7, 2028, and (iv) $45.0 million aggregate principal amount of 4.74% Senior Notes, Series D, due January 7, 2031. On August 11, 2016, the note agreement for these notes was amended to make certain changes to its terms, including certain changes to affirmative covenants, negative covenants and definitions contained therein. Interest on each respective series of the January 2016 Senior Notes is payable semi-annually. On August 11, 2016, the Operating Partnership issued and sold $75.0 million aggregate principal amount of senior notes, comprised of (i) $25.0 million aggregate principal amount of 4.09% Senior Notes, Series A, due August 11, 2025, (ii) $25.0 million aggregate principal amount of 4.18% Senior Notes, Series B, due August 11, 2026, and (iii) $25.0 million aggregate principal amount of 4.24% Senior Notes, Series C, due August 11, 2027. Interest on each respective series of the August 2016 Senior Notes is payable semi-annually. On March 7, 2017 , the Operating Partnership issued and sold $ 400.0 million aggregate principal amount of 4.30% Senior Notes which will mature on March 15, 2027 . The Senior Notes began accruing interest on March 7, 2017 and began paying interest semi-annually beginning September 15, 2017 . The Senior Notes were sold at an issue price of 99.68% of their face value, before the underwriters’ discount. Our net proceeds from the offering, after deducting underwriting discounts and expenses, were approximately $396.1 million . Certain properties have mortgage debt that contains financial covenants. As of September 30, 2017 , the Trust is in compliance with all mortgage debt financial covenants, except with respect to a certain $7.8 million mortgage loan from Bank SNB National Association for the Oklahoma City, Oklahoma medical office building formerly leased by a wholly-owned subsidiary of Foundation Healthcare, Inc. (OTC: FDNH). The Trust and the bank have reached a tentative resolution which is pending the bank’s loan committee approval. Scheduled principal payments due on debt as of September 30, 2017 , are as follows (in thousands): 2017 $ 504 2018 54,195 2019 44,022 2020 168,483 2021 8,048 Thereafter 908,322 Total Payments $ 1,183,574 As of September 30, 2017 , the Company had total consolidated indebtedness of approximately $1.2 billion . The weighted average interest rate on consolidated indebtedness was 3.81% (based on the 30-day LIBOR rate as of September 30, 2017 , of 1.24% ). For the three month periods ended September 30, 2017 and 2016 , the Company incurred interest expense on its debt, exclusive of deferred financing cost amortization, of $11.4 million and $6.5 million , respectively. For the nine month periods ended September 30, 2017 and 2016 , the Company incurred interest expense on its debt, exclusive of deferred financing cost amortization, of $31.6 million and $14.0 million |
Derivatives
Derivatives | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instrument Detail [Abstract] | |
Derivatives | Derivatives In the normal course of business, a variety of financial instruments are used to manage or hedge interest rate risk. The Company has implemented ASC 815, Derivatives and Hedging (ASC 815), which establishes accounting and reporting standards requiring that all derivatives, including certain derivative instruments embedded in other contracts, be recorded as either an asset or a liability measured at their fair value unless they qualify for a normal purchase or normal sales exception. When specific hedge accounting criteria are not met, ASC 815 requires that changes in a derivative’s fair value be recognized currently in earnings. Changes in the fair market values of the Company’s derivative instruments are recorded in the consolidated statements of income if such derivatives do not qualify for, or the Company does not elect to apply for, hedge accounting. If hedge accounting is applied to a derivative instrument, such changes are reported in accumulated other comprehensive income within the consolidated statement of equity, exclusive of ineffectiveness amounts, which are recognized as adjustments to net income. To manage interest rate risk for certain of its variable-rate debt, the Company uses interest rate swaps as part of its risk management strategy. These derivatives are designed to mitigate the risk of future interest rate increases by providing a fixed interest rate for a limited, pre-determined period of time. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of September 30, 2017 , the Company had five outstanding interest rate swap contracts that are designated as cash flow hedges of interest rate risk. For presentational purposes, they are shown as one derivative due to the identical nature of their economic terms. The effective portion of the change in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (“AOCI”) on the consolidated balance sheets and is subsequently reclassified into earnings as interest expense for the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. For the nine months ended September 30, 2017 , the Company recognized a $0.2 million loss as a result of hedge ineffectiveness. Hedge ineffectiveness was insignificant for the three months ended September 30, 2017 and for the three and nine months ended September 30, 2016 . The Company expects hedge ineffectiveness to be insignificant in the next 12 months. The following table summarizes the location and aggregate fair value of the interest rate swaps on the Company’s consolidated balance sheets (in thousands): Total notional amount $ 250,000 Effective fixed interest rate (1) 2.87 % Effective date 7/7/2016 Maturity date 6/10/2023 Asset balance at September 30, 2017 (included in Other assets) $ 12,760 Asset balance at December 31, 2016 (included in Other assets) $ 13,881 (1) 1.07% effective swap rate plus 1.80% spread per Credit Agreement. On January 26, 2017 , the Company entered into a $300.0 million notional amount forward starting swap to reduce the exposure to fluctuations in interest rates related to the forecasted issuance of the 4.30% senior notes due in 2027. Upon the issuance of the senior notes on March 7, 2017, the forward starting swap was terminated and the Company realized a $0.8 million |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 9 Months Ended |
Sep. 30, 2017 | |
Other Liabilities Disclosure [Abstract] | |
Accrued Expenses and Other Liabilities | Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following as of September 30, 2017 and December 31, 2016 (in thousands): September 30, December 31, Real estate taxes payable $ 20,102 $ 9,300 Prepaid rent 11,920 5,834 Embedded derivative — 5,571 Tenant improvement allowance 3,727 5,315 Accrued interest 3,138 4,905 Security deposits 2,600 4,506 Accrued incentive compensation 3,211 1,405 Contingent consideration 1,166 1,392 Accrued expenses and other 5,557 4,059 Total $ 51,421 $ 42,287 |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based Compensation | Stock-based Compensation The Company follows ASC 718, Compensation - Stock Compensation (“ASC 718”), in accounting for its share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee’s requisite service period. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized when incurred. Share-based payments classified as liability awards are marked to fair value at each reporting period. Any common shares issued pursuant to the Company's incentive equity compensation and employee stock purchase plans will result in the Operating Partnership issuing OP Units to the Trust on a one-for-one basis, with the Operating Partnership receiving the net cash proceeds of such issuances. Certain of the Company’s employee stock awards vest only upon the achievement of performance targets. ASC 718 requires recognition of compensation cost only when achievement of performance conditions is considered probable. Consequently, the Company’s determination of the amount of stock compensation expense requires a significant level of judgment in estimating the probability of achievement of these performance targets. Subsequent changes in actual experience are monitored and estimates are updated as information is available. In connection with the IPO, the Trust adopted the 2013 Equity Incentive Plan (“2013 Plan”), which made available 600,000 common shares to be administered by the Compensation and Nominating Governance Committee of the Board of Trustees. On August 7, 2014, at the Annual Meeting of Shareholders of Physicians Realty Trust, the Trust’s shareholders approved an amendment to the 2013 Plan to increase the number of common shares authorized for issuance under the 2013 Plan by 1,850,000 common shares, for a total of 2,450,000 common shares authorized for issuance. Restricted Common Shares Restricted common shares granted under the 2013 Plan are eligible for dividends as well as the right to vote. In the nine month period ended September 30, 2017 , the Trust granted a total of 143,593 restricted common shares with a total value of $2.8 million to its officers and certain of its employees, which have vesting periods ranging from one to three years. A summary of the status of the Trust’s non-vested restricted common shares as of September 30, 2017 and changes during the nine month period then ended follow: Common Shares Weighted Average Grant Date Fair Value Non-vested at December 31, 2016 296,785 $ 16.16 Granted 143,593 19.74 Vested (254,395 ) 16.04 Forfeited (550 ) 18.78 Non-vested at September 30, 2017 185,433 $ 19.08 For all service awards, the Company records compensation expense for the entire award on a straight-line basis over the requisite service period. For the three month periods ended September 30, 2017 and 2016 , the Company recognized non-cash share compensation of $0.8 million and $0.9 million , respectively. For the nine month periods ended September 30, 2017 and 2016 , the Company recognized non-cash share compensation of $2.3 million and $2.8 million , respectively. Unrecognized compensation expense at September 30, 2017 was $1.8 million . Restricted Share Units In March 2017, under the 2013 Plan, the Trust granted restricted share units at a target level of 174,320 to its officers and certain employees and 32,831 to its trustees, which are subject to certain performance, timing, and market conditions and a three -year and two -year service period for officers/employees and trustees, respectively. In addition, each restricted share unit contains one dividend equivalent. The recipient will accrue dividend equivalents on awarded share units equal to the cash dividend that would have been paid on the awarded share unit had the awarded share unit been an issued and outstanding common share on the record date for the dividend. Approximately 70% of the restricted share units issued to officers and certain employees vest based on certain market conditions. The market conditions were valued with the assistance of independent valuation specialists. The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $33.43 per unit for the March 2017 grant using the following assumptions: Volatility 21.5 % Dividend assumption reinvested Expected term in years 2.8 Risk-free rate 1.68 % Share price (per share) $ 19.80 The remaining 30% of the restricted share units issued to officers and certain employees, and 100% of restricted share units issued to trustees, vest based upon certain performance or timing conditions. With respect to the performance conditions of the March 2017 grant, the grant date fair value of $19.80 per unit was based on the share price at the date of grant. The combined weighted average grant date fair value of the March 2017 restricted share units issued to officers and certain employees is $29.34 per unit. The following is a summary of the activity in the Trust’s restricted share units during the nine months ended September 30, 2017 : Executive Awards Trustee Awards Restricted Share Units Weighted Average Grant Date Fair Value Restricted Share Weighted Non-vested at December 31, 2016 235,483 $ 21.84 57,260 $ 17.03 Granted 174,320 29.34 32,831 19.80 Vested (55,680 ) (1) 16.94 (38,871 ) 16.72 Non-vested at September 30, 2017 354,123 $ 26.30 51,220 $ 19.04 (1) Restricted units vested by Company executives in 2017 resulted in the issuance of 105,792 common shares, less 50,112 common shares withheld to cover minimum withholding tax obligations, for multiple employees. For the three month periods ending September 30, 2017 and 2016 , the Trust recognized non-cash share restricted unit compensation expense of $1.0 million and $0.6 million , respectively. For the nine month periods ended September 30, 2017 and 2016 , the Trust recognized non-cash share unit compensation expense of $2.7 million and $1.5 million , respectively. Unrecognized compensation expense at September 30, 2017 was $6.0 million |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements ASC Topic 820, Fair Value Measurement (“ASC 820”), requires certain assets and liabilities be reported and/or disclosed at fair value in the financial statements and provides a framework for establishing that fair value. The framework for determining fair value is based on a hierarchy that prioritizes the valuation techniques and inputs used to measure fair value. In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset. These Level 3 fair value measurements are based primarily on management’s own estimates using pricing models, discounted cash flow methodologies, or similar techniques taking into account the characteristics of the asset or liability. In instances where inputs used to measure fair value fall into different levels of the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability. The Company’s derivative instruments as of September 30, 2017 consist of five interest rate swaps. For presentational purposes, the Company’s interest rate swaps are shown as a single derivative due to the identical nature of their economic terms, as detailed in the Derivative Instruments section of Note 2 (Summary of Significant Accounting Policies) and Note 7 (Derivatives) . The Company’s interest rate swaps are not traded on an exchange. The Company’s derivative assets and liabilities are recorded at fair value based on a variety of observable inputs including contractual terms, interest rate curves, yield curves, measure of volatility, and correlations of such inputs. The Company measures its derivatives at fair value on a recurring basis. The fair values are based on Level 2 inputs described above. The Company considers its own credit risk, as well as the credit risk of its counterparties, when evaluating the fair value of its derivatives. The Company also has assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. This generally includes assets subject to impairment. There were no such assets measured at fair value as of September 30, 2017 . The carrying amounts of cash and cash equivalents, tenant receivables, payables, and accrued interest are reasonable estimates of fair value because of the short term maturities of these instruments. Fair values for real estate loans receivable and mortgage debt are estimated based on rates currently prevailing for similar instruments of similar maturities and are based primarily on Level 2 inputs. The following table presents the fair value of the Company’s financial instruments (in thousands): September 30, December 31, Carrying Amount Fair Value Carrying Amount Fair Value Assets: Real estate loans receivable $ 78,944 $ 78,349 $ 39,154 $ 39,154 Notes receivable $ — $ — $ 16,618 $ 16,618 Derivative assets $ 12,760 $ 12,760 $ 13,881 $ 13,881 Liabilities: Credit facility $ (389,000 ) $ (389,000 ) $ (651,000 ) $ (651,000 ) Notes payable $ (625,000 ) $ (624,741 ) $ (225,000 ) $ (214,584 ) Mortgage debt $ (169,850 ) $ (172,276 ) $ (123,632 ) $ (125,420 ) Derivative liabilities $ — $ — $ (5,571 ) $ (5,571 ) |
