10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number: 000-54675

CARTER VALIDUS MISSION CRITICAL REIT, INC.

(Exact name of registrant as specified in its charter)

Maryland	27-1550167
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)
4890 West Kennedy Blvd., Suite 650
Tampa, FL 33609	(813) 287-0101
(Address of Principal Executive Offices; Zip Code)	(Registrant’s Telephone Number)

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of November 16, 2015, there were approximately 180,703,000 shares of common stock of Carter Validus Mission Critical REIT, Inc. outstanding.

CARTER VALIDUS MISSION CRITICAL REIT, INC.

(A Maryland Corporation)

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION (Unaudited)		3
Item 1.	Condensed Consolidated Financial Statements		3
	Condensed Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014		3
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2015 and 2014		4
	Condensed Consolidated Statement of Stockholders’ Equity for the Nine Months Ended September 30, 2015		5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2015 and 2014		6
	Notes to Condensed Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		36
Item 4.	Controls and Procedures		37
PART II.	OTHER INFORMATION		38
Item 1.	Legal Proceedings		38
Item 1A.	Risk Factors		38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		38
Item 3.	Defaults Upon Senior Securities		39
Item 4.	Mine Safety Disclosures		39
Item 5.	Other Information		39
Item 6.	Exhibits		39
SIGNATURES

2

PART I. FINANCIAL STATEMENTS

Item 1. Financial Statements.

CARTER VALIDUS MISSION CRITICAL REIT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

As of September 30, 2015 and December 31, 2014

(in thousands, except share data)

	(Unaudited)
	September 30, 2015		December 31, 2014
ASSETS
Real estate:
Land ($4,280 and $4,280, respectively, related to VIE)	$	173,467	$	153,998
Buildings and improvements, less accumulated depreciation of $87,990 and $52,785, respectively ($86,106 and $87,850, respectively, related to VIE)		1,664,472		1,584,801
Construction in process		97,986		53,552
Acquired intangible assets, less accumulated amortization of $34,997 and $21,759, respectively ($10,078 and $11,314, respectively, related to VIE)		204,179		204,436
Total real estate, net ($100,464 and $103,444, respectively, related to VIE)		2,140,104		1,996,787
Cash and cash equivalents ($2,475 and $1,397, respectively, related to VIE)		41,380		113,093
Preferred equity investment		127,147		—
Real estate-related notes receivables		514		23,535
Other assets ($6,669 and $5,126, respectively, related to VIE)		90,500		57,427
Total assets	$	2,399,645	$	2,190,842
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Notes payable ($52,467 and $53,031, respectively, related to VIE)	$	546,597	$	490,909
Credit facility		283,000		75,000
Accounts payable due to affiliates ($71 and $17, respectively, related to VIE)		2,192		1,833
Accounts payable and other liabilities ($1,796 and $1,473, respectively, related to VIE)		55,498		31,829
Intangible lease liabilities, less accumulated amortization of $14,846 and $10,774, respectively ($12,972 and $14,445, respectively, related to VIE)		57,476		60,678
Total liabilities		944,763		660,249
Stockholders’ equity:
Preferred stock, $0.01 par value per share, 50,000,000 shares authorized; none issued and outstanding		—		—
Common stock, $0.01 par value per share, 300,000,000 shares authorized; 180,911,195 and 175,561,681 shares issued, respectively; 179,810,937 and 175,038,055 shares outstanding, respectively		1,798		1,750
Additional paid-in capital		1,576,948		1,557,623
Accumulated distributions in excess of earnings		(150,989)		(100,273)
Accumulated other comprehensive loss		(6,494)		(1,161)
Total stockholders’ equity		1,421,263		1,457,939
Noncontrolling interests		33,619		72,654
Total equity		1,454,882		1,530,593
Total liabilities and stockholders’ equity	$	2,399,645	$	2,190,842

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

CARTER VALIDUS MISSION CRITICAL REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three and Nine Months Ended September 30, 2015 and 2014

(in thousands, except share data and per share amounts)

(Unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Revenue:
Rental and parking revenue	$	44,528	$	38,486	$	138,542	$	91,287
Tenant reimbursement revenue		4,168		4,164		14,253		10,259
Real estate-related notes receivables interest income		18		(257)		373		2,174
Total revenue		48,714		42,393		153,168		103,720
Expenses:
Rental and parking expenses		6,409		6,108		21,092		14,429
General and administrative expenses		1,609		1,411		4,469		3,212
Change in fair value of contingent consideration		160		—		460		—
Acquisition related expenses		—		4,087		3,654		10,598
Asset management fees		4,708		4,078		13,274		9,538
Depreciation and amortization		16,369		13,002		48,597		31,275
Total expenses		29,255		28,686		91,546		69,052
Income from operations		19,459		13,707		61,622		34,668
Other income (expense):
Other income		2,709		277		5,828		477
Interest expense		(7,733)		(5,478)		(21,043)		(13,905)
Total other expense		(5,024)		(5,201)		(15,215)		(13,428)
Net income		14,435		8,506		46,407		21,240
Net income attributable to noncontrolling interests in consolidated partnerships		(863)		(1,152)		(4,057)		(2,437)
Net income attributable to common stockholders	$	13,572	$	7,354	$	42,350	$	18,803
Other comprehensive income (loss):
Unrealized (loss) income on interest rate swaps, net	$	(4,031)	$	782	$	(4,959)	$	(726)
Other comprehensive (loss) income		(4,031)		782		(4,959)		(726)
Other comprehensive loss attributable to noncontrolling interests in consolidated partnerships		14		—		106		—
Other comprehensive (loss) income attributable to common stockholders		(4,017)		782		(4,853)		(726)
Comprehensive income		10,404		9,288		41,448		20,514
Comprehensive income attributable to noncontrolling interests in consolidated partnerships		(849)		(1,152)		(3,951)		(2,437)
Comprehensive income attributable to common stockholders	$	9,555	$	8,136	$	37,497	$	18,077
Weighted average number of common shares outstanding:
Basic		179,270,022		172,914,286		177,717,870		133,908,958
Diluted		179,286,709		172,931,516		177,736,797		133,928,250
Net income per common share attributable to common stockholders:
Basic	$	0.08	$	0.04	$	0.24	$	0.14
Diluted	$	0.08	$	0.04	$	0.24	$	0.14
Distributions declared per common share	$	0.18	$	0.18	$	0.52	$	0.52

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

CARTER VALIDUS MISSION CRITICAL REIT, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

For the Nine Months Ended September 30, 2015

(in thousands, except for share data)

(Unaudited)

							Accumulated		Accumulated
	Common Stock				Additional		Distributions		Other		Total
	No. of		Par		Paid in		in Excess		Comprehensive		Stockholders’		Noncontrolling		Total
	Shares		Value		Capital		of Earnings		Loss		Equity		Interests		Equity
Balance, December 31, 2014		175,038,055	$	1,750	$	1,557,623	$	(100,273)	$	(1,161)	$	1,457,939	$	72,654	$	1,530,593
Vesting of restricted stock		10,500		—		—		—		—		—		—		—
Issuance of common stock under the distribution reinvestment plan		5,339,014		54		50,666		—		—		50,720		—		50,720
Purchase of noncontrolling interests		—		—		(25,811)		—		(480)		(26,291)		(40,933)		(67,224)
Distributions to noncontrolling interests		—		—		—		—		—		—		(2,053)		(2,053)
Distributions declared to common stockholders		—		—		—		(93,066)		—		(93,066)		—		(93,066)
Other offering costs		—		—		(82)		—		—		(82)		—		(82)
Redemption of common stock		(576,632)		(6)		(5,515)		—		—		(5,521)		—		(5,521)
Stock-based compensation		—		—		67		—		—		67		—		67
Other comprehensive loss		—		—		—		—		(4,853)		(4,853)		(106)		(4,959)
Net income		—		—		—		42,350		—		42,350		4,057		46,407
Balance, September 30, 2015		179,810,937	$	1,798	$	1,576,948	$	(150,989)	$	(6,494)	$	1,421,263	$	33,619	$	1,454,882

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

CARTER VALIDUS MISSION CRITICAL REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2015 and 2014

(in thousands)

(Unaudited)

	Nine Months Ended
	September 30,
	2015		2014
Cash flows from operating activities:
Net income	$	46,407	$	21,240
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		48,597		31,275
Amortization of deferred financing costs		2,794		1,893
Amortization of above-market leases		296		145
Amortization of intangible lease liabilities		(4,072)		(3,147)
Amortization of real estate-related notes receivables origination costs and commitment fees		114		1,167
Bad debt expense		6,497		—
Straight-line rent		(15,787)		(11,634)
Stock-based compensation		67		68
Change in fair value of contingent consideration		460		—
Changes in operating assets and liabilities:
Accounts payable and other liabilities		4,698		4,635
Accounts payable due to affiliates		359		8,949
Other assets		(9,136)		(1,244)
Net cash provided by operating activities		81,294		53,347
Cash flows from investing activities:
Investment in real estate		(123,753)		(952,950)
Capital expenditures		(44,178)		(13,074)
Real estate deposits, net		166		(1,560)
Real estate-related notes receivables advances		(267)		(14,644)
Collections of real estate-related notes receivables		9,500		27,500
Preferred equity investment		(127,147)		—
Investment in notes receivables		(11,000)		—
Origination costs net of commitment fees related to real estate-related notes receivables		—		(293)
Net cash used in investing activities		(296,679)		(955,021)
Cash flows from financing activities:
Proceeds from notes payable		64,305		191,466
Payments on notes payable		(8,617)		(4,913)
Proceeds from credit facility		235,000		20,000
Payments on credit facility		(27,000)		(97,000)
Payments of deferred financing costs		(2,415)		(7,047)
Repurchase of common stock		(5,521)		(2,837)
Offering costs on issuance of common stock		(82)		(94,938)
Distributions to stockholders		(42,407)		(30,312)
Proceeds from issuance of common stock		—		966,209
Payments to escrow funds		(2,152)		(12,137)
Collections of escrow funds		1,838		3,471
Purchase of noncontrolling interest in consolidated partnerships		(67,224)		—
Proceeds from noncontrolling interest in consolidated partnerships		—		39,914
Distributions to noncontrolling interests in consolidated partnerships		(2,053)		(2,470)
Net cash provided by financing activities		143,672		969,406
Net change in cash and cash equivalents		(71,713)		67,732
Cash and cash equivalents - Beginning of period		113,093		7,511
Cash and cash equivalents - End of period	$	41,380	$	75,243
Supplemental cash flow disclosure:
Interest paid, net of interest capitalized of $3,739 and $1,362, respectively	$	21,352	$	12,491
Supplemental disclosure of non-cash transactions:
Common stock issued through distribution reinvestment plan	$	50,720	$	33,684
Net unrealized loss on interest rate swap	$	(4,959)	$	(726)
Real estate-related notes receivables converted to investment in real estate	$	13,674	$	20,000
Accrued contingent consideration	$	—	$	5,030

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

CARTER VALIDUS MISSION CRITICAL REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September 30, 2015

Note 1—Organization and Business Operations

Carter Validus Mission Critical REIT, Inc., or the Company, a Maryland corporation, was incorporated on December 16, 2009 and elected to be taxed and currently qualifies as a real estate investment trust, or a REIT, under the Internal Revenue Code of 1986, as amended, for federal income tax purposes. The Company was organized to acquire and operate a diversified portfolio of income-producing commercial real estate, with a focus on the data center and healthcare property sectors, net leased to investment grade and other creditworthy tenants, as well as to make other real estate-related investments that relate to such property types. The Company operates through two reportable segments—commercial real estate investments in data centers and healthcare. Substantially all of the Company’s business is conducted through Carter/Validus Operating Partnership, LP, a Delaware limited partnership, or the Operating Partnership. The Company is the sole general partner of the Operating Partnership. Carter/Validus Advisors, LLC, or the Advisor, the Company’s affiliated advisor, is the sole limited partner of the Operating Partnership.

As of September 30, 2015, the Company owned 48 real estate investments (including one real estate investment owned through a consolidated partnership), consisting of 79 properties located in 44 metropolitan statistical areas, or MSAs. As of September 30, 2015, the Company had investments in 7.875% Series B Redeemable Cumulative Preferred Stock with a $0.01 par value per share in a private real estate corporation, or the Preferred Equity Investment, in an aggregate amount of $127,147,000.

The Company ceased offering shares of common stock in its $1,746,875,000 initial public offering, or the Offering, on June 6, 2014. At the completion of the Offering, the Company raised gross proceeds of approximately $1,716,046,000 (including shares of common stock issued pursuant to a distribution reinvestment plan, or the DRIP). The Company will continue to issue shares of common stock under the DRIP Offering (as defined below) until such time as the Company sells all of the shares registered for sale under the DRIP Offering, unless the Company files a new registration statement with the Securities and Exchange Commission, or the SEC, or the DRIP Offering is terminated by the Company’s board of directors.

In addition, the Company registered $100,000,000 in shares of common stock under the DRIP pursuant to a registration statement on Form S-3 (Registration No. 333-195258), or the DRIP Offering, and collectively with the Offering, the Offerings, which was filed with the SEC on April 14, 2014 and automatically became effective with the SEC upon filing. As of September 30, 2015, the Company had issued approximately 180,863,000 shares of common stock in the Offerings for gross proceeds of $1,794,581,000, before share redemptions of $10,587,000 and offering costs, selling commissions and dealer manager fees of $174,708,000.

Except as the context otherwise requires, “we,” “our,” “us,” and the “Company” refer to Carter Validus Mission Critical REIT, Inc., the Operating Partnership, all majority-owned subsidiaries and controlled subsidiaries.

Note 2—Summary of Significant Accounting Policies

The summary of significant accounting policies presented below is designed to assist in understanding the Company’s condensed consolidated financial statements. Such condensed consolidated financial statements and the accompanying notes thereto are the representation of management. The accompanying condensed consolidated unaudited financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in the United States, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal and recurring nature considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

The condensed consolidated balance sheet at December 31, 2014 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by GAAP for complete financial statements. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements as of and for the year ended December 31, 2014 and related notes thereto set forth in the Company’s Annual Report on Form 10-K, filed with the SEC on March 26, 2015.

7

Principles of Consolidation and Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of the Company, the Operating Partnership, all majority-owned subsidiaries and controlled subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the financial statements in conformity with GAAP necessarily requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Concentration of Credit Risk and Significant Leases

As of September 30, 2015, the Company had cash on deposit, including restricted cash, in certain financial institutions which had deposits in excess of current federally insured levels; however, the Company has not experienced any losses in such accounts. The Company limits its cash investments to financial institutions with high credit standings; therefore, the Company believes it is not exposed to any significant credit risk on its cash deposits. To date, the Company has experienced no loss or lack of access to cash in its accounts. Concentration of credit risk with respect to accounts receivable from tenants is limited.

As of September 30, 2015, the Company owned real estate investments in 44 MSAs, (including one real estate investment owned through a consolidated partnership), four of which accounted for 10.0% or more of rental revenue. Real estate investments located in the Dallas-Ft. Worth-Arlington, Texas MSA, the Chicago-Naperville-Elgin, Illinois-Indiana-Wisconsin MSA, the Atlanta-Sandy Springs-Roswell, Georgia MSA and the Houston-The Woodlands-Sugar Land, Texas MSA accounted for an aggregate of 13.8%, 12.1%, 10.1% and 10.6%, respectively, of rental revenue for the nine months ended September 30, 2015.

As of September 30, 2015, the Company had two tenants that accounted for 10.0% or more of rental revenue. The leases with AT&T Services, Inc. and the lease with Bay Area Regional Medical Center, LLC accounted for 13.2% and 10.4%, respectively, of rental revenue for the nine months ended September 30, 2015.

Share Repurchase Program

The Company’s share repurchase program allows for repurchases of shares of the Company’s common stock when certain criteria are met. The share repurchase program provides that all redemptions during any calendar year, including those redeemable upon death or a qualifying disability of a stockholder, are limited to those that can be funded with proceeds raised from the DRIP Offering during the prior calendar year and other operating funds, if any, as the board of directors, in its sole discretion, may reserve for this purpose.

Repurchases of shares of the Company’s common stock are at the sole discretion of the Company’s board of directors. In addition, the Company’s board of directors, at its sole discretion, may amend, suspend, reduce, terminate or otherwise change the share repurchase program upon 30 days’ prior notice to the Company’s stockholders for any reason it deems appropriate. The share repurchase program provides that the Company will limit the number of shares repurchased during any calendar year to 5.0% of the number of shares of common stock outstanding as of December 31st of the previous calendar year. During the nine months ended September 30, 2015, the Company received valid redemption requests related to approximately 577,000 shares of common stock, all of which were redeemed in full for an aggregate purchase price of approximately $5,521,000 (an average of $9.57 per share). During the nine months ended September 30, 2014, the Company received valid redemption requests related to approximately 295,000 shares of common stock, all of which were redeemed in full for an aggregate purchase price of approximately $2,837,000 (an average of $9.62 per share).

Earnings Per Share

Basic earnings per share attributable for all periods presented are computed by dividing net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Shares of non-vested restricted common stock give rise to potentially dilutive shares of common stock. Diluted earnings per share are computed based on the weighted average number of shares outstanding and all potentially dilutive securities. Diluted earnings per share reflect the effect of approximately 17,000 shares for the three months ended September 30, 2015 and 2014 and approximately 19,000 shares for the nine months ended September 30, 2015 and 2014 of non-vested shares of restricted common stock that were outstanding as of such period.

8

Preferred Equity Investment

The Company accounts for its Preferred Equity Investment as an asset under the cost method of accounting, as the Company exercises no influence over the investee. The Company recognizes dividends as other income in the condensed consolidated statements of comprehensive income.

Recently Issued Accounting Pronouncements

On May 28, 2014, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update, or ASU, 2014-09, Revenue from Contracts with Customers, or ASU 2014-09. The objective of ASU 2014-09 is to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle, which may require more judgment and estimates within the revenue recognition process than are required under existing GAAP. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) Deferral of the Effective Date, or ASU 2015-14. ASU 2015-14 defers the effective date of ASU 2014-09 by one year to fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted as of the original effective date, which was annual reporting periods beginning after December 15, 2016, and the interim periods within that year. The Company is in the process of evaluating the impact ASU 2014-09 will have on the Company’s condensed consolidated financial statements.

On February 18, 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, or ASU 2015-02, that changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The amendment affects the following areas: limited partnerships and similar legal entities, evaluating fees paid to a decision maker or a service provider as a variable interest, the effect of fee arrangements on the primary beneficiary determination and certain investment funds. Under the amendment, all reporting entities are within the scope of ASC Subtopic 810-10, Consolidation—Overall, unless a scope exception applies. The presumption that a general partner controls a limited partnership has been eliminated. In addition, fees paid to decision makers that meet certain conditions no longer cause decision makers to consolidate variable interest entities in certain instances. The amendment is effective for public business entities for periods beginning after December 15, 2015. Early adoption of ASU 2015-02 is permitted. The Company is in the process of evaluating the impact ASU 2015-02 will have on the Company’s condensed consolidated financial statements.

On April 7, 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, or ASU 2015-03, that intends to simplify the presentation of debt issuance costs. The amendment requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. On August 18, 2015, the FASB issued ASU 2015-15, Interest—Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated With Line-of-Credit Arrangements—Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 Emerging Issues Task Force Meeting (SEC Update), or ASU 2015-15, which clarified that the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. Both ASU 2015-03 and ASU 2015-15 are effective for public business entities for fiscal years beginning after December 15, 2015, and are to be applied retrospectively, with early adoption permitted. The Company is in the process of evaluating the impact ASU 2015-03 and ASU 2015-15 will have on the Company’s condensed consolidated financial statements.

On September 25, 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, or ASU 2015-16, which eliminates the requirement for an acquirer to retrospectively adjust the financial statements for measurement-period adjustments that occur in periods after a business combination is consummated. ASU 2015-16 requires that the acquirer recognize adjustments to the provisional amounts recorded in the reporting period when the adjustments are determined. The effects of adjustments (such as depreciation, amortization, or other income effects) to provisional amounts to periods after the acquisition date are included in the earnings of the current reporting period. The amendment is effective for public business entities for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Early adoption of ASU 2015-16 is permitted. The Company is in the process of evaluating the impact ASU 2015-16 will have on the Company’s condensed consolidated financial statements.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the Company’s condensed consolidated financial position or results of operations.

9

Note 3—Real Estate Investments

During the nine months ended September 30, 2015, the Company completed the acquisition of two healthcare real estate investments, which were determined to be business combinations, for an aggregate purchase price of $137,427,000, plus closing costs, or the 2015 Acquisitions. The aggregate purchase price was settled net of the outstanding balance of real estate-related notes receivables due to the Company in the amount of $13,674,000, which reduced the total cash paid to $123,753,000. The Company funded the purchase price of the 2015 Acquisitions using net cash proceeds from the Offerings and its unsecured credit facility. The following table summarizes the 2015 Acquisitions:

Property Description	Date Acquired	Ownership Percentage
Landmark Hospital of Savannah	1/15/2015	100%
21st Century Oncology Portfolio (1)	3/31/2015; 04/20/2015	100%

(1) Portfolio consists of 20 real estate properties, 18 of which were purchased on March 31, 2015 and two of which were purchased on April 20, 2015.

Results of operations for the 2015 Acquisitions are reflected in the accompanying condensed consolidated statements of comprehensive income for the nine months ended September 30, 2015 for the period subsequent to the acquisition date of each property. For the period from the acquisition date through September 30, 2015, the Company recognized $6,333,000 of revenues and a net loss of $463,000 for the 2015 Acquisitions. In addition, during the nine months ended September 30, 2015, the Company incurred aggregate charges related to acquisition fees and costs of $3,478,000 in connection with the 2015 Acquisitions, which are included in the accompanying condensed consolidated statements of comprehensive income. The total amount of all acquisition fees and expenses are limited to 6.0% of the contract purchase price of the property. The contract purchase price is the amount actually paid or allocated in respect of the purchase, development, construction or improvement of a property, exclusive of acquisition fees and acquisition expenses. For the nine months ended September 30, 2015 and 2014, acquisition fees and expenses did not exceed 6.0% of the purchase price of the Company’s acquisitions during such periods.

