Completes $841 Million of Healthcare Real
Estate Investments for 2015
Introduces Acquisition Guidance of $750
Million to $1.0 Billion for 2016
Physicians Realty Trust (NYSE:DOC) (the “Company”), a
self-managed healthcare properties REIT, announced today the
closing of $152.8 million of medical real estate investments, made
directly or indirectly through its operating partnership (defined
below), during the fourth quarter of 2015. Total investment
activity for 2015 was $841 million, representing 103% growth in
gross real estate assets year over year.
Fourth Quarter 2015 Investments
The Company previously announced in October 2015 the
acquisitions of the Catalyst Portfolio, the Truman Medical Center
Mezz Loan, the Arete Surgical Center, the Cambridge Professional
Center, and the Great Falls Replacement Surgical Hospital Mezz
Loan, for an aggregate purchase price of approximately $53.5
million. In addition to these previously announced acquisitions,
the Company also completed the $99.3 million of acquisitions
described below:
HonorHealth 44th Street. On November 13, 2015, the Company
closed on the 15 year sale-leaseback of a 27,270 medical facility
property with HonorHealth (S&P: “A-”) in Phoenix, Arizona, for
a purchase price of approximately $7.2 million. The facility is
100% leased by HonorHealth. The first year unlevered cash yield on
this investment is expected to be approximately 6.3%.
Mercy Medical Center. On December 1, 2015, the Company
closed on the acquisition of a 30,000 medical office building in
Fenton, Missouri for a purchase price of approximately $9.9 million
that is 100% leased to Mercy Health System (S&P: “AA-“), a
member of the Sisters of Mercy Health System, St. Louis, Inc., one
of the largest Catholic healthcare systems in the United States.
The first year unlevered cash yield on this investment is expected
to be approximately 6.5%.
Nashville MOB. On December 17, 2015, the Company entered
into and closed the contribution agreement with the owner of a
newly constructed approximately 110,000 square foot medical office
building ("MOB") anchored by a major physician group in Nashville,
Tennessee in exchange for approximately $45.4 million paid in
Series A Participating Redeemable Preferred Units of the Operating
Partnership and cash to pay off the existing debt encumbered by the
facility. The Class A Nashville MOB is 100% leased to multiple
tenants under long-term leases. Once all tenants take occupancy
(expected in June 2016), the first year stabilized unlevered cash
yield on this investment is expected to be approximately 6.0%.
Hillside Medical Center - Suite 100. On December 18, 2015,
the Company completed the acquisition of the final 16,669 square
foot condominium interest in the Hillside Medical Center in
Hanover, Pennsylvania for a purchase price of approximately $4.2
million. The Company now owns 100% of this medical office facility,
which is 100% occupied. Hanover Hospital leases 60% of this
facility. The Company's aggregate investment in this property is
approximately $15.6 million, and the first year unlevered cash
yield is expected to be approximately 7.2%.
KSF Orthopaedic. On December 22, 2015, the Company
completed the acquisition of a 49,868 square foot medical office
building in Houston, Texas, primarily leased to a prominent
orthopedic group and affiliates of United Surgical Partners
International, Inc., a subsidiary of Tenet Healthcare (NYSE:THC).
The purchase price was approximately $6.3 million, and the first
year unlevered cash yield on this investment is expected to be
approximately 7.2%.
Great Falls Clinic. On December 29, 2015, the Company
completed the acquisition of an approximate 75% interest in the
108,000 square foot medical office building located on the campus
of the Great Falls Clinic and Hospital in Great Falls, Montana, in
partnership with the physicians of Great Falls Clinic. This
facility is 100% occupied and was acquired for a total purchase
price of approximately $24.2 million. The first year unlevered cash
yield is expected to be approximately 6.8%.
Randall Road MOB - Suites 170, 320, 380. During December 2015
and January 2016, the Company completed the purchase of three
additional condominium interests in the Randall Road Medical Office
Facility, located in Elgin, Illinois. Suites 170 and 320 were
purchased for a combined total of $0.9 million in December 2015 and
Suite 380 was purchased for $0.7 million in January 2016. The
facility, which is adjacent to Advocate healthcare system’s Sherman
hospital, is now 95% owned by the Company, and is 100% occupied.
The Company's aggregate investment is approximately $16.4 million,
and the first year unlevered cash yield is expected to be
approximately 8.1%. The Company expects to complete the purchase of
the last remaining condominium unit during 2016.
The remaining fourth quarter investment activity of roughly $1.0
million was for additional draws on an existing construction
loan.
Pending Transactions
In addition to the properties acquired and real estate mezzanine
and construction loan investments executed during the fourth
quarter of 2015, the Company acquired Randall Road MOB Suite 380
detailed above as well as entered into definitive agreements, made
directly or indirectly through its operating partnership, to make 5
acquisitions of 7 healthcare properties. The properties, located in
5 states, represent an aggregate total of approximately $99.6
million in pending acquisitions.