Tenant Operating Leases
Tenant Operating Leases | 9 Months Ended |
Sep. 30, 2017 | |
Leases [Abstract] | |
Tenant Operating Leases | Tenant Operating Leases The Company is lessor of medical office buildings and other healthcare facilities. Leases have expirations from 2017 through 2045 . As of September 30, 2017 , the future minimum rental payments on non-cancelable leases, exclusive of expense recoveries, were as follows (in thousands): 2017 $ 67,739 2018 269,984 2019 266,191 2020 261,454 2021 256,090 Thereafter 1,565,112 Total $ 2,686,570 |
Rent Expense
Rent Expense | 9 Months Ended |
Sep. 30, 2017 | |
Leases [Abstract] | |
Rent Expense | Rent Expense The Company leases the rights to parking structures at two of its properties, the air space above one property, and the land upon which 75 of its properties are located from third party land owners pursuant to separate leases. In addition, the Company leases four individual office spaces. The Company’s leases require fixed rental payments and may also include escalation clauses and renewal options. These leases have terms of up to 98 years remaining, excluding extension options. As of September 30, 2017 , the future minimum lease obligations under non-cancelable parking, air, ground, and office leases were as follows (in thousands): 2017 $ 580 2018 2,401 2019 2,328 2020 2,270 2021 2,283 Thereafter 106,531 Total $ 116,393 Rent expense for the parking, air, and ground leases of $0.6 million and $0.5 million for the three month periods ended September 30, 2017 and 2016 , respectively, and $1.8 million and $1.3 million for the nine month periods ended September 30, 2017 and 2016 , respectively, are reported in operating expenses in the consolidated statements of income. Rent expense for office leases was insignificant for the three and nine month periods ended September 30, 2017 and 2016 |
Credit Concentration
Credit Concentration | 9 Months Ended |
Sep. 30, 2017 | |
Concentration Risks, Types, No Concentration Percentage [Abstract] | |
Credit Concentration | Credit Concentration The Company uses annualized base rent (“ABR”) as its credit concentration metric. A nnualized base rent is calculated by multiplying contractual base rent for the month ended September 30, 2017 by 12, excluding the impact of concessions and straight-line rent. The following table summarizes certain information about the Company’s top five tenant credit concentrations as of September 30, 2017 (in thousands): Tenant Total ABR Percent of ABR CHI - Nebraska $ 16,018 5.9 % CHI - KentuckyOne Health 13,120 4.8 % Baylor Scott and White Health 7,402 2.7 % US Oncology 6,689 2.5 % CHI - St. Alexius (North Dakota) 6,235 2.3 % Remaining portfolio 221,917 81.8 % Total $ 271,381 100.0 % Annualized base rent collected from the Company’s top five tenant relationships comprises 18.2% of its total annualized base rent for the period ending September 30, 2017 . Total annualized base rent from CHI affiliated tenants totals 19.5% , including the affiliates disclosed above. Consolidated financial statements of CHI, the parent of the subsidiaries and affiliates of the entities party to master lease agreements, are publicly available on the Catholic Health Initiatives website (www.catholichealthinitiatvies.org/). Information included on the CHI website is not incorporated by reference within this Quarterly Report on Form 10-Q. The following table summarizes certain information about the Company’s top five geographic concentrations as of September 30, 2017 (in thousands): State Total ABR Percent of ABR Texas $ 46,900 17.3 % Nebraska 17,607 6.5 % Indiana 17,141 6.3 % Kentucky 16,013 5.9 % Arizona 14,629 5.4 % Other 159,091 58.6 % Total $ 271,381 100.0 % |
Earnings Per Share and Earnings
Earnings Per Share and Earnings Per Unit | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share and Earnings Per Unit | Earnings Per Share and Earnings Per Unit For the three months ended September 30, 2017, approximately 405,343 restricted share units were excluded from the computation of diluted earnings per share and diluted earnings per unit as their impact would have been anti-dilutive. The following table shows the amounts used in computing the Trust’s basic and diluted earnings per share (in thousands, except share and per share data): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Numerator for earnings per share - basic: Net income $ 12,539 $ 10,294 $ 29,586 $ 22,902 Net income attributable to noncontrolling interests: Operating Partnership (362 ) (255 ) (823 ) (629 ) Partially owned properties (53 ) (176 ) (379 ) (553 ) Preferred distributions (106 ) (436 ) (505 ) (1,421 ) Numerator for earnings per share - basic $ 12,018 $ 9,427 $ 27,879 $ 20,299 Numerator for earnings per share - diluted: Numerator for earnings per share - basic $ 12,018 $ 9,427 $ 27,879 $ 20,299 Operating Partnership net income 362 255 823 629 Numerator for earnings per share - diluted $ 12,380 $ 9,682 $ 28,702 $ 20,928 Denominator for earnings per share - basic and diluted: Weighted average number of shares outstanding - basic 177,847,424 134,608,396 157,542,167 122,973,862 Effect of dilutive securities: Noncontrolling interest - Operating Partnership units 5,379,981 3,618,988 4,663,157 3,778,014 Restricted common shares 70,740 208,892 85,689 203,020 Restricted share units — 444,511 189,905 441,093 Denominator for earnings per share - diluted: 183,298,145 138,880,787 162,480,918 127,395,989 Earnings per share - basic $ 0.07 $ 0.07 $ 0.18 $ 0.17 Earnings per share - diluted $ 0.07 $ 0.07 $ 0.18 $ 0.16 The following table shows the amounts used in computing the Operating Partnership’s basic and diluted earnings per unit (in thousands, except unit and per unit data): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Numerator for earnings per unit - basic and diluted: Net income $ 12,539 $ 10,294 $ 29,586 $ 22,902 Net income attributable to noncontrolling interests - partially owned properties (53 ) (176 ) (379 ) (553 ) Preferred distributions (106 ) (436 ) (505 ) (1,421 ) Numerator for earnings per unit - basic and diluted $ 12,380 $ 9,682 $ 28,702 $ 20,928 Denominator for earnings per unit - basic and diluted: Weighted average number of units outstanding - basic 183,227,405 138,227,384 162,205,324 126,751,876 Effect of dilutive securities: Restricted common shares 70,740 208,892 85,689 203,020 Restricted share units — 444,511 189,905 441,093 Denominator for earnings per unit - diluted 183,298,145 138,880,787 162,480,918 127,395,989 Earnings per unit - basic $ 0.07 $ 0.07 $ 0.18 $ 0.17 Earnings per unit - diluted $ 0.07 $ 0.07 $ 0.18 $ 0.16 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Since September 30, 2017 , the Trust, through subsidiaries of its Operating Partnership, closed on the below acquisitions: Property (1) Location Acquisition Date Purchase Price (in thousands) Franklin MOB & ASC Franklin, TN October 10, 2017 $ 9,950 Davis Portfolio 2.0 (2 MOBs) Minneapolis, MN October 31, 2017 18,749 $ 28,699 (1) |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation GAAP requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). ASC 810 broadly defines a VIE as an entity in which either (i) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. We identify the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity. We consolidate our investment in a VIE when we determine that we are the VIE’s primary beneficiary. We may change our original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary. We perform this analysis on an ongoing basis. For property holding entities not determined to be VIEs, we consolidate such entities in which the Operating Partnership owns 100% of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest. All intercompany balances and transactions are eliminated in consolidation. For entities in which the Operating Partnership owns less than 100% |
Noncontrolling Interests | Noncontrolling Interests The Company presents the portion of any equity it does not own in entities that it controls (and thus consolidates) as noncontrolling interests and classifies such interests as a component of consolidated equity, separate from the Company’s total shareholders’ equity, on the consolidated balance sheets. Operating Partnership: Net income or loss is allocated to noncontrolling interests (limited partners) based on their respective ownership percentage of the Operating Partnership. The ownership percentage is calculated by dividing the number of OP Units held by the noncontrolling interests by the total OP Units held by the noncontrolling interests and the Trust. Issuance of additional common shares and OP Units changes the ownership interests of both the noncontrolling interests and the Trust. Such transactions and the related proceeds are treated as capital transactions. During the three months ended March 31, 2017, the Operating Partnership partially funded a property acquisition by issuing an aggregate of 2,247,817 OP Units valued at approximately $44.3 million . The acquisition had a total purchase price of approximately $78.6 million . In addition, on January 31, 2017, the Operating Partnership redeemed the noncontrolling interest in a joint venture between the Operating Partnership and Medical Center of New Albany I, LLC, an Ohio limited liability company. As consideration, the Operating Partnership paid approximately $2.1 million in cash and issued 38,641 OP Units, representing an aggregate $2.8 million . No acquisitions were funded through the issuance of OP units during the three months ended June 30, 2017 or September 30, 2017 . Noncontrolling interests in the Company include OP Units held by other investors. As of September 30, 2017 , the Trust held a 97.1% interest in the Operating Partnership. As the sole general partner and the majority interest holder, the Trust consolidates the financial position and results of operations of the Operating Partnership. Holders of OP Units may not transfer their OP Units without the Trust’s prior written consent, as general partner of the Operating Partnership. Beginning on the first anniversary of the issuance of OP Units, OP Unit holders may tender their units for redemption by the Operating Partnership in exchange for cash equal to the market price of the Trust’s common shares at the time of redemption or for unregistered common shares on a one-for-one basis. Such selection to pay cash or issue common shares to satisfy an OP Unit holder’s redemption request is solely within the control of the Trust. Accordingly, the Trust presents the OP Units of the Operating Partnership held by investors other than the Trust as noncontrolling interests within equity in the consolidated balance sheets. Partially Owned Properties: The Trust and Operating Partnership reflect noncontrolling interests in partially owned properties on the balance sheet for the portion of consolidated properties that are not wholly owned by the Company. The earnings or losses from those properties attributable to the noncontrolling interests are reflected as noncontrolling interests in partially owned properties in the consolidated statements of income. Redeemable Noncontrolling Interests - Series A Preferred Units and Partially Owned Properties On February 5, 2015, the Company entered into a Second Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”) which provides for the designation and issuance of the newly designated Series A Participating Redeemable Preferred Units of the Operating Partnership (“Series A Preferred Units”). Series A Preferred Units have priority over all other partnership interests of the Operating Partnership with respect to distributions and liquidation. Holders of Series A Preferred Units are entitled to a 5% cumulative return and upon redemption, the receipt of one common share and $200 . The holders of the Series A Preferred Units have agreed not to cause the Operating Partnership to redeem their Series A Preferred Units prior to one year from the issuance date. In addition, Series A Preferred Units are redeemable at the option of the holders which redemption obligation may be satisfied, at the Trust’s option, in cash or registered common shares. Instruments that require settlement in registered common shares may not be classified in permanent equity as it is not always completely within an issuer’s control to deliver registered common shares. Due to the redemption rights associated with the Series A Preferred Units, the Company classifies the Series A Preferred Units in the mezzanine section of the consolidated balance sheets. The Series A Preferred Units were evaluated for embedded features that should be bifurcated and separately accounted for as a freestanding derivative. The Company determined that the Series A Preferred Units contained features that require bifurcation. The Company records the carrying amount of the redeemable noncontrolling interests, less the value of the embedded derivative, at the greater of the carrying value or redemption value in the consolidated balance sheets. On February 5, 2015, the acquisition of a medical office building located in Minnetonka, Minnesota (the “Minnetonka MOB”) was partially funded with the issuance of 44,685 Series A Preferred Units which were valued at $9.7 million . On December 17, 2015, the acquisition of a medical office building located in Nashville, Tennessee (the “Nashville MOB”) was partially funded with the issuance of 91,236 Series A Preferred Units which were valued at $19.7 million . On April 1, 2016, the Series A Preferred Units issued in conjunction with the Minnetonka MOB acquisition were redeemed for a total value of $9.8 million . The fair value of the embedded derivative associated with the previously outstanding Series A Preferred Units was $2.7 million which was derecognized in the course of the redemption. On January 12, 2017, the Series A Preferred Units issued in conjunction with the Nashville MOB acquisition were redeemed for a total value of $20.0 million . The fair value of the embedded derivative associated with the previously outstanding Series A Preferred Units was $5.6 million which was derecognized in the course of the redemption. As of September 30, 2017 , no Series A Preferred Units are outstanding. In connection with the acquisition of the Minnetonka MOB, the Trust received a $5 million equity investment from a third party, effective March 1, 2015. This investment earns a 15% cumulative preferred return. At any point subsequent to the third anniversary of the investment, the holder can require the Trust to redeem the instrument at a price for which the investor will realize a 15% |