As of September 30, 2015, the Company completed its fair value purchase price allocation for the 2015 Acquisitions. The following table summarizes the Company’s allocation of the fair value purchase price of the 2015 Acquisitions acquired during the nine months ended September 30, 2015 (amounts in thousands):

	Total
Land	$           19,469
Buildings and improvements	101,251
In-place leases	15,819
Tenant improvements	1,123
Above-market leases	635
Total assets acquired	138,297
Below-market leases	(870)
Total liabilities acquired	(870)
Net assets acquired	$         137,427

10

Assuming the 2015 Acquisitions described above had occurred on January 1, 2014, pro forma revenues, net income and net income attributable to common stockholders would have been as follows (amounts in thousands, unaudited):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Pro forma basis:
Revenues	$	48,714	$	47,489	$	155,842	$	130,852
Net income	$	14,435	$	14,993	$	51,184	$	43,912
Net income attributable to common stockholders	$	13,572	$	13,841	$	47,127	$	41,475
Net income per common share attributable to common stockholders:
Basic	$	0.08	$	0.08	$	0.27	$	0.26
Diluted	$	0.08	$	0.08	$	0.27	$	0.26

The pro forma information for the three and nine months ended September 30, 2015 was adjusted to exclude $0 and $3,478,000, respectively, of acquisition expenses recorded during such periods. The pro forma information may not be indicative of what actual results of operations would have been had the transactions occurred at the beginning of 2014, nor is it necessarily indicative of future operating results.

Consolidated Partnership

Bay Area Regional Medical Center

On July 8, 2015, the Company acquired the remaining noncontrolling interests in the Bay Area Regional Medical Center for a total cost of $102,475,000. As a result, the Bay Area Regional Medical Center became a wholly-owned property of the Company. In connection with the acquisition of the noncontrolling interests in the Bay Area Regional Medical Center, the borrower paid off the outstanding principal and accrued interest in the amount of $9,805,000 on the revolving credit agreement loan.

Note 4—Acquired Intangible Assets, Net

Acquired intangible assets, net, which are included in real estate in the accompanying condensed consolidated balance sheets, consisted of the following as of September 30, 2015 and December 31, 2014 (amounts in thousands, except weighted average life amounts):

	September 30, 2015		December 31, 2014
In-place leases, net of accumulated amortization of $34,002 and $21,099, respectively (with a weighted average remaining life of 14.4 years and 15.1 years, respectively)	$	198,078	$	198,635
Above-market leases, net of accumulated amortization of $825 and $529, respectively (with a weighted average remaining life of 11.2 years and 11.4 years, respectively)		3,457		3,118
Ground lease interest, net of accumulated amortization of $170 and $131, respectively (with a weighted average remaining life of 60.6 years and 61.2 years, respectively)		2,644		2,683
	$	204,179	$	204,436

The aggregate weighted average remaining life of the acquired intangible assets was 15.0 years and 15.6 years as of September 30, 2015 and December 31, 2014, respectively.

11

Note 5—Other Assets

Other assets consisted of the following as of September 30, 2015 and December 31, 2014 (amounts in thousands):

	September 30, 2015		December 31, 2014
Deferred financing costs, net of accumulated amortization of $7,326 and $4,532, respectively	$	10,793	$	11,172
Lease commissions, net of accumulated amortization of $144 and $54, respectively		3,704		394
Investments in unconsolidated partnerships		99		106
Tenant receivable		4,248		3,361
Notes receivables		11,000		—
Straight-line rent receivable		41,353		25,566
Restricted cash held in escrow		13,696		13,382
Real estate escrow deposits		—		250
Restricted cash		661		734
Derivative assets		—		273
Prepaid and other assets		4,946		2,189
	$	90,500	$	57,427

Note 6—Future Minimum Rent

The Company’s real estate assets are leased to tenants under operating leases with varying terms. The leases frequently have provisions to extend the lease agreement. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants.

The future minimum rental income from the Company’s investment in real estate assets under non-cancelable operating leases including optional renewal periods for which exercise is reasonably assured for the three months ending December 31, 2015 and for each of the next four years ending December 31 and thereafter, are as follows (amounts in thousands):

Year	Amount
Three months ending December 31, 2015	$	41,745
2016		171,576
2017		175,139
2018		178,500
2019		181,081
Thereafter		1,814,128
	$	2,562,169

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Note 7—Notes Payable and Unsecured Credit Facility

The Company’s debt outstanding as of September 30, 2015 and December 31, 2014 consisted of the following (amounts in thousands):

	September 30, 2015		December 31, 2014
Notes payable:
Fixed rate notes payable	$	132,010	$	134,271
Variable rate notes payable fixed through interest rate swaps		371,106		206,162
Variable rate notes payable		43,481		150,476
Total notes payable		546,597		490,909
Unsecured credit facility:
Revolving line of credit		73,000		—
Term loan		210,000		75,000
Total unsecured credit facility		283,000		75,000
Total debt outstanding	$	829,597	$	565,909

Significant loan and unsecured credit facility activities since December 31, 2014, excluding scheduled principal payments, include:

• The Company exercised its option to draw an additional $37,000,000 under a certain note payable with a variable interest rate at the 30-day London interbank offered rate, or LIBOR, plus 225 basis points with a maturity date of February 26, 2019, or the AT&T California Data Center Loan. Coincident with the AT&T California Data Center Loan, the Company entered into an interest rate swap agreement to effectively fix the variable interest rate on the AT&T California Data Center Loan at 3.7% per annum.

• The Company exercised its option to draw an additional $27,305,000 under a certain note payable with a variable interest rate at the 30-day LIBOR rate plus 225 basis points with a maturity date of December 10, 2018, or the AT&T Tennessee Data Center Loan. Coincident with the AT&T Tennessee Data Center Loan, the Company entered into an interest rate swap agreement to effectively fix the variable interest rate on the AT&T Tennessee Data Center Loan at 3.5% per annum.

• The Company is required by the terms of applicable loan documents to meet certain financial covenants, such as coverage ratios and reporting requirements. In addition, certain loan agreements include a cross-default provision to financial covenants in lease agreements with the Company’s tenants so a default in the financial covenant in the lease agreement is a default for the Company’s loan. As of September 30, 2015, the Company was in compliance with all such covenants and requirements, with the exception of two tenants. As of September 30, 2015, two of the Company’s tenants were in non-compliance with certain financial covenants in their respective lease agreements, which violated the covenants in the Company’s respective loan agreements. The lender waived compliance with these covenants for the quarter ended September 30, 2015. In the event the Company is not in compliance with these covenants in future periods and is unable to obtain a consent or waiver, the lender may choose to pursue remedies under the respective loan agreements, which could include, at the lender’s discretion, declaring the loans to be immediately due and payable and payment of termination fees and costs incurred by the lender, among other potential remedies. The Company and its lenders are working to modify certain financial covenants with respect to the Company’s tenants’ coverage ratios.

• The Company made a draw of $235,000,000 on its unsecured credit facility and paid down $27,000,000 on its unsecured credit facility.

• The Operating Partnership amended certain agreements related to its unsecured credit facility to add six new lenders and to increase the maximum commitments available under the unsecured credit facility from $365,000,000 to an aggregate of up to $475,000,000, consisting of a $400,000,000 revolving line of credit, with a maturity date of May 28, 2017, subject to the Operating Partnership’s right to a 12-month extension, and a $75,000,000 term loan, with a maturity date of May 28, 2018, subject to the Operating Partnership’s right to a 12-month extension. The new and existing lenders agreed to continue to make the loans on an unsecured basis. Subject to certain conditions, the unsecured credit facility can be increased to $500,000,000.

• The Operating Partnership entered into an agreement to obtain an unsecured term loan facility in the aggregate principal amount of $135,000,000, with a maturity date of August 21, 2020. Subject to certain conditions, the unsecured term loan facility can be increased to $300,000,000. The unsecured term loan facility shall bear interest at per annum rates equal to, at the Operating Partnership’s option, either (a) LIBOR, plus an applicable margin ranging from 1.75% to 2.25%, which is determined by the overall leverage of the Operating Partnership; or (b) a base rate, which means, for any day, a fluctuating rate per annum equal to the prime rate for such day, plus an applicable margin ranging from 0.75% to 1.25%, which is determined based on the overall leverage of the Operating Partnership.

13

• As of September 30, 2015, the total unencumbered pool availability under the credit facility was $458,975,000 and the remaining aggregate unencumbered pool availability was $175,975,000.

• As of September 30, 2015, the Company had 7 variable rate notes payable that were fixed through interest rate swaps.

The principal payments and balloon payments due on the notes payable and the unsecured credit facility for the three months ending December 31, 2015 and for each of the next four years ending December 31 and thereafter, are as follows (amounts in thousands):

Year	Principal Payments		Balloon Payments (1)		Total Amount
Three months ending December 31, 2015	$	3,278	$	—	$	3,278
2016		13,007		13,441		26,448
2017		12,378		253,052		265,430
2018		10,454		140,134		150,588
2019		3,548		194,143		197,691
Thereafter		2,540		183,622		186,162
	$	45,205	$	784,392	$	829,597

(1) Includes the unsecured credit facility.

Note 8—Intangible Lease Liabilities, Net

Intangible lease liabilities, net, consisted of the following as of September 30, 2015 and December 31, 2014 (amounts in thousands, except weighted average life amounts):

	September 30, 2015		December 31, 2014
Below-market leases, net of accumulated amortization of $14,700 and $10,721, respectively (with a weighted average remaining life of 17.1 years and 17.5 years, respectively)	$	52,297	$	55,406
Ground leasehold liabilities, net of accumulated amortization of $146 and $53, respectively (with a weighted average remaining life of 43.4 years and 44.1 years, respectively)		5,179		5,272
	$	57,476	$	60,678

The aggregate weighted average remaining life of intangible lease liabilities was 19.4 years and 19.8 years as of September 30, 2015 and December 31, 2014, respectively.

Note 9—Commitments and Contingencies

Litigation

In the ordinary course of business, the Company may become subject to litigation or claims. As of September 30, 2015, there were, and currently there are, no material pending legal proceedings to which the Company is a party.

Note 10—Related-Party Transactions and Arrangements

The Company pays to the Advisor 2.0% of the contract purchase price of each property or asset acquired and 2.0% of the amount advanced with respect to a mortgage loan. For the three months ended September 30, 2015 and 2014, the Company incurred $0 and $9,379,000, respectively, and for the nine months ended September 30, 2015 and 2014, the Company incurred $2,748,000 and $18,684,000, respectively, in acquisition fees to the Advisor or its affiliates related to investments in real estate. During the three months ended September 30, 2015 and 2014, the Company incurred $0 and $136,000, respectively, and during the nine months ended September 30, 2015 and 2014, the Company incurred $5,000 and $293,000, respectively, in acquisition fees to the Advisor or its affiliates related to investments in real estate-related notes receivables.

14

The Company pays the Advisor an annual asset management fee of 0.85% of the aggregate asset value plus costs and expenses incurred by the Advisor in providing asset management services. The fee is payable monthly in an amount equal to 0.07083% of the aggregate asset value as of the last day of the immediately preceding month. For the three months ended September 30, 2015 and 2014, the Company incurred $4,708,000 and $4,078,000, respectively, and for the nine months ended September 30, 2015 and 2014, the Company incurred $13,274,000 and $9,538,000, respectively, in asset management fees to the Advisor.

The Company reimburses the Advisor for all expenses it paid or incurred in connection with the services provided to the Company, subject to certain limitations. The Company will not reimburse the Advisor for personnel costs in connection with services for which the Advisor receives an acquisition and advisory fee or a disposition fee. For the three months ended September 30, 2015 and 2014, the Advisor allocated $376,000 and $410,000, respectively, and for the nine months ended September 30, 2015 and 2014, the Advisor allocated $941,000 and $1,279,000, respectively, in operating expenses on the Company’s behalf.

The Company has no direct employees. The employees of the Advisor and other affiliates provide services to the Company related to acquisitions, property management, asset management, accounting, investor relations, and all other administrative services. If the Advisor or its affiliates provides a substantial amount of services, as determined by a majority of the Company’s independent directors, in connection with the sale of one or more properties, the Company will pay the Advisor a disposition fee up to the lesser of 1.0% of the contract sales price and one-half of the brokerage commission paid if a third party broker is involved. In no event will the combined real estate commission paid to the Advisor, its affiliates and unaffiliated third parties exceed 6.0% of the contract sales price. In addition, after investors have received a return on their net capital contributions and an 8.0% cumulative non-compounded annual return, then the Advisor is entitled to receive 15.0% of the remaining net sale proceeds. For the three and nine months ended September 30, 2015 and 2014, the Company did not incur a disposition fee or a subordinated participation in net sale proceeds to the Advisor or its affiliates.

Upon listing of the Company’s common stock on a national securities exchange, a listing fee equal to 15.0% of the amount by which the market value of the Company’s outstanding stock plus all distributions paid by the Company prior to listing exceeds the sum of the total amount of capital raised from investors and the amount of cash flow necessary to generate an 8.0% cumulative, non-compounded annual return to investors will be paid to the Advisor. For the three and nine months ended September 30, 2015 and 2014, the Company did not incur a listing fee.

The Company pays Carter Validus Real Estate Management Services, LLC, or the Property Manager, leasing and management fees for the Company’s properties. Such fees equal 3.0% of gross revenues from single-tenant properties and 4.0% of gross revenues from multi-tenant properties. The Company will reimburse the Property Manager and its affiliates for property-level expenses that any of them pay or incur on the Company’s behalf, including salaries, bonuses and benefits of persons employed by the Property Manager and its affiliates, except for the salaries, bonuses and benefits of persons who also serve as one of the Company’s executive officers. The Property Manager and its affiliates may subcontract the performance of their duties to third parties and pay all or a portion of the property management fee to the third parties with whom they contract for these services. If the Company contracts directly with third parties for such services at customary market fees, the Company may pay the Property Manager an oversight fee equal to 1.0% of the gross revenues of the property managed. In no event will the Company pay the Property Manager, the Advisor or its affiliates both a property management fee and an oversight fee with respect to any particular property. The Company will pay the Property Manager a separate fee for the one-time initial rent-up, lease renewals or leasing-up of newly constructed properties in an amount not to exceed the fee customarily charged in arm’s length transactions by others rendering similar services in the same geographic area for similar properties as determined by a survey of brokers and agents in such area. For the three months ended September 30, 2015 and 2014, the Company incurred $1,139,000 and $936,000, respectively, and for the nine months ended September 30, 2015 and 2014, the Company incurred $3,585,000 and $2,328,000, respectively, in property management fees to the Property Manager.

Accounts Payable Due to Affiliates

The following amounts were outstanding due to affiliates as of September 30, 2015 and December 31, 2014 (amounts in thousands):

Entity	Fee	September 30, 2015		December 31, 2014
Carter/Validus Advisors, LLC and its affiliates	Asset management fees	$	1,575	$	1,307
Carter Validus Real Estate Management Services, LLC	Property management fees		382		385
Carter/Validus Advisors, LLC and its affiliates	General, administrative and other costs		235		141
		$	2,192	$	1,833

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Note 11—Segment Reporting

Management reviews the performance of individual properties and aggregates individual properties based on operating criteria into two reportable segments—commercial real estate investments in data centers and healthcare, and makes operating decisions based on these two reportable segments. The Company’s commercial real estate investments in data centers and healthcare are based on certain underwriting assumptions and operating criteria, which are different for data centers and healthcare. There were no intersegment sales or transfers during the three and nine months ended September 30, 2015 and 2014.

The Company evaluates performance based on net operating income of the individual properties in each segment. Net operating income, a non-GAAP financial measure, is defined as total revenues, less rental expenses, which excludes depreciation and amortization, general and administrative expenses, acquisition related expenses, asset management fees, change in fair value of contingent consideration, interest expense and interest income. The Company believes that segment net operating income serves as a useful supplement to net income because it allows investors and management to measure unlevered property-level operating results and to compare operating results to the operating results of other real estate companies and between periods on a consistent basis. Segment net operating income should not be considered as an alternative to net income determined in accordance with GAAP as an indicator of financial performance, and accordingly, the Company believes that in order to facilitate a clear understanding of the consolidated historical operating results, segment net operating income should be examined in conjunction with net income as presented in the accompanying condensed consolidated financial statements and data included elsewhere in this Quarterly Report on Form 10-Q.

Real estate-related notes receivables interest income, general and administrative expenses, change in fair value of contingent consideration, acquisition related expenses, asset management fees, depreciation and amortization, other income and interest expense are not allocated to individual segments for purposes of assessing segment performance.

Non-segment assets primarily consist of corporate assets, including cash and cash equivalents, real estate and escrow deposits, deferred financing costs, real estate-related notes receivables, the Preferred Equity Investment and other assets not attributable to individual properties.

Summary information for the reportable segments during the three and nine months ended September 30, 2015 and 2014, are as follows (amounts in thousands):

	Data Centers		Healthcare		Three Months Ended September 30, 2015
Revenue:
Rental, parking and tenant reimbursement revenue	$	28,407	$	20,289	$	48,696
Expenses:
Rental and parking expenses		(4,847)		(1,562)		(6,409)
Segment net operating income	$	23,560	$	18,727		42,287
Revenue:
Real estate-related notes receivables interest income						18
Expenses:
General and administrative expenses						(1,609)
Change in fair value of contingent consideration						(160)
Acquisition related expenses						—
Asset management fees						(4,708)
Depreciation and amortization						(16,369)
Income from operations						19,459
Other income (expense):
Other income						2,709
Interest expense						(7,733)
Net income					$	14,435

16

	Data Centers		Healthcare		Three Months Ended September 30, 2014
Revenue:
Rental, parking and tenant reimbursement revenue	$	24,752	$	17,898	$	42,650
Expenses:
Rental and parking expenses		(5,123)		(985)		(6,108)
Segment net operating income	$	19,629	$	16,913		36,542
Revenue:
Real estate-related notes receivables interest expense						(257)
Expenses:
General and administrative expenses						(1,411)
Acquisition related expenses						(4,087)
Asset management fees						(4,078)
Depreciation and amortization						(13,002)
Income from operations						13,707
Other income (expense):
Other income						277
Interest expense						(5,478)
Net income					$	8,506

	Data Centers		Healthcare		Nine Months Ended September 30, 2015
Revenue:
Rental, parking and tenant reimbursement revenue	$	86,226	$	66,569	$	152,795
Expenses:
Rental and parking expenses		(15,287)		(5,805)		(21,092)
Segment net operating income	$	70,939	$	60,764		131,703
Revenue:
Real estate-related notes receivables interest income						373
Expenses:
General and administrative expenses						(4,469)
Change in fair value of contingent consideration						(460)
Acquisition related expenses						(3,654)
Asset management fees						(13,274)
Depreciation and amortization						(48,597)
Income from operations						61,622
Other income (expense):
Other income						5,828
Interest expense						(21,043)
Net income					$	46,407

17

	Data Centers		Healthcare		Nine Months Ended September 30, 2014
Revenue:
Rental, parking and tenant reimbursement revenue	$	60,569	$	40,977	$	101,546
Expenses:
Rental and parking expenses		(12,104)		(2,325)		(14,429)
Segment net operating income	$	48,465	$	38,652		87,117
Revenue:
Real estate-related notes receivables interest income						2,174
Expenses:
General and administrative expenses						(3,212)
Acquisition related expenses						(10,598)
Asset management fees						(9,538)
Depreciation and amortization						(31,275)
Income from operations						34,668
Other income (expense):
Other income						477
Interest expense						(13,905)
Net income					$	21,240

Assets by reportable segments as of September 30, 2015 and December 31, 2014 are as follows (amounts in thousands):

	September 30, 2015		December 31, 2014
Assets by segment:
Data centers	$	1,110,250	$	1,130,131
Healthcare		1,115,858		933,257
All other		173,537		127,454
Total assets	$	2,399,645	$	2,190,842

Capital additions and acquisitions by reportable segments for the nine months ended September 30, 2015 and 2014 are as follows (amounts in thousands):

	Nine Months Ended September 30,
	2015		2014
Capital additions and acquisitions by segment:
Data centers	$	2,793	$	438,539
Healthcare		178,812		547,485
Total capital additions and acquisitions	$	181,605	$	986,024

Note 12—Preferred Equity Investment

During the nine months ended September 30, 2015, the Company invested an aggregate amount of $127,147,000 in 7.875% Series B Redeemable Cumulative Preferred Stock. The Preferred Equity Investment is stated at cost and consisted of a principal amount of $125,000,000, plus origination costs of $2,772,000, offset by closing fees of $625,000. During the three and nine months ended September 30, 2015, the Company recognized dividend income related to the Preferred Equity Investment of approximately $2,461,000 and $5,359,000, respectively.

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Note 13—Fair Value

Preferred Equity Investment—The carrying value of the Preferred Equity Investment was $127,147,000 as of September 30, 2015, which approximated its fair value.

Notes payable – Fixed Rate—The estimated fair value of notes payable – fixed rate measured using quoted prices and observable inputs from similar liabilities (Level 2) was approximately $132,700,000 and $134,837,000 as of September 30, 2015 and December 31, 2014, respectively, as compared to the carrying value of $132,010,000 and $134,271,000 as of September 30, 2015 and December 31, 2014, respectively.

Notes payable – Variable—The estimated fair value of notes payable – variable rate fixed through interest rate swap agreements (Level 2) was approximately $366,062,000 and $208,889,000 as of September 30, 2015 and December 31, 2014, respectively, as compared to the carrying value of $371,106,000 and $206,162,000 as of September 30, 2015 and December 31, 2014, respectively. The carrying value of the notes payable – variable was $43,481,000 and $150,476,000 as of September 30, 2015 and December 31, 2014, respectively, which approximated its fair value.

Unsecured credit facility—The carrying value of the unsecured credit facility – variable was $228,000,000 and $20,000,000, which approximated its fair value, as of September 30, 2015 and December 31, 2014, respectively. The estimated fair value of the unsecured credit facility – variable rate fixed through interest rate swap agreements (Level 2) was approximately $51,422,000 and $50,505,000 as of September 30, 2015 and December 31, 2014, respectively, as compared to the carrying value of $55,000,000 and $55,000,000 as of September 30, 2015 and December 31, 2014, respectively.

Contingent consideration—The Company has contingent obligations to transfer cash payments to the former owner in conjunction with a certain acquisition if specified future operational objectives are met over future reporting periods. Liabilities for contingent consideration will be measured at fair value each reporting period, with the acquisition-date fair value included as part of the consideration transferred, and subsequent changes in fair value recorded in earnings as change in fair value of contingent consideration.