- Great Falls Replacement Surgical
Hospital, Great Falls, Montana: The Company provided a mezzanine
loan in the amount of approximately $4.5 million to construct a
replacement surgical facility, which has now been completed,
containing approximately 63,886 square feet and adjacent to the
Company’s Great Falls Clinic medical office facility described
above. This new facility is replacing an existing surgical facility
moving it to a location more efficient to the physician owners and
in closer proximity with the patients they serve. The Company
entered into a purchase agreement to acquire the facility for a
purchase price of approximately $29 million, with a first year
unlevered yield expected to be approximately 8.8%. The building is
expected to be 100% occupied.
- St. Vincent - Naab, Indianapolis,
Indiana: This 40,936 square foot medical office building is located
on the campus of St. Vincent Hospital, in Indianapolis, Indiana.
St. Vincent is a flagship hospital in Ascension Health (S&P:
“AA+”). The multi-tenant facility houses services in the areas of
women's health, oncology, and diagnostic imaging and is anchored by
St. Vincent. The purchase price is approximately $8.5 million, with
a first year unlevered yield expected to be approximately 6.8%. The
building is 100% occupied.
- Park Nicollet Clinic, Chanhassen,
Minnesota: This 56,600 square foot medical office building is
located in Chanhassen, a suburb of Minneapolis. This single tenant
MOB is 100% leased to and occupied by the Park Nicollet Clinic, a
subsidiary affiliate of HealthPartners (S&P, “A”). The purchase
price is approximately $18.6 million, with a first year unlevered
yield expected to be approximately 6.6%.
- Riverview Medical Center: This 73,465
square foot medical office building is 100% leased to and occupied
by the Fairview Health System (S&P, "Baa2"), located in
Lancaster, Ohio. The purchase price is approximately $12.9 million,
with a stabilized first year unlevered cash yield expected to be
approximately 7.5%.
- Birmingham, Alabama MOBs: This
portfolio of 3 on-campus medical office buildings containing
approximately 224,876 square feet of medical office facilities is
located on the campus of a national health system (S&P: “AA+”)
hospital, in Birmingham, Alabama. The multi-tenant facility is 93%
occupied, with 24% anchored by the hospital and the balance
occupied by physicians on the medical staff of the hospital. The
purchase price is approximately $30.6 million, with a first year
unlevered cash yield expected to be approximately 7.2%.
In addition to the above pending transactions, we have executed
8 non-binding letters of intent (LOIs) to acquire 16 facilities in
7 states, for purchase prices aggregating approximately $167.4
million.
Each pending acquisition described in this press release is
subject to customary closing conditions and the non-binding letters
of intent are subject to negotiation and execution of definitive
agreements and customary closing conditions and there can be no
assurance the Company will complete any of these transactions or
acquire any of these buildings.
John T. Thomas, President and Chief Executive Officer stated,
“We continue to grow Physicians Realty Trust in a prudent manner,
focusing on high quality real estate, anchored by what we believe
to be excellent health systems and physician practices. We more
than doubled the Company's gross real estate assets in 2015. In
addition, we were one of the few healthcare real estate investment
trusts that produced a positive total shareholder return for the
2015 calendar year, measured by both stock appreciation and
dividends paid. The vast majority of the investments completed in
2015 and pending investments for 2016 are a result of management's
relationships with physicians, and health systems, and their
advisers. We anticipate similar growth in 2016, as we expect to
complete, including the pending investments announced today,
between $750 million to $1 billion of total real estate investments
in 2016, subject to favorable capital market conditions.”
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
is a Maryland real estate investment trust and has elected to be
taxed as a REIT for U.S. federal income tax purposes. 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 controlled by the Operating Partnership.
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.
Forward-Looking Statements
This press release contains statements that are “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by the use of words such as
“anticipate”, “believe”, “expect”, “estimate”, “plan”, “outlook”,
and “project” and other similar expressions that predict or
indicate future events or trends or that are not statements of
historical matters. These forward looking statements include any
statements regarding the Company’s strategic and operational plans.
Forward looking statements should not be read as a guarantee of
future performance or results, and will not necessarily be accurate
indications of the times at, or by, which such performance or
results will be achieved. Forward looking statements are based on
information available at the time those statements are made and/or
management’s good faith belief as of that time with respect to
future events, and are subject to risks and uncertainties that
could cause actual performance or results to differ materially from
those expressed in or suggested by the forward looking statements.
These forward looking statements include any statements regarding
the Company’s strategic and operational plans. These
forward-looking statements are subject to various risks and
uncertainties, not all of which are known to the Company and many
of which are beyond the Company’s control, which could cause actual
results to differ materially from such statements. These risks and
uncertainties are described in greater detail in the Company’s
filings with the Securities and Exchange Commission (the
"Commission"), including, without limitation, the Company’s annual
and periodic reports and other documents filed with the Commission.
Unless legally required, the Company disclaims any obligation to
update any forward-looking statements, whether as a result of new
information, future events or otherwise. The Company undertakes no
obligation to update these statements after the date of this
release.
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version on businesswire.com: http://www.businesswire.com/news/home/20160119006848/en/
Physicians Realty TrustJohn T. Thomas, 214-549-6611President and
CEOorJeff N. Theiler, 414-367-5610EVP and CFO
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