Dividends and Distributions | Dividends and Distributions On September 21, 2017 , the Trust announced that its Board of Trustees authorized and the Trust declared a cash dividend of $0.23 per common share for the quarterly period ended September 30, 2017 . The distribution was paid on October 18, 2017 to common shareholders and OP Unit holders of record as of the close of business on October 3, 2017 . All distributions paid by the Operating Partnership are declared and paid at the same time as dividends are distributed by the Trust to common shareholders. It has been the Operating Partnership’s policy to declare quarterly distributions so as to allow the Trust to comply with applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), governing REITs. The declaration and payment of quarterly distributions remains subject to the review and approval of the Trust’s Board of Trustees. Our shareholders are entitled to reinvest all or a portion of any cash distribution on their common shares by participating in our Dividend Reinvestment and Share Purchase Plan (“DRIP”), subject to the terms of the plan. Tax Status of Dividends and Distributions Our distributions of current and accumulated earnings and profits for U.S. federal income tax purposes generally are taxable to shareholders as ordinary income. Distributions in excess of these earnings and profits generally are treated as a non-taxable reduction of the shareholders’ basis in the shares to the extent thereof (non-dividend distributions) and thereafter as taxable gain. |
Purchase of Investment Properties | Purchases of Investment Properties A property acquired not subject to an existing lease is treated as an asset acquisition and recorded at its purchase price, inclusive of acquisition costs, allocated between the acquired tangible and intangible assets and assumed liabilities based upon their relative fair values at the date of acquisition. A property acquired with an existing lease is accounted for as a business combination pursuant to the acquisition method in accordance with ASC Topic 805, Business Combinations (“ASC 805”), and assets acquired and liabilities assumed, including identified intangible assets and liabilities, are recorded at fair value. The determination of fair value involves the use of significant judgment and estimation. The Company makes estimates of the fair value of the tangible and intangible acquired assets and assumed liabilities using information obtained from multiple sources as a result of pre-acquisition due diligence and generally includes the assistance of a third party appraiser. The Company estimates the fair value of buildings acquired on an “as-if-vacant” basis and depreciates the building value over the estimated remaining life of the building. The Company determines the allocated value of other fixed assets, such as site improvements, based upon the replacement cost and depreciates such value over the assets’ estimated remaining useful lives as determined at the applicable acquisition date. The fair value of land is determined either by considering the sales prices of similar properties in recent transactions or based on internal analyses of recently acquired and existing comparable properties within the Company’s portfolio. In recognizing identified intangible assets and liabilities in connection with a business combination, the value of above or below-market leases is estimated based on the present value (using an interest rate which reflected the risks associated with the leases acquired) of the difference between contractual amounts to be received pursuant to the leases and management’s estimate of market lease rates measured over a period equal to the estimated remaining term of the lease. The capitalized above-market or below-market lease intangibles are amortized as a reduction or addition to rental income over the estimated remaining term of the respective leases plus the term of any renewal options that the lessee would be economically compelled to exercise. In determining the value of in-place leases, management considers current market conditions and costs to execute similar leases in arriving at an estimate of the carrying costs during the expected lease-up period from vacant to existing occupancy. In estimating carrying costs, management includes real estate taxes, insurance, other operating expenses, estimates of lost rental revenue during the expected lease-up periods, and costs to execute similar leases, including leasing commissions, tenant improvements, legal, and other related costs based on current market demand. The values assigned to in-place leases are amortized to amortization expense over the estimated remaining term of the lease. If a lease terminates prior to its scheduled expiration, all unamortized costs related to that lease are written off, net of any required lease termination payments. The Company calculates the fair value of any long-term debt assumed by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings, which the Company approximates based on the rate it would expect to incur on a replacement instrument on the date of acquisition, and recognizes any fair value adjustments related to long-term debt as effective yield adjustments over the remaining term of the instrument. |
Impairment of Intangible and Long-Lived Assets | Impairment of Intangible and Long-Lived Assets The Company periodically evaluates its long-lived assets, primarily consisting of investments in real estate, for impairment indicators or whenever events or changes in circumstances indicate that the recorded amount of an asset may not be fully recoverable. If indicators of impairment are present, the Company evaluates the carrying value of the related real estate properties in relation to the undiscounted expected future cash flows of the underlying operations. In performing this evaluation, management considers market conditions and current intentions with respect to holding or disposing of the real estate property. The Company adjusts the net book value of real estate properties to fair value if the sum of the expected future undiscounted cash flows, including sales proceeds, is less than book value. The Company recognizes an impairment loss at the time it makes any such determination. If the Company determines that an asset is impaired, the impairment to be recognized is measured as the amount by which the recorded amount of the asset exceeds its fair value. Fair value is typically determined using a discounted future cash flow analysis or other acceptable valuation techniques, which are based, in turn, upon Level 3 inputs, such as revenue and expense growth rates, capitalization rates, discount rates, or other available market data. The Company did not record impairment charges in the three and nine month periods ended September 30, 2017 and 2016 |
Assets Held for Sale and Discontinued Operations | Assets Held for Sale and Discontinued Operations The Company may sell properties from time to time for various reasons, including favorable market conditions. The Company classifies certain long-lived assets as held for sale once the criteria, as defined by GAAP, has been met. Long-lived assets to be disposed of are reported at the lower of their carrying amount or fair value minus cost to sell, and are no longer depreciated. No properties were classified as held for sale as of September 30, 2017 |
Investments in Unconsolidated Entities | Investments in Unconsolidated Entities |
Real Estate Loans Receivable | Real Estate Loans Receivable Real estate loans receivable consists of eleven mezzanine loans and two term loans as of September 30, 2017 . Generally, each mezzanine loan is collateralized by an ownership interest in the respective borrower, while the two term loans are secured by equity interests in two |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand and short-term investments with maturities of three or fewer months from the date of purchase. The Company is subject to concentrations of credit risk as a result of its temporary cash investments. The Company places its temporary cash investments with high credit quality financial institutions in order to mitigate this risk. |
Escrow Reserves | Escrow Reserves The Company is required to maintain various escrow reserves on certain notes payable to cover future property taxes and insurance and tenant improvements costs as defined in each loan agreement. The total reserves as of September 30, 2017 and December 31, 2016 are $1.7 million and $4.3 million |
Deferred Costs | Deferred Costs |
Rental Revenue | Rental Revenue Rental revenue is recognized on a straight-line basis over the terms of the related leases when collectability is reasonably assured. Recognizing rental revenue on a straight-line basis for leases may result in recognizing revenue for amounts more or less than amounts currently due from tenants. Amounts recognized in excess of amounts currently due from tenants, net of related allowances, are included in other assets and were approximately $42.5 million and $32.0 million as of September 30, 2017 and December 31, 2016 , respectively. If the Company determines that collectability of straight-line rents is not reasonably assured, the Company limits future recognition to amounts contractually owed and, where appropriate, establishes an allowance for estimated losses. Allowances recognized against straight line rent were approximately $4.7 million and $0.6 million as of September 30, 2017 and December 31, 2016 |
Expense Recoveries | Expense Recoveries Expense recoveries relate to tenant reimbursement of real estate taxes, insurance, and other operating expenses that are recognized as expense recovery revenue in the period the applicable expenses are incurred. The reimbursements are recorded at gross, as the Company is generally the primary obligor with respect to real estate taxes and purchasing goods and services from third-party suppliers, has discretion in selecting the supplier, and bears the credit risk of tenant reimbursement. |
Derivative Instruments | Derivative Instruments When the Company has derivative instruments embedded in other contracts, it records them either as an asset or a liability measured at their fair value unless they qualify for a normal purchase or normal sale exception. When specific hedge accounting criteria are not met, changes in the Company’s derivative instruments’ fair value are recognized currently in earnings. Changes in the fair market values of the Company’s derivative instruments are recorded in the consolidated statements of income if the derivative instruments do not qualify for, or the Company does not elect to apply for, hedge accounting. If hedge accounting is applied to a derivative instrument, such changes are reported in accumulated other comprehensive income within the consolidated statement of equity, exclusive of ineffectiveness amounts, which are recognized as adjustments to net income. To manage interest rate risk for certain of its variable-rate debt, the Company uses interest rate swaps as part of its risk management strategy. These derivatives are designed to mitigate the risk of future interest rate increases by providing a fixed interest rate for a limited, pre-determined period of time. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of September 30, 2017 , the Company had five outstanding interest rate swap contracts that are designated as cash flow hedges of interest rate risk. For presentational purposes, they are shown as one derivative due to the identical nature of their economic terms. Further detail is provided in Note 7 (Derivatives) . The effective portion of the change in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (“AOCI”) on the consolidated balance sheets and is subsequently reclassified into earnings as interest expense for the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. For the nine months ended September 30, 2017 , the Company recognized a $0.2 million loss as a result of hedge ineffectiveness. Hedge ineffectiveness was insignificant for the three months ended September 30, 2017 and for the three and nine months ended September 30, 2016 |
Income Taxes | Income Taxes The Trust elected to be taxed as a REIT for federal tax purposes commencing with the filing of its tax return for the short taxable year ending December 31, 2013. The Trust had no taxable income prior to electing REIT status. To qualify as a REIT, the Trust must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income to its shareholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Trust generally will not be subject to federal income tax to the extent it distributes qualifying dividends to its shareholders. If the Trust fails to qualify as a REIT in any taxable year, it will be subject to federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost, unless the Internal Revenue Service grants the Trust relief under certain statutory provisions. Such an event could materially adversely affect the Trust’s net income and net cash available for distribution to shareholders. However, the Trust intends to continue to operate in such a manner as to continue qualifying for treatment as a REIT. Although the Trust continues to qualify for taxation as a REIT, in various instances, the Trust is subject to state and local taxes on its income and property, and federal income and excise taxes on its undistributed income. As discussed in Note 1 (Organization and Business) , the Trust conducts substantially all of its operations through the Operating Partnership. As a partnership, the Operating Partnership generally is not liable for federal income taxes. The income and loss from the operations of the Operating Partnership is included in the tax returns of its partners, including the Trust, who are responsible for reporting their allocable share of the partnership income and loss. Accordingly, no provision for income taxes has been made on the accompanying consolidated financial statements. |
Tenant Receivables, Net | Tenant Receivables, Net Tenant accounts receivable are stated net of the applicable allowance. Rental payments under these contracts are primarily due monthly. The Company assesses the collectability of tenant receivables, including straight-line rent receivables, and defers recognition of revenue if collectability is not reasonably assured. The Company bases its assessment of the collectability of rent receivables on several factors, including, among other things, payment history, the financial strength of the tenant, and current economic conditions. If management’s evaluation of these factors indicates it is probable that the Company will be unable to recover the full value of the receivable, the Company provides a reserve against the portion of the receivable that it estimates may not be recovered. At September 30, 2017 and December 31, 2016 , the allowance for doubtful accounts was $1.2 million and $2.4 million |
Management Estimates | Management Estimates |
Contingent Liabilities | Contingent Liabilities |
Reclassifications | Reclassifications |
Segment Reporting | Segment Reporting Under the provision of Codification Topic 280, Segment Reporting , the Company has determined that it has one |