The estimated fair value and the carrying value of the contingent consideration was $7,030,000 and $6,570,000 as of September 30, 2015 and December 31, 2014, respectively, which is reported in the accompanying condensed consolidated balance sheets in accounts payable and other liabilities. The Company uses an income approach to value the contingent consideration liability, which is determined based on the present value of probability-weighted future cash flows. The Company has classified the contingent consideration liability as Level 3 of the fair value hierarchy due to the lack of relevant observable market data over fair value inputs such as probability-weighting for payment outcomes. Increases in the assessed likelihood of a high payout under a contingent consideration arrangement contributes to increases in the fair value of the related liability. Conversely, decreases in the assessed likelihood of a higher payout under a contingent consideration arrangement contributes to decreases in the fair value of the related liability. Changes in assumptions could have an impact on the payout of contingent consideration arrangements with a maximum payout of $9,069,000 in cash and a minimum payout of $0 as of September 30, 2015.

Derivative instruments— Considerable judgment is necessary to develop estimated fair values of financial instruments. Accordingly, the estimates presented herein are not necessarily indicative of the amount the Company could realize, or be liable for, on disposition of the financial instruments. The Company has determined that the majority of the inputs used to value its interest rate swaps fall within Level 2 of the fair value hierarchy. The credit valuation adjustment associated with these instruments utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and the respective counterparty. However, as of September 30, 2015, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions, and has determined that the credit valuation adjustments are not significant to the overall valuation of its interest rate swaps. As a result, the Company determined that its interest rate swaps valuation in its entirety is classified in Level 2 of the fair value hierarchy.

19

In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014 (amounts in thousands):

	September 30, 2015
	Fair Value Hierarchy
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets:
Derivative assets	$	—	$	—	$	—	$	—
Total assets at fair value	$	—	$	—	$	—	$	—
Liabilities:
Derivative liabilities	$	—	$	(6,494)	$	—	$	(6,494)
Contingent consideration obligations		—		—		(7,030)		(7,030)
Total liabilities at fair value	$	—	$	(6,494)	$	(7,030)	$	(13,524)

	December 31, 2014
	Fair Value Hierarchy
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets:
Derivative assets	$	—	$	273	$	—	$	273
Total assets at fair value	$	—	$	273	$	—	$	273
Liabilities:
Derivative liabilities	$	—	$	(1,808)	$	—	$	(1,808)
Contingent consideration obligations		—		—		(6,570)		(6,570)
Total liabilities at fair value	$	—	$	(1,808)	$	(6,570)	$	(8,378)

The following table provides a rollforward of the fair value of recurring Level 3 fair value measurements for the three and nine months ended September 30, 2015 and 2014 (amounts in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Liabilities:
Contingent consideration obligations:
Beginning balance	$	6,870	$	5,030	$	6,570	$	—
Additions to contingent consideration obligations		—		—		—		5,030
Total changes in fair value included in earnings		160		—		460		—
Ending balance	$	7,030	$	5,030	$	7,030	$	5,030
Unrealized losses still held (1)	$	160	$	—	$	460	$	—

(1) Represents the unrealized losses recorded in earnings or other comprehensive income (loss) during the period for liabilities classified as Level 3 that are still held at the end of the period.

Note 14—Derivative Instruments and Hedging Activities

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. 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.

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The effective portion of changes in the fair value of derivatives designated, and that qualify, as cash flow hedges is recorded in accumulated other comprehensive loss in the accompanying condensed consolidated statement of stockholders’ equity and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the nine months ended September 30, 2015, such derivatives were used to hedge the variable cash flows associated with variable rate debt. The ineffective portion of changes in fair value of the derivatives is recognized directly in earnings. During the three and nine months ended September 30, 2015 and 2014, no gains or losses were recognized due to ineffectiveness of hedges of interest rate risk.

Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next twelve months, the Company estimates that an additional $4,257,000 will be reclassified from accumulated other comprehensive loss as an increase to interest expense.

See Note 13—“Fair Value” for a further discussion of the fair value of the Company’s derivative instruments.

The following table summarizes the notional amount and fair value of the Company’s derivative instruments (amounts in thousands):

				September 30, 2015						December 31, 2014
						Fair Value of						Fair Value of
Derivatives Designated as Hedging Instruments	Balance Sheet Location	Effective Dates	Maturity Dates	Outstanding Notional Amount		Asset		(Liability) (1)		Outstanding Notional Amount		Asset (2)		(Liability) (3)
Interest rate swaps	Other assets /Accounts payable and other liabilities	10/12/2012   to 08/03/2015	10/11/2017   to 07/11/2019	$	426,106	$	—	$	(6,494)	$	261,162	$	273	$	(1,808)

(1) Of this amount, $(6,494,000) related to controlling interests.

(2) Of this amount, $273,000 related to controlling interests.

(3) Of this amount, $(1,434,000) related to controlling interests and $(374,000) related to noncontrolling interests.

The notional amount under the agreements is an indication of the extent of the Company’s involvement in each instrument at the time, but does not represent exposure to credit, interest rate or market risks.

Accounting for changes in the fair value of a derivative instrument depends on the intended use and designation of the derivative instrument. The Company designated the interest rate swaps as cash flow hedges to hedge the variability of the anticipated cash flows on its variable rate notes payable. The change in fair value of the effective portion of the derivative instrument that is designated as a hedge is recorded in other comprehensive income (loss), or OCI, in the accompanying condensed consolidated statements of comprehensive income.

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The table below summarizes the amount of gains or losses recognized on interest rate derivatives designated as cash flow hedges for the three and nine months ended September 30, 2015 and 2014 (amounts in thousands):

Derivatives in Cash Flow Hedging Relationships	Amount of Loss Recognized in OCI on Derivatives (Effective Portion)		Location Of Loss Reclassified From Accumulated Other Comprehensive Loss to Net Income (Effective Portion)	Amount of Loss Reclassified From Accumulated Other Comprehensive Loss to Net Income (Effective Portion)
Three Months Ended September 30, 2015
Interest rate swaps	$	(5,246)	Interest Expense	$	(1,215)
Total	$	(5,246)		$	(1,215)
Three Months Ended September 30, 2014
Interest rate swaps	$	(59)	Interest Expense	$	(841)
Total	$	(59)		$	(841)
Nine Months Ended September 30, 2015
Interest rate swaps	$	(7,999)	Interest Expense	$	(3,040)
Total	$	(7,999)		$	(3,040)
Nine Months Ended September 30, 2014
Interest rate swaps	$	(2,513)	Interest Expense	$	(1,787)
Total	$	(2,513)		$	(1,787)

Credit Risk-Related Contingent Features

The Company has agreements with each of its derivative counterparties that contain cross-default provisions, whereby if the Company defaults on certain of its unsecured indebtedness, then the Company could also be declared in default on its derivative obligations, resulting in an acceleration of payment thereunder.

In addition, the Company is exposed to credit risk in the event of non-performance by its derivative counterparties. The Company believes it mitigates its credit risk by entering into agreements with creditworthy counterparties. The Company records credit risk valuation adjustments on its interest rate swaps based on the respective credit quality of the Company and the counterparty. As of September 30, 2015, the fair value of derivatives in a net liability position, including accrued interest but excluding any adjustment for nonperformance risk related to these agreements, was $7,285,000. As of September 30, 2015, there were no termination events or events of default related to the interest rate swaps.

Tabular Disclosure Offsetting Derivatives

The Company has elected not to offset derivative positions in its condensed consolidated financial statements. The following table presents the effect on the Company’s financial position had the Company made the election to offset its derivative positions as of September 30, 2015 and December 31, 2014 (amounts in thousands):

Offsetting of Derivative Assets
							Gross Amounts Not Offset in the Balance Sheet
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Balance Sheet		Net Amounts of Assets Presented in the Balance Sheet		Financial Instruments Collateral		Cash Collateral		Net Amount
September 30, 2015	$	—	$	—	$	—	$	—	$	—	$	—
December 31, 2014	$	273	$	—	$	273	$	—	$	—	$	273
Offsetting of Derivative Liabilities
							Gross Amounts Not Offset in the Balance Sheet
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Balance Sheet		Net Amounts of Liabilities Presented in the Balance Sheet		Financial Instruments Collateral		Cash Collateral		Net Amount
September 30, 2015	$	6,494	$	—	$	6,494	$	—	$	—	$	6,494
December 31, 2014	$	1,808	$	—	$	1,808	$	—	$	—	$	1,808

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The Company reports derivatives in the accompanying condensed consolidated balance sheets as other assets and accounts payable and other liabilities.

Note 15—Accumulated Other Comprehensive Loss

The following table presents a rollforward of amounts recognized in accumulated other comprehensive loss, net of noncontrolling interests, by component for the nine months ended September 30, 2015 (amounts in thousands):

	Unrealized Loss on Derivative Instruments		Accumulated Other Comprehensive Loss
Balance as of December 31, 2014	$	(1,161)	$	(1,161)
Other comprehensive loss before reclassification		(7,661)		(7,661)
Amount of loss reclassified from accumulated other comprehensive loss to net income (effective portion)		2,808		2,808
Other comprehensive loss		(4,853)		(4,853)
Purchase of noncontrolling interests		—		(480)
Balance as of September 30, 2015	$	(6,014)	$	(6,494)

The following table presents reclassifications out of accumulated other comprehensive loss for the nine months ended September 30, 2015 (amounts in thousands):

Details about Accumulated Other Comprehensive Loss Components	Amounts Reclassified from Accumulated Other Comprehensive Loss to Net Income		Affected Line Items in the Condensed Consolidated Statements of Comprehensive Income
Interest rate swap contracts	$	3,040	Interest expense

Note 16—Subsequent Events

Distributions Paid

On October 1, 2015, the Company paid aggregate distributions of $10,348,000 ($4,716,000 in cash and $5,632,000 in shares of the Company’s common stock issued pursuant to the DRIP Offering), which related to distributions declared for each day in the period from September 1, 2015 through September 30, 2015. On November 2, 2015, the Company paid aggregate distributions of $10,722,000 ($4,901,000 in cash and $5,821,000 in shares of the Company’s common stock issued pursuant to the DRIP Offering), which related to distributions declared for each day in the period from October 1, 2015 through October 31, 2015.

Distributions Declared

On November 5, 2015, the board of directors of the Company approved and declared a distribution to the Company’s stockholders of record as of the close of business on each day of the period commencing on December 1, 2015 and ending on February 29, 2016. The distributions for December 2015 will be calculated based on 365 days in the calendar year and equal to $0.001917808 per share of common stock, which will be equal to an annualized distribution rate of 7.0%, assuming a purchase price of $10.00 per share. The distributions for January 2016 and February 2016 will be calculated based on 366 days in the calendar year and will be equal to $0.001912568 per share of common stock, which will be equal to an annualized distribution rate of 7.0%, assuming a purchase price of $10.00 per share. The distributions declared for each record date in December 2015, January 2016 and February 2016 will be paid in January 2016, February 2016 and March 2016, respectively. The distributions will be payable to stockholders from legally available funds therefor.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the notes thereto, and the other unaudited financial information appearing elsewhere in this Quarterly Report on Form 10-Q. The following discussion should also be read in conjunction with our audited consolidated financial statements, and the notes thereto, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission, or the SEC, on March 26, 2015, or the 2014 Annual Report on Form 10-K.

The terms “we,” “our,” and the “Company” refer to Carter Validus Mission Critical REIT, Inc., Carter/Validus Operating Partnership, LP, all majority-owned subsidiaries and controlled subsidiaries.

Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q, other than historical facts, include forward-looking statements that reflect our expectations and projections about our future results, performance, prospects and opportunities. Such statements include, in particular, statements about our plans, strategies, and prospects and are subject to certain risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ materially from those projected or anticipated. Therefore, such statements are not intended to be a guarantee of our performance in future periods. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “would,” “could,” “should,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” or other similar words. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect our management’s view only as of the date this Quarterly Report on Form 10-Q is filed with the SEC. We make no representation or warranty (express or implied) about the accuracy of any such forward-looking statements contained in this Quarterly Report on Form 10-Q, and we do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. See Item 1A. “Risk Factors” of our 2014 Annual Report on Form 10-K for a discussion of some, although not all, of the risks and uncertainties that could cause actual results to differ materially from those presented in our forward-looking statements.

Management’s discussion and analysis of financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with the generally accepted accounting principles in the United States, or GAAP. The preparation of these financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

Overview

We were formed on December 16, 2009 under the laws of Maryland to acquire and operate a diversified portfolio of income-producing commercial real estate. We may also invest in real estate-related investments that relate to such property types. We elected to be taxed, and currently qualify as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the Code, for federal income tax purposes.

We ceased offering shares of common stock in our initial public offering of up to $1,746,875,000 in shares of common stock, or our Offering, on June 6, 2014. Upon completion of our Offering, we raised gross proceeds of approximately $1,716,046,000 (including shares of common stock issued pursuant to a distribution reinvestment plan, or the DRIP). We will continue to issue shares of common stock under the DRIP Offering (as defined below) until such time as we sell all of the shares registered for sale under the DRIP Offering, unless we file a new registration statement with the SEC or the DRIP Offering is terminated by our board of directors.

In addition, we registered $100,000,000 in shares of common stock under the DRIP pursuant to a registration statement on Form S-3 (Registration No. 333-195258), or the DRIP Offering, and collectively with our Offering, our Offerings, which was filed with the SEC on April 14, 2014 and automatically became effective with the SEC upon filing. As of September 30, 2015, we had issued approximately 180,863,000 shares of common stock in our Offerings for gross proceeds of $1,794,581,000, before share redemptions of $10,587,000 and offering costs, selling commissions and dealer manager fees of $174,708,000.

Substantially all of our operations are conducted through Carter/Validus Operating Partnership, LP, or our Operating Partnership. We are externally advised by Carter/Validus Advisors, LLC, or our Advisor, pursuant to an advisory agreement between us and our Advisor, which is our affiliate. Our Advisor supervises and manages our day-to-day operations and selects the properties and real estate-related investments we acquire, subject to the oversight and approval of our board of directors. Our Advisor also provides marketing, sales and client services on our behalf. Our Advisor engages affiliated entities to provide various services to us. Our Advisor is managed by, and is a subsidiary of, our sponsor, Carter/Validus REIT Investment Management Company, LLC, or our Sponsor. We have no paid employees and rely upon our Advisor to provide substantially all of our services.

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Carter Validus Real Estate Management Services, LLC, or our Property Manager, a wholly-owned subsidiary of our Sponsor, serves as our property manager. Our Advisor and our Property Manager received, and will continue to receive, fees during the acquisition and operational stages and our Advisor will be eligible to receive fees during the liquidation stage of the Company.

We currently operate through two reportable segments – commercial real estate investments in data centers and healthcare. As of September 30, 2015, we had completed acquisitions of 48 real estate investments (including one real estate investment owned through a consolidated partnership) consisting of 79 properties, comprised of 89 buildings and parking facilities and approximately 5,977,000 square feet of gross rentable area (excluding parking facilities), for an aggregate purchase price of $2,118,062,000. As of September 30, 2015, we had invested an aggregate amount of $127,147,000 in 7.875% Series B Redeemable Cumulative Preferred Stock with a $0.01 par value per share of a private real estate corporation, or our Preferred Equity Investment.

Critical Accounting Policies

Our critical accounting policies were disclosed in our 2014 Annual Report on Form 10-K. There have been no material changes to our critical accounting policies as disclosed therein.

Interim Unaudited Financial Data

Our accompanying condensed consolidated financial statements have been prepared by us in accordance with GAAP in conjunction with the rules and regulations of the SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, our accompanying condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. Our accompanying condensed consolidated financial statements reflect all adjustments, which are, in our view, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim period. Interim results of operations are not necessarily indicative of the results to be expected for the full year; such full year results may be less favorable. Our accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our 2014 Annual Report on Form 10-K.

Qualification as a REIT

We elected to be taxed, and currently qualify, as a REIT for federal income tax purposes and we intend to continue to be taxed as a REIT. To maintain our qualification as a REIT, we must continue to meet certain organizational and operational requirements, including a requirement to currently distribute at least 90.0% of our REIT taxable income to our stockholders. As a REIT, we generally will not be subject to federal income tax on taxable income that we distribute to our stockholders.

If we fail to maintain our qualification as a REIT in any taxable year, we would then be subject to federal income taxes on our taxable income at regular corporate rates and would not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service grants us relief under certain statutory provisions. Such an event could have a material adverse effect on our net income and net cash available for distribution to our stockholders.

Recently Issued Accounting Pronouncements

For a discussion of recently issued accounting pronouncements, see Note 2—“Summary of Significant Accounting Policies—Recently Issued Accounting Pronouncements” to our condensed consolidated financial statements that are a part of this Quarterly Report on Form 10-Q.

Segment Reporting

We report our financial performance based on two reporting segments—commercial real estate investments in data centers and healthcare. See Note 11—“Segment Reporting” to the condensed consolidated financial statements for additional information on our two reporting segments.

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Results of Operations

Our results of operations are influenced by the timing of acquisitions and the operating performance of our real estate investments. The following table shows the property statistics of our real estate investments as of September 30, 2015 and 2014:

	September 30,
	2015		2014
Number of commercial operating real estate investments (1)		46		43
Leased rentable square feet		5,719,000		5,277,000
Weighted average percentage of rentable square feet leased		98%		98%

(1) As of September 30, 2015, we owned 48 real estate investments, two of which were under construction. As of September 30, 2014, we owned 45 real estate investments, two of which were under construction.

The following table summarizes our real estate investment activity for the three and nine months ended September 30, 2015 and 2014:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Commercial operating real estate investments acquired		—		7		2		12
Approximate aggregate purchase price of acquired real estate investments	$	—	$	540,181,000	$	137,427,000	$	926,501,000
Leased rentable square feet		—		1,655,000		268,000		2,150,000

Three Months Ended September 30, 2015 Compared to Three Months Ended September 30, 2014

Revenue. Revenue increased $6.3 million, or 14.9%, to $48.7 million for the three months ended September 30, 2015, as compared to $42.4 million for the three months ended September 30, 2014. Revenue consisted of rental and parking revenue, tenant reimbursement revenue and real estate-related notes receivables interest income. Rental and parking revenue increased $6.0 million, or 15.6%, net of tenant bad debt write-offs of $3.7 million, to $44.5 million for the three months ended September 30, 2015, as compared to $38.5 million for the three months ended September 30, 2014, and tenant reimbursement revenue was $4.2 million for both the three months ended September 30, 2015 and September 30, 2014. The increase in rental and parking revenue was primarily due to an increase in base rental income on 46 operating real estate investments with leases in-place as of September 30, 2015, partially offset by the write-off of bad debt related to the early lease termination at one property, coupled with annual rent escalations at our same store properties, as compared to 43 operating real estate investments with leases in-place as of September 30, 2014. During the three months ended September 30, 2015, we had one tenant vacate a property, which we replaced with a new tenant. Real estate-related notes receivables interest income increased $0.3 million, or 100.0%, to $0.0 million for the three months ended September 30, 2015, as compared to $(0.3) million for the three months ended September 30, 2014. The increase was primarily due to amortization of loan origination fees of $0.8 million, offset by real estate-related notes receivables interest income of $0.5 million.

Rental and Parking Expenses. Rental and parking expenses increased $0.3 million, or 4.9%, to $6.4 million for the three months ended September 30, 2015, as compared to $6.1 million for the three months ended September 30, 2014. The increase was primarily due to owning 46 operating real estate investments with leases in-place as of September 30, 2015, as compared to owning 43 operating real estate investments with leases in-place as of September 30, 2014, which resulted in increased real estate taxes and property management fees for such period.

General and Administrative Expenses. General and administrative expenses increased $0.2 million, or 14.3%, to $1.6 million for the three months ended September 30, 2015, as compared to $1.4 million for the three months ended September 30, 2014. The increase was primarily due to increased professional and legal fees of $0.1 million and increased other administrative expenses of $0.1 million.

Change in fair value of contingent consideration. The change in fair value of contingent consideration increased $0.2 million, or 100%, to $0.2 million for the three months ended September 30, 2015. During 2014, we purchased a property that may result in additional purchase price to be paid to the seller. Upon acquisition, we recorded contingent consideration in the amount of $6.2 million. The increase in contingent consideration represents the change in the estimated fair value of the contingent consideration from the time of acquisition through September 30, 2015, due to a change in the discount periods. Increases or decreases in the fair value of the contingent consideration can result from changes in discount periods, discount rates and probabilities that the contingency will be met.

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Acquisition Related Expenses. Acquisition fees and expenses associated with transactions determined to be business combinations are expensed as incurred. Acquisition related expenses decreased $4.1 million, or 100.0%, to $0.0 million for the three months ended September 30, 2015, as compared to $4.1 million for the three months ended September 30, 2014. We did not acquire any real estate investments during the three months ended September 30, 2015. For the three months ended September 30, 2014, acquisition fees and expenses related to the acquisitions of four real estate investments for an aggregate purchase price of $181.8 million, which were determined to be business combinations.

Asset Management Fees. Asset management fees increased $0.6 million, or 14.6%, to $4.7 million for the three months ended September 30, 2015, as compared to $4.1 million for the three months ended September 30, 2014. The increase in asset management fees was attributable to an increase in the weighted average real estate-related investments of $2,092.0 million as of September 30, 2015, as compared to $1,074.9 million as of September 30, 2014.

Depreciation and Amortization. Depreciation and amortization increased $3.4 million, or 26.2%, to $16.4 million for the three months ended September 30, 2015, as compared to $13.0 million for the three months ended September 30, 2014. The increase was primarily due to an increase in the weighted average depreciable basis of real estate properties to $1,837.4 million as of September 30, 2015, as compared to $1,035.6 million as of September 30, 2014.

Other Income. Other income increased $2.4 million, or 800.0%, to $2.7 million for the three months ended September 30, 2015, as compared to $0.3 million for the three months ended September 30, 2014. The increase was primarily due to an increase in dividend income related to our Preferred Equity Investment.

Interest Expense. Interest expense increased $2.2 million, or 40.0%, to $7.7 million for the three months ended September 30, 2015, as compared to $5.5 million for the three months ended September 30, 2014. The increase was due to increased interest expense on notes payable and our unsecured credit facility of $2.6 million and increased amortization expense of debt issue costs of $0.2 million, offset by increase in capitalized interest of $0.6 million. The increase in interest expense on notes payable and our unsecured credit facility of $2.6 million was due to an increase in outstanding balances on notes payable and our unsecured credit facility to $829.6 million as of September 30, 2015, as compared to an outstanding balance on notes payable and our unsecured credit facility of $462.7 million as of September 30, 2014.

