Physicians Realty Trust (NYSE: DOC) (the “Company,” the “Trust,”
“we,” “our,” “us,” and “DOC”), a self-managed healthcare real
estate investment trust, announced today the execution of purchase
and sale agreements to acquire six medical office facilities,
including four that are on the campus of hospitals owned by
investment grade rated health systems, for a total purchase price
of approximately $189.4 million in two separate transactions.
In one transaction, the Company is acquiring three on-campus
medical office facilities totaling approximately 269,393 square
feet, which are 97.3% occupied, for an aggregate purchase price of
approximately $100.7 million. These buildings are located in a
major metropolitan market in the Southeast on the campus of two
separate hospitals owned by an investment grade rated health
system. The hospitals lease approximately 40% of the space, with
the remaining space leased to physicians and other providers. The
closing of this acquisition is expected to occur in the fourth
quarter of 2017, producing an expected first year cash yield of
approximately 5.5%.
This acquisition is the result of the exercise of certain rights
of first refusal by the health system in conjunction with a
recently announced portfolio sale. While those rights were executed
by the health system at the pricing established in the portfolio
sale, we have negotiated new leases with the health system which
increased the rent per square foot, reduced vacancy by nearly 8%,
and extended the weighted average lease term across the three
properties.
John T. Thomas, President and Chief Executive Officer of the
Trust, commented, “The pending acquisition of these high quality
medical office facilities demonstrates the effectiveness of our
continued efforts to grow and improve one of the finest medical
office portfolios in the United States. These potential investments
are a result of our relationship-focused approach to ownership – a
strategy which we believe produces the highest quality medical
office real estate investments for the long-term benefit of our
company and shareholders.”
“The acquisition of these facilities represents the latest
transaction in which a health system has chosen Physicians Realty
Trust as the owner of its real estate assets through the execution
of rights of first refusal. In the course of negotiations directly
with the health system, the hospitals agreed to lease enhancements
to increase the occupancy, leasable term, and overall yield on the
investment relative to the terms of the health system’s original
sale agreement. We have worked hard to earn a reputation with our
provider clients, that when they have a choice of who owns their
most important outpatient care facilities, they choose Physicians
Realty Trust,” Mr. Thomas concluded.
We also announce today the execution of purchase and sale
agreements relating to three additional medical office facilities
in the Minneapolis-St. Paul market, developed by The Davis Group.
The crown jewel of the investment is the Hazelwood Medical Commons,
a brand new 147,926 rentable square foot medical office facility
that is 90% leased. The facility is adjacent to St. John’s
Hospital, part of the Fairview Health System (Moody’s: “A2”), which
leases approximately 110,000 rentable square feet for an ambulatory
surgery center, imaging, breast center, primary care, and physician
office space. Other tenants include a large OB/GYN physician group,
a urology group, and a pathology lab. The remaining two medical
office facilities are strategically located and represent an
aggregate of 55,793 rentable square feet. The first is just off the
campus of Fairview’s Southdale Hospital, and is 100% occupied, with
a large dermatology group as the anchor tenant, leasing 79% of the
facility. The second is a recently developed off-campus medical
office facility that is 90% leased, anchored by Noran Neurological,
primarily for use by its employed neurologists, and also occupied
by a specialty practice group owned by HealthPartners (Moody’s:
“A2”).
The total purchase price for the three facilities is
approximately $88.7 million, with an expected first year cash yield
of approximately 5.4%. The Davis Group will manage these facilities
for the Company. We expect to close the acquisition of the smaller
two facilities in the fourth quarter of 2017 in all-cash
transactions, and Mr. Davis will contribute the Hazelwood Medical
Commons facility, in exchange for Series A preferred units of our
operating partnership, in a transaction expected to close early in
2018.
Mr. Thomas added, “We are proud to expand our relationship with
Mark Davis and The Davis Group in the Twin Cities as they continue
to develop and deliver high quality medical office facilities to
their health system clients and providers, and we expect to have
the opportunity to acquire those facilities in the future.”
The pending acquisitions described in this press release are
subject to customary closing conditions. Accordingly, there can be
no assurance we will complete the acquisition of any of the
properties.
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 the 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.
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”,
“continue”, 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
may include statements regarding the Company’s strategic and
operational plans, the Company’s ability to generate internal and
external growth, the future outlook, anticipated cash returns, cap
rates or yields on properties, anticipated closing of property
acquisitions, and ability to execute its business plan. While
forward-looking statements reflect our good faith beliefs, they are
not guarantees of future performance. 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 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 and
the Operating Partnership's filings with the Securities and
Exchange Commission (the “Commission”), including, without
limitation, the Company’s and the Operating Partnership'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 after the date of this
release, whether as a result of new information, future events or
otherwise. For a description of factors that may cause the
Company’s and the Operating Partnership's actual results or
performance to differ from its forward-looking statements, please
review the information under the heading “Risk Factors” included in
the Company’s and the Operating Partnership's Annual Report on
Form 10-K for the fiscal year ended December 31, 2016
filed with the Commission on February 24, 2017 and in the Company’s
and the Operating Partnership's Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 2017 filed with the Commission
on May 5, 2017.
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version on businesswire.com: http://www.businesswire.com/news/home/20170926005996/en/
Physicians Realty TrustJohn T. Thomas, 214-549-6611President and
CEOjtt@docreit.comorJeffrey N. Theiler, 414-367-5610Executive Vice
President and CFOjnt@docreit.com
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