New Accounting Pronouncements | New Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers , which creates a new Topic, Accounting Standards Codification Topic 606. The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This standard is effective for interim or annual periods beginning after December 15, 2017 and allows for either full retrospective or modified retrospective adoption. Early adoption of this standard is permitted for reporting periods beginning after December 15, 2016. The Company anticipates that adoption of ASU 2014-09 will take place on January 1, 2018 via the modified retrospective approach. Under the full retrospective method, the standard would be applied retrospectively to all reporting periods represented on the financial statements. The modified retrospective approach applies the standard in the year of initial application and presents the cumulative effect of prior periods with an adjustment to beginning retained earnings, with no restatement of comparative periods. As leasing arrangements (which are excluded from ASU 2014-09) represent the primary source of revenue for the Company, the impact of adoption will be limited to the Company’s recognition and presentation of non-lease revenues, which are currently reflected as a component of other income. The Company continues to evaluate the impact of ASU 2014-09 to its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases . The update amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. ASU 2016-02 will be effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted. As a result of adopting ASU 2016-02, the Company will recognize all of its operating leases for which it is the lessee, including ground leases, on its consolidated balance sheets. The Company is evaluating the impact of the adoption of ASU 2016-02 on January 1, 2019 to its consolidated financial statements. We expect that certain executory and non-lease components, such as common area maintenance, will need to be accounted for separately from the lease component of the lease, with the lease component continuing to be recognized on a straight-line basis over the lease term. Based on current guidance within the ASU, we intend to account for the executory and non-lease components under the new revenue recognition guidance in ASU 2014-09, upon our adoption of ASU 2016-02. When the revenue for such items is not separately stipulated in the lease, we will separate the lease components of revenue due under leases from the non-lease components. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting . This update simplifies several aspects of accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statements of cash flows. ASU 2016-09 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016. The Company adopted ASU 2016-09 on January 1, 2017, with no material effect on its consolidated financial statements with no adjustments made to prior periods. In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business |
Organization and Business (Tabl
Organization and Business (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Issuance and sale of common shares pursuant to the ATM Program | During the quarterly periods ended March 31, 2017, June 30, 2017 and September 30, 2017 , the Trust’s issuance and sale of common shares pursuant to the ATM Program is as follows (in thousands, except common shares and price): Common shares sold Weighted average price Net proceeds Quarterly period ended March 31, 2017 — $ — $ — Quarterly period ended June 30, 2017 4,150,000 20.07 82,440 Quarterly period ended September 30, 2017 — — — Year to date 4,150,000 $ 20.07 $ 82,440 |
Acquisitions and Dispositions (
Acquisitions and Dispositions (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Schedule of acquisitions and aggregate purchase price | Investment activity for the three months ended September 30, 2017 is summarized below: Property (1) Location Acquisition Date Purchase Price (in thousands) Clearview Cancer Institute (2) Huntsville, AL August 4, 2017 $ 53,250 Northside Cherokee/Towne Lake MOB (2) Atlanta, GA August 15, 2017 37,127 HonorHealth Mesa MOB (2) Mesa, AZ August 15, 2017 4,800 2017 CHI Portfolio - Tranche 2 (5 MOBs) (2) AR, MN, NE, TX August 24, 2017 & August 31, 2017 33,694 NCI Buyout - Great Falls Clinic (4) Great Falls, MT September 21, 2017 1,061 Legends Park MOB & ASC (2) Midland, TX September 27, 2017 30,000 Loan Investments (3) Various Various 30,251 $ 190,183 (1) “MOB” means medical office building and “ASC” means ambulatory surgery center. (2) The Company accounted for three of these facilities as asset acquisitions and capitalized total acquisition costs of $ 0.1 million . The remaining six facilities were accounted for as business combinations pursuant to the acquisition method, with acquisition expense totaling $2.2 million , which includes costs related to properties pursued but not acquired. (3) Loan investments listed here include two separate transactions at a weighted average interest rate of 8.0% . (4) The Company acquired an additional 3.2% interest in the Great Falls Clinic joint venture from the predecessor owner, increasing the Company’s total interest to 85.0% September 30, 2017 , the Trust, through subsidiaries of its Operating Partnership, closed on the below acquisitions: Property (1) Location Acquisition Date Purchase Price (in thousands) Franklin MOB & ASC Franklin, TN October 10, 2017 $ 9,950 Davis Portfolio 2.0 (2 MOBs) Minneapolis, MN October 31, 2017 18,749 $ 28,699 (1) |
Schedule of preliminary purchase price allocations of assets acquired and liabilities assumed | The following table summarizes the acquisition date fair values of the assets acquired and the liabilities assumed, which the Company determined using Level 2 and Level 3 inputs (in thousands): 1st Quarter 2nd Quarter 3rd Quarter Total Land $ 14,190 $ 5,662 $ 5,004 $ 24,856 Building and improvements 187,239 537,952 134,305 859,496 In-place lease intangible 27,670 38,766 19,233 85,669 Above market in-place lease intangible 13,406 2,815 550 16,771 Below market in-place lease intangible (757 ) (2,097 ) (705 ) (3,559 ) Above market in-place ground lease — (4,172 ) (448 ) (4,620 ) Below market in-place ground lease 1,042 3,245 1,471 5,758 Receivables 480 (46 ) — 434 Debt assumed (26,379 ) — — (26,379 ) Issuance of OP Units (44,978 ) — — (44,978 ) Net assets acquired $ 171,913 $ 582,125 $ 159,410 $ 913,448 |
Revenues and net income related to disposition | The following table summarizes revenues and net income related to the Georgia Portfolio for the periods presented (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Revenues — 425 438 1,259 Income before gain on sale of investment properties: — 112 87 308 Gain on sale of investment properties — — 5,303 — Net income — 112 5,390 308 |
Schedule of pro forma combined revenue, net income, and earnings per share-basic and diluted | The following table illustrates the pro forma consolidated revenue, net income, and earnings per share as if the Company had acquired the 2017 acquisitions as of January 1, 2016 (in thousands, except share and per share amounts): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Revenue $ 95,623 $ 89,349 $ 283,152 $ 230,026 Net income 13,174 15,799 37,179 28,509 Net income available to common shareholders 12,635 14,772 35,251 25,743 Earnings per share - basic $ 0.07 $ 0.08 $ 0.22 $ 0.16 Earnings per share - diluted $ 0.07 $ 0.08 $ 0.22 $ 0.16 Weighted average number of shares outstanding - basic 177,847,424 177,847,424 157,542,167 157,542,167 Weighted average number of shares outstanding - diluted 183,298,145 183,298,145 162,480,918 162,480,918 Physicians Realty L.P. The following table illustrates the pro forma consolidated revenue, net income, and earnings per share as if the Company had acquired the 2017 acquisitions as of January 1, 2016 (in thousands, except unit and per unit amounts): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Revenue $ 95,623 $ 89,349 $ 283,152 $ 230,026 Net income 13,174 15,799 37,179 28,509 Net income available to common unitholders 13,015 15,187 36,295 26,535 Earnings per unit - basic $ 0.07 $ 0.08 $ 0.22 $ 0.16 Earnings per unit - diluted $ 0.07 $ 0.08 $ 0.22 $ 0.16 Weighted average number of units outstanding - basic 183,227,405 183,227,405 162,205,324 162,205,324 Weighted average number of units outstanding - diluted 183,298,145 183,298,145 162,480,918 162,480,918 |
Intangibles (Tables)
Intangibles (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
Summary of the carrying amount of intangible assets and liabilities | The following is a summary of the carrying amount of intangible assets and liabilities as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Cost Accumulated Amortization Net Cost Accumulated Amortization Net Assets In-place leases $ 301,293 $ (75,354 ) $ 225,939 $ 222,394 $ (55,605 ) $ 166,789 Above market leases 51,967 (10,613 ) 41,354 35,478 (6,909 ) 28,569 Leasehold interest 712 (168 ) 544 712 (124 ) 588 Below market ground leases 48,636 (1,120 ) 47,516 42,878 (539 ) 42,339 Total $ 402,608 $ (87,255 ) $ 315,353 $ 301,462 $ (63,177 ) $ 238,285 Liabilities Below market leases $ 13,741 $ (3,933 ) $ 9,808 $ 10,297 $ (2,345 ) $ 7,952 Above market ground leases 5,965 (93 ) 5,872 1,345 (44 ) 1,301 Total $ 19,706 $ (4,026 ) $ 15,680 $ 11,642 $ (2,389 ) $ 9,253 |
Summary of the carrying amount of acquired lease intangibles | The following is a summary of the acquired lease intangible amortization for the three and nine month periods ended September 30, 2017 and 2016 , respectively (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Amortization expense related to in-place leases $ 9,453 $ 7,420 $ 26,520 $ 19,855 Decrease of rental income related to above-market leases 1,335 1,276 3,987 3,322 Decrease of rental income related to leasehold interest 15 15 44 45 Increase of rental income related to below-market leases 623 670 1,704 1,218 Decrease of operating expense related to above market ground leases 34 8 49 17 Increase in operating expense related to below market ground leases 208 158 581 299 |
Schedule of future amortization of the acquired lease intangibles | Future aggregate net amortization of the acquired lease intangibles as of September 30, 2017 , is as follows (in thousands): Net Decrease in Revenue Net Increase in Expenses 2017 $ (762 ) $ 9,336 2018 (2,849 ) 34,468 2019 (2,960 ) 30,335 2020 (3,087 ) 27,858 2021 (3,206 ) 26,380 Thereafter (19,226 ) 139,206 Total $ (32,090 ) $ 267,583 |
Other Assets (Tables)
Other Assets (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Other Assets, Unclassified [Abstract] | |
Schedule of other assets | Other assets consisted of the following as of September 30, 2017 and December 31, 2016 (in thousands): September 30, December 31, Straight line rent receivable, net $ 42,510 $ 32,018 Note receivable — 16,618 Interest rate swap 12,760 13,881 Lease inducements, net 14,962 13,255 Prepaid expenses 19,858 8,928 Escrows 1,666 4,334 Leasing commissions, net 2,857 1,858 Earnest deposits 26,770 1,500 Other 2,526 2,795 Total $ 123,909 $ 95,187 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of debt | The following is a summary of debt as of September 30, 2017 and December 31, 2016 (in thousands): September 30, December 31, Fixed interest mortgage notes $ 140,971 (1) $ 90,185 (2) Variable interest mortgage notes 28,603 (3) 33,009 (4) Total mortgage debt 169,574 123,194 $850 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.20%, due September 2020 139,000 401,000 $400 million senior unsecured notes bearing fixed interest of 4.30%, due March 2027 400,000 — $250 million unsecured term borrowing bearing fixed interest of 2.87%, due June 2023 (5) 250,000 250,000 $150 million senior unsecured notes bearing fixed interest of 4.03% to 4.74%, due January 2023 to 2031 150,000 150,000 $75 million senior unsecured notes bearing fixed interest of 4.09% to 4.24%, due August 2025 to 2027 75,000 75,000 Total principal 1,183,574 999,194 Unamortized deferred financing costs (7,917 ) (8,477 ) Unamortized discount (3,715 ) — Unamortized fair value adjustment 275 438 Total debt $ 1,172,217 $ 991,155 (1) Fixed interest mortgage notes, bearing interest from 3.00% to 5.50% , with a weighted average interest rate of 4.41% , and due in 2018, 2019, 2020, 2021, 2022, and 2024 collateralized by 8 properties with a net book value of $216.9 million . (2) Fixed interest mortgage notes, bearing interest from 4.71% to 6.58% , with a weighted average interest rate of 5.44% , and due in 2017, 2018, 2019, 2020, 2021, 2022, and 2032 collateralized by 11 properties with a net book value of $156.7 million . (3) Variable interest mortgage notes, bearing variable interest of LIBOR plus 2.25% to 3.25% , with a weighted average interest rate of 4.24% and due in 2018, collateralized by 3 properties with a net book value of $39.7 million . (4) Variable interest mortgage notes, bearing variable interest of LIBOR plus 2.25% to 3.25% , with a weighted average interest rate of 3.68% and due in 2017 and 2018, collateralized by 4 properties with a net book value of $45.6 million . (5) The Trust’s borrowings under the term loan feature of the Credit Agreement bear interest at a rate which is determined by the Trust’s credit rating, currently equal to LIBOR + 1.80% . The Trust has entered into a pay-fixed receive-variable interest rate swap, fixing the LIBOR component of this rate at 1.07% |
Schedule of adjusted LIBOR rate loans and interest rates based on credit rating | Base Rate Loans, Adjusted LIBOR Rate Loans, and Letters of Credit (each, as defined in the Credit Agreement) will be subject to interest rates, based upon the Trust’s investment grade rating as follows: Credit Rating Margin for Revolving Loans: Adjusted LIBOR Rate Loans and Letter of Credit Fee Margin for Revolving Loans: Base Rate Loans Margin for Term Loans: Adjusted LIBOR Rate Loans and Letter of Credit Fee Margin for Term Loans: Base Rate Loans At Least A- or A3 LIBOR + 0.85% — % LIBOR + 1.40% 0.40 % At Least BBB+ or BAA1 LIBOR + 0.90% — % LIBOR + 1.45% 0.45 % At Least BBB or BAA2 LIBOR + 1.00% 0.10 % LIBOR + 1.55% 0.55 % At Least BBB- or BAA3 LIBOR + 1.20% 0.20 % LIBOR + 1.80% 0.80 % Below BBB- or BAA3 LIBOR + 1.55% 0.60 % LIBOR + 2.25% 1.25 % |
Schedule of principal payments due on debt | Scheduled principal payments due on debt as of September 30, 2017 , are as follows (in thousands): 2017 $ 504 2018 54,195 2019 44,022 2020 168,483 2021 8,048 Thereafter 908,322 Total Payments $ 1,183,574 |
Derivatives (Tables)
Derivatives (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instrument Detail [Abstract] | |
Schedule of Interest Rate Derivatives | The following table summarizes the location and aggregate fair value of the interest rate swaps on the Company’s consolidated balance sheets (in thousands): Total notional amount $ 250,000 Effective fixed interest rate (1) 2.87 % Effective date 7/7/2016 Maturity date 6/10/2023 Asset balance at September 30, 2017 (included in Other assets) $ 12,760 Asset balance at December 31, 2016 (included in Other assets) $ 13,881 (1) 1.07% effective swap rate plus 1.80% |
Accrued Expenses and Other Li31
Accrued Expenses and Other Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of accrued expenses and other liabilities | Accrued expenses and other liabilities consisted of the following as of September 30, 2017 and December 31, 2016 (in thousands): September 30, December 31, Real estate taxes payable $ 20,102 $ 9,300 Prepaid rent 11,920 5,834 Embedded derivative — 5,571 Tenant improvement allowance 3,727 5,315 Accrued interest 3,138 4,905 Security deposits 2,600 4,506 Accrued incentive compensation 3,211 1,405 Contingent consideration 1,166 1,392 Accrued expenses and other 5,557 4,059 Total $ 51,421 $ 42,287 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of non-vested restricted common shares | A summary of the status of the Trust’s non-vested restricted common shares as of September 30, 2017 and changes during the nine month period then ended follow: Common Shares Weighted Average Grant Date Fair Value Non-vested at December 31, 2016 296,785 $ 16.16 Granted 143,593 19.74 Vested (254,395 ) 16.04 Forfeited (550 ) 18.78 Non-vested at September 30, 2017 185,433 $ 19.08 |