Nine Months Ended September 30, 2015 Compared to Nine Months Ended September 30, 2014

Revenue. Revenue increased $49.4 million, or 47.6%, to $153.2 million for the nine months ended September 30, 2015, as compared to $103.7 million for the nine months ended September 30, 2014. Revenue consisted of rental and parking revenue, tenant reimbursement revenue and real estate-related notes receivables interest income. Rental and parking revenue increased $47.2 million, or 51.7%, net of tenant bad debt write-offs of $6.5 million, to $138.5 million for the nine months ended September 30, 2015, as compared to $91.3 million for the nine months ended September 30, 2014, and tenant reimbursement revenue increased $4.0 million, or 38.8%, to $14.3 million for the nine months ended September 30, 2015, as compared to $10.3 million for the nine months ended September 30, 2014. The increase in rental and parking revenue and tenant reimbursement revenue was primarily due to an increase in base rental income on 46 operating real estate investments with leases in-place as of September 30, 2015, partially offset by the write-off of bad debt related to the early lease termination at one property, coupled with annual rent escalations at our same store properties, as compared to 43 operating real estate investments with leases in-place as of September 30, 2014. During the nine months ended September 30, 2015, we had one tenant vacate a property, which we replaced with a new tenant. Real estate-related notes receivables interest income decreased $1.8 million, or 81.8%, to $0.4 million for the nine months ended September 30, 2015, as compared to $2.2 million for the nine months ended September 30, 2014. The decrease was primarily due to real estate-related notes receivables interest income of $2.9 million, offset by amortization of loan origination fees of $1.1 million, due to a repayment in real estate-related notes receivables of $19.9 million to $0.5 million as of September 30, 2015, as compared to $20.4 million as of September 30, 2014.

Rental and Parking Expenses. Rental and parking expenses increased $6.7 million, or 46.5%, to $21.1 million for the nine months ended September 30, 2015, as compared to $14.4 million for the nine months ended September 30, 2014. The increase was primarily due to owning 46 operating real estate investments with leases in-place as of September 30, 2015, coupled with payments made on behalf of a tenant for 2014 real estate taxes in the amount of $0.9 million, as compared to owning 43 operating real estate investments with leases in-place as of September 30, 2014, which resulted in increased utility costs of $0.3 million, increased real estate taxes of $2.7 million, increased property management fees of $2.2 million, increased administrative costs of $0.6 million and increased other rental and parking expenses of $0.9 million for such period.

General and Administrative Expenses. General and administrative expenses increased $1.3 million, or 40.6%, to $4.5 million for the nine months ended September 30, 2015, as compared to $3.2 million for the nine months ended September 30, 2014. The increase was primarily due to increased expenses associated with our transfer agent of $1.2 million and increased professional and legal fees of $0.1 million. Prior to the completion of our Offering on June 6, 2014, expenses associated with our transfer agent were reported in the statement of stockholders’ equity as offering costs during the period we were selling shares of common stock pursuant to our Offering.

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Change in fair value of contingent consideration. The change in fair value of contingent consideration increased $0.5 million, or 100%, to $0.5 million for the nine months ended September 30, 2015. During 2014, we purchased a property that may result in additional purchase price to be paid to the seller. Upon acquisition, we recorded contingent consideration in the amount of $6.2 million. The increase in contingent consideration represents the change in the estimated fair value of the contingent consideration from the time of acquisition through September 30, 2015, due to a change in the discount periods. Increases or decreases in the fair value of the contingent consideration can result from changes in discount periods, discount rates and probabilities that the contingency will be met.

Acquisition Related Expenses. Acquisition fees and expenses associated with transactions determined to be business combinations are expensed as incurred. Acquisition related expenses decreased $6.9 million, or 65.1%, to $3.7 million for the nine months ended September 30, 2015, as compared to $10.6 million for the nine months ended September 30, 2014. The decrease was primarily related to acquisition fees and expenses associated with the purchase of two real estate investments for an aggregate purchase price of $137.4 million acquired during the nine months ended September 30, 2015, which were determined to be business combinations. For the nine months ended September 30, 2014, acquisition fees and expenses related to the acquisitions of eight real estate investments for an aggregate purchase price of $469.6 million, which were determined to be business combinations.

Asset Management Fees. Asset management fees increased $3.8 million, or 40.0%, to $13.3 million for the nine months ended September 30, 2015, as compared to $9.5 million for the nine months ended September 30, 2014. The increase in asset management fees was attributable to an increase in the weighted average real estate-related investments of $2,092.0 million as of September 30, 2015, as compared to $1,074.9 million as of September 30, 2014.

Depreciation and Amortization. Depreciation and amortization increased $17.3 million, or 55.3%, to $48.6 million for the nine months ended September 30, 2015, as compared to $31.3 million for the nine months ended September 30, 2014. The increase was primarily due to an increase in the weighted average depreciable basis of real estate properties to $1,837.4 million as of September 30, 2015, as compared to $1,035.6 million as of September 30, 2014.

Other Income. Other income increased $5.3 million, or 1,060.0%, to $5.8 million for the nine months ended September 30, 2015, as compared to $0.5 million for the nine months ended September 30, 2014. The increase was primarily due to an increase in dividend income related to our Preferred Equity Investment.

Interest Expense. Interest expense increased $7.1 million, or 51.1%, to $21.0 million for the nine months ended September 30, 2015, as compared to $13.9 million for the nine months ended September 30, 2014. The increase was due to increased interest expense on notes payable and our unsecured credit facility of $8.6 million and increased amortization expense of debt issue costs of $0.9 million, offset by an increase in capitalized interest of $2.4 million. The increase in interest expense on notes payable and our unsecured credit facility of $8.6 million was due to an increase in outstanding balances on notes payable and our unsecured credit facility to $829.6 million as of September 30, 2015, as compared to an outstanding balance on notes payable and our unsecured credit facility of $462.7 million as of September 30, 2014.

Organization and Offering Costs

Prior to the termination of the Offering, we reimbursed our Advisor or its affiliates for organization and offering costs it incurred on our behalf, but only to the extent the reimbursement did not cause the selling commissions, the dealer manager fee and the other organization and offering costs incurred by us to exceed 15% of gross offering proceeds as of the date of the reimbursement. Since inception and through the termination of our Offering on June 6, 2014, we paid approximately $156,519,000 in selling commissions and dealer manager fees to SC Distributors, LLC, or our Dealer Manager, and we reimbursed our Advisor or its affiliates approximately $14,207,000 in offering expenses, and incurred approximately $3,900,000 of other organization and offering costs, which totaled $174,626,000, or 10.2%, of total gross offering proceeds which were $1,716,046,000.

As of September 30, 2015, we incurred approximately $82,000 in other offering costs related to the DRIP Offering.

Other organization costs were expensed as incurred and selling commissions and dealer manager fees were charged to stockholders’ equity as the amounts related to raising capital. For a further discussion of other organization and offering costs, see Note 10—“Related-Party Transactions and Arrangements” to the condensed consolidated financial statements that are a part of this Quarterly Report on Form 10-Q.

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Preferred Equity Investment

During the nine months ended September 30, 2015, we invested an aggregate amount of $127,147,000 in 7.875% Series B Redeemable Cumulative Preferred Stock. Our Preferred Equity Investment is stated at cost and consisted of a principal amount of $125,000,000, plus origination costs of $2,772,000, offset by closing fees of $625,000. During the three and nine months ended September 30, 2015, we recognized dividend income related to our Preferred Equity Investment of approximately $2,461,000 and $5,359,000, respectively.

Inflation

We are exposed to inflation risk as income from long-term leases is the primary source of our cash flows from operations. There are provisions in certain of our leases with tenants that are intended to protect us from, and mitigate the risk of, the impact of inflation. These provisions include reimbursement billings for operating expenses, pass-through charges and real estate tax and insurance reimbursements. However, due to the long-term nature of our leases, among other factors, the leases may not reset frequently enough to adequately offset the effects of inflation.

Liquidity and Capital Resources

Our principal demands for funds are for real estate and real estate-related investments, for the payment of acquisition related costs, capital expenditures, operating expenses, distributions and redemptions to stockholders and principal and interest on any current and any future indebtedness. Generally, cash needs for items other than acquisitions and acquisition related costs will be generated from operations of our current and future investments. We expect to utilize funds from the DRIP Offering and future proceeds from secured and unsecured financings to complete future real estate-related investments. As our Offering terminated on June 6, 2014, we expect to meet future cash needs for real estate-related investments from cash flows from operations, the DRIP Offering and debt financings. In addition, cash paid for distributions will be reduced due to the DRIP Offering. The sources of our operating cash flows will be primarily provided by the rental income received from current and future tenants of our leased properties.

We are required by the terms of applicable loan documents to meet certain financial covenants, such as coverage ratios and reporting requirements. In addition, certain loan agreements include a cross-default provision to financial covenants in lease agreements with our tenants so a default in the financial covenant in the lease agreement is a default for our loan. As of September 30, 2015, we were in compliance with all such covenants and requirements, with the exception of two tenants.

As of September 30, 2015, two of our tenants were in non-compliance with certain financial covenants in their respective lease agreements, which violated the covenants in our respective loan agreements. The lender waived compliance with these covenants for the quarter ended September 30, 2015. In the event we are not in compliance with these covenants in future periods and are unable to obtain a consent or waiver, the lender may choose to pursue remedies under the respective loan agreements, which could include, at the lender’s discretion, declaring the loans to be immediately due and payable and payment of termination fees and costs incurred by the lender, among other potential remedies. We are working with our lenders to modify certain financial covenants with respect to our tenants’ coverage ratios.

Short-term Liquidity and Capital Resources

On a short-term basis, our principal demands for funds will be for the acquisition of real estate and real estate-related notes and investments and payments of tenant improvements, acquisition related costs, operating expenses, distributions, and interest and principal payments on current and future debt financings. We expect to meet our short-term liquidity requirements through net cash flows provided by operations, the DRIP Offering, borrowings on our unsecured credit facility, as well as secured and unsecured borrowings from banks and other lenders to finance our expected future acquisitions.

Long-term Liquidity and Capital Resources

On a long-term basis, our principal demands for funds will be for the acquisition of real estate and real estate-related investments and payments of tenant improvements, acquisition related costs, operating expenses, distributions and redemptions to stockholders, and interest and principal payments on current and future indebtedness. We expect to meet our long-term liquidity requirements through proceeds from cash flow from operations, borrowings on our unsecured credit facility, proceeds from secured or unsecured borrowings from banks or other lenders, and reinvestments pursuant to the DRIP Offering.

We expect that substantially all cash flows from operations will be used to pay distributions to our stockholders after certain capital expenditures, however, we have used, and may continue to use other sources to fund distributions, as necessary, such as, borrowing on our unsecured credit facility and/or future borrowings on unencumbered assets. To the extent cash flows from operations are lower due to fewer properties being acquired or lower than expected returns on the properties held, distributions paid to stockholders may be lower. We expect that substantially all net cash flows from our Offerings or debt financings will be used to fund acquisitions, certain capital expenditures identified at acquisition, repayments of outstanding debt or distributions to our stockholders in excess of cash flows from operations.

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Capital Expenditures

We estimate that we will require approximately $68.9 million in expenditures for capital improvements over the next 12 months. We cannot provide assurances, however, that actual expenditures will not exceed these estimated expenditure levels. As of September 30, 2015, we had $2.3 million of restricted cash in lender-controlled escrow reserve accounts for such capital expenditures. In addition, as of September 30, 2015, we had approximately $41.4 million in cash and cash equivalents. For the nine months ended September 30, 2015, we had capital expenditures of $44.2 million that primarily related to two healthcare real estate investments that are currently under construction.

Unsecured Credit Facility

On August 21, 2015, our Operating Partnership amended certain agreements related to our unsecured credit facility to add six new lenders and to increase the maximum commitments available under our unsecured credit facility from $365,000,000 to an aggregate of up to $475,000,000, consisting of a $400,000,000 revolving line of credit, with a maturity date of May 28, 2017, subject to our Operating Partnership’s right to a 12-month extension, and a $75,000,000 term loan, with a maturity date of May 28, 2018, subject to our Operating Partnership’s right to a 12-month extension. The new and existing lenders agreed to continue to make the loans on an unsecured basis. Subject to certain conditions, our unsecured credit facility can be increased to $500,000,000.

Additionally, on August 21, 2015, our Operating Partnership entered into an agreement to obtain an unsecured term loan facility in the aggregate principal amount of $135,000,000, with a maturity date of August 21, 2020. Subject to certain conditions, our unsecured term loan facility can be increased to $300,000,000. Our unsecured term loan facility shall bear interest at per annum rates equal to, at our Operating Partnership’s option, either (a) the London Interbank Offered Rate, or LIBOR, plus an applicable margin ranging from 1.75% to 2.25%, which is determined by the overall leverage of our Operating Partnership; or (b) a base rate, which means, for any day, a fluctuating rate per annum equal to the prime rate for such day, plus an applicable margin ranging from 0.75% to 1.25%, which is determined based on the overall leverage of our Operating Partnership.

As of September 30, 2015, we had an aggregate outstanding balance of $283,000,000 under our unsecured credit facility. As of September 30, 2015, we had an aggregate unencumbered pool availability remaining under our unsecured credit facility of $175,975,000. We believe we were in compliance with all financial covenant requirements as of September 30, 2015.

Cash Flows

Nine Months Ended September 30, 2015 Compared to Nine Months Ended September 30, 2014

Operating Activities. During the nine months ended September 30, 2015, net cash provided by operating activities increased $28.0 million, or 52.5%, to $81.3 million, as compared to $53.3 million for the nine months ended September 30, 2014. The increase was primarily due to the operations of our property acquisitions, partially offset by increased operating expenses.

Investing Activities. During the nine months ended September 30, 2015, net cash used in investing activities decreased $658.3 million, or 68.9%, to $296.7 million, as compared to $955.0 million for the nine months ended September 30, 2014. The decrease was primarily due to a decrease in investments in real estate of $829.2 million, a decrease in real estate deposits of $1.8 million, a decrease in origination costs net of commitment fees related to real estate-related notes receivables of $0.3 million and a decrease in real estate-related notes receivables advances of $14.3 million, partially offset by our Preferred Equity Investment of $127.1 million, our investment in notes receivables of $11.0 million, a decrease in collections of notes receivables of $18.0 million and an increase in capital expenditures of $31.2 million.

Financing Activities. During the nine months ended September 30, 2015, net cash provided by financing activities was $143.7 million. This was primarily due to proceeds of $299.3 million from notes payable and our unsecured credit facility and collections of escrow funds of $1.8 million. We also had cash outflows related to payments of notes payable and our unsecured credit facility of $35.6 million, paid distributions of $42.4 million to our stockholders, paid distributions of $2.1 million to noncontrolling interests, paid $2.2 million to escrow funds, paid deferred financing costs of $2.4 million, repurchased common stock of $5.5 million and purchased the remaining noncontrolling interest in a consolidated partnership in the amount of $67.2 million. During the nine months ended September 30, 2014, net cash provided by financing activities was $969.4 million.

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Distributions

The amount of distributions payable to our stockholders is determined by our board of directors and is dependent on a number of factors, including funds available for distribution, financial condition, capital expenditure requirements and annual distribution requirements needed to maintain our status as a REIT under the Code. To the extent that funds are available, we intend to continue to pay monthly distributions to stockholders. Our board of directors may reduce the amount of distributions paid or suspend distribution payments at any time and therefore distribution payments are not assured. Our Advisor may also defer, suspend and/or waive fees and expense reimbursements if we have not generated sufficient cash flow from our operations and other sources to fund distributions. Additionally, our organizational documents permit us to pay distributions from unlimited amounts of any source, and we may use sources other than operating cash flows to fund distributions, including proceeds from our Offerings, which may reduce the amount of capital we ultimately invest in properties or other permitted investments.

We have funded distributions with operating cash flows from our properties and offering proceeds raised in our Offering and the DRIP Offering. To the extent that we do not have taxable income, distributions paid will be considered a return of capital to stockholders. The following table shows distributions paid during the nine months ended September 30, 2015 and 2014:

	Nine Months Ended September 30,
	2015			2014
Distributions paid in cash - common stockholders	$	42,407,000		$	30,312,000
Distributions reinvested (shares issued)		50,720,000			33,684,000
Total distributions	$	93,127,000		$	63,996,000
Source of distributions:
Cash flows provided by operations (1)	$	42,407,000	46%	$	30,312,000	47%
Offering proceeds from issuance of common stock pursuant to the DRIP (1)		50,720,000	54%		33,684,000	53%
Total sources	$	93,127,000	100%	$	63,996,000	100%

(1) Percentages were calculated by dividing the respective source amount by the total sources of distributions.

Total distributions declared but not paid as of September 30, 2015 were $10.3 million for common stockholders. These distributions were paid on October 1, 2015.

For the nine months ended September 30, 2015, we paid and declared distributions of approximately $93.1 million to common stockholders including shares issued pursuant to the DRIP Offering, as compared to FFO (as defined below) for the nine months ended September 30, 2015 of $87.4 million. The payment of distributions from sources other than FFO may reduce the amount of proceeds available for investment and operations or cause us to incur additional interest expense as a result of borrowed funds.

For a discussion of distributions paid subsequent to September 30, 2015, see Note 16—“Subsequent Events” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

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Contractual Obligations

As of September 30, 2015, we had approximately $829,597,000 of debt outstanding, of which $546,597,000 related to notes payable and $283,000,000 related to our unsecured credit facility. See Note 7—“Notes Payable and Unsecured Credit Facility” to the condensed consolidated financial statements that are a part of this Quarterly Report on Form 10-Q for certain terms of the debt outstanding. Our contractual obligations as of September 30, 2015 were as follows (amounts in thousands):

	Payments due by period
	Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Total
Principal payments — fixed rate debt	$	16,319	$	57,445	$	7,944	$	50,302	$	132,010
Interest payments — fixed rate debt		6,193		10,232		6,183		3,988		26,596
Principal payments — variable rate debt fixed through interest rate swap agreements (1)		7,765		211,085		207,256		—		426,106
Interest payments — variable rate debt fixed through interest rate swap agreements (2)		17,168		31,242		5,904		—		54,314
Principal payments — variable rate debt		1,411		96,373		173,697		—		271,481
Interest payments — variable rate debt		5,734		10,787		6,129		—		22,650
Contingent consideration (3)		—		7,030		—		—		7,030
Capital expenditures		68,914		—		1,720		—		70,634
Total	$	123,504	$	424,194	$	408,833	$	54,290	$	1,010,821

(1) As of September 30, 2015, we had $426.1 million outstanding on notes payable and borrowings under our unsecured credit facility that were fixed through the use of interest rate swap agreements.

(2) We used the fixed rates under our interest rate swap agreements as of September 30, 2015 to calculate the debt payment obligations in future periods.

(3) Contingent consideration represents our best estimate of the cash payments we will be obligated to make under contingent consideration arrangements with a former owner of a property we acquired if specified objectives are achieved by the acquired entity. Our maximum cash payment under this arrangement is $9.1 million in 2016.

Off-Balance Sheet Arrangements

As of September 30, 2015, we had no off-balance sheet arrangements.

Related-Party Transactions and Arrangements

We have entered into agreements with our Advisor and its affiliates, whereby we agree to pay certain fees to, or reimburse certain expenses of, our Advisor or its affiliates for acquisition fees and expenses, organization and offering expenses, asset and property management fees and reimbursement of operating costs. Refer to Note 10—“Related-Party Transactions and Arrangements” to our condensed consolidated financial statements that are a part of this Quarterly Report on Form 10-Q for a detailed discussion of the various related-party transactions and agreements.

Funds from Operations and Modified Funds from Operations

One of our objectives is to provide cash distributions to our stockholders from cash generated by our operations. The purchase of real estate assets and real estate-related investments, and the corresponding expenses associated with that process, is a key operational feature of our business plan in order to generate cash from operations. Due to certain unique operating characteristics of real estate companies, the National Association of Real Estate Investment Trusts, or NAREIT, an industry trade group, has promulgated a measure known as funds from operations, or FFO, which we believe is an appropriate supplemental measure to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental performance measure. FFO is not equivalent to our net income as determined under GAAP.

We define FFO, consistent with NAREIT’s definition, as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property and asset impairment write-downs, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnership and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis.

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We, along with the others in the real estate industry, consider FFO to be an appropriate supplemental measure of a REIT’s operating performance because it is based on a net income analysis of property portfolio performance that excludes non-cash items such as depreciation and amortization and asset impairment write-downs, which we believe provides a more complete understanding of our performance to investors and to our management, and when compared year over year, reflects the impact on our operations from trends in occupancy.

Historical accounting convention (in accordance with GAAP) for real estate assets requires companies to report its investment in real estate at its carrying value, which consists of capitalizing the cost of acquisitions, development, construction, improvements and significant replacements, less depreciation and amortization and asset impairment write-downs, if any, which is not necessarily equivalent to the fair market value of its investment in real estate assets.

The historical accounting convention requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time, which could be the case if such assets are not adequately maintained or repaired and renovated as required by relevant circumstances and/or as requested or required by lessees for operational purposes in order to maintain the value disclosed. We believe that, since fair value of real estate assets historically rises and falls with market conditions including, but not limited to, inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation could be less informative.

In addition, we believe it is appropriate to disregard asset impairment write-downs as it is a non-cash adjustment to recognize losses on prospective sales of real estate assets. Since losses from sales of real estate assets are excluded from FFO, we believe it is appropriate that asset impairment write-downs in advancement of realization of losses should be excluded. Impairment write-downs are based on negative market fluctuations and underlying assessments of general market conditions, which are independent of our operating performance, including, but not limited to, a significant adverse change in the financial condition of our tenants, changes in supply and demand for similar or competing properties, changes in tax, real estate, environmental and zoning law, which can change over time. When indicators of potential impairment suggest that the carrying value of real estate and related assets may not be recoverable, we assess the recoverability by estimating whether we will recover the carrying value of the asset through undiscounted future cash flows and eventual disposition (including, but not limited to, net rental and lease revenues, net proceeds on the sale of property and any other ancillary cash flows at a property or group level under GAAP). If based on this analysis, we do not believe that we will be able to recover the carrying value of the real estate asset, we will record an impairment write-down to the extent that the carrying value exceeds the estimated fair value of the real estate asset. Testing for indicators of impairment is a continuous process and is analyzed on a quarterly basis. Investors should note, however, that determinations of whether impairment charges have been incurred are based partly on anticipated operating performance, because estimated undiscounted future cash flows from a property, including estimated future net rental and lease revenues, net proceeds on the sale of the property, and certain other ancillary cash flows, are taken into account in determining whether an impairment charge has been incurred. While impairment charges are excluded from the calculation of FFO as described above, investors are cautioned that due to the fact that impairments are based on estimated future undiscounted cash flows and that we intend to have a relatively limited term of our operations, it could be difficult to recover any impairment charges through the eventual sale of the property. No impairment losses have been recorded to date.

