Executed Purchase and Sale Agreements
Totaling $166.0 Million
Physicians Realty Trust (NYSE: DOC) (the “Company,” the “Trust,”
“we,” “our,” “us,” and “DOC”), a self-managed healthcare real
estate investment trust, is announcing that the Company has
completed acquisitions of eight medical office facilities since
June 30, 2017. The facilities represent approximately 417,753
square feet with a total purchase price of $129.7 million at an
average first year cash yield of 6.1%, and bring year to date
investment activity to $966.2 million. The Company is also
announcing fully executed purchase and sale agreements to acquire
an additional two medical office facilities totaling approximately
390,033 square feet for $166.0 million at an average first year
cash yield of 4.8%.
John T. Thomas, President and Chief Executive Officer of the
Trust, commented, “Our growth plans are not only intact, they are
thriving. We have and continue to grow and improve the finest
medical office portfolio in the United States. As we have
throughout our 4 year history, our growth continues to come from
our deep-seated relationships in the healthcare industry and
off-market negotiated transactions. We believe this strategy
produces the highest quality medical office real estate investments
at the best returns for our company and shareholders. We are well
on track to achieve our 2017 acquisition guidance of $1.2 to $1.4
billion of new investments at very attractive yields. These
investments also reflect our continued effort to source and acquire
assets anchored by strong credits, occupying younger, larger,
strategically located real estate to meet the health needs of the
communities they serve for years to come.”
“We also recognize the tireless and hard work of our providers
located in the Houston, Texas area. While none of our medical
facilities in the area suffered any material damage or flooding
from Hurricane Harvey, the providers who work in our facilities and
the patients that depend on them for care, have suffered greatly.
Our hearts and prayers continue to be with them as they recover,
and we are happy to report that our facilities are fully
operational to provide them access to care as and when needed,” Mr.
Thomas continued. “We have also been working with our tenants in
the path of Hurricane Irma to prepare, and pray for the safety and
well-being of their families and patients. We are assessing each of
our facilities in the aftermath, and will provide an update of any
material damage or interruption of operations as our providers
begin to return to work.”
Recent Acquisitions
Clearview Cancer Institute (CCI) - On August 4, 2017, the
Company closed on the acquisition of a 112,986 square foot medical
office facility in Huntsville, Alabama for a purchase price of
approximately $53.3 million. This facility is 100% leased by the
14-physician CCI practice and is northern Alabama’s leading cancer
treatment facility. One of the top five fastest growing cities in
the Southeast, Huntsville is known for its high tech industry,
stemming from its deep history with NASA and the Marshall Space
Flight Center. This acquisition was brought to DOC by Anchor Health
Properties who currently manages the DOC-owned Maury Regional MOB
in Spring Hill, Tennessee. CCI was purpose-built for the tenant’s
hematology and oncology needs and features heavy clinical use
services including three linear accelerators, chemotherapy
treatment centers, and imaging. The practice has existing
relationships with all hospitals in northern Alabama, and DOC’s new
acquisition is the flagship practice location, which also has two
other satellite locations. The first year unlevered yield on this
investment is expected to be approximately 6.3%.
Northside Cherokee / Towne Lake - On August 15, 2017, the
Company closed on the acquisition of a 102,977 square foot medical
office facility in Atlanta, Georgia for a purchase price of
approximately $38.0 million. This facility is 100% leased to
Northside Hospital through a long-term, NNN lease extending through
2028. Onsite services include urgent care, cardiology, general
surgery, primary care, family medicine, urology, and diagnostic
imaging services. Northside Hospital is one of Georgia’s largest
and most respected health systems and is committed to balancing
clinical excellence with safe, high-quality, compassionate patient
care, serving more than 2.5 million patients annually through three
hospitals, over 150 outpatient locations, and nearly 15,000
employees. Towne Lake was in the original Duke Realty Healthcare
portfolio and was brought to DOC by Northside after it exercised
its Right of First Refusal. Northside matched the price allocated
to the facility by the potential Buyer and offered DOC additional
lease enhancements. The stabilized unlevered yield on this
investment is expected to be approximately 5.1%.