Schedule of weighted average grant date fair value assumptions | The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $33.43 per unit for the March 2017 grant using the following assumptions: Volatility 21.5 % Dividend assumption reinvested Expected term in years 2.8 Risk-free rate 1.68 % Share price (per share) $ 19.80 |
Summary of the activity in the restricted share units | The following is a summary of the activity in the Trust’s restricted share units during the nine months ended September 30, 2017 : Executive Awards Trustee Awards Restricted Share Units Weighted Average Grant Date Fair Value Restricted Share Weighted Non-vested at December 31, 2016 235,483 $ 21.84 57,260 $ 17.03 Granted 174,320 29.34 32,831 19.80 Vested (55,680 ) (1) 16.94 (38,871 ) 16.72 Non-vested at September 30, 2017 354,123 $ 26.30 51,220 $ 19.04 (1) Restricted units vested by Company executives in 2017 resulted in the issuance of 105,792 common shares, less 50,112 common shares withheld to cover minimum withholding tax obligations, for multiple employees. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of other financial instruments | The following table presents the fair value of the Company’s financial instruments (in thousands): September 30, December 31, Carrying Amount Fair Value Carrying Amount Fair Value Assets: Real estate loans receivable $ 78,944 $ 78,349 $ 39,154 $ 39,154 Notes receivable $ — $ — $ 16,618 $ 16,618 Derivative assets $ 12,760 $ 12,760 $ 13,881 $ 13,881 Liabilities: Credit facility $ (389,000 ) $ (389,000 ) $ (651,000 ) $ (651,000 ) Notes payable $ (625,000 ) $ (624,741 ) $ (225,000 ) $ (214,584 ) Mortgage debt $ (169,850 ) $ (172,276 ) $ (123,632 ) $ (125,420 ) Derivative liabilities $ — $ — $ (5,571 ) $ (5,571 ) |
Tenant Operating Leases (Tables
Tenant Operating Leases (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Leases [Abstract] | |
Schedule of future minimum rental payments on non-cancelable leases, exclusive of expense recoveries | As of September 30, 2017 , the future minimum rental payments on non-cancelable leases, exclusive of expense recoveries, were as follows (in thousands): 2017 $ 67,739 2018 269,984 2019 266,191 2020 261,454 2021 256,090 Thereafter 1,565,112 Total $ 2,686,570 |
Rent Expense (Tables)
Rent Expense (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Leases [Abstract] | |
Schedule of future minimum lease obligations under non-cancelable ground leases | As of September 30, 2017 , the future minimum lease obligations under non-cancelable parking, air, ground, and office leases were as follows (in thousands): 2017 $ 580 2018 2,401 2019 2,328 2020 2,270 2021 2,283 Thereafter 106,531 Total $ 116,393 |
Credit Concentration (Tables)
Credit Concentration (Tables) - Sales Revenue, Services, Net | 9 Months Ended |
Sep. 30, 2017 | |
Customer Concentration Risk | |
Concentration Risk [Line Items] | |
Schedules of Concentration of Risk, by Risk Factor | The following table summarizes certain information about the Company’s top five tenant credit concentrations as of September 30, 2017 (in thousands): Tenant Total ABR Percent of ABR CHI - Nebraska $ 16,018 5.9 % CHI - KentuckyOne Health 13,120 4.8 % Baylor Scott and White Health 7,402 2.7 % US Oncology 6,689 2.5 % CHI - St. Alexius (North Dakota) 6,235 2.3 % Remaining portfolio 221,917 81.8 % Total $ 271,381 100.0 % |
Geographic Concentration Risk | |
Concentration Risk [Line Items] | |
Schedules of Concentration of Risk, by Risk Factor | The following table summarizes certain information about the Company’s top five geographic concentrations as of September 30, 2017 (in thousands): State Total ABR Percent of ABR Texas $ 46,900 17.3 % Nebraska 17,607 6.5 % Indiana 17,141 6.3 % Kentucky 16,013 5.9 % Arizona 14,629 5.4 % Other 159,091 58.6 % Total $ 271,381 100.0 % |
Earnings Per Share and Earnin37
Earnings Per Share and Earnings Per Unit (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of amounts used in computing basic and diluted earnings per share | The following table shows the amounts used in computing the Trust’s basic and diluted earnings per share (in thousands, except share and per share data): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Numerator for earnings per share - basic: Net income $ 12,539 $ 10,294 $ 29,586 $ 22,902 Net income attributable to noncontrolling interests: Operating Partnership (362 ) (255 ) (823 ) (629 ) Partially owned properties (53 ) (176 ) (379 ) (553 ) Preferred distributions (106 ) (436 ) (505 ) (1,421 ) Numerator for earnings per share - basic $ 12,018 $ 9,427 $ 27,879 $ 20,299 Numerator for earnings per share - diluted: Numerator for earnings per share - basic $ 12,018 $ 9,427 $ 27,879 $ 20,299 Operating Partnership net income 362 255 823 629 Numerator for earnings per share - diluted $ 12,380 $ 9,682 $ 28,702 $ 20,928 Denominator for earnings per share - basic and diluted: Weighted average number of shares outstanding - basic 177,847,424 134,608,396 157,542,167 122,973,862 Effect of dilutive securities: Noncontrolling interest - Operating Partnership units 5,379,981 3,618,988 4,663,157 3,778,014 Restricted common shares 70,740 208,892 85,689 203,020 Restricted share units — 444,511 189,905 441,093 Denominator for earnings per share - diluted: 183,298,145 138,880,787 162,480,918 127,395,989 Earnings per share - basic $ 0.07 $ 0.07 $ 0.18 $ 0.17 Earnings per share - diluted $ 0.07 $ 0.07 $ 0.18 $ 0.16 Three Months Ended Nine Months Ended 2017 2016 2017 2016 Numerator for earnings per unit - basic and diluted: Net income $ 12,539 $ 10,294 $ 29,586 $ 22,902 Net income attributable to noncontrolling interests - partially owned properties (53 ) (176 ) (379 ) (553 ) Preferred distributions (106 ) (436 ) (505 ) (1,421 ) Numerator for earnings per unit - basic and diluted $ 12,380 $ 9,682 $ 28,702 $ 20,928 Denominator for earnings per unit - basic and diluted: Weighted average number of units outstanding - basic 183,227,405 138,227,384 162,205,324 126,751,876 Effect of dilutive securities: Restricted common shares 70,740 208,892 85,689 203,020 Restricted share units — 444,511 189,905 441,093 Denominator for earnings per unit - diluted 183,298,145 138,880,787 162,480,918 127,395,989 Earnings per unit - basic $ 0.07 $ 0.07 $ 0.18 $ 0.17 Earnings per unit - diluted $ 0.07 $ 0.07 $ 0.18 $ 0.16 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | Investment activity for the three months ended September 30, 2017 is summarized below: Property (1) Location Acquisition Date Purchase Price (in thousands) Clearview Cancer Institute (2) Huntsville, AL August 4, 2017 $ 53,250 Northside Cherokee/Towne Lake MOB (2) Atlanta, GA August 15, 2017 37,127 HonorHealth Mesa MOB (2) Mesa, AZ August 15, 2017 4,800 2017 CHI Portfolio - Tranche 2 (5 MOBs) (2) AR, MN, NE, TX August 24, 2017 & August 31, 2017 33,694 NCI Buyout - Great Falls Clinic (4) Great Falls, MT September 21, 2017 1,061 Legends Park MOB & ASC (2) Midland, TX September 27, 2017 30,000 Loan Investments (3) Various Various 30,251 $ 190,183 (1) “MOB” means medical office building and “ASC” means ambulatory surgery center. (2) The Company accounted for three of these facilities as asset acquisitions and capitalized total acquisition costs of $ 0.1 million . The remaining six facilities were accounted for as business combinations pursuant to the acquisition method, with acquisition expense totaling $2.2 million , which includes costs related to properties pursued but not acquired. (3) Loan investments listed here include two separate transactions at a weighted average interest rate of 8.0% . (4) The Company acquired an additional 3.2% interest in the Great Falls Clinic joint venture from the predecessor owner, increasing the Company’s total interest to 85.0% September 30, 2017 , the Trust, through subsidiaries of its Operating Partnership, closed on the below acquisitions: Property (1) Location Acquisition Date Purchase Price (in thousands) Franklin MOB & ASC Franklin, TN October 10, 2017 $ 9,950 Davis Portfolio 2.0 (2 MOBs) Minneapolis, MN October 31, 2017 18,749 $ 28,699 (1) |
Organization and Business - Add
Organization and Business - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | |||
Jul. 31, 2017 | Mar. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |
Class of Stock [Line Items] | ||||
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | ||
Common shares sold (in shares) | 21,500,000 | 17,250,000 | ||
Shares issued upon exercise of the underwriters' overallotment option | 1,500,000 | 2,250,000 | ||
Net proceeds | $ 420.7 | $ 300.8 | ||
Number of partnership units issued | 21,500,000 | 17,250,000 |
Organization and Business - ATM
Organization and Business - ATM Program (Details) - USD ($) | Aug. 05, 2016 | Jul. 31, 2017 | Mar. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2017 | Oct. 31, 2017 |
Class of Stock [Line Items] | ||||||||
Common shares sold (in shares) | 21,500,000 | 17,250,000 | ||||||
Net proceeds | $ 420,700,000 | $ 300,800,000 | ||||||
2016 ATM Program | ||||||||
Class of Stock [Line Items] | ||||||||
Common shares sold (in shares) | 0 | 4,150,000 | 0 | 4,150,000 | ||||
Weighted average price | $ 0 | $ 20.07 | $ 0 | $ 20.07 | ||||
Net proceeds | $ 0 | $ 82,440,000 | $ 0 | $ 82,440,000 | ||||
Subsequent Event | ||||||||
Class of Stock [Line Items] | ||||||||
Sale of stock, remaining authorized amount | $ 216,700,000 | |||||||
Maximum | Private Placement | 2016 ATM Program | ||||||||
Class of Stock [Line Items] | ||||||||
Aggregate offering price of common stock | $ 300,000,000 |
Summary of Significant Accoun41
Summary of Significant Accounting Policies - Principals of Consolidation (Details) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Ownership interest in consolidated subsidiaries (as a percent) | 100.00% |
Summary of Significant Accoun42
Summary of Significant Accounting Policies - Noncontrolling Interests (Details) | Jan. 31, 2017USD ($)shares | Jan. 12, 2017USD ($) | Dec. 17, 2015USD ($)shares | Mar. 01, 2015USD ($) | Feb. 05, 2015USD ($)$ / sharesshares | Sep. 30, 2017USD ($)acquisitions | Jun. 30, 2017acquisitions | Mar. 31, 2017USD ($)shares | Sep. 30, 2017USD ($)Rate | Dec. 31, 2016USD ($) | Apr. 01, 2016USD ($) |
Business Acquisition [Line Items] | |||||||||||
Purchase price | $ 190,183,000 | $ 1,000,000,000 | |||||||||
Percentage of interest held | Rate | 97.10% | ||||||||||
Operating partnership units redemption ratio | 1 | ||||||||||
Fair value of embedded derivative | $ 5,600,000 | $ 0 | $ 0 | $ 5,571,000 | |||||||
Equity method investment received | $ 5,000,000 | ||||||||||
Internal rate of return | 15.00% | ||||||||||
Number Of Acquisitions Funded Through Issuance of OP Units | acquisitions | 0 | 0 | |||||||||
Noncontrolling interest redeemed for cash | $ 1,100,000 | $ 1,100,000 | |||||||||
Operating Partnership | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Purchase price | $ 78,600,000 | ||||||||||
Units | Operating Partnership | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Number of units issued for funding purchase price | shares | 2,247,817 | ||||||||||
Supplemental disclosure of noncash activity - issuance of OP Units and Series A Preferred Units in connection with acquisitions | $ 44,300,000 | ||||||||||
Joint venture, Operating Partnership and Medical Center of New Albany I, LLC | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Supplemental disclosure of noncash activity - issuance of OP Units and Series A Preferred Units in connection with acquisitions | $ 2,800,000 | ||||||||||
Payments to acquire businesses, gross | $ 2,100,000 | ||||||||||
Joint venture, Operating Partnership and Medical Center of New Albany I, LLC | Units | Operating Partnership | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Decrease from redemptions or purchase of interests (in shares) | shares | 38,641 | ||||||||||
Minnetonka MOB | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Number of units issued for funding purchase price | shares | 44,685 | ||||||||||
Consideration transferred, equity interests issued and issuable | $ 9,700,000 | ||||||||||
Minnetonka MOB | Units | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Preferred shares value redeemed | $ 9,800,000 | ||||||||||
Fair value of embedded derivative | $ 2,700,000 | ||||||||||
Nashville MOB | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Number of units issued for funding purchase price | shares | 91,236 | ||||||||||
Payments to acquire businesses, gross | $ 20,000,000 | ||||||||||
Consideration transferred, equity interests issued and issuable | $ 19,700,000 | ||||||||||
Series A Preferred Units | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Cumulative preferred return | 5.00% | ||||||||||
Redeemable noncontrolling interest, equity, preferred, redemption shares in exchange | 1 | ||||||||||
Redemption value (in dollars per share) | $ / shares | $ 200 | ||||||||||
Period in which preferred units will be redeemable | 1 year |
Summary of Significant Accoun43
Summary of Significant Accounting Policies - Dividends and Distributions (Details) - $ / shares | Sep. 21, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 |
Accounting Policies [Abstract] | |||||
Dividends and distributions declared per common share and OP Unit (in dollars per share) | $ 0.23 | $ 0.230 | $ 0.225 | $ 0.685 | $ 0.675 |
Cash dividend distributed to common shareholders (in dollars per share) | $ 0.23 |
Summary of Significant Accoun44
Summary of Significant Accounting Policies - Impairment of Intangible and Long-Lived Assets (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Accounting Policies [Abstract] | ||||
Impairment loss | $ 0 | $ 0 | $ 0 | $ 0 |
Summary of Significant Accoun45
Summary of Significant Accounting Policies - Assets Held for Sale and Discontinued Operations (Details) | Sep. 30, 2017properties |
Accounting Policies [Abstract] | |
Number of properties, held for sale | 0 |
Summary of Significant Accoun46
Summary of Significant Accounting Policies - Real Estate Loans Receivable (Details) | 9 Months Ended |
Sep. 30, 2017buildingsmezzanine_loan | |
Property, Plant and Equipment [Line Items] | |
Number of medical office building developments as collateral for real estate loans receivable | buildings | 2 |
Mezzanine Loan Receivable | |
Property, Plant and Equipment [Line Items] | |
Number of mezzanine loans collateralized | 11 |
Term Loan Receivable | |
Property, Plant and Equipment [Line Items] | |
Number of mezzanine loans collateralized | 2 |
Summary of Significant Accoun47
Summary of Significant Accounting Policies - Escrow Reserves (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Accounting Policies [Abstract] | ||
Escrow deposit | $ 1,666 | $ 4,334 |
Summary of Significant Accoun48
Summary of Significant Accounting Policies - Rental Revenue (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Accounting Policies [Abstract] | ||
Straight line rent receivable, net | $ 42,510 | $ 32,018 |
Allowance against straight line rent | $ 4,700 | $ 600 |
Summary of Significant Accoun49
Summary of Significant Accounting Policies - Derivative Instruments (Details) - Interest Rate Swap $ in Millions | Mar. 07, 2017USD ($) | Sep. 30, 2017USD ($)instruments |
Derivative [Line Items] | ||
Derivative, net hedge ineffectiveness gain (loss) | $ 0.8 | |
Cash Flow Hedging | ||