In developing estimates of expected future cash flow, we make certain assumptions regarding future market rental income amounts subsequent to the expiration of current lease arrangements, property operating expenses, terminal capitalization and discount rates, the expected number of months it takes to re-lease the property, required tenant improvements and the number of years the property will be held for investment. The use of alternative assumptions in the future cash flow analysis could result in a different determination of the property’s future cash flows and a different conclusion regarding the existence of an asset impairment, the extent of such loss, if any, as well as the carrying value of the real estate asset.

Publicly registered, non-listed REITs, such as ours, typically have a significant amount of acquisition activity and are substantially more dynamic during their initial years of investment and operations. While other start up entities may also experience significant acquisition activity during their initial years, we believe that publicly registered, non-listed REITs are unique in that they have a limited life with targeted exit strategies within a relatively limited time frame after the acquisition activity ceases. We will use the proceeds raised in our offering to acquire real estate assets and real estate-related investments, and we intend to begin the process of achieving a liquidity event (i.e., listing of our shares of common stock on a national securities exchange, a merger or sale, the sale of all or substantially all of our assets, or another similar transaction) within five years after the completion of our offering stage, which is generally comparable to other publicly registered, non-listed REITs. Thus, we do not intend to continuously purchase real estate assets and intend to have a limited life. Due to these factors and other unique features of publicly registered, non-listed REITS, the Investment Program Association, or the IPA, an industry trade group, has standardized a measure known as modified funds from operations, or MFFO, which we believe to be another appropriate supplemental measure to reflect the operating performance of a publicly registered, non-listed REIT. MFFO is a metric used by management to evaluate sustainable performance and dividend policy. MFFO is not equivalent to our net income as determined under GAAP.

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We define MFFO, a non-GAAP measure, consistent with the IPA’s definition: FFO further adjusted for the following items included in the determination of GAAP net income; acquisition fees and expenses; amounts related to straight-line rental income and amortization of above and below intangible lease assets and liabilities; accretion of discounts and amortization of premiums on debt investments; mark-to-market adjustments included in net income; nonrecurring gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, adjustments related to contingent purchase price obligations where such adjustments have been included in the derivation of GAAP net income, and after adjustments for a consolidated and unconsolidated partnership and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. Our MFFO calculation complies with the IPA’s Practice Guideline, described above. In calculating MFFO, we exclude paid and accrued acquisition fees and expenses that are reported in our condensed consolidated statements of comprehensive income, amortization of above and below-market leases, adjustments related to contingent purchase price obligations, amounts related to straight-line rents (which are adjusted in order to reflect such payments from a GAAP accrual basis to closer to an expected to be received cash basis of disclosing the rent and lease payments); and the adjustments of such items related to noncontrolling interests in our Operating Partnership. The other adjustments included in the IPA’s guidelines are not applicable to us.

Since MFFO excludes acquisition fees and expenses, it should not be construed as a historic performance measure. Acquisition fees and expenses are paid in cash by us, and we have not set aside or put into escrow any specific amount of proceeds from our offerings to be used to fund acquisition fees and expenses. Acquisition fees and expenses include payments to our Advisor or its affiliates and third parties. Such fees and expenses will not be reimbursed by our Advisor or its affiliates and third parties, and therefore if there are no further proceeds from the sale of shares of our common stock to fund future acquisition fees and expenses, such fees and expenses will need to be paid from either additional debt, operational earnings or cash flows, net proceeds from the sale of properties, or from ancillary cash flows. As a result, the amount of proceeds available for investment and operations would be reduced, or we may incur additional interest expense as a result of borrowed funds. Nevertheless, our Advisor or its affiliates will not accrue any claim on our assets if acquisition fees and expenses are not paid from the proceeds of our offerings. Under GAAP, acquisition fees and expenses related to the acquisition of properties determined to be business combinations are expensed as incurred, including investment transactions that are no longer under consideration, and are included in acquisition related expenses in the accompanying condensed consolidated statements of comprehensive income and acquisition fees and expenses associated with transactions determined to be an asset purchase are capitalized.

All paid and accrued acquisition fees and expenses have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of other properties are generated to cover the purchase price of the real estate asset, these fees and expenses and other costs related to such property. In addition, MFFO may not be an indicator of our operating performance, especially during periods in which properties are being acquired.

In addition, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income in determining cash flows from operations in accordance with GAAP.

We use MFFO and the adjustments used to calculate it in order to evaluate our performance against other publicly registered, non-listed REITs, which intend to have limited lives with short and defined acquisition periods and targeted exit strategies shortly thereafter. As noted above, MFFO may not be a useful measure of the impact of long-term operating performance if we do not continue to operate in this manner. We believe that our use of MFFO and the adjustments used to calculate it allow us to present our performance in a manner that reflects certain characteristics that are unique to publicly registered, non-listed REITs, such as their limited life, limited and defined acquisition period and targeted exit strategy, and hence the use of such measures may be useful to investors. For example, acquisition fees and expenses are intended to be funded from the proceeds of our offering and other financing sources and not from operations. By excluding acquisition fees and expenses, the use of MFFO provides information consistent with management’s analysis of the operating performance of its real estate assets. Additionally, fair value adjustments, which are based on the impact of current market fluctuations and underlying assessments of general market conditions, but can also result from operational factors such as rental and occupancy rates, may not be directly related or attributable to our current operating performance. By excluding such charges that may reflect anticipated and unrealized gains or losses, we believe MFFO provides useful supplemental information.

Presentation of this information is intended to assist management and investors in comparing the operating performance of different REITs, although it should be noted that not all REITs calculate FFO and MFFO the same way, so comparisons with other REITs may not be meaningful. Furthermore, FFO and MFFO are not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income as an indication of our performance, as an indication of our liquidity, or indicative of funds available to fund our cash needs, including our ability to make distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with other measurements as an indication of our performance. MFFO has limitations as a performance measure in an offering such as ours where the price of a share of common stock is stated value and there is no asset value determination during the offering stage for a period thereafter. MFFO may be useful in assisting management and investors in assessing the sustainability of operating performance in future operating periods, and in particular, after the offering and acquisition stages are complete and net asset value is disclosed. MFFO is not a useful measure in evaluating net asset value since impairment write-downs are taken into account in determining net asset value but not in determining MFFO.

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FFO and MFFO, as described above, should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operational performance. The method used to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operation performance and considered more prominently than the non-GAAP FFO and measures and the adjustments to GAAP in calculating FFO and MFFO. MFFO has not been scrutinized to the level of other similar non-GAAP performance measures by the SEC or any other regulatory body.

The following is a reconciliation of net income attributable to controlling interests, which is the most directly comparable GAAP financial measure, to FFO and MFFO for the three and nine months ended September 30, 2015 and 2014 (amounts in thousands, except share data and per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net income attributable to common stockholders	$	13,572		$	7,354		$	42,350		$	18,803
Adjustments:
Depreciation and amortization		16,369			13,002			48,597			31,275
Noncontrolling interests’ share of the above adjustments related to the consolidated partnerships		(876)			(1,294)			(3,563)			(2,956)
FFO	$	29,065		$	19,062		$	87,384		$	47,122
Adjustments:
Acquisition related expenses (1)	$	—		$	4,087		$	3,654		$	10,598
Amortization of intangible assets and liabilities (2)		(1,022)			(1,043)			(3,776)			(3,002)
Change in fair value of contingent consideration		160			—			460			—
Straight-line rents (3)		(4,326)			(5,044)			(15,787)			(11,634)
Noncontrolling interests’ share of the above adjustments related to the consolidated partnerships		484	(4)		828	(5)		2,358	(6)		1,791	(7)
MFFO	$	24,361		$	17,890		$	74,293		$	44,875
Weighted average common shares outstanding - basic		179,270,022			172,914,286			177,717,870			133,908,958
Weighted average common shares outstanding - diluted		179,286,709			172,931,516			177,736,797			133,928,250
Net income per common share - basic	$	0.08		$	0.04		$	0.24		$	0.14
Net income per common share - diluted	$	0.08		$	0.04		$	0.24		$	0.14
FFO per common share - basic	$	0.16		$	0.11		$	0.49		$	0.35
FFO per common share - diluted	$	0.16		$	0.11		$	0.49		$	0.35

(1) In evaluating investments in real estate assets, management differentiates the costs to acquire the investment from the operations derived from the investment. Such information would be comparable only for publicly registered, non-listed REITs that have completed their acquisitions activities and have other similar operating characteristics. By excluding expensed acquisition related expenses, management believes MFFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management’s analysis of the investing and operating performance of our properties. Acquisition fees and expenses include payments in cash to our Advisor and third parties. Acquisition fees and expenses incurred in a business combination, under GAAP, are considered operating expenses and as expenses are included in the determination of net income, which is a performance measure under GAAP. All paid and accrued acquisition fees and expenses will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of properties are generated to cover the purchase price of the property, these fees and expenses and other costs related to the property.

35

(2) Under GAAP, certain intangibles are accounted for at cost and reviewed at least annually for impairment, and certain intangibles are assumed to diminish predictably in value over time and are amortized, similar to depreciation and amortization of real estate-related assets that are excluded from FFO. However, because real estate values and market lease rates historically rise or fall with market conditions, management believes that by excluding charges related to amortization of these intangibles, MFFO provides useful supplemental information on the performance of the real estate.

(3) Under GAAP, rental revenue is recognized on a straight-line basis over the terms of the related lease (including rent holidays if applicable). This may result in income recognition that is significantly different than the underlying contract terms. By adjusting for the change in deferred rent receivables, MFFO may provide useful supplemental information on the realized economic impact of lease terms, providing insight on the expected contractual cash flows of such lease terms, and aligns with our analysis of operating performance.

(4) Of this amount, $120,000 related to straight-line rents and $364,000 related to above- and below-market leases.

(5) Of this amount, $468,000 related to straight-line rents and $360,000 related to above- and below-market leases.

(6) Of this amount, $1,265,000 related to straight-line rents and $1,093,000 related to above- and below-market leases.

(7) Of this amount, $702,000 related to straight-line rents and $1,089,000 related to above- and below-market leases.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. In pursuing our business plan, the primary market risk to which we are exposed is interest rate risk.

We have obtained variable rate debt financing to fund certain property acquisitions, and we are exposed to changes in the one-month LIBOR. Our objectives in managing interest rate risks seek to limit the impact of interest rate changes on operations and cash flows, and to lower overall borrowing costs. To achieve these objectives, we will borrow primarily at interest rates with the lowest margins available and, in some cases, with the ability to convert variable interest rates to fixed rates.

We have entered, and may continue to enter, into derivative financial instruments, such as interest rate swaps, in order to mitigate our interest rate risk on a given variable rate financial instrument. To the extent we do, we are exposed to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. When the fair value of a derivative contract is negative, we owe the counterparty and, therefore, it does not possess credit risk. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. We manage the market risk associated with interest rate contracts by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. We have not entered, and do not intend to enter, into derivative or interest rate transactions for speculative purposes. We may also enter into rate-lock arrangements to lock interest rates on future borrowings.

As of September 30, 2015, we had eight fixed rate notes payable in the aggregate amount of $132.0 million, six variable rate notes payable in the aggregate amount of $299.6 million that were fixed through interest rate swap agreements, one variable rate note payable in the aggregate amount of $19.7 million, one note payable in the aggregate amount of $95.3 million, of which $71.5 million was fixed through an interest rate swap agreement and $23.8 million was variable rate and $283.0 million borrowed under our unsecured credit facility, of which $55.0 million was fixed through interest rate swap agreements and $228.0 million was variable rate. As of September 30, 2015, the weighted average interest rate on notes payable and our unsecured credit facility was 3.8%.

As of September 30, 2015, $271.5 million of the $829.6 million total debt outstanding was subject to variable interest rates with a weighted average interest rate of 2.4% per annum. As of September 30, 2015, an increase of 50 basis points in the market rates of interest would have resulted in a change in interest expense of $1.4 million per year, assuming all of our derivatives remained effective hedges.

As of September 30, 2015, we had 14 interest rate swap agreements outstanding, which mature on various dates from October 2017 through July 2019, with an aggregate notional amount under the swap agreements of $426.1 million and an aggregate settlement value of $(7.3) million. The settlement value of these interest rate swap agreements is dependent upon existing market interest rates and swap spreads. As of September 30, 2015, an increase of 50 basis points in the market rates of interest would have resulted in an increase to the settlement value of these interest rate swaps to $(0.9) million. These interest rate swaps were designated as hedging instruments.

We do not have any foreign operations and thus we are not exposed to foreign currency fluctuations.

36

Item 4. Controls and Procedures.

(a) Evaluation of disclosure controls and procedures. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports pursuant to the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and we necessarily were required to apply our judgement in evaluating whether the benefits of the controls and procedures that we adopt outweigh their costs.

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, an evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q was conducted under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures, as of September 30, 2015, were effective, in all material respects, for the purposes stated above.

(b) Changes in internal control over financial reporting. There have been no changes in our internal controls over financial reporting that occurred during the three months ended September 30, 2015, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

37

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

We are not aware of any material pending legal proceedings to which we are a party or to which our properties are the subject.

Item 1A. Risk Factors.

There have been no material changes from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the SEC on March 26, 2015, except as noted below.

Distributions paid from sources other than our cash flow from operations will result in us having fewer funds available for the acquisition of properties and other real estate-related investments, which may adversely affect our ability to fund future distributions with cash flow from operations and may adversely affect your overall return.

We have paid, and may continue to pay, distributions from sources other than from our cash flows from operations. For the nine months ended September 30, 2015, our cash flows provided by operations of approximately $81.3 million was a shortfall of $11.8 million, or 12.7%, of our distributions paid (total distributions were approximately $93.1 million, of which $42.4 million was cash and $50.7 million was reinvested in shares of our common stock pursuant to the DRIP Offering) during such period and such shortfall was paid from proceeds from our Offerings and borrowings. For the year ended December 31, 2014, our cash flows provided by operations of approximately $70.1 million was a shortfall of $24.3 million, or 25.7%, of our distributions paid (total distributions were approximately $94.4 million, of which $44.0 million was cash and $50.4 million was reinvested in shares of our common stock pursuant to the DRIP and the DRIP Offering) during such period and such shortfall was paid from proceeds from our Offering. Additionally, we may in the future pay distributions from sources other than from our cash flow from operations. Until we acquire additional properties or other real estate-related investments, we may not generate sufficient cash flow from operations to pay distributions. Our inability to acquire additional properties or other real estate-related investments may result in a lower return on your investment than you expect.

We do not have any limits on the sources of funding distribution payments to our stockholders. We may pay, and have no limits on the amounts we may pay, distributions from any source, such as from borrowings, the sale of assets, the sale of additional securities, advances from our advisor, our advisor’s deferral, suspension and/or waiver of its fees and expense reimbursements and offering proceeds. Funding distributions from borrowings could restrict the amount we can borrow for investments, which may affect our profitability. Funding distributions with the sale of assets may affect our ability to generate cash flows. Funding distributions from the sale of additional securities could dilute your interest in us if we sell shares of our common stock to third party investors. If we fund distributions from the proceeds of our Offerings, we will have less funds available for acquiring properties or real estate-related investments. Our inability to acquire additional properties or real estate-related investments may have a negative effect on our investors’ ability to generate sufficient cash flow from operations to pay distributions. As a result, the return investors may realize on their investment may be reduced and investors who invest in us before we generate significant cash flow may realize a lower rate of return than later investors. Payment of distributions from any of the above-mentioned sources could restrict our ability to generate sufficient cash flow from operations, affect our profitability and/or affect the distributions payable upon a liquidity event, any or all of which may have an adverse effect on an investment in us.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered Sales of Equity Securities

On July 17, 2015, we granted an aggregate of 9,000 shares of common stock under our 2010 Restricted Share Plan to our independent directors in connection with such independent directors’ re-election to our board of directors. The shares were not registered under the Securities Act and were issued in reliance on Section 4(2) of the Securities Act. There were no other sales of unregistered securities during the three months ended September 30, 2015.

Use of Public Offering Proceeds

As of September 30, 2015, we had issued approximately 180.9 million shares of common stock in our Offerings for gross proceeds of $1,794.6 million out of which we paid $156.5 million in selling commissions and dealer manager fees, $18.2 million in organization and offering costs and $52.9 million in acquisition related expenses to our Advisor or its affiliates. With the net offering proceeds, we acquired $2,118.1 million in real estate investments, $117.2 million in real estate-related notes receivables and $127.1 million in a preferred equity investment. In addition, we invested $63.6 million in expenditures for capital improvements related to certain real estate investments.

Upon termination of our Offering on June 6, 2014, we had issued 172.6 million shares of common stock in our Offering for gross proceeds of $1,716.0 million.

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Share Repurchase Program

Our share repurchase program permits stockholders to sell their shares back to us after they have held them for at least one year, subject to certain conditions and limitations. We will limit the number of shares repurchased during any calendar year to 5.0% of the number of shares of our common stock outstanding on December 31st of the previous calendar year. In addition, the share repurchase program provides that all redemptions during any calendar year, including those upon death or a qualifying disability of a stockholder, are limited to those that can be funded with proceeds raised from the DRIP Offering during the prior calendar year and other operating funds, if any, as the board of directors, in its sole discretion, may reserve for this purpose. Our board of directors has the right, in its sole discretion, to waive such holding requirement in the event of the death or qualifying disability of a stockholder, other involuntary exigent circumstances, such as bankruptcy, or a mandatory requirement under a stockholder’s IRA.

During the three months ended September 30, 2015, we fulfilled the following repurchase requests pursuant to our share repurchase program:

Period	Total Number of Shares Repurchased		Average Price Paid per Share		Total Numbers of Shares Purchased as Part of Publicly Announced Plans and Programs		Approximate Dollar Value of Shares Available that may yet be Repurchased under  the Program
07/01/2015 - 07/31/2015		112,728	$	9.52		112,728	$	—
08/01/2015 - 08/31/2015		72,870	$	9.66		72,870	$	—
09/01/2015 - 09/30/2015		58,600	$	9.44		58,600	$	—
Total		244,198				244,198

During the three months ended September 30, 2015, we redeemed approximately $2,330,000 of common stock, which represented all repurchase requests received in good order and eligible for repurchase during the three months ended September 30, 2015 repurchase date.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

The exhibits listed on the Exhibit Index (following the signatures section of this Quarterly Report on Form 10-Q) are filed herewith, or incorporated by reference.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CARTER VALIDUS MISSION CRITICAL REIT, INC.
	(Registrant)
Date: November 16, 2015	By:	/s/    JOHN E. CARTER
		John E. Carter
		Chief Executive Officer
		(Principal Executive Officer)

Date: November 16, 2015	By:	/s/    TODD M. SAKOW
		Todd M. Sakow
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

40

EXHIBIT INDEX

Pursuant to Item 601(a)(2) of Regulation S-K, this Exhibit Index immediately precedes the exhibits.

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the nine months ended September 30, 2015 (and are numbered in accordance with Item 601 of Regulation S-K).

Exhibit No:
3.1	Articles of Amendment and Restatement (included as Exhibit 3.4 to the Pre-Effective Amendment No. 3 to the Registrant’s Registration Statement on Form S-11 (Commission File No. 333-165643) filed on November 16, 2010, and incorporated herein by reference)
3.2	First Amendment to Articles of Amendment and Restatement (incorporated by reference to Registrant’s Current Report on Form 8-K filed on March 31, 2011)
3.3*	Second Articles of Amendment and Restatement
3.4	Bylaws of Carter Validus Mission Critical REIT, Inc. (incorporated by reference to Registrant’s Registration Statement on Form S-11 (Commission File No. 333-165643) filed on March 23, 2010, and incorporated herein by reference)
3.5*	Amended and Restated Bylaws of Carter Validus Mission Critical REIT, Inc.
3.4	Agreement of Limited Partnership of Carter/Validus Operating Partnership, LP (included as Exhibit 10.5 to the Pre-Effective Amendment No. 3 to the Registrant’s Registration Statement on Form S-11 (Commission File No. 333-165643) filed on November 16, 2010, and incorporated herein by reference)
4.1	Distribution Reinvestment Plan (included as Appendix A to the prospectus dated April 14, 2014 attached to the Registrant’s Registration Statement on Form S-3, filed on April 14, 2014, and incorporated herein by reference)
4.2	Carter Validus Mission Critical REIT, Inc. 2010 Restricted Share Plan (included as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 24, 2011, and incorporated herein by reference)
4.3	Form of Restricted Stock Award Agreement (included as Exhibit 10.6 to the Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form S-11 (Commission File No. 333-165643) filed on June 25, 2010, and incorporated herein by reference)
10.1	First Amendment to Second Amended and Restated Credit Agreement and Amendment to Other Loan Documents, dated August 21, 2015, by and among Carter/Validus Operating Partnership, LP, Carter Validus Mission Critical REIT, Inc., the guarantors and the lenders party thereto (included as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (Commission File No. 000-54675) filed on August 25, 2015, and incorporated herein by reference).
10.2	Term Loan Agreement, dated August 21, 2015, by and among Carter/Validus Operating Partnership, LP, as borrower, KeyBank National Association, the other lenders which are parties to this agreement and other lenders that may become parties to this agreement, KeyBank National Association, as administrative agent, Capital One, National Association, as documentation agent, and Bank of America, N.A., as co-syndication agent, and Suntrust Bank, as co-syndication agent, and Fifth Third Bank, as co-syndication agent, and KeyBanc Capital Markets, Inc., Capital One, National Association, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Suntrust Robinson Humphrey, Inc. as joint lead arrangers and joint book runners (included as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (Commission File No. 000-54675) filed on August 25, 2015, and incorporated herein by reference).
10.3	Contribution Agreement, dated August 21, 2015, by and among Carter/Validus Operating Partnership, LP, Carter Validus Mission Critical REIT, Inc., and the other subsidiary guarantors as identified therein (included as Exhibit 10.3 to the Registrant’s Current Report on Form 8-K (Commission File No. 000-54675) filed on August 25, 2015, and incorporated herein by reference).
10.4	Unconditional Guaranty of Payment and Performance, dated August 21, 2015, from Carter Validus Mission Critical REIT, Inc., et al. for the benefit of KeyBank National Association (included as Exhibit 10.4 to the Registrant’s Current Report on Form 8-K (Commission File No. 000-54675) filed on August 25, 2015, and incorporated herein by reference).
10.5	Term Loan Note, dated August 21, 2015, from Carter/Validus Operating Partnership, LP to Capital One, National Association (included as Exhibit 10.5 to the Registrant’s Current Report on Form 8-K (Commission File No. 000-54675) filed on August 25, 2015, and incorporated herein by reference).