HonorHealth Mesa MOB - On August 15, 2017, the Company closed on
the acquisition of a 14,400 square foot medical office facility in
Mesa, Arizona for a purchase price of approximately $4.8 million.
This facility is 100% leased and is a full-service primary care
facility, with HonorHealth’s build-out completed just last year.
HonorHealth offers convenient access to healthcare with a large
network of high-quality primary care and specialty physicians, as
well as other healthcare providers. The health system was formed in
March 2015 after the merger of Scottsdale Healthcare and the John
C. Lincoln Health Network and now encompasses more than 3,400
expert physicians, 11,600 dedicated employees, and over 3,000
caring volunteers working in partnership. HonorHealth is rated “A2”
by Moody’s. This closing marks DOC’s fifth transaction with
HonorHealth. The first year unlevered yield on this investment is
expected to be approximately 6.0%.
CHI Tranche 2 (five properties) - On August 24, 2017 and August
31, 2017, the Company closed on a total of five properties, located
in four states, comprising of 187,390 square feet, for a purchase
price of approximately $33.7 million. These facilities are 97%
leased on a weighted average basis and are part of the Catholic
Health Initiatives (“CHI”) MOB portfolio. CHI is a nonprofit,
faith-based health system and is the nation’s third-largest
nonprofit health system, and is rated “Baa1” by Moody’s. CHI
operates in 17 states, comprising 104 hospitals, including four
academic health centers and major teaching hospitals as well as 30
critical-access facilities. These properties represent the five
remaining properties of the second CHI tranche. The first year
unlevered blended yield on these five properties is expected to be
approximately 6.8%.
Pending Acquisitions
Northside Center Pointe I & II - As previously announced,
the Company has entered into a contract to purchase a medical
office facility located in Atlanta, Georgia comprising of 363,174
square feet for a purchase price of $156.0 million. Upon closing on
Northside Center Pointe I & II, the first year unlevered cash
yield is expected to be 4.7%. The company expects the acquisition
of Northside Center Pointe I & II will be completed on or
before September 15, 2017.
Franklin ASC/MOB - The Company has entered into a contract to
purchase a medical office facility located in Franklin, Tennessee
comprising of 26,859 square feet for a purchase price of $10.0
million. The facility is anchored by an ambulatory surgery center
owned by joint venture including USPI, St. Thomas Hospital (a
member of Ascension Health (Moody’s: “Aa2”) and physicians who
perform surgery at the facility. This is our 12th facility anchored
by USPI, a subsidiary of Tenet Health (NYSE:THC). Upon closing, the
first year unlevered cash yield on this investment is expected to
be 6.7%.
About Physicians Realty Trust
Physicians Realty Trust is a self-managed healthcare real estate
company organized to acquire, selectively develop, own and manage
healthcare properties that are leased to physicians, hospitals and
healthcare delivery systems. The Company invests in real estate
that is integral to providing high quality healthcare. The Company
conducts its business through an UPREIT structure in which its
properties are owned by Physicians Realty L.P., a Delaware limited
partnership (the “operating partnership”), directly or through
limited partnerships, limited liability companies or other
subsidiaries. The Company is the sole general partner of the
operating partnership and, as of June 30, 2017, owned approximately
96.7% of the partnership interests in our operating partnership
(“OP Units”).
Investors are encouraged to visit the Investor Relations portion
of the Company’s website (www.docreit.com) for additional
information, including annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and amendments to
those reports filed or furnished pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act of 1934, as amended, press releases,
supplemental information packages and investor presentations.
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version on businesswire.com: http://www.businesswire.com/news/home/20170911006252/en/
Physicians Realty TrustJohn T. ThomasPresident and CEO(214)
549-6611jtt@docreit.comorJeffrey N. TheilerExecutive Vice President
and CFO(414) 367-5610jnt@docreit.com
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