Derivative [Line Items] | ||
Outstanding interest rate swap contracts designated as cash flow hedges | instruments | 5,000 | |
Derivative, net hedge ineffectiveness gain (loss) | $ 0.2 |
Summary of Significant Accoun50
Summary of Significant Accounting Policies - Tenant Receivables, Net (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Accounting Policies [Abstract] | ||
Allowance for doubtful accounts receivable | $ 1.2 | $ 2.4 |
Summary of Significant Accoun51
Summary of Significant Accounting Policies - Segment Reporting (Details) | 9 Months Ended |
Sep. 30, 2017segment | |
Accounting Policies [Abstract] | |
Number of reportable segments | 1 |
Summary of Significant Accoun52
Summary of Significant Accounting Policies - Impairment on Real Estate Property (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Accounting Policies [Abstract] | ||||
Impairment on investment property | $ 0 | $ 0 | $ 0 | $ 0 |
Acquisitions and Dispositions -
Acquisitions and Dispositions - Investment Activity (Details) $ in Thousands | Sep. 27, 2017USD ($) | Sep. 21, 2017USD ($) | Aug. 31, 2017USD ($) | Aug. 15, 2017USD ($) | Aug. 04, 2017USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)properties | Sep. 30, 2016USD ($) | Jul. 21, 2017 |
Business Acquisition [Line Items] | ||||||||||
Purchase price | $ 190,183 | $ 1,000,000 | ||||||||
Facilities accounted for as asset acquisitions | properties | 3 | |||||||||
Capitalized acquisition costs | $ 100 | |||||||||
Facilities accounted for as business combinations | properties | 6 | |||||||||
Acquisition expenses | 2,184 | $ 4,398 | $ 12,831 | $ 11,031 | ||||||
Clearview Cancer Institute | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Purchase price | $ 53,250 | |||||||||
Northside Cherokee/Towne Lake MOB | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Purchase price | $ 37,127 | |||||||||
HonorHealth Mesa MOB | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Purchase price | $ 4,800 | |||||||||
2017 CHI Portfolio - Tranche 2 (5 MOBs) | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Purchase price | $ 33,694 | |||||||||
NCI Buyout - Great Falls Clinic | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Purchase price | $ 1,061 | |||||||||
Additional interest acquired | 3.20% | |||||||||
Noncontrolling interest ownership percentage | 85.00% | |||||||||
Legends Park MOB & ASC | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Purchase price | $ 30,000 | |||||||||
Loan Investments | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Purchase price | $ 30,251 | |||||||||
Weighted average interest rate | 8.00% | 8.00% |
- Acquisition Date Fair Values
- Acquisition Date Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 |
Business Acquisition [Line Items] | |||
Land | $ 24,856 | ||
Building and improvements | 859,496 | ||
Receivables | 434 | ||
Debt assumed | (26,379) | ||
Issuance of OP Units | (44,978) | ||
Net assets acquired | 913,448 | ||
In-place lease intangible | |||
Business Acquisition [Line Items] | |||
Intangible assets | (85,669) | ||
Above market in-place lease intangible | |||
Business Acquisition [Line Items] | |||
Intangible assets | (16,771) | ||
Below market in-place lease intangible | |||
Business Acquisition [Line Items] | |||
Intangible liabilities | (3,559) | ||
Above market in-place ground lease | |||
Business Acquisition [Line Items] | |||
Intangible liabilities | (4,620) | ||
Below market in-place ground lease | |||
Business Acquisition [Line Items] | |||
Intangible liabilities | 5,758 | ||
Business Combination Acquisition Period One | |||
Business Acquisition [Line Items] | |||
Land | $ 14,190 | ||
Building and improvements | 187,239 | ||
Receivables | 480 | ||
Debt assumed | (26,379) | ||
Issuance of OP Units | (44,978) | ||
Net assets acquired | 171,913 | ||
Business Combination Acquisition Period One | In-place lease intangible | |||
Business Acquisition [Line Items] | |||
Intangible assets | (27,670) | ||
Business Combination Acquisition Period One | Above market in-place lease intangible | |||
Business Acquisition [Line Items] | |||
Intangible assets | (13,406) | ||
Business Combination Acquisition Period One | Below market in-place lease intangible | |||
Business Acquisition [Line Items] | |||
Intangible liabilities | (757) | ||
Business Combination Acquisition Period One | Above market in-place ground lease | |||
Business Acquisition [Line Items] | |||
Intangible liabilities | 0 | ||
Business Combination Acquisition Period One | Below market in-place ground lease | |||
Business Acquisition [Line Items] | |||
Intangible liabilities | $ 1,042 | ||
Business Combination Acquisition Period Two | |||
Business Acquisition [Line Items] | |||
Land | $ 5,662 | ||
Building and improvements | 537,952 | ||
Receivables | (46) | ||
Debt assumed | 0 | ||
Issuance of OP Units | 0 | ||
Net assets acquired | 582,125 | ||
Business Combination Acquisition Period Two | In-place lease intangible | |||
Business Acquisition [Line Items] | |||
Intangible assets | (38,766) | ||
Business Combination Acquisition Period Two | Above market in-place lease intangible | |||
Business Acquisition [Line Items] | |||
Intangible assets | (2,815) | ||
Business Combination Acquisition Period Two | Below market in-place lease intangible | |||
Business Acquisition [Line Items] | |||
Intangible liabilities | (2,097) | ||
Business Combination Acquisition Period Two | Above market in-place ground lease | |||
Business Acquisition [Line Items] | |||
Intangible liabilities | (4,172) | ||
Business Combination Acquisition Period Two | Below market in-place ground lease | |||
Business Acquisition [Line Items] | |||
Intangible liabilities | $ 3,245 | ||
Business Combination Acquisition Period Three | |||
Business Acquisition [Line Items] | |||
Land | 5,004 | ||
Building and improvements | 134,305 | ||
Receivables | 0 | ||
Debt assumed | 0 | ||
Issuance of OP Units | 0 | ||
Net assets acquired | 159,410 | ||
Business Combination Acquisition Period Three | In-place lease intangible | |||
Business Acquisition [Line Items] | |||
Intangible assets | (19,233) | ||
Business Combination Acquisition Period Three | Above market in-place lease intangible | |||
Business Acquisition [Line Items] | |||
Intangible assets | (550) | ||
Business Combination Acquisition Period Three | Below market in-place lease intangible | |||
Business Acquisition [Line Items] | |||
Intangible liabilities | (705) | ||
Business Combination Acquisition Period Three | Above market in-place ground lease | |||
Business Acquisition [Line Items] | |||
Intangible liabilities | (448) | ||
Business Combination Acquisition Period Three | Below market in-place ground lease | |||
Business Acquisition [Line Items] | |||
Intangible liabilities | $ 1,471 |
Acquisitions and Dispositions55
Acquisitions and Dispositions - Dispositions (Details) - Disposal Group, Disposed of by Sale, Not Discontinued Operations $ in Thousands | Aug. 15, 2017USD ($) | Feb. 23, 2017USD ($)ft²buildings | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) |
Peachtree Dunwoody Medical Center [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Land | $ 7,700 | |||||
Lease terms | P90D | |||||
Georgia Portfolio | ||||||
Business Acquisition [Line Items] | ||||||
Number of medical office buildings | buildings | 4 | |||||
Square feet of building being disposed | ft² | 80,292 | |||||
Proceeds from divestiture of businesses | $ 18,200 | |||||
Gain on disposal | $ 5,300 | $ 0 | $ 0 | $ 5,303 | $ 0 | |
Revenues | 0 | 425 | 438 | 1,259 | ||
Income before gain on sale of investment properties: | 0 | 112 | 87 | 308 | ||
Net income | $ 0 | $ 112 | $ 5,390 | $ 308 |
Acquisitions and Dispositions56
Acquisitions and Dispositions - Unaudited Pro Forma Financial Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Business Acquisition [Line Items] | ||||
Revenue | $ 95,623 | $ 89,349 | $ 283,152 | $ 230,026 |
Net income | 13,174 | 15,799 | 37,179 | 28,509 |
Net income available to common shareholders | $ 12,635 | $ 14,772 | $ 35,251 | $ 25,743 |
Earnings per share - basic (in dollars per share) | $ 0.07 | $ 0.08 | $ 0.22 | $ 0.16 |
Earnings per share - diluted (in dollars per share) | $ 0.07 | $ 0.08 | $ 0.22 | $ 0.16 |
Weighted average number of shares outstanding - basic | 177,847,424 | 177,847,424 | 157,542,167 | 157,542,167 |
Weighted average number of shares outstanding - diluted (in shares) | 183,298,145 | 183,298,145 | 162,480,918 | 162,480,918 |
Operating Partnership | ||||
Business Acquisition [Line Items] | ||||
Revenue | $ 95,623 | $ 89,349 | $ 283,152 | $ 230,026 |
Net income | 13,174 | 15,799 | 37,179 | 28,509 |
Net income available to common shareholders | $ 13,015 | $ 15,187 | $ 36,295 | $ 26,535 |
Earnings per unit - basic (in dollars per unit) | $ 0.07 | $ 0.08 | $ 0.22 | $ 0.16 |
Earnings per unit - diluted (in dollars per unit) | $ 0.07 | $ 0.08 | $ 0.22 | $ 0.16 |
Weighted average limited partnership units outstanding, basic (in shares) | 183,227,405 | 183,227,405 | 162,205,324 | 162,205,324 |
Denominator for earnings per unit - diluted (in shares) | 183,298,145 | 183,298,145 | 162,480,918 | 162,480,918 |
Acquisitions and Dispositions57
Acquisitions and Dispositions - Additional Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)parking_deckstateshealthcarepropertycondominium_units | Sep. 30, 2016USD ($) | |
Business Acquisition [Line Items] | ||||
Number of parking decks | parking_deck | 1 | |||
Number of states in which operating healthcare properties and land parcel located | states | 15 | |||
Buyout of redeemable noncontrolling interest | $ 3,900 | |||
Purchase price | $ 190,183 | 1,000,000 | ||
Real estate revenues | 92,999 | $ 70,010 | 246,264 | $ 167,360 |
Net income | 12,539 | $ 10,294 | 29,586 | $ 22,902 |
Loans | ||||
Business Acquisition [Line Items] | ||||
Mortgage loans on real estate, new mortgage loans | $ 38,800 | |||
Series of Individually Immaterial Business Acquisitions | ||||
Business Acquisition [Line Items] | ||||
Number of operating healthcare properties | healthcareproperty | 29 | |||
Number of condominium units | condominium_units | 2 | |||
Payments to acquire businesses, gross | $ 984,000 | |||
Real estate revenues | 18,500 | 25,800 | ||
Net income | $ 5,200 | $ 3,000 |
Intangibles - Summary of Carryi
Intangibles - Summary of Carrying Amount of Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Assets | ||
Cost | $ 402,608 | $ 301,462 |
Accumulated Amortization | (87,255) | (63,177) |
Net | 315,353 | 238,285 |
Liability | ||
Cost | 19,706 | 11,642 |
Accumulated amortization | (4,026) | (2,389) |
Net | 15,680 | 9,253 |
In-place lease intangible | ||
Assets | ||
Cost | 301,293 | 222,394 |
Accumulated Amortization | (75,354) | (55,605) |
Net | 225,939 | 166,789 |
Above market in-place lease intangible | ||
Assets | ||
Cost | 51,967 | 35,478 |
Accumulated Amortization | (10,613) | (6,909) |
Net | 41,354 | 28,569 |
Leasehold interest | ||
Assets | ||
Cost | 712 | 712 |
Accumulated Amortization | (168) | (124) |
Net | 544 | 588 |
Below market in-place ground lease | ||
Assets | ||
Cost | 48,636 | 42,878 |
Accumulated Amortization | (1,120) | (539) |
Net | 47,516 | 42,339 |
Below market in-place lease intangible | ||
Liability | ||
Below market lease, cost | 13,741 | 10,297 |
Below market lease, accumulated amortization | (3,933) | (2,345) |
Below Market Lease, Net | 9,808 | 7,952 |
Above market ground leases | ||
Liability | ||
Cost | 5,965 | 1,345 |
Accumulated amortization | (93) | (44) |
Net | $ 5,872 | $ 1,301 |
Intangibles - Summary of Acquir
Intangibles - Summary of Acquired Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
In-place lease intangible | ||||
Intangibles | ||||
Amortization expense related to in-place leases | $ 9,453 | $ 7,420 | $ 26,520 | $ 19,855 |
Above market in-place lease intangible | ||||
Intangibles | ||||
Decrease of rental income | 1,335 | 1,276 | 3,987 | 3,322 |
Decrease of rental income related to leasehold interest | ||||
Intangibles | ||||
Decrease of rental income | 15 | 15 | 44 | 45 |
Below market in-place lease intangible | ||||
Intangibles | ||||
Increase of rental income related to below-market leases | 623 | 670 | 1,704 | 1,218 |
Decrease of operating expense related to above market ground leases | ||||
Intangibles | ||||
Decrease (increase) of operating expense | 34 | 8 | 49 | 17 |
Below market in-place ground lease | ||||
Intangibles | ||||
Decrease (increase) of operating expense | $ 208 | $ 158 | $ 581 | $ 299 |
Intangibles - Future Aggregate
Intangibles - Future Aggregate Net Amortization of Acquired Lease Intangibles (Details 4) $ in Thousands | Sep. 30, 2017USD ($) |
Future aggregate net amortization of acquired lease intangibles (net decrease in revenue) | |
2,017 | $ (762) |
2,018 | (2,849) |
2,019 | (2,960) |
2,020 | (3,087) |
2,021 | (3,206) |
Thereafter | (19,226) |
Total | (32,090) |
Future aggregate net amortization of acquired lease intangibles (net increase in expenses) | |
2,017 | 9,336 |
2,018 | 34,468 |
2,019 | 30,335 |
2,020 | 27,858 |
2,021 | 26,380 |
Thereafter | 139,206 |
Total | $ 267,583 |
Intangibles - Additional Inform
Intangibles - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | |
Intangibles | ||
Net recognition of loss in rental income from intangible amortization write offs | $ (0.3) | $ (1.3) |
Weighted average amortization period for lease intangibles | 17 years | |
Weighted average amortization period for lease intangible liability | 20 years | |
In-place lease intangible | ||
Intangibles | ||
Finite-lived intangible assets, disposals | 0.4 | $ 3.1 |
Above market lease intangible accumulated amortization written off | $ 0.1 | $ 1.9 |
Other Assets - Schedule of Othe
Other Assets - Schedule of Other Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Other Assets, Unclassified [Abstract] | ||
Straight line rent receivable, net | $ 42,510 | $ 32,018 |
Note receivable | 0 | 16,618 |
Interest rate swap | 12,760 | 13,881 |
Lease inducements, net | 14,962 | 13,255 |
Prepaid expenses | 19,858 | 8,928 |
Escrows | 1,666 | 4,334 |
Leasing commissions, net | 2,857 | 1,858 |
Earnest deposits | 26,770 | 1,500 |
Other | 2,526 | 2,795 |
Total | $ 123,909 | $ 95,187 |
Debt - Summary of Debt (Details
Debt - Summary of Debt (Details) | Jul. 07, 2016Rate | Sep. 30, 2017USD ($)healthcarepropertyRate | Dec. 31, 2016USD ($)propertiesRate | Mar. 07, 2017USD ($) | Jan. 26, 2017 | Aug. 11, 2016USD ($) | Jan. 07, 2016USD ($) |
Debt | |||||||
Long-term debt, gross | $ 1,183,574,000 | $ 999,194,000 | |||||
Unamortized deferred financing costs | (7,917,000) | (8,477,000) | |||||
Unamortized discount | (3,715,000) | 0 | |||||
Unamortized fair value adjustment | 275,000 | 438,000 | |||||
Total principal | 1,172,217,000 | 991,155,000 | |||||
Mortgages | |||||||
Debt | |||||||
Long-term debt, gross | 169,574,000 | 123,194,000 | |||||
Senior notes | |||||||
Debt | |||||||
Effective fixed interest rate | 4.30% | ||||||
Debt instrument, face amount | $ 400,000,000 | $ 75,000,000 | $ 150,000,000 | ||||
Mortgage notes, bearing fixed interest due in 2017, 2018, 2019, 2020, 2021, 2022, 2024, and 2032 | Mortgages | |||||||
Debt | |||||||
Long-term debt, gross | $ 140,971,000 | $ 90,185,000 | |||||
Weighted average interest rate | 4.41% | 5.44% | |||||
Pledged assets, not separately reported, real estate | $ 216,900,000 | $ 156,700,000 | |||||
Pledged assets separately reported real estate pledged as collateral number | 8 | 11 | |||||