41

10.6	Term Loan Note, dated August 21, 2015, from Carter/Validus Operating Partnership, LP to Synovus Bank (included as Exhibit 10.6 to the Registrant’s Current Report on Form 8-K (Commission File No. 000-54675) filed on August 25, 2015, and incorporated herein by reference).
10.7	Term Loan Note, dated August 21, 2015, from Carter/Validus Operating Partnership, LP to Eastern Bank (included as Exhibit 10.7 to the Registrant’s Current Report on Form 8-K (Commission File No. 000-54675) filed on August 25, 2015, and incorporated herein by reference).
10.8	Term Loan Note, dated August 21, 2015, from Carter/Validus Operating Partnership, LP to SunTrust Bank (included as Exhibit 10.8 to the Registrant’s Current Report on Form 8-K (Commission File No. 000-54675) filed on August 25, 2015, and incorporated herein by reference).
10.9	Term Loan Note, dated August 21, 2015, from Carter/Validus Operating Partnership, LP to Bank of America, N.A. (included as Exhibit 10.9 to the Registrant’s Current Report on Form 8-K (Commission File No. 000-54675) filed on August 25, 2015, and incorporated herein by reference).
10.10	Term Loan Note, dated August 21, 2015, from Carter/Validus Operating Partnership, LP to KeyBank National Association (included as Exhibit 10.10 to the Registrant’s Current Report on Form 8-K (Commission File No. 000-54675) filed on August 25, 2015, and incorporated herein by reference).
10.11	Term Loan Note, dated August 21, 2015, from Carter/Validus Operating Partnership, LP to Cadence Bank, N.A. (included as Exhibit 10.11 to the Registrant’s Current Report on Form 8-K (Commission File No. 000-54675) filed on August 25, 2015, and incorporated herein by reference).
10.12	Term Loan Note, dated August 21, 2015, from Carter/Validus Operating Partnership, LP to Renasant Bank (included as Exhibit 10.12 to the Registrant’s Current Report on Form 8-K (Commission File No. 000-54675) filed on August 25, 2015, and incorporated herein by reference).
10.13	Term Loan Note, dated August 21, 2015, from Carter/Validus Operating Partnership, LP to Hancock Bank (included as Exhibit 10.13 to the Registrant’s Current Report on Form 8-K (Commission File No. 000-54675) filed on August 25, 2015, and incorporated herein by reference).
10.14	Term Loan Note, dated August 21, 2015, from Carter/Validus Operating Partnership, LP to Woodforest National Bank (included as Exhibit 10.14 to the Registrant’s Current Report on Form 8-K (Commission File No. 000-54675) filed on August 25, 2015, and incorporated herein by reference).
10.15	Term Loan Note, dated August 21, 2015, from Carter/Validus Operating Partnership, LP to Fifth Third Bank (included as Exhibit 10.15 to the Registrant’s Current Report on Form 8-K (Commission File No. 000-54675) filed on August 25, 2015, and incorporated herein by reference).
10.16	Term Loan Note, dated August 21, 2015, from Carter/Validus Operating Partnership, LP to Mega International Commercial Bank Co., Ltd. Silicon Valley Branch (included as Exhibit 10.16 to the Registrant’s Current Report on Form 8-K (Commission File No. 000-54675) filed on August 25, 2015, and incorporated herein by reference).
10.17	Term Loan Note, dated August 21, 2015, from Carter/Validus Operating Partnership, LP to Texas Capital Bank, N.A. (included as Exhibit 10.17 to the Registrant’s Current Report on Form 8-K (Commission File No. 000-54675) filed on August 25, 2015, and incorporated herein by reference).
10.18	Joinder Agreement, dated August 21, 2015, by DC-1650 UNION HILL ROAD, LLC, HC-800 EAST 68th STREET, LLC, HCP-RTS, LLC, HC-77-840 FLORA ROAD, LLC, HC-40055 BOB HOPE DRIVE, LLC, HC-58295 29 PALMS HIGHWAY, LLC, HC-8991 BRIGHTON LANE, LLC, HC-6555 CORTEZ, LLC, HC-601 REDSTONE AVENUE WEST, LLC, HC-2270 COLONIAL BLVD, LLC, HC-2234 COLONIAL BLVD, LLC, HC-1026 MAR WALT DRIVE NW, LLC, HC-7751 BAYMEADOWS RD. E., LLC, HC-1120 LEE BOULEVARD, LLC, HC-8625 COLLIER BLVD., LLC, HC-6879 US HIGHWAY 98 WEST, LLC, HC-7850 N. UNIVERSITY DRIVE, LLC, HC-#2 PHYSICIANS PARK DR., LLC, HC-52 NORTH PECOS ROAD, LLC, HC-6160 S. FORT APACHE ROAD, LLC, HC-187 SKYLAR DRIVE, LLC, HC-860 PARKVIEW DRIVE NORTH, UNITS A&B, LLC and HC-6310 HEALTH PKWY., UNITS 100 & 200, LLC to KeyBank National Association, as Agent (included as Exhibit 10.18 to the Registrant’s Current Report on Form 8-K (Commission File No. 000-54675) filed on August 25, 2015, and incorporated herein by reference).
10.19	Form of Indemnification Agreement entered into between Carter Validus Mission Critical REIT, Inc. and each of the following persons as of August 26, 2015: John E. Carter, Lisa Drummond, Mario Garcia, Jr., Jonathan Kuchin, Randall Greene, Ronald Rayevich, Todd M. Sakow and Michael A. Seton (included as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (Commission File No. 000-54675) filed on August 26, 2015, and incorporated herein by reference).
31.1*	Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

42

32.1**	Certification of Chief Executive Officer and Chief Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1	Press Release, dated September 9, 2015 (included as Exhibit 99.1 to the Registrant’s Current Report on Form 8-K (Commission File No. 000-54675) filed on September 9, 2015 and incorporated herein by reference).
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

** Furnished herewith in accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

43

EX-3.3

Exhibit 3.3

SECOND ARTICLES OF

AMENDMENT AND RESTATEMENT

FOR

CARTER VALIDUS MISSION CRITICAL REIT, INC.

a Maryland Corporation

TABLE OF CONTENTS

		PAGE
ARTICLE I	NAME		1
ARTICLE II	PURPOSES AND POWERS		1
ARTICLE III	RESIDENT AGENT AND PRINCIPAL OFFICE		1
ARTICLE IV	DEFINITIONS		1
ARTICLE V	STOCK		7
SECTION 5.1	AUTHORIZED SHARES		7
SECTION 5.2	COMMON SHARES		7
SECTION 5.3	PREFERRED SHARES		8
SECTION 5.4	CLASSIFIED OR RECLASSIFIED SHARES		8
SECTION 5.5	STOCKHOLDERS’ CONSENT IN LIEU OF MEETING		8
SECTION 5.6	CHARTER AND BYLAWS		9
SECTION 5.7	NO ISSUANCE OF SHARE CERTIFICATES		9
SECTION 5.8	SUITABILITY OF STOCKHOLDERS.		9
SECTION 5.9	RESTRICTIONS ON OWNERSHIP AND TRANSFER		10
SECTION 5.10	SETTLEMENTS		15
SECTION 5.11	SEVERABILITY		15
SECTION 5.12	ENFORCEMENT		16
SECTION 5.13	NON-WAIVER		16
SECTION 5.14	REPURCHASE OF SHARES		16
SECTION 5.15	DISTRIBUTION REINVESTMENT PLANS		16
SECTION 5.16	PREEMPTIVE AND APPRAISAL RIGHTS		16
ARTICLE VI	BOARD OF DIRECTORS		16
SECTION 6.1	NUMBER OF DIRECTORS		16
SECTION 6.2	EXPERIENCE		17
SECTION 6.3	COMMITTEES		17
SECTION 6.4	TERM		17
SECTION 6.5	FIDUCIARY OBLIGATIONS		17
SECTION 6.6	RESIGNATION, REMOVAL OR DEATH		17
ARTICLE VII	POWERS OF THE BOARD OF DIRECTORS		17
SECTION 7.1	GENERAL		17
SECTION 7.2	AUTHORIZATION BY BOARD OF STOCK ISSUANCE		17
SECTION 7.3	FINANCINGS		18
SECTION 7.4	REIT QUALIFICATION		18
SECTION 7.5	DETERMINATIONS BY BOARD		18
SECTION 7.6	STOCKHOLDER CONCURRENCE REQUIRED		18
SECTION 7.7	VOTE OF MAJORITY OF INDEPENDENT DIRECTORS REQUIRED		18
ARTICLE VIII	ADVISOR		19
SECTION 8.1	APPOINTMENT AND INITIAL INVESTMENT OF ADVISOR		19

i

SECTION 8.2	SUPERVISION OF ADVISOR	19
SECTION 8.3	FIDUCIARY OBLIGATIONS	20
SECTION 8.4	AFFILIATION AND FUNCTIONS	20
SECTION 8.5	TERMINATION	20
SECTION 8.6	DISPOSITION FEE ON SALE OF PROPERTY	20
SECTION 8.7	INCENTIVE FEES	20
SECTION 8.8	SUBORDINATED INCENTIVE LISTING FEE	20
SECTION 8.9	SUBORDINATED PARTICIPATION IN NET SALE PROCEEDS	20
SECTION 8.10	ORGANIZATION AND OFFERING EXPENSES LIMITATION	20
SECTION 8.11	ACQUISITION FEES	20
SECTION 8.12	FINANCING COORDINATION FEE	21
SECTION 8.13	ASSET MANAGEMENT FEE	21
SECTION 8.14	EFFECT OF LISTING	21
ARTICLE IX	INVESTMENT OBJECTIVES AND LIMITATIONS	21
SECTION 9.1	REVIEW OF OBJECTIVES	21
SECTION 9.2	CERTAIN PERMITTED INVESTMENTS	21
SECTION 9.3	INVESTMENT LIMITATIONS	21
ARTICLE X	CONFLICTS OF INTEREST	23
SECTION 10.1	SALES AND LEASES TO THE COMPANY	23
SECTION 10.2	SALES AND LEASES TO THE SPONSOR, ADVISOR, DIRECTORS OR AFFILIATES	23
SECTION 10.3	OTHER TRANSACTIONS	23
SECTION 10.4	CONFLICT RESOLUTION PROCEDURES	24
ARTICLE XI	STOCKHOLDERS	24
SECTION 11.1	MEETINGS OF STOCKHOLDERS	24
SECTION 11.2	VOTING RIGHTS OF STOCKHOLDERS	25
SECTION 11.3	EXTRAORDINARY ACTIONS	25
SECTION 11.4	VOTING LIMITATIONS ON SHARES HELD BY THE ADVISOR, DIRECTORS AND AFFILIATES	25
SECTION 11.5	RIGHT OF INSPECTION	25
SECTION 11.6	ACCESS TO STOCKHOLDER LIST	25
SECTION 11.7	REPORTS	26
SECTION 11.8	TENDER OFFERS	26
ARTICLE XII	LIABILITY OF STOCKHOLDERS, DIRECTORS, ADVISORS AND AFFILIATES	27
SECTION 12.1	LIMITATION OF STOCKHOLDER LIABILITY	27
SECTION 12.2	LIMITATION OF DIRECTOR AND OFFICER LIABILITY; INDEMNIFICATION	27
SECTION 12.3	RESERVED	27
SECTION 12.4	EXPRESS EXCULPATORY CLAUSES IN INSTRUMENTS	27
ARTICLE XIII	AMENDMENTS	28
ARTICLE XIV	DURATION	28

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CARTER VALIDUS MISSION CRITICAL REIT, INC.

SECOND ARTICLES OF AMENDMENT AND RESTATEMENT

FIRST:        Carter Validus Mission Critical REIT, Inc., a Maryland corporation, desires to amend and restate its charter as currently in effect and as hereinafter amended.

SECOND:   The following provisions are all the provisions of the charter currently in effect and as hereinafter amended:

ARTICLE I

INCORPORATOR AND NAME

Leon Volchyok, whose address is c/o Proskauer Rose LLP, 1585 Broadway, New York, New York 10036, being at least 18 years of age, formed a corporation under the general laws of the State of Maryland on December 16, 2009. The name of the corporation is Carter Validus Mission Critical REIT, Inc. (the “Company”). So far as may be practicable, the business of the Company shall be conducted and transacted under that name.

ARTICLE II

PURPOSES AND POWERS

The purposes for which the Company is formed are to engage in any lawful act or activity (including, without limitation or obligation, qualifying and engaging in business as a real estate investment trust under Sections 856 through 860, or any successor sections, of the Internal Revenue Code of 1986, as amended (the “Code”)), for which corporations may be organized under the MGCL and the general laws of the State of Maryland as now or hereafter in force.

ARTICLE III

RESIDENT AGENT AND PRINCIPAL OFFICE

The name and address of the resident agent for service of process of the Company in the State of Maryland is The Corporation Trust Incorporated, 351 West Camden Street, Baltimore, Maryland 21201. The address of the Company’s principal office in the State of Maryland is c/o The Corporation Trust Incorporated, 351 West Camden Street, Baltimore, Maryland 21201. The Company may have such other offices and places of business within or outside the State of Maryland as the Board may from time to time determine.

ARTICLE IV

DEFINITIONS

As used in the Charter, the following terms shall have the following meanings unless the context otherwise requires:

“ACQUISITION EXPENSES” means any and all expenses incurred by the Company, the Advisor, or any Affiliate of either in connection with the selection, acquisition or development of any Asset, whether or not acquired, including, without limitation, legal fees and expenses, travel and communications expenses, costs of appraisals, nonrefundable option payments on property not acquired, accounting fees and expenses, and title insurance premiums.

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“ACQUISITION FEE” means any and all fees and commissions, exclusive of Acquisition Expenses, paid by any Person to any other Person (including any fees or commissions paid by or to any Affiliate of the Company or the Advisor) in connection with making or investing in Mortgages or the purchase, development or construction of a Property, including real estate commissions, selection fees, Development Fees, Construction Fees, nonrecurring management fees, loan fees, points or any other fees of a similar nature. Excluded shall be Development Fees and Construction Fees paid to any Person not affiliated with the Sponsor in connection with the actual development and construction of a project.

“ADVISOR” or “ADVISORS” means the Person or Persons, if any, appointed, employed or contracted with by the Company pursuant to Section 8.1 hereof and responsible for directing or performing the day-to-day business affairs of the Company, including any Person to whom the Advisor subcontracts all or substantially all of such functions.

“ADVISORY AGREEMENT” means the agreement between the Company and the Advisor pursuant to which the Advisor will direct or perform the day-to-day business affairs of the Company.

“AFFILIATE ” or “ AFFILIATED” means, with respect to any Person, (i) any Person directly or indirectly owning, controlling or holding, with the power to vote, ten percent (10%) or more of the outstanding voting securities of such other Person; (ii) any Person, ten percent (10%) or more of whose outstanding voting securities are directly or indirectly owned, controlled or held, with the power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by or under common control with such other Person; (iv) any executive officer, director, trustee or general partner of such other Person; and (v) any legal entity for which such Person acts as an executive officer, director, trustee or general partner.

“ASSET” means any Property, Mortgage or other investment (other than investments in bank accounts, money market funds or other current assets) owned by the Company, directly or indirectly through one (1) or more of its Affiliates, and any other investment made by the Company, directly or indirectly through one (1) or more of its Affiliates.

“AVERAGE INVESTED ASSETS” means, for a specified period, the average of the aggregate book value of the Assets invested, directly or indirectly in equity interests in and loans secured by real estate, before deducting depreciation, bad debts or other non-cash reserves, computed by taking the average of such values at the end of each month during such period.

“BOARD” means the Board of Directors of the Company.

“BYLAWS means the Bylaws of the Company, as amended from time to time.

“CHARTER” means the charter of the Company, as amended from time to time.

“CODE” shall have the meaning as provided in Article II herein.

“COMMENCEMENT OF THE INITIAL PUBLIC OFFERING” shall mean the date that the Securities and Exchange Commission declares effective the registration statement filed under the Securities Act for the Initial Public Offering.

“COMMON SHARES” shall have the meaning as provided in Section 5.1 herein.

“COMPANY” shall have the meaning as provided in Article I herein.

“COMPETITIVE REAL ESTATE COMMISSION” means a real estate or brokerage commission paid for the purchase or sale of a Property that is reasonable, customary and competitive in light of the size, type and location of the Property.

“CONSTRUCTION FEE” means a fee or other remuneration for acting as general contractor and/or construction manager to construct improvements, supervise and coordinate projects or provide major repairs or rehabilitations on a Property.

“CONTRACT PURCHASE PRICE” means the amount actually paid or allocated in respect of the purchase, development, construction or improvement of a Property or the amount of funds advanced with respect to a Mortgage, or the amount actually paid or allocated in respect of the purchase of other Assets, in each case exclusive of Acquisition Fees and Acquisition Expenses, but in each case including any indebtedness assumed or incurred in respect of such Property.

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“DEVELOPMENT FEE” means a fee for the packaging of a Property or Mortgage, including the negotiation and approval of plans and any assistance in obtaining zoning and necessary variances and financing for a specific Property, either initially or at a later date.

“DIRECTOR” means a director of the Company.

“DISTRIBUTIONS” means any distribution (as such term is defined in Section 2-301 of the MGCL) of money or other property, pursuant to Section 5.2(iii) hereof, by the Company to owners of Shares, including distributions that may constitute a return of capital for federal income tax purposes.

“EXCESS AMOUNT” has the meaning provided in Section 8.12 herein.

“EXCHANGE ACT” means the Securities Exchange Act of 1934, as amended from time to time, or any successor statute thereto.

“EXTENSION AMENDMENT” has the meaning provided in Article XV herein.

“GROSS PROCEEDS” means the aggregate purchase price of all Shares sold for the account of the Company through an Offering, without deduction for Selling Commissions, volume discounts, any marketing support and due diligence expense reimbursement or Organization and Offering Expenses. For the purpose of computing Gross Proceeds, the purchase price of any Share for which reduced Selling Commissions are paid to a dealer manager or a Soliciting Dealer (where net proceeds to the Company are not reduced) shall be deemed to be the full amount of the offering price per Share pursuant to the Prospectus for such Offering without reduction.

“INDEMNITEE” has the meaning provided in Section 12.2 herein.

“INDEPENDENT APPRAISER” means a Person with no material current or prior business or personal relationship with the Advisor or the Directors and who is engaged to a substantial extent in the business of rendering opinions regarding the value of Real Property or of other Assets of the type held by the Company. Membership in a nationally recognized appraisal society such as the American Institute of Real Estate Appraisers or the Society of Real Estate Appraisers shall be conclusive evidence of being engaged to a substantial extent in the business of rendering opinions as to the value of Real Property.

“INDEPENDENT DIRECTOR” means a Director who is not, and within the last two years has not been, directly or indirectly associated with the Sponsor or the Advisor by virtue of (i) ownership of an interest in the Sponsor, the Advisor or any of their Affiliates, (ii) employment by the Sponsor, the Advisor or any of their Affiliates, (iii) service as an officer or director of the Sponsor, the Advisor or any of their Affiliates, (iv) performance of services, other than as a Director, for the Company, (v) service as a director or trustee of more than three REITs organized by the Sponsor or advised by the Advisor or (vi) maintenance of a material business or professional relationship with the Sponsor, the Advisor or any of their Affiliates. A business or professional relationship is considered “material” per se if the aggregate gross revenue derived by the Director from the Sponsor, the Advisor and their Affiliates exceeds five percent (5%) of either the Director’s annual gross income, derived from all sources, during either of the last two years or the Director’s net worth on a fair market value basis. An indirect association with the Sponsor or the Advisor shall include circumstances in which a Director’s spouse, parent, child, sibling, mother- or father-in-law, son- or daughter-in-law or brother- or sister-in-law is or has been associated with the Sponsor, the Advisor, any of their Affiliates or the Company. Notwithstanding the foregoing, after Listing, “Independent Director” shall have the meaning given to such term in Section 303A.02 of the New York Stock Exchange Listed Company Manual or, if the Company’s Shares are Listed on another national securities exchange, the definition of “Independent Director” found in the listing rules of such national securities exchange.

“INITIAL INVESTMENT” means that portion of the initial capitalization of the Company contributed by the Sponsor or its Affiliates pursuant to Section II.A. of the NASAA REIT Guidelines.

“INITIAL PUBLIC OFFERING” means the first Offering.

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“INVESTED CAPITAL” means the amount calculated by multiplying the total number of Shares purchased by Stockholders by the issue price at the time of such purchase, reduced by the portion of any Distribution that is attributable to Net Sales Proceeds and by any amounts paid by the Company to repurchase Shares pursuant to the Company’s plan for the repurchase of Shares.

“IRA” means an “individual retirement account” (as defined in Section 408 of the Code).

“JOINT VENTURES” means those joint venture or partnership arrangements in which the Company or the Operating Partnership is a co-venturer, limited liability company member, limited partner or general partner established to acquire or hold Assets.

“LEVERAGE” means the aggregate amount of indebtedness of the Company for money borrowed (including purchase money mortgage loans) outstanding at any time, both secured and unsecured.

“LIQUIDITY EVENT” includes a sale of all or substantially all the Assets, a sale or merger of the Company, a Listing, or other similar transaction.

“LISTING” means the listing of the Common Shares on a national securities exchange or the trading of the Common Shares in the over-the-counter market. Upon such Listing, the Common Shares shall be deemed Listed.

“MGCL” means the Maryland General Corporation Law, as in effect from time to time.

“MORTGAGES” means, in connection with mortgage financing provided by the Company, all of the notes, deeds of trust, security interests or other evidences of indebtedness or obligations, which are secured or collateralized by Real Property owned by the borrowers under such notes, deeds of trust, security interests or other evidences of indebtedness or obligations.

“NASAA REIT GUIDELINES” means the Statement of Policy Regarding Real Estate Investment Trusts as revised and adopted by the North American Securities Administrators Association on May 7, 2007.