Mortgage notes, bearing fixed interest due in 2017, 2018, 2019, 2020, 2021, 2022, 2024, and 2032 | Minimum | Mortgages | |||||||
Debt | |||||||
Interest rate (as a percent) | Rate | 3.00% | 4.71% | |||||
Mortgage notes, bearing fixed interest due in 2017, 2018, 2019, 2020, 2021, 2022, 2024, and 2032 | Maximum | Mortgages | |||||||
Debt | |||||||
Interest rate (as a percent) | Rate | 5.50% | 6.58% | |||||
Mortgage Notes Bearing Variable Interest | Mortgages | |||||||
Debt | |||||||
Long-term debt, gross | $ 28,603,000 | $ 33,009,000 | |||||
Revolving Credit Facility Due September 2020 | $850 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.20%, due September 2020 | |||||||
Debt | |||||||
Long-term debt, gross | $ 139,000,000 | 401,000,000 | |||||
Reference rate (as a percent) | 1.20% | ||||||
Debt instrument, face amount | $ 850,000,000 | ||||||
Senior Unsecured Note Due 2027 | Senior notes | |||||||
Debt | |||||||
Long-term debt, gross | $ 400,000,000 | 0 | |||||
Interest rate (as a percent) | 4.30% | ||||||
Debt instrument, face amount | $ 400,000,000 | ||||||
Unsecured Term Loan Due June 2023 | $250 million unsecured term borrowing bearing fixed interest of 2.87%, due June 2023 (5) | |||||||
Debt | |||||||
Long-term debt, gross | $ 250,000,000 | 250,000,000 | |||||
Interest rate (as a percent) | 2.87% | ||||||
Debt instrument, face amount | $ 250,000,000 | ||||||
Unsecured Notes Bearing Fixed Interest Due January 2023 to 2031 | Senior notes | |||||||
Debt | |||||||
Long-term debt, gross | 150,000,000 | 150,000,000 | |||||
Debt instrument, face amount | $ 150,000,000 | ||||||
Unsecured Notes Bearing Fixed Interest Due January 2023 to 2031 | Minimum | Senior notes | |||||||
Debt | |||||||
Interest rate (as a percent) | 4.03% | ||||||
Unsecured Notes Bearing Fixed Interest Due January 2023 to 2031 | Maximum | Senior notes | |||||||
Debt | |||||||
Interest rate (as a percent) | 4.74% | ||||||
Senior Unsecured Notes Due August 2025 to 2027 | Senior notes | |||||||
Debt | |||||||
Long-term debt, gross | $ 75,000,000 | $ 75,000,000 | |||||
Debt instrument, face amount | $ 75,000,000 | ||||||
Senior Unsecured Notes Due August 2025 to 2027 | Minimum | Senior notes | |||||||
Debt | |||||||
Interest rate (as a percent) | 4.09% | ||||||
Senior Unsecured Notes Due August 2025 to 2027 | Maximum | Senior notes | |||||||
Debt | |||||||
Interest rate (as a percent) | 4.24% | ||||||
Mortgage notes, bearing variable interest due in 2017 and 2018 | Mortgages | |||||||
Debt | |||||||
Weighted average interest rate | Rate | 4.24% | 3.68% | |||||
Pledged assets, not separately reported, real estate | $ 39,700,000 | $ 45,600,000 | |||||
Pledged assets separately reported real estate pledged as collateral number | 3 | 4 | |||||
London Interbank Offered Rate (LIBOR) | Unsecured Term Loan Due June 2023 | $250 million unsecured term borrowing bearing fixed interest of 2.87%, due June 2023 (5) | |||||||
Debt | |||||||
Reference rate (as a percent) | 1.80% | 1.80% | |||||
London Interbank Offered Rate (LIBOR) | Mortgage notes, bearing variable interest due in 2017 and 2018 | Minimum | Mortgages | |||||||
Debt | |||||||
Reference rate (as a percent) | Rate | 2.25% | 2.25% | |||||
London Interbank Offered Rate (LIBOR) | Mortgage notes, bearing variable interest due in 2017 and 2018 | Maximum | Mortgages | |||||||
Debt | |||||||
Reference rate (as a percent) | 3.25% | 3.25% | |||||
Interest Rate Swap | |||||||
Debt | |||||||
Effective fixed interest rate | Rate | 2.87% | ||||||
Interest Rate Swap | London Interbank Offered Rate (LIBOR) | $250 million unsecured term borrowing bearing fixed interest of 2.87%, due June 2023 (5) | |||||||
Debt | |||||||
Interest rate (as a percent) | Rate | 2.87% | ||||||
Effective fixed interest rate | Rate | 1.07% |
Debt - Trust Investment Grade R
Debt - Trust Investment Grade Rating (Details) | 9 Months Ended |
Sep. 30, 2017 | |
Credit rating at least A- or A3 | Adjusted LIBOR rate loans and letter of credit | London Interbank Offered Rate (LIBOR) | |
Debt | |
Reference rate (as a percent) | 0.85% |
Credit rating at least A- or A3 | Adjusted LIBOR Rate Term Loans And Letter Of Credit | London Interbank Offered Rate (LIBOR) | |
Debt | |
Reference rate (as a percent) | 1.40% |
Credit rating at least BBBplus or BAA1 | Adjusted LIBOR rate loans and letter of credit | London Interbank Offered Rate (LIBOR) | |
Debt | |
Reference rate (as a percent) | 0.90% |
Credit rating at least BBBplus or BAA1 | Adjusted LIBOR Rate Term Loans And Letter Of Credit | London Interbank Offered Rate (LIBOR) | |
Debt | |
Reference rate (as a percent) | 1.45% |
Credit rating at least BBB or BAA2 | Adjusted LIBOR rate loans and letter of credit | London Interbank Offered Rate (LIBOR) | |
Debt | |
Reference rate (as a percent) | 1.00% |
Credit rating at least BBB or BAA2 | Adjusted LIBOR Rate Term Loans And Letter Of Credit | London Interbank Offered Rate (LIBOR) | |
Debt | |
Reference rate (as a percent) | 1.55% |
Credit rating at least BBB- or BAA3 | Adjusted LIBOR rate loans and letter of credit | London Interbank Offered Rate (LIBOR) | |
Debt | |
Reference rate (as a percent) | 1.20% |
Credit rating at least BBB- or BAA3 | Adjusted LIBOR Rate Term Loans And Letter Of Credit | London Interbank Offered Rate (LIBOR) | |
Debt | |
Reference rate (as a percent) | 1.80% |
Credit rating below BBB- or BAA3 | Adjusted LIBOR rate loans and letter of credit | London Interbank Offered Rate (LIBOR) | |
Debt | |
Reference rate (as a percent) | 1.55% |
Credit rating below BBB- or BAA3 | Adjusted LIBOR Rate Term Loans And Letter Of Credit | London Interbank Offered Rate (LIBOR) | |
Debt | |
Reference rate (as a percent) | 1.25% |
Term Loan | Credit rating at least A- or A3 | Base rate loans | Base rate | |
Debt | |
Reference rate (as a percent) | 0.40% |
Term Loan | Credit rating at least BBBplus or BAA1 | Base rate loans | Base rate | |
Debt | |
Reference rate (as a percent) | 0.45% |
Term Loan | Credit rating at least BBB or BAA2 | Base rate loans | Base rate | |
Debt | |
Reference rate (as a percent) | 0.55% |
Term Loan | Credit rating at least BBB- or BAA3 | Base rate loans | Base rate | |
Debt | |
Reference rate (as a percent) | 0.80% |
Term Loan | Credit rating below BBB- or BAA3 | Base rate loans | Base rate | |
Debt | |
Reference rate (as a percent) | 1.25% |
$850 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.20%, due September 2020 | Credit rating at least A- or A3 | Base rate loans | Base rate | |
Debt | |
Reference rate (as a percent) | 0.00% |
$850 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.20%, due September 2020 | Credit rating at least BBBplus or BAA1 | Base rate loans | Base rate | |
Debt | |
Reference rate (as a percent) | 0.00% |
$850 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.20%, due September 2020 | Credit rating at least BBB or BAA2 | Base rate loans | Base rate | |
Debt | |
Reference rate (as a percent) | 0.10% |
$850 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.20%, due September 2020 | Credit rating at least BBB- or BAA3 | Base rate loans | Base rate | |
Debt | |
Reference rate (as a percent) | 0.20% |
$850 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.20%, due September 2020 | Credit rating below BBB- or BAA3 | Base rate loans | Base rate | |
Debt | |
Reference rate (as a percent) | 0.60% |
Debt - Scheduled Principal Paym
Debt - Scheduled Principal Payments (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
2,017 | $ 504 | |
2,018 | 54,195 | |
2,019 | 44,022 | |
2,020 | 168,483 | |
2,021 | 8,048 | |
Thereafter | 908,322 | |
Total principal | $ 1,183,574 | $ 999,194 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) | Mar. 07, 2017 | Jul. 07, 2016 | Jun. 10, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Jan. 26, 2017 | Dec. 31, 2016 | Aug. 11, 2016 | Jun. 09, 2016 | Jan. 07, 2016 |
Debt | ||||||||||||
Maturity date | Jun. 10, 2023 | |||||||||||
Long-term debt, gross | $ 1,183,574,000 | $ 1,183,574,000 | $ 999,194,000 | |||||||||
Interest expense, debt | $ 11,400,000 | $ 6,500,000 | $ 31,600,000 | $ 14,000,000 | ||||||||
Credit Agreement Amendment | ||||||||||||
Debt | ||||||||||||
Current borrowing capacity | $ 1,100,000,000 | |||||||||||
Maximum borrowing capacity as a percentage of maximum principal amount | 10.00% | |||||||||||
Accordion feature, increase limit | $ 500,000,000 | |||||||||||
Maximum borrowing capacity under accordion feature | $ 1,600,000,000 | |||||||||||
Prepayment of premium percentage, maximum | 2.00% | |||||||||||
Unused fee (as a percent) | 0.25% | |||||||||||
Credit Agreement Amendment | London Interbank Offered Rate (LIBOR) | ||||||||||||
Debt | ||||||||||||
Reference rate (as a percent) | 1.20% | |||||||||||
Series A | ||||||||||||
Debt | ||||||||||||
Interest rate (as a percent) | 4.09% | 4.03% | ||||||||||
Series B | ||||||||||||
Debt | ||||||||||||
Interest rate (as a percent) | 4.18% | 4.43% | ||||||||||
Series C | ||||||||||||
Debt | ||||||||||||
Interest rate (as a percent) | 4.57% | |||||||||||
Series D | ||||||||||||
Debt | ||||||||||||
Interest rate (as a percent) | 4.74% | |||||||||||
Unsecured Debt | Unsecured Term Loan Due June 2023 | ||||||||||||
Debt | ||||||||||||
Interest rate (as a percent) | 2.87% | 2.87% | ||||||||||
Debt instrument, face amount | $ 250,000,000 | $ 250,000,000 | ||||||||||
Long-term debt, gross | 250,000,000 | $ 250,000,000 | 250,000,000 | |||||||||
Unsecured Debt | Unsecured Term Loan Due June 2023 | London Interbank Offered Rate (LIBOR) | ||||||||||||
Debt | ||||||||||||
Reference rate (as a percent) | 1.80% | 1.80% | ||||||||||
$850 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.20%, due September 2020 | ||||||||||||
Debt | ||||||||||||
Current borrowing capacity | 694,000,000 | $ 694,000,000 | ||||||||||
Amount outstanding | 139,000,000 | 139,000,000 | ||||||||||
Term of extension option | 1 year | |||||||||||
$850 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.20%, due September 2020 | Credit Agreement Amendment | Minimum | ||||||||||||
Debt | ||||||||||||
Current borrowing capacity | $ 750,000,000 | |||||||||||
$850 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.20%, due September 2020 | Credit Agreement Amendment | Maximum | ||||||||||||
Debt | ||||||||||||
Current borrowing capacity | $ 850,000,000 | |||||||||||
Term Loan | ||||||||||||
Debt | ||||||||||||
Amount outstanding | $ 250 | 250,000,000 | 250,000,000 | |||||||||
Term Loan | Credit Agreement Amendment | ||||||||||||
Debt | ||||||||||||
Current borrowing capacity | $ 250,000,000 | |||||||||||
Debt instrument, term | 7 years | |||||||||||
Letter of Credit | ||||||||||||
Debt | ||||||||||||
Amount outstanding | 17,000,000 | 17,000,000 | ||||||||||
Senior notes | ||||||||||||
Debt | ||||||||||||
Effective fixed interest rate | 4.30% | |||||||||||
Debt instrument, face amount | $ 400,000,000 | $ 75,000,000 | $ 150,000,000 | |||||||||
Redemption price, percentage | 99.68% | |||||||||||
Proceeds from issuance of debt | $ 396,100,000 | |||||||||||
Senior notes | Series A | ||||||||||||
Debt | ||||||||||||
Debt instrument, face amount | 25,000,000 | 15,000,000 | ||||||||||
Senior notes | Series B | ||||||||||||
Debt | ||||||||||||
Debt instrument, face amount | $ 25,000,000 | 45,000,000 | ||||||||||
Senior notes | Series C | ||||||||||||
Debt | ||||||||||||
Interest rate (as a percent) | 4.24% | |||||||||||
Debt instrument, face amount | $ 25,000,000 | 45,000,000 | ||||||||||
Senior notes | Series D | ||||||||||||
Debt | ||||||||||||
Debt instrument, face amount | $ 45,000,000 | |||||||||||
Mortgages | ||||||||||||
Debt | ||||||||||||
Long-term debt, gross | $ 169,574,000 | $ 169,574,000 | $ 123,194,000 | |||||||||
Interest Rate Swap | ||||||||||||
Debt | ||||||||||||
Effective fixed interest rate | 2.87% | |||||||||||
Interest Rate Swap | Unsecured Debt | London Interbank Offered Rate (LIBOR) | ||||||||||||
Debt | ||||||||||||
Effective fixed interest rate | 1.07% | |||||||||||
Interest rate (as a percent) | 2.87% | |||||||||||
Operating Partnership | $850 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.20%, due September 2020 | ||||||||||||
Debt | ||||||||||||
Interest rate at end of period (as a percent) | 3.81% | 3.81% | ||||||||||
Operating Partnership | $850 million unsecured revolving credit facility bearing variable interest of LIBOR plus 1.20%, due September 2020 | London Interbank Offered Rate (LIBOR) | ||||||||||||
Debt | ||||||||||||
Reference rate (as a percent) | 1.24% | |||||||||||
Bank SNB National Association | Mortgages | ||||||||||||
Debt | ||||||||||||
Debt default, amount | $ 7,800,000 | $ 7,800,000 |
Derivatives - Location and Aggr
Derivatives - Location and Aggregate Fair Value of Interest Rate Swaps (Details) - USD ($) $ in Thousands | Jul. 07, 2016 | Sep. 30, 2017 | Jan. 26, 2017 |
Derivative [Line Items] | |||
Total notional amount | $ 250,000 | ||
Effective date | Jul. 7, 2016 | ||
Maturity date | Jun. 10, 2023 | ||
Interest Rate Swap | |||
Derivative [Line Items] | |||
Total notional amount | $ 300,000 | ||
Effective fixed interest rate | 2.87% | ||
Unsecured Debt | London Interbank Offered Rate (LIBOR) | Interest Rate Swap | |||
Derivative [Line Items] | |||
Effective fixed interest rate | 1.07% | ||
Unsecured Term Loan Due June 2023 | Unsecured Debt | London Interbank Offered Rate (LIBOR) | |||
Derivative [Line Items] | |||
Reference rate (as a percent) | 1.80% | 1.80% |
Derivatives - Additional Inform
Derivatives - Additional Information (Details) $ in Thousands | Mar. 07, 2017USD ($) | Sep. 30, 2017USD ($)instruments | Jan. 26, 2017USD ($) | Jul. 07, 2016USD ($)Rate |
Derivative [Line Items] | ||||
Derivative, notional amount | $ 250,000 | |||
Interest Rate Swap | ||||
Derivative [Line Items] | ||||
Derivative, net hedge ineffectiveness gain (loss) | $ 800 | |||
Derivative, notional amount | $ 300,000 | |||
Effective fixed interest rate | Rate | 2.87% | |||
Cash Flow Hedging | Interest Rate Swap | ||||
Derivative [Line Items] | ||||
Outstanding interest rate swap contracts designated as cash flow hedges | instruments | 5,000 | |||
Derivative, net hedge ineffectiveness gain (loss) | $ 200 |
Accrued Expenses and Other Li69
Accrued Expenses and Other Liabilities - Schedule of Accrued Expense and Other Liabilities (Details) - USD ($) | Sep. 30, 2017 | Jan. 12, 2017 | Dec. 31, 2016 |
Other Liabilities Disclosure [Abstract] | |||
Real estate taxes payable | $ 20,102,000 | $ 9,300,000 | |
Prepaid rent | 11,920,000 | 5,834,000 | |
Embedded derivative | 0 | $ 5,600,000 | 5,571,000 |
Tenant improvement allowance | 3,727,000 | 5,315,000 | |
Accrued interest | 3,138,000 | 4,905,000 | |
Security deposits | 2,600,000 | 4,506,000 | |
Accrued incentive compensation | 3,211,000 | 1,405,000 | |
Contingent consideration | 1,166,000 | 1,392,000 | |
Accrued expenses and other | 5,557,000 | 4,059,000 | |
Total | $ 51,421,000 | $ 42,287,000 |
Stock-based Compensation - Addi
Stock-based Compensation - Additional Information (Details) - Restricted common shares - 2013 Plan - shares | Aug. 07, 2014 | Jul. 24, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Maximum number of shares authorized | 2,450,000 | 600,000 |
Increase in number of common shares authorized for issuance | 1,850,000 |
Stock-based Compensation - Summ
Stock-based Compensation - Summary of the Status of the Trust's Non-Vested Restricted Common Shares (Details) - 2013 Plan - Restricted common shares | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Non-vested at the beginning of the period (in shares) | shares | 296,785 |