“NET ASSETS” means the total Assets (other than intangibles) at cost, before deducting depreciation, reserves for bad debts or other non-cash reserves, less total liabilities, calculated at least quarterly by the Company on a basis consistently applied.

“NET INCOME” means, for any period, the Company’s total revenues applicable to such period, less the total expenses applicable to such period other than additions to reserves for depreciation, bad debts or other similar non-cash reserves and excluding any gain from the sale of the Assets.

“NET SALES PROCEEDS” means, in the case of a transaction described in clause (i)(A) of the definition of Sale, the proceeds of any such transaction less the amount of selling expenses incurred by or on behalf of the Company, including all real estate commissions, closing costs and legal fees and expenses. In the case of a transaction described in clause (i)(B) of the definition of Sale, Net Sales Proceeds means the proceeds of any such transaction less the amount of selling expenses incurred by or on behalf of the Company, including any legal fees and expenses and other selling expenses incurred in connection with such transaction. In the case of a transaction described in clause (i)(C) of the definition of Sale, Net Sales Proceeds means the proceeds of any such transaction actually distributed to the Company or the Operating Partnership from the Joint Venture less the amount of any selling expenses, including legal fees and expenses incurred by or on behalf of the Company (other than those paid by the Joint Venture). In the case of a transaction or series of transactions described in clause (i)(D) of the definition of Sale, Net Sales Proceeds means the proceeds of any such transaction (including the aggregate of all payments under a Mortgage or in satisfaction thereof other than regularly scheduled interest payments) less the amount of selling expenses incurred by or on behalf of the Company, including all commissions, closing costs and legal fees and expenses. In the case of a transaction described in clause (i)(E) of the definition of Sale, Net Sales Proceeds means the proceeds of any such transaction less the amount of selling expenses incurred by or on behalf of the Company, including any legal fees and expenses and other selling expenses incurred in connection with such transaction. In the case of a transaction described in clause (ii) of the definition of Sale, Net Sales Proceeds means the proceeds of such transaction or series of transactions less all amounts generated thereby which are reinvested in one (1) or more Assets within one hundred eighty (180) days thereafter and less the amount of any real estate commissions, closing costs, and legal fees and expenses and other selling expenses incurred by or allocated to the

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Company or the Operating Partnership in connection with such transaction or series of transactions. Net Sales Proceeds shall also include any amounts that the Company determines, in its discretion, to be economically equivalent to proceeds of a Sale. Net Sales Proceeds shall not include any reserves established by the Company, which shall be determined by the Board in its sole discretion.

“NON-COMPLIANT TENDER OFFER” has the meaning provided in Section 11.8 herein.

“OFFERING” means any public offering and sale of Shares pursuant to an effective registration statement filed under the Securities Act.

“OPERATING PARTNERSHIP” means Carter/Validus Operating Partnership, LP, an Affiliate of the Company through which the Company may own Assets.

“ORGANIZATION AND OFFERING EXPENSES” means any and all costs and expenses incurred by and to be paid from the assets of the Company in connection with the formation, qualification and registration of the Company, and the marketing and distribution of Shares, including, without limitation, total underwriting and brokerage discounts and commissions (including fees of the underwriters’ attorneys), expenses for printing, engraving and amending registration statements or supplementing prospectuses, mailing and distributing costs, salaries of employees while engaged in sales activity, telephone and other telecommunications costs, all advertising and marketing expenses (including the costs related to investor and broker-dealer sales meetings), charges of transfer agents, registrars, trustees, escrow holders, depositories and experts, and fees, expenses and taxes related to the filing, registration and qualification of the sale of the Shares under federal and state laws, including taxes and fees and accountants’ and attorneys’ fees.

“PERSON” means an individual, corporation, partnership, estate, trust (including a trust qualified under Sections 401(a) or 501(c)(17) of the Code), portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other legal entity and also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act and a group to which an Excepted Holder Limit (as defined in Section 5.9(i) hereof) applies.

“PLAN OF LIQUIDATION” has the meaning provided in Article XV herein.

“PREFERRED SHARES” has the meaning provided in Section 5.1 herein.

“PROPERTY” or “PROPERTIES” means, as the context requires, any, or all, respectively, of the Real Property acquired by the Company, directly or indirectly through joint venture arrangements or other partnership or investment interests.

“PROSPECTUS” means the same as that term is defined in Section 2(10) of the Securities Act, including a preliminary prospectus and an offering circular as described in Rule 256 of the General Rules and Regulations under the Securities Act.

“REAL PROPERTY” or “REAL ESTATE” means land, rights in land (including leasehold interests), and any buildings, structures, improvements, furnishings, fixtures and equipment located on or used in connection with land and rights or interests in land.

“REFINANCING PROCEEDS” means the proceeds of the refinancing of any indebtedness of the Company, less the amount of expenses incurred by or on behalf of the Company in connection with such refinancing.

“REINVESTMENT PLAN” has the meaning provided in Section 5.15 herein.

“REIT” means a corporation, trust, association or other legal entity (other than a real estate syndication) that is engaged primarily in investing in equity interests in real estate (including fee ownership and leasehold interests) or in loans secured by real estate or both, as defined pursuant to the REIT Provisions of the Code.

“REIT PROVISIONS OF THE CODE” means Sections 856 through 860 of the Code and any successor or other provisions of the Code relating to real estate investment trusts (including provisions as to the attribution of ownership of beneficial interests therein) and the regulations promulgated thereunder.

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“SALE” or “SALES” means (i) any transaction or series of transactions whereby: (A) the Company or the Operating Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any Property or portion thereof, including the lease of any Property consisting of a building only, and including any event with respect to any Property which gives rise to a significant amount of insurance proceeds or condemnation awards; (B) the Company or the Operating Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of all or substantially all of the interest of the Company or the Operating Partnership in any Joint Venture in which it is a co-venturer or partner; (C) any Joint Venture in which the Company or the Operating Partnership is a co-venturer or partner directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any Property or portion thereof, including any event with respect to any Property which gives rise to a significant amount of insurance proceeds or condemnation awards; (D) the Company or the Operating Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, conveys or relinquishes its interest in any Mortgage or portion thereof, including any payments thereunder or in satisfaction thereof (other than regularly scheduled interest payments) or any amounts owed pursuant to such Mortgage, and including any event with respect to any Mortgage which gives rise to a significant amount of insurance proceeds or similar awards; or (E) the Company or the Operating Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any other Asset not previously described in this definition or any portion thereof, but (ii) not including any transaction or series of transactions specified in clause (i) (A) through (E) above in which the proceeds of such transaction or series of transactions are reinvested by the Company in one (1) or more Assets within one hundred eighty (180) days thereafter.

“SECURITIES” means any of the following issued by the Company, as the text requires: Shares, any other stock, shares or other evidences of equity or beneficial or other interests, voting trust certificates, bonds, debentures, notes or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in, temporary or interim certificates for, receipts for, guarantees of, or warrants, options or rights to subscribe to, purchase or acquire, any of the foregoing.

“SECURITIES ACT” means the Securities Act of 1933, as amended from time to time, or any successor statute thereto. Reference to any provision of the Securities Act shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision thereto, as interpreted by any applicable regulations as in effect from time to time.

“SELLING COMMISSIONS” means any and all commissions payable to underwriters, dealer managers or other broker-dealers in connection with the sale of Shares.

“SHARES” means shares of beneficial interest or stock of the Company of any class or series, including Common Shares and Preferred Shares, that has the right to elect the Directors of the Company.

“SOLICITING DEALERS” means those broker-dealers that are members of the Financial Industry Regulatory Authority, or that are exempt from broker-dealer registration, and that, in either case, enter into participating broker or other agreements with a dealer manager to sell Shares.

“SPONSOR” means any Person which (i) is directly or indirectly instrumental in organizing, wholly or in part, the Company, (ii) will control, manage or participate in the management of the Company, and any Affiliate of any such Person, (iii) takes the initiative, directly or indirectly, in founding or organizing the Company, either alone or in conjunction with one (1) or more other Persons, (iv) receives a material participation in the Company in connection with the founding or organizing of the business of the Company, in consideration of services or property, or both services and property, (v) has a substantial number of relationships and contacts with the Company, (vi) possesses significant rights to control Properties, (vii) receives fees for providing services to the Company which are paid on a basis that is not customary in the industry or (viii) provides goods or services to the Company on a basis which was not negotiated at arm’s-length with the Company. The term “Sponsor” shall not include a Person whose only relationship with the Company is that of an independent property manager and whose only compensation is as such or wholly independent third parties such as attorneys, accountants and underwriters whose only compensation is for professional services.

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“STOCKHOLDER LIST” has the meaning provided in Section 11.6 herein.

“STOCKHOLDERS” means the holders of record of the Shares as maintained in the books and records of the Company or its transfer agent.

“TENDERED SHARES” has the meaning provided in Section 11.8 herein.

“TERMINATION DATE” means the date of termination of the Advisory Agreement.

“TERMINATION OF THE INITIAL PUBLIC OFFERING” shall mean the earlier of (i) the date on which the Initial Public Offering expires or is terminated by the Company or (ii) the date on which all Shares offered in the Initial Public Offering are sold, excluding warrants, if any, offered thereunder and Shares that may be acquired upon exercise of such warrants and shares offered thereunder that may be acquired pursuant to the Reinvestment Plan.

“TOTAL OPERATING EXPENSES” means all costs and expenses paid or incurred by the Company, as determined under generally accepted accounting principles, that are in any way related to the operation of the Company or to Company business, including advisory fees, but excluding (i) the expenses of raising capital such as Organization and Offering Expenses, legal, audit, accounting, underwriting, brokerage, listing, registration, and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and Listing of the Shares, (ii) interest payments, (iii) taxes, (iv) non-cash expenditures such as depreciation, amortization and bad debt reserves, (v) incentive fees paid in compliance with the NASAA REIT Guidelines, (vi) Acquisition Fees and Acquisition Expenses, (vii) real estate commissions on the Sale of Property, and (viii) other fees and expenses connected with the acquisition, disposition, management and ownership of real estate interests, mortgage loans or other property (including the costs of foreclosure, insurance premiums, legal services, maintenance, repair and improvement of property).

“UNIMPROVED REAL PROPERTY” means Property in which the Company has an equity interest that was not acquired for the purpose of producing rental or other operating income, that has no development or construction in process and for which no development or construction is planned, in good faith, to commence within one (1) year.

“2%/25% GUIDELINES” has the meaning provided in Section 8.12 herein.

ARTICLE V

STOCK

SECTION 5.1    AUTHORIZED SHARES.  The total number of Shares that the Company shall have authority to issue is 350,000,000 Shares, of which (i) 300,000,000 shall be designated as common stock, $0.01 par value per Share (the “Common Shares”); and (ii) 50,000,000 shall be designated as preferred stock, $0.01 par value per Share (the “Preferred Shares”). All shares shall be fully paid and nonassessable when issued. The aggregate par value of all authorized shares of stock having par value is $3,500,000. If Shares of one (1) class of stock are classified or reclassified into Shares of another class of stock pursuant to Section 5.2(ii) or Section 5.3 of this Article V, the number of authorized Shares of the former class shall be automatically decreased and the number of Shares of the latter class shall be automatically increased, in each case by the number of Shares so classified or reclassified, as the case may be, so that the aggregate number of Shares of all classes that the Company has authority to issue shall not be more than the total number of Shares set forth in the first sentence of this Section 5.1. The Board, with the approval of a majority of the entire Board and without any action by the Stockholders, may amend the Charter from time to time to increase or decrease the aggregate number of Shares or the number of Shares of any class or series that the Company has authority to issue.

SECTION 5.2    COMMON SHARES.

(i)      COMMON SHARES SUBJECT TO TERMS OF PREFERRED SHARES. The Common Shares shall be subject to the express terms of any class or series of Preferred Shares.

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(ii)    DESCRIPTION. Subject to Section 5.9 of this Article V and except as may otherwise be specified in the Charter, each Common Share shall entitle the holder thereof to one (1) vote per share on all matters upon which Stockholders are entitled to vote. The Board may classify or reclassify any unissued Common Shares from time to time in one (1) or more classes or series of stock.

(iii)    DISTRIBUTION RIGHTS. The Board from time to time may authorize the Company to declare and pay to Stockholders such dividends or other Distributions in cash or other assets of the Company or from any other source as the Board in its discretion shall determine. The Board shall endeavor to authorize the Company to declare and pay such dividends and other Distributions as shall be necessary for the Company to qualify as a REIT under the Code unless the Board has determined, in its sole discretion, that qualification as a REIT is not in the best interests of the Company; provided, however, Stockholders shall have no right to any dividend or other Distribution unless and until authorized by the Board and declared by the Company. The exercise of the powers and rights of the Board pursuant to this section shall be subject to the provisions of any class or series of Shares at the time outstanding. The receipt by any Person in whose name any Shares are registered on the records of the Company or by his or her duly authorized agent shall be a sufficient discharge for all dividends or other Distributions payable or deliverable in respect of such Shares and from all liability to see to the application thereof. Prior to Listing, distributions in kind shall not be permitted, except for distributions of readily marketable securities, distributions of beneficial interests in a liquidating trust established for the dissolution of the Company and the liquidation of its assets in accordance with the terms of the Charter or distributions in which (i) the Board advises each Stockholder of the risks associated with direct ownership of the property, (ii) the Board offers each Stockholder the election of receiving such in-kind distributions and (iii) in-kind distributions are made only to those Stockholders that accept such offer.

(iv)    RIGHTS UPON LIQUIDATION. In the event of any voluntary or involuntary liquidation, dissolution or winding up, or any distribution of the assets of the Company, the aggregate assets available for distribution to holders of the Common Shares shall be determined in accordance with applicable law. Each holder of Common Shares of a particular class shall be entitled to receive, ratably with each other holder of Common Shares of such class, that portion of such aggregate assets available for distribution as the number of outstanding Common Shares of such class held by such holder bears to the total number of outstanding Common Shares of such class then outstanding.

(v)    VOTING RIGHTS. Except as may be provided otherwise in the Charter, and subject to the express terms of any class or series of Preferred Shares, the holders of the Common Shares shall have the exclusive right to vote on all matters (as to which a common stockholder shall be entitled to vote pursuant to applicable law) at all meetings of the Stockholders.

SECTION 5.3    PREFERRED SHARES.  The Board may classify any unissued Preferred Shares and reclassify any previously classified but unissued Preferred Shares of any series from time to time, in one (1) or more classes or series of Shares.

SECTION 5.4    CLASSIFIED OR RECLASSIFIED SHARES.  Prior to issuance of classified or reclassified Shares of any class or series, the Board by resolution shall: (a) designate that class or series to distinguish it from all other classes and series of Shares; (b) specify the number of Shares to be included in the class or series; (c) set or change, subject to the provisions of Section 5.9 and the express terms of any class or series of Shares outstanding at the time, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other Distributions, qualifications and terms and conditions of redemption for each class or series of Shares; and (d) cause the Company to file articles supplementary with the State Department of Assessments and Taxation of Maryland. Any of the terms of any class or series of Shares set or changed pursuant to clause (c) of this Section 5.4 may be made dependent upon facts or events ascertainable outside the Charter (including determinations by the Board or other facts or events within the control of the Company) and may vary among holders thereof, provided that the manner in which such facts, events or variations shall operate upon the terms of such class or series of Shares is clearly and expressly set forth in the articles supplementary or other charter document.

SECTION 5.5    STOCKHOLDERS’ CONSENT IN LIEU OF MEETING.  Any action required or permitted to be taken at any meeting of the Stockholders may be taken without a meeting by consent, in writing or by electronic transmission, in any manner permitted by the MGCL and set forth in the Bylaws.

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SECTION 5.6    CHARTER AND BYLAWS.  The rights of all Stockholders and the terms of all Shares are subject to the provisions of the Charter and the Bylaws.

SECTION 5.7    NO ISSUANCE OF SHARE CERTIFICATES.  Unless otherwise provided by the Board, the Company shall not issue stock certificates. A Stockholder’s investment shall be recorded on the books of the Company. Prior to Listing, to transfer his or her Shares, a Stockholder shall submit an executed form to the Company, which form shall be provided by the Company upon request. Such transfer will also be recorded on the books of the Company. Upon issuance or transfer of Shares, the Company will provide the Stockholder with information concerning his or her rights with regard to such Shares, as required by the Bylaws and the MGCL or other applicable law.

SECTION 5.8    SUITABILITY OF STOCKHOLDERS.

Until Listing, the following provisions shall apply:

(i)    INVESTOR SUITABILITY STANDARDS.  Subject to suitability standards established by individual states, to become a Stockholder in the Company, if such prospective Stockholder is an individual (including an individual beneficiary of a purchasing IRA), or if the prospective Stockholder is a fiduciary (such as a trustee of a trust or corporate pension or profit sharing plan, or other tax-exempt organization, or a custodian under the Uniform Gifts to Minors Act), such individual or fiduciary, as the case may be, must represent to the Company, among other requirements as the Company may require from time to time:

(a)    that such individual (or, in the case of a fiduciary, that the fiduciary account or the donor who directly or indirectly supplies the funds to purchase the Shares) has a minimum annual gross income of $70,000 and a net worth (excluding home, home furnishings and automobiles) of not less than $70,000; or

(b)    that such individual (or, in the case of a fiduciary, that the fiduciary account or the donor who directly or indirectly supplies the funds to purchase the Shares) has a net worth (excluding home, home furnishings, and automobiles) of not less than $250,000.

(ii)    DETERMINATION OF SUITABILITY OF SALE.  The Sponsor and each Person selling Common Shares on behalf of the Sponsor or the Company shall make every reasonable effort to determine that the purchase of Common Shares is a suitable and appropriate investment for each Stockholder. In making this determination, each Person selling Common Shares on behalf of the Company shall ascertain that the prospective Stockholder: (a) meets the minimum income and net worth standards established for the Company; (b) can reasonably benefit from the Company based on the prospective Stockholder’s overall investment objectives and portfolio structure; (c) is able to bear the economic risk of the investment based on the prospective Stockholder’s overall financial situation; and (d) has apparent understanding of (1) the fundamental risks of the investment; (2) the risk that the Stockholder may lose the entire investment; (3) the lack of liquidity of the Common Shares; (4) the restrictions on transferability of the Common Shares; and (5) the tax consequences of the investment.

The Sponsor or each Person selling Common Shares on behalf of the Sponsor or the Company shall make this determination on the basis of information it has obtained from a prospective Stockholder. Relevant information for this purpose will include at least the age, investment objectives, investment experiences, income, net worth, financial situation, and other investments of the prospective Stockholder, as well as any other pertinent factors.

The Sponsor or each Person selling Common Shares on behalf of the Sponsor or the Company shall maintain records of the information used to determine that an investment in Common Shares is suitable and appropriate for a Stockholder. The Sponsor or each Person selling Common Shares on behalf of the Sponsor or the Company shall maintain these records for at least six years.

(iii)    MINIMUM INVESTMENT AND TRANSFER.  Subject to certain individual state requirements and except for Shares issued pursuant to the Reinvestment Plan, the Company will sell its Common Shares only to investors who initially purchase a minimum of 200 Common Shares for an aggregate price of $2,000 and no such sale or transfer will be permitted of less than 200 Common Shares and a Stockholder shall not transfer, fractionalize or subdivide such shares so as to retain less than the minimum number thereof.

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SECTION 5.9    RESTRICTIONS ON OWNERSHIP AND TRANSFER.

(i)    DEFINITIONS. For purposes of this Section 5.9, the following terms shall have the following meanings:

“AGGREGATE SHARE OWNERSHIP LIMIT” means not more than 9.8% in value of the aggregate of the outstanding Shares and not more than 9.8% (in value or in number of shares, whichever is more restrictive) of any class or series of Shares, or such other percentage determined by the Board in accordance with Section 5.9(ii)(h) of the Charter.

“BENEFICIAL OWNERSHIP” means ownership of Shares by a Person, whether the interest in the Shares is held directly or indirectly (including by a nominee), and shall include interests that would be treated as owned through the application of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The terms “Beneficial Owner,” “Beneficially Owns” and “Beneficially Owned” shall have the correlative meanings.

“BUSINESS DAY” means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in New York City are authorized or required by law, regulation or executive order to close.

“CHARITABLE BENEFICIARY” means one (1) or more beneficiaries of the Trust as determined pursuant to Section 5.9(iii)(f), provided that each such organization must be described in Section 501(c)(3) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

“CONSTRUCTIVE OWNERSHIP” means ownership of Shares by a Person, whether the interest in the Shares is held directly or indirectly (including by a nominee), and shall include interests that would be treated as owned through the application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code. The terms “Constructive Owner,” “Constructively Owns” and “Constructively Owned” shall have the correlative meanings.

“EXCEPTED HOLDER” means a Stockholder for whom an Excepted Holder Limit is created by the Charter or by the Board pursuant to Section 5.9(ii)(g).

“EXCEPTED HOLDER LIMIT” means, provided that the affected Excepted Holder agrees to comply with the requirements established by the Board pursuant to Section 5.9(ii)(g), and subject to adjustment pursuant to Section 5.9(ii)(h), the percentage limit established by the Board pursuant to Section 5.9(ii)(g).

“MARKET PRICE” on any date means, with respect to any class or series of outstanding Shares, the Closing Price for such Shares on such date. The “Closing Price” on any date shall mean the last sale price for such Shares, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such Shares, in either case as reported on the principal national securities exchange on which such Shares are Listed or admitted to trading or, if such Shares are not Listed or admitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotation system that may then be in use or, if such Shares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such Shares selected by the Board or, in the event that no trading price is available for such Shares, the fair market value of the Shares, as determined in good faith by the Board.

“NYSE” means the New York Stock Exchange.

“PROHIBITED OWNER” means, with respect to any purported Transfer, any Person who, but for the provisions of Section 5.9(ii)(a), would Beneficially Own or Constructively Own Shares, and if appropriate in the context, shall also mean any Person who would have been the record owner of the Shares that the Prohibited Owner would have so owned.

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“RESTRICTION TERMINATION DATE” means the first day on which the Company determines pursuant to Section 7.4 that it is no longer in the best interests of the Company to attempt to, or continue to, qualify as a REIT or that compliance with the restrictions and limitations on Beneficial Ownership, Constructive Ownership and Transfers of Shares set forth herein is no longer required in order for the Company to qualify as a REIT.