Granted (in shares) | shares | 143,593 |
Vested (in shares) | shares | (254,395) |
Forfeited (in shares) | shares | (550) |
Non-vested at the end of the period (in shares) | shares | 185,433 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Non-vested at beginning of period (in dollars per share) | $ / shares | $ 16.16 |
Granted (in dollars per share) | $ / shares | 19.74 |
Vested (in dollars per share) | $ / shares | 16.04 |
Forfeited (in shares) | $ / shares | 18.78 |
Non-vested at end of period (in dollars per share) | $ / shares | $ 19.08 |
Stock-based Compensation - Rest
Stock-based Compensation - Restricted Common Shares Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Non-cash share compensation | $ 4,976 | $ 3,497 | ||
2013 Plan | Restricted common shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 143,593 | |||
Grant date value | $ 2,800 | |||
Non-cash share compensation | $ 800 | $ 900 | 2,300 | $ 2,800 |
Unrecognized compensation expense | $ 1,800 | $ 1,800 | ||
2013 Plan | Restricted common shares | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 1 year | |||
2013 Plan | Restricted common shares | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years |
Stock-based Compensation - Re73
Stock-based Compensation - Restricted Share Assumptions (Details) - 2013 Plan - Restricted share units (RSUs) | 3 Months Ended |
Sep. 30, 2017$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Volatility | 21.50% |
Expected term in years | 2 years 9 months 18 days |
Risk-free rate | 1.68% |
Share price (per share) | $ 19.80 |
Stock-based Compensation - Re74
Stock-based Compensation - Restricted Share Units Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Percentage of restricted share units issued to trustees | 100.00% | |||||
Non-cash share compensation | $ 4,976 | $ 3,497 | ||||
2013 Plan | Restricted share units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Non-cash share compensation | $ 1,000 | $ 600 | 2,700 | $ 1,500 | ||
Unrecognized compensation expense | $ 6,000 | $ 6,000 | ||||
2013 Plan | Trustee Awards, Restricted Stock Units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in shares) | 32,831 | |||||
Granted (in dollars per share) | $ 19.80 | |||||
2013 Plan | Performance based restricted stock units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 30.00% | |||||
Granted (in dollars per share) | $ 29.34 | |||||
Performance conditions grant date fair value (in dollars per share) | $ 19.80 | |||||
Directors | 2013 Plan | Restricted share units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting period | 2 years | |||||
Number of dividend equivalent included in each award | 1 | |||||
Directors | 2013 Plan | Trustee Awards, Restricted Stock Units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in shares) | 32,831 | |||||
Officers | 2013 Plan | Restricted share units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in shares) | 174,320 | |||||
Vesting period | 3 years | |||||
Officers | 2013 Plan | Market Based Restricted Stock Units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 70.00% | |||||
Granted (in dollars per share) | $ 33.43 |
Stock-based Compensation - Su75
Stock-based Compensation - Summary of Activity in the Trust's Restricted Share Units (Details) | 9 Months Ended | |
Sep. 30, 2017$ / sharesshares | Dec. 31, 2016shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, shares issued (in shares) | 179,208,786 | 135,966,013 |
2013 Plan | Executive Awards, Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, shares issued (in shares) | 105,792 | |
Restricted stock shares issued net of tax withholdings (in shares) | 50,112 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Non-vested at the beginning of the period (in shares) | 235,483 | |
Granted (in shares) | 174,320 | |
Vested (in shares) | (55,680) | |
Non-vested at the end of the period (in shares) | 354,123 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||
Non-vested at beginning of period (in dollars per share) | $ / shares | $ 21.84 | |
Granted (in dollars per share) | $ / shares | 29.34 | |
Vested (in dollars per share) | $ / shares | 16.94 | |
Non-vested at end of period (in dollars per share) | $ / shares | $ 26.30 | |
2013 Plan | Trustee Awards, Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Non-vested at the beginning of the period (in shares) | 57,260 | |
Granted (in shares) | 32,831 | |
Vested (in shares) | (38,871) | |
Non-vested at the end of the period (in shares) | 51,220 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||
Non-vested at beginning of period (in dollars per share) | $ / shares | $ 17.03 | |
Granted (in dollars per share) | $ / shares | 19.80 | |
Vested (in dollars per share) | $ / shares | 16.72 | |
Non-vested at end of period (in dollars per share) | $ / shares | $ 19.04 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) | Sep. 30, 2017USD ($)instruments |
Cash Flow Hedging | Interest Rate Swap | |
Fair value of other financial instruments | |
Outstanding interest rate swap contracts designated as cash flow hedges | instruments | 5,000 |
Fair value, measurements, nonrecurring | |
Fair value of other financial instruments | |
Assets subject to impairment fair value disclosure | $ | $ 0 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Company's Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Assets [Abstract] | ||
Note receivable | $ 0 | $ 16,618 |
Liabilities: | ||
Credit facility | (382,960) | (643,742) |
Notes payable | (619,793) | (224,330) |
Carrying amount | Recurring basis | ||
Assets [Abstract] | ||
Real estate loans receivable | 78,944 | 39,154 |
Note receivable | 0 | 16,618 |
Liabilities: | ||
Credit facility | (389,000) | (651,000) |
Notes payable | (625,000) | (225,000) |
Mortgage debt | (169,850) | (123,632) |
Carrying amount | Interest Rate Swap | Recurring basis | ||
Assets [Abstract] | ||
Derivative assets | 12,760 | 13,881 |
Carrying amount | Embedded derivatives | Recurring basis | ||
Liabilities: | ||
Derivative liabilities | 0 | (5,571) |
Fair value | Recurring basis | ||
Assets [Abstract] | ||
Real estate loans receivable | 78,349 | 39,154 |
Note receivable | 0 | 16,618 |
Liabilities: | ||
Credit facility | (389,000) | (651,000) |
Notes payable | (624,741) | (214,584) |
Mortgage debt | (172,276) | (125,420) |
Fair value | Interest Rate Swap | Recurring basis | ||
Assets [Abstract] | ||
Derivative assets | 12,760 | 13,881 |
Fair value | Embedded derivatives | Recurring basis | ||
Liabilities: | ||
Derivative liabilities | $ 0 | $ (5,571) |
Tenant Operating Leases - Sched
Tenant Operating Leases - Schedule of Future Minimum Rental Payments (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Future minimum rental payments on non-cancelable leases | |
2,017 | $ 67,739 |
2,018 | 269,984 |
2,019 | 266,191 |
2,020 | 261,454 |
2,021 | 256,090 |
Thereafter | 1,565,112 |
Total | $ 2,686,570 |
Rent Expense - Additional Infor
Rent Expense - Additional Information (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($)propertieshealthcareproperty | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)propertieshealthcareproperty | Sep. 30, 2016USD ($) | |
Operating Leased Assets [Line Items] | ||||
Number of properties subject to parking lease | 2 | 2 | ||
Number of properties subject to air space lease | healthcareproperty | 1 | 1 | ||
Number of properties subject to ground leases | 75 | 75 | ||
Number of office space leases | 4 | 4 | ||
Maximum lease terms | 98 years | |||
Operating Expense | Parking, Air And Ground Leases | ||||
Operating Leased Assets [Line Items] | ||||
Rent expenses for parking, air, and ground leases | $ | $ 0.6 | $ 0.5 | $ 1.8 | $ 1.3 |
Rent Expense - Schedule of Futu
Rent Expense - Schedule of Future Minimum Lease Obligations (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Future minimum lease obligations under non-cancelable parking, air, and ground leases | |
2,017 | $ 580 |
2,018 | 2,401 |
2,019 | 2,328 |
2,020 | 2,270 |
2,021 | 2,283 |
Thereafter | 106,531 |
Total | $ 116,393 |
Credit Concentration - Schedule
Credit Concentration - Schedule of ABR (Annualized Base Rent) (Details) - Sales Revenue, Services, Net $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($)Rate | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ | $ 271,381 |
Percent of ABR (annualized base rent) | Rate | 100.00% |
Customer Concentration Risk | CHI - Nebraska | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ | $ 16,018 |
Percent of ABR (annualized base rent) | Rate | 5.90% |
Customer Concentration Risk | CHI - KentuckyOne Health | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ | $ 13,120 |
Percent of ABR (annualized base rent) | Rate | 4.80% |
Customer Concentration Risk | Baylor Scott and White Health | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ | $ 7,402 |
Percent of ABR (annualized base rent) | Rate | 2.70% |
Customer Concentration Risk | US Oncology | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ | $ 6,689 |
Percent of ABR (annualized base rent) | Rate | 2.50% |
Customer Concentration Risk | CHI - St. Alexius (North Dakota) | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ | $ 6,235 |
Percent of ABR (annualized base rent) | Rate | 2.30% |
Customer Concentration Risk | Remaining portfolio | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ | $ 221,917 |
Percent of ABR (annualized base rent) | Rate | 81.80% |
Geographic Concentration Risk | Texas | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ | $ 46,900 |
Percent of ABR (annualized base rent) | Rate | 17.30% |
Geographic Concentration Risk | Nebraska | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ | $ 17,607 |
Percent of ABR (annualized base rent) | Rate | 6.50% |
Geographic Concentration Risk | Indiana | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ | $ 17,141 |
Percent of ABR (annualized base rent) | Rate | 6.30% |
Geographic Concentration Risk | Kentucky | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ | $ 16,013 |
Percent of ABR (annualized base rent) | Rate | 5.90% |
Geographic Concentration Risk | Arizona | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ | $ 14,629 |
Percent of ABR (annualized base rent) | Rate | 5.40% |
Geographic Concentration Risk | Other | |
Concentration Risk [Line Items] | |
Total ABR (annualized base rent) | $ | $ 159,091 |
Percent of ABR (annualized base rent) | Rate | 58.60% |
Credit Concentration - Addition
Credit Concentration - Additional Information (Details) - Sales Revenue, Services, Net | 9 Months Ended |
Sep. 30, 2017Rate | |
Concentration Risk [Line Items] | |
Percent of ABR (annualized base rent) | 100.00% |
Top five tenant relationships | Customer Concentration Risk | |
Concentration Risk [Line Items] | |
Percent of ABR (annualized base rent) | 18.20% |
CHI Portfolio | Customer Concentration Risk | |
Concentration Risk [Line Items] | |
Percent of ABR (annualized base rent) | 19.50% |
Earnings Per Share and Earnin83
Earnings Per Share and Earnings Per Unit - Schedule of Earnings Per Share and Earnings Per Unit (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | ||
Earnings Per Share | |||||
Units excluded from the computation of diluted earnings per share (in shares) | 405,343 | ||||
Numerator for earnings per share - basic: | |||||
Net income | $ 12,539 | $ 10,294 | $ 29,586 | $ 22,902 | |
Operating Partnership | (362) | (255) | (823) | (629) | |
Partially owned properties | [1] | (53) | (176) | (379) | (553) |
Preferred distributions | (106) | (436) | (505) | (1,421) | |
Numerator for earnings per share - basic | 12,018 | 9,427 | 27,879 | 20,299 | |
Numerator for earnings per share - diluted: | |||||
Numerator for earnings per share - basic | 12,018 | 9,427 | 27,879 | 20,299 | |
Operating Partnership net income | 362 | 255 | 823 | 629 | |
Numerator for earnings per share - diluted | $ 12,380 | $ 9,682 | $ 28,702 | $ 20,928 | |
Denominator for earnings per share - basic and diluted: | |||||
Weighted average number of shares outstanding - basic (in shares) | 177,847,424 | 134,608,396 | 157,542,167 | 122,973,862 | |
Effect of dilutive securities: | |||||
Noncontrolling interest - Operating Partnership units (in shares) | 5,379,981 | 3,618,988 | 4,663,157 | 3,778,014 | |
Weighted average number of shares outstanding - diluted (in shares) | 183,298,145 | 138,880,787 | 162,480,918 | 127,395,989 | |
Earnings per share - basic (in dollars per share) | $ 0.07 | $ 0.07 | $ 0.18 | $ 0.17 | |
Earnings per share - diluted (in dollars per share) | $ 0.07 | $ 0.07 | $ 0.18 | $ 0.16 | |
Restricted common shares | |||||
Effect of dilutive securities: | |||||
Effect of dilutive securities, restricted shares and RSUs (in shares) | 70,740 | 208,892 | 85,689 | 203,020 | |
Restricted share units (RSUs) | |||||
Effect of dilutive securities: | |||||
Effect of dilutive securities, restricted shares and RSUs (in shares) | 0 | 444,511 | 189,905 | 441,093 | |
Operating Partnership | |||||
Numerator for earnings per share - basic: | |||||
Net income | $ 12,539 | $ 10,294 | $ 29,586 | $ 22,902 | |
Partially owned properties | [2] | (53) | (176) | (379) | (553) |
Preferred distributions | (106) | (436) | (505) | (1,421) | |
Numerator for earnings per share - basic | 12,380 | 9,682 | 28,702 | 20,928 | |
Numerator for earnings per unit - basic and diluted | $ 12,380 | $ 9,682 | $ 28,702 | $ 20,928 | |
Weighted average limited partnership units outstanding, basic (in shares) | 183,227,405 | 138,227,384 | 162,205,324 | 126,751,876 | |
Numerator for earnings per share - diluted: | |||||
Numerator for earnings per share - basic | $ 12,380 | $ 9,682 | $ 28,702 | $ 20,928 | |
Effect of dilutive securities: | |||||
Denominator for earnings per unit - diluted (in shares) | 183,298,145 | 138,880,787 | 162,480,918 | 127,395,989 | |
Earnings per unit - basic (dollars per share) | $ 0.07 | $ 0.07 | $ 0.18 | $ 0.17 | |
Earnings per unit - diluted (dollars per share) | $ 0.07 | $ 0.07 | $ 0.18 | $ 0.16 | |
Operating Partnership | Restricted common shares | |||||
Effect of dilutive securities: | |||||
Effect of dilutive securities, restricted shares and RSUs (in shares) | 70,740 | 208,892 | 85,689 | 203,020 | |
Operating Partnership | Restricted share units (RSUs) | |||||
Effect of dilutive securities: | |||||
Effect of dilutive securities, restricted shares and RSUs (in shares) | 0 | 444,511 | 189,905 | 441,093 | |
[1] | Includes amounts attributable to redeemable noncontrolling interests. No such adjustments are required for the three and nine months ended September 30, 2016 | ||||
[2] | Includes amounts attributable to redeemable noncontrolling interests. No such adjustments are required for the three and nine months ended September 30, 2016 |
Subsequent Events - Closed Acqu
Subsequent Events - Closed Acquisitions (Details) - USD ($) $ in Thousands | Oct. 10, 2017 | Oct. 31, 2017 | Sep. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2017 |
Subsequent Event [Line Items] | |||||
Purchase price | $ 190,183 | $ 1,000,000 | |||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Purchase price | $ 28,699 | ||||
Operating Partnership | |||||
Subsequent Event [Line Items] | |||||
Purchase price | $ 78,600 | ||||
Operating Partnership | Subsequent Event | Franklin MOB & ASC | |||||
Subsequent Event [Line Items] | |||||
Purchase price | $ 9,950 | ||||
Operating Partnership | Subsequent Event | Davis Portfolio 2.0 (2 MOBs) | |||||
Subsequent Event [Line Items] | |||||
Purchase price | $ 18,749 |