“TRANSFER” means any issuance, sale, transfer, gift, assignment, devise or other disposition, as well as any other event that causes any Person to acquire Beneficial Ownership or Constructive Ownership, or any agreement to take any such actions or cause any such events, of Shares or the right to vote or receive dividends on Shares, including (a) the granting or exercise of any option (or any disposition of any option), (b) any disposition of any securities or rights convertible into or exchangeable for Shares or any interest in Shares or any exercise of any such conversion or exchange right and (c) Transfers of interests in other entities that result in changes in Beneficial Ownership or Constructive Ownership of Shares; in each case, whether voluntary or involuntary, whether owned of record, Constructively Owned or Beneficially Owned and whether by operation of law or otherwise. The terms “Transferring” and “Transferred” shall have the correlative meanings.

“TRUST” means any trust provided for in Section 5.9(iii)(a).

“TRUSTEE” means the Person unaffiliated with the Company and a Prohibited Owner, that is appointed by the Company to serve as trustee of the Trust.

(ii)    SHARES.

(a)    OWNERSHIP LIMITATIONS. During the period commencing on the date that the Company elects to qualify for federal income tax treatment as a REIT and prior to the Restriction Termination Date, but subject to Section 5.10:

(I)    BASIC RESTRICTIONS.

(A)    (1) Except as set forth in any articles supplementary creating any class or series of Shares, no Person, other than an Excepted Holder, shall Beneficially Own or Constructively Own Shares in excess of the Aggregate Share Ownership Limit and (2) no Excepted Holder shall Beneficially Own or Constructively Own Shares in excess of the Excepted Holder Limit for such Excepted Holder.

(B)    No Person shall Beneficially Own or Constructively Own Shares to the extent that such Beneficial or Constructive Ownership of Shares would result in the Company being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year), or otherwise failing to qualify as a REIT (including, but not limited to, Beneficial Ownership or Constructive Ownership that would result in the Company actually owning or Constructively Owning an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Company from such tenant would cause the Company to fail to satisfy any of the gross income requirements of Section 856(c) of the Code).

(C)    Any Transfer of Shares that, if effective, would result in Shares being Beneficially Owned by less than 100 Persons (determined under the principles of Section 856(a)(5) of the Code) shall be void ab initio , and the intended transferee shall acquire no rights in such Shares.

(II)    TRANSFER IN TRUST. If any Transfer of Shares occurs which, if effective, would result in any Person Beneficially Owning or Constructively Owning Shares in violation of Section 5.9(ii)(a)(I)(A) or (B),

(A)    then that number of Shares the Beneficial Ownership or Constructive Ownership of which otherwise would cause such Person to violate Section 5.9(ii)(a)(I)(A) or (B) (rounded to the nearest whole share) shall be automatically Transferred to a Trust for the benefit of a Charitable Beneficiary, as described in Section 5.9(iii), effective as of the close of business on the Business Day prior to the date of such Transfer, and such Person shall acquire no rights in such Shares;

(B)    if the Transfer to the Trust described in clause (A) of this Section 5.9(ii)(a)(II) would not be effective for any reason to prevent the violation of Section 5.9(ii)(a)(I)(A) or (B) then the Transfer of that number of Shares that otherwise would cause any Person to violate Section 5.9(ii)(a)(I)(A) or (B) shall be void ab initio , and the intended transferee shall acquire no rights in such Shares; or

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(C)     to the extent that, upon a transfer of Shares pursuant to this Section 5.9(ii)(a)(II), a violation of any provision of this Section 5.9 would nonetheless be continuing (for example, where the ownership of Shares by a single Charitable Trust would violate the 100 stockholder requirement applicable to REITs), then Shares shall be transferred to that number of Charitable Trusts, each having a distinct Charitable Trustee and Charitable Beneficiary or Beneficiaries that are distinct from those of each other Charitable Trust, such that there is no violation of any of the provisions of this Section 5.9.

(b)    REMEDIES FOR BREACH. If the Board or any duly authorized committee thereof shall at any time determine in good faith that a Transfer or other event has taken place that results in a violation of Section 5.9(ii)(a) or that a Person intends to acquire or has attempted to acquire Beneficial Ownership or Constructive Ownership of any Shares in violation of Section 5.9(ii)(a) (whether or not such violation is intended), the Board or a committee thereof shall take such action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, without limitation, causing the Company to redeem Shares, refusing to give effect to such Transfer on the books of the Company or instituting proceedings to enjoin such Transfer or other event; provided, however, that any Transfer or attempted Transfer or other event in violation of Section 5.9(ii)(a) shall automatically result in the Transfer to the Trust described above, and, where applicable, such Transfer (or other event) shall be void ab initio as provided above irrespective of any action (or non-action) by the Board or a committee thereof.

(c)    NOTICE OF RESTRICTED TRANSFER. Any Person who acquires or attempts or intends to acquire Beneficial Ownership or Constructive Ownership of Shares that will or may violate Section 5.9(ii)(a)(I)(A) or (B) or any Person who would have owned Shares that resulted in a Transfer to the Trust pursuant to the provisions of Section 5.9(ii)(a)(II) shall immediately give written notice to the Company of such event, or in the case of such a proposed or attempted transaction, give at least 15 days prior written notice, and shall provide to the Company such other information as the Company may request in order to determine the effect, if any, of such Transfer on the Company’s status as a REIT.

(d)    OWNERS REQUIRED TO PROVIDE INFORMATION. From the Commencement of the Initial Public Offering and prior to the Restriction Termination Date:

(I)    every owner of more than five percent (5%) (or such lower percentage as required by the Code or the Treasury Regulations promulgated thereunder) of the outstanding Shares, within 30 days after the end of each taxable year, shall give written notice to the Company stating the name and address of such owner, the number of Shares Beneficially Owned and a description of the manner in which such Shares are held. Each such owner shall provide to the Company such additional information as the Company may request in order to determine the effect, if any, of such Beneficial Ownership on the Company’s status as a REIT and to ensure compliance with the Aggregate Share Ownership Limit; and

(II)    each Person who is a Beneficial Owner or a Constructive Owner of Shares and each Person (including the stockholder of record) who is holding Shares for a Beneficial Owner or a Constructive Owner shall provide to the Company such information as the Company may request, in good faith, in order to determine the Company’s status as a REIT and to comply with requirements of any taxing authority or governmental authority or to determine such compliance.

(e)    REMEDIES NOT LIMITED. Subject to Section 7.4 of the Charter, nothing contained in this Section 5.9(ii)(e) shall limit the authority of the Board to take such other action as it deems necessary or advisable to protect the Company and the interests of its stockholders in preserving the Company’s status as a REIT.

(f)    AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of this Section 5.9(ii), Section 5.9(iii), or any definition contained in Section 5.9(i), the Board shall have the power to determine the application of the provisions of this Section 5.9(ii) or Section 5.9(iii) or any such definition with respect to any situation based on the facts known to it. In the event Section 5.9(ii) or (iii) requires an action by the Board and the Charter fails to provide specific guidance with respect to such action, the Board shall have the power to determine the action to be taken so long as such action is not contrary to the provisions of Section 5.9. Absent a decision to the contrary by the Board (which the Board may make in its sole and absolute discretion), if a Person

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would have (but for the remedies set forth in Section 5.9(ii)(b)) acquired Beneficial Ownership or Constructive Ownership of Shares in violation of Section 5.9(ii)(a), such remedies (as applicable) shall apply first to the Shares which, but for such remedies, would have been Beneficially Owned or Constructively Owned (but not actually owned) by such Person, pro rata among the Persons who actually own such Shares based upon the relative number of the Shares held by each such Person.

(g)    EXCEPTIONS.

(I)    Subject to Section 5.9(ii)(a)(I)(B), the Board, in its sole discretion, may (prospectively or retroactively) exempt a Person from the Aggregate Share Ownership Limit and may establish or increase an Excepted Holder Limit for such Person if:

(A)    the Board obtains such representations and undertakings from such Person as are reasonably necessary to ascertain that no individual’s Beneficial Ownership or Constructive Ownership of such Shares will violate Section 5.9(ii)(a)(I)(B);

(B)    such Person represents that it does not, and undertakes that it will not, actually own or Constructively Own an interest in a tenant of the Company (or a tenant of any entity owned or controlled by the Company) that would cause the Company to actually own or Constructively Own more than a 9.8% interest (as set forth in Section 856(d)(2)(B) of the Code) in such tenant and the Board obtains such representations and undertakings from such Person as are reasonably necessary to ascertain this fact (for this purpose, a tenant from whom the Company (or an entity owned or controlled by the Company) derives (and is expected to continue to derive) a sufficiently small amount of revenue such that, in the opinion of the Board, rent from such tenant would not adversely affect the Company’s ability to qualify as a REIT, shall not be treated as a tenant of the Company); and

(C)    such Person agrees that any violation or attempted violation of such representations or undertakings (or other action which is contrary to the restrictions contained in Section 5.9(ii)(a) through Section 5.9(ii)(f)) will result in such Shares being automatically Transferred to a Trust in accordance with Section 5.9(ii)(A)(II) and Section 5.9(iii).

(II)    Prior to granting any exception pursuant to Section 5.9(ii)(g)(I), the Board may require a ruling from the Internal Revenue Service, or an opinion of counsel, in either case in form and substance satisfactory to the Board in its sole discretion, as it may deem necessary or advisable in order to determine or ensure the Company’s status as a REIT. Notwithstanding the receipt of any ruling or opinion, the Board may impose such conditions or restrictions as it deems appropriate in connection with granting such exception.

(III)    Subject to Section 5.9(ii)(a)(I)(B), an underwriter which participates in an Offering or a private placement of Shares (or Securities convertible into or exchangeable for Shares) may Beneficially Own or Constructively Own Shares (or Securities convertible into or exchangeable for Shares) in excess of the Aggregate Share Ownership Limit but only to the extent necessary to facilitate such Offering or private placement.

(IV)    The Board may only reduce the Excepted Holder Limit for an Excepted Holder: (1) with the written consent of such Excepted Holder at any time, or (2) pursuant to the terms and conditions of the agreements and undertakings entered into with such Excepted Holder in connection with the establishment of the Excepted Holder Limit for that Excepted Holder. No Excepted Holder Limit shall be reduced to a percentage that is less than the Aggregate Share Ownership Limit.

(h)    INCREASE OR DECREASE IN AGGREGATE SHARE OWNERSHIP LIMIT. Subject to Section 5.9(ii)(a)(I)(B), the Board may from time to time increase the Aggregate Share Ownership Limit for one (1) or more Persons and decrease the Aggregate Share Ownership Limit for all other Persons; provided, however, that the decreased Aggregate Share Ownership Limit will not be effective for any Person whose percentage ownership of Shares is in excess of such decreased Aggregate Share Ownership Limit until such time as such Person’s percentage of Shares equals or falls below the decreased Aggregate Share Ownership Limit, but any further acquisition of Shares in excess of such percentage ownership of Shares will be in violation of the Aggregate Share Ownership Limit and, provided further, that the new Aggregate Share Ownership Limit would not allow five or fewer Persons to Beneficially Own or Constructively Own more than 49.9% in value of the outstanding Shares.

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(i)      NOTICE TO STOCKHOLDERS UPON ISSUANCE OR TRANSFER. Upon issuance or Transfer of Shares prior to the Restriction Termination Date, the Company shall provide the recipient with a notice containing information about the Shares purchased or otherwise Transferred, in lieu of issuance of a share certificate, in a form substantially similar to the following:

The securities of Carter Validus Mission Critical REIT, Inc. (the “Company”) are subject to restrictions on Beneficial and Constructive Ownership and Transfer for the purpose, among others, of the Company’s maintenance of its status as a real estate investment trust under the Internal Revenue Code of 1986, as amended (the “Code”). Subject to certain further restrictions and except as expressly provided in the Company’s charter, (i) no Person may Beneficially or Constructively Own Shares in excess of 9.8% of the value of the total outstanding Shares or 9.8% (in value or in number of shares, whichever is more restrictive) of any class or series of Shares unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable); (ii) no Person may Beneficially or Constructively Own Shares that would result in the Company being “closely held” under Section 856(h) of the Code or otherwise cause the Company to fail to qualify as a REIT; and (iii) any Transfer of Shares that, if effective, would result in the Shares being beneficially owned by fewer than 100 Persons (determined under the principles of Section 856(a)(5) of the Code) shall be void ab initio and the intended transferee shall acquire no rights in such Shares. Any Person who Beneficially or Constructively Owns or attempts to Beneficially or Constructively Own Shares which causes or will cause a Person to Beneficially or Constructively Own Shares in excess or in violation of the above limitations must immediately give written notice (or, in the case of an attempted transaction, give at least 15 days prior written notice) to the Company. If any of the restrictions on transfer or ownership as set forth in (i) and (ii) above are violated, the Shares in excess or in violation of such limitations will be automatically transferred to a Trustee of a Trust for the benefit of one (1) or more Charitable Beneficiaries. In addition, the Company may redeem shares upon the terms and conditions specified by the Board in its sole discretion if the Board determines that ownership or a Transfer or other event may violate the restrictions described above. Furthermore, upon the occurrence of certain events, attempted Transfers in violation of the restrictions described above may be void ab initio . All capitalized terms in this notice have the meanings defined in the Company’s charter, as the same may be amended from time to time, a copy of which, including the restrictions on transfer and ownership, will be furnished to each holder of Shares on request and without charge. Requests for such a copy may be directed to the Secretary of the Company at its principal office.

(iii)      TRANSFER OF SHARES IN TRUST.

(a)      OWNERSHIP IN TRUST. Upon any purported Transfer or other event described in Section 5.9(ii)(a)(II) that would result in a Transfer of Shares to a Trust, such Shares shall be Transferred to the Trustee as trustee of a Trust for the exclusive benefit of one (1) or more Charitable Beneficiaries. Such Transfer to the Trustee shall be effective as of the close of business on the Business Day prior to the purported Transfer or other event that results in the Transfer to the Trust pursuant to Section 5.9(ii)(a)(II). The Trustee shall be appointed by the Company and shall be a Person unaffiliated with the Company and any Prohibited Owner. Each Charitable Beneficiary shall be designated by the Company as provided in Section 5.9(iii)(f).

(b)      STATUS OF SHARES HELD BY THE TRUSTEE. Shares held by the Trustee shall be issued and outstanding Shares. The Prohibited Owner shall have no rights in the Shares held in trust by the Trustee. The Prohibited Owner shall not benefit economically from ownership of any Shares held in trust by the Trustee, shall have no rights to dividends or other Distributions and shall not possess any rights to vote or other rights attributable to the Shares held in the Trust.

(c)      DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends or other Distributions with respect to Shares held in the Trust, which rights shall be exercised for the exclusive benefit of the Charitable Beneficiary. Any dividend or other Distribution paid prior to the discovery by the Company that the Shares have been Transferred to the Trustee shall be paid by the recipient of such dividend or other Distribution to the Trustee upon demand and any dividend or other Distribution authorized but unpaid shall be paid when due to the Trustee. Any dividend or other Distribution so paid to the Trustee shall be held in trust for the Charitable Beneficiary. The Prohibited Owner shall have no voting rights with respect to shares held in the Trust and, subject to Maryland law, effective as of the date that the Shares have been Transferred to the Trustee, the Trustee shall have the authority (at the Trustee’s sole discretion) (i) to rescind as void any vote cast by a Prohibited Owner prior to the discovery by the Company that the Shares have been Transferred to the Trustee and (ii) to recast

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such vote in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary; provided, however, that if the Company has already taken irreversible corporate action, then the Trustee shall not have the authority to rescind and recast such vote. Notwithstanding the provisions of this Section 5.9, until the Company has received notification that Shares have been Transferred into a Trust, the Company shall be entitled to rely on its stock Transfer and other stockholder records for purposes of preparing lists of Stockholders entitled to vote at meetings, determining the validity and authority of proxies and otherwise conducting votes of Stockholders.

(d)      SALE OF SHARES BY TRUSTEE. Within 20 days of receiving notice from the Company that Shares have been Transferred to the Trust, the Trustee shall sell the Shares held in the Trust to a Person, designated by the Trustee, whose ownership of the Shares will not violate the ownership limitations set forth in Section 5.9(ii)(a)(I) or (II). Upon such sale, the interest of the Charitable Beneficiary in the Shares sold shall terminate and the Trustee shall distribute the net proceeds of the sale to the Prohibited Owner and to the Charitable Beneficiary as provided in this Section 5.9(iii)(d). The Prohibited Owner shall receive the lesser of (1) the price paid by the Prohibited Owner for the Shares or, if the Prohibited Owner did not give value for the Shares in connection with the event causing the Shares to be held in the Trust (e.g., in the case of a gift, devise or other such transaction), the Market Price of the Shares on the day of the event causing the Shares to be held in the Trust and (2) the price per Share received by the Trustee from the sale or other disposition of the Shares held in the Trust. The Trustee may reduce the amount payable to the Prohibited Owner by the amount of dividends and other Distributions which have been paid to the Prohibited Owner and are owed by the Prohibited Owner to the Trustee pursuant to Section 5.9(iii)(c). Any net sales proceeds in excess of the amount payable to the Prohibited Owner shall be immediately paid to the Charitable Beneficiary. If, prior to the discovery by the Company that Shares have been Transferred to the Trustee, such Shares are sold by a Prohibited Owner, then (i) such Shares shall be deemed to have been sold on behalf of the Trust and (ii) to the extent that the Prohibited Owner received an amount for such Shares that exceeds the amount that such Prohibited Owner was entitled to receive pursuant to this Section 5.9, such excess shall be paid to the Trustee upon demand.

(e)      PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares Transferred to the Trustee shall be deemed to have been offered for sale to the Company, or its designee, at a price per Share equal to the lesser of (i) the price per Share in the transaction that resulted in such Transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Company, or its designee, accepts such offer. The Company may reduce the amount payable to the Prohibited Owner by the amount of dividends and other Distributions which have been paid to the Prohibited Owner and are owed by the Prohibited Owner to the Trustee pursuant to Section 5.9(iii)(c). The Company may pay the amount of such reduction to the Trustee for the benefit of the Charitable Beneficiary. The Company shall have the right to accept such offer until the Trustee has sold the Shares held in the Trust pursuant to Section 5.9(iii)(d). Upon such a sale to the Company, the interest of the Charitable Beneficiary in the Shares sold shall terminate and the Trustee shall distribute the net proceeds of the sale to the Prohibited Owner.

(f)      DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the Trustee, the Company shall designate one (1) or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust such that (i) the Shares held in the Trust would not violate the restrictions set forth in Section 5.9(ii)(a)(I) or (II) in the hands of such Charitable Beneficiary and (ii) each such organization must be described in Section 501(c)(3) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

SECTION 5.10      SETTLEMENTS.    Nothing in Section 5.9 shall preclude the settlement of any transaction entered into through the facilities of the NYSE or any other national securities exchange or automated inter-dealer quotation system. The fact that the settlement of any transaction occurs shall not negate the effect of any provision of Sections 5.9, and any transfer in such a transaction shall be subject to all of the provisions and limitations set forth in Section 5.9.

SECTION 5.11      SEVERABILITY.    If any provision of Section 5.9 or any application of any such provision is determined to be void, invalid or unenforceable by any court having jurisdiction over the issue, the validity and enforceability of the remaining provisions of Section 5.9 shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court.

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SECTION 5.12      ENFORCEMENT.    The Company is authorized specifically to seek equitable relief, including injunctive relief, to enforce the provisions of Section 5.9.

SECTION 5.13      NON-WAIVER.    No delay or failure on the part of the Company or the Board in exercising any right hereunder shall operate as a waiver of any right of the Company or the Board, as the case may be, except to the extent specifically waived in writing.

SECTION 5.14      REPURCHASE OF SHARES.    Prior to Listing, the Board may establish, from time to time, a program or programs by which the Company voluntarily repurchases Shares from its Stockholders; provided, however, that such repurchase does not impair the capital or operations of the Company. The Sponsor, the Advisor, the Directors or any Affiliates thereof may not receive any fees arising out of the repurchase of Shares by the Company.

SECTION 5.15      DISTRIBUTION REINVESTMENT PLANS.    The Board may establish, from time to time, a distribution reinvestment plan or plans (each, a “Reinvestment Plan”). Under any such Reinvestment Plan, (i) all material information regarding Distributions to the Stockholders and the effect of reinvesting such Distributions, including the tax consequences thereof, shall be provided to the Stockholders not less often than annually and (ii) each Stockholder participating in such Reinvestment Plan shall have a reasonable opportunity to withdraw from the Reinvestment Plan not less often than annually after receipt of the information required in clause (i) above.

SECTION 5.16      PREEMPTIVE AND APPRAISAL RIGHTS.      Except as may be provided by the Board in setting the terms of classified or reclassified Shares pursuant to Section 5.4 or as may otherwise be provided by contract approved by the Board, no holder of Shares shall, as such holder, have any preemptive right to purchase or subscribe for any additional Shares or any other security of the Company which it may issue or sell. Holders of Shares shall not be entitled to exercise any rights of an objecting stockholder provided for under Title 3, Subtitle 2 of the MGCL or any successor statute unless the Board, upon the affirmative vote of a majority of the Board, shall determine that such rights apply, with respect to all or any classes or series of Shares, to one (1) or more transactions occurring after the date of such determination in connection with which holders of such Shares would otherwise be entitled to exercise such rights.

ARTICLE VI

BOARD OF DIRECTORS

SECTION 6.1      NUMBER OF DIRECTORS.    The number of Directors of the Company shall be five, which number may be increased or decreased from time to time pursuant to the Bylaws; provided, however, that prior to Listing, the number of Directors shall not be fewer than three, and following Listing, the number of Directors shall not be fewer than the minimum number required by the MGCL. Until Listing, a majority of the Board will be Independent Directors except for a period of up to 60 days after the death, removal or resignation of an Independent Director pending the election of such Independent Director’s successor. Any and all vacancies on the Board may be filled only by the affirmative vote of a majority of the remaining Directors in office, even if the remaining Directors do not constitute a quorum, and any Director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which such vacancy occurred. Notwithstanding the foregoing sentence, until Listing, Independent Directors shall nominate replacements for vacancies among the Independent Directors’ positions. No reduction in the number of Directors shall cause the removal of any Director from office prior to the expiration of his term. For the purposes of voting for Directors, each Share may be voted for as many individuals as there are Directors to be elected and for whose election the Share is entitled to be voted. Cumulative voting for Directors is prohibited.

The names of the Directors who currently serve on the Board until the next annual meeting of the Stockholders and until their successors are duly elected and qualify are:

John Carter

Mario Garcia, Jr.

Jonathan Kuchin

Randall Greene

Ronald Rayevich

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SECTION 6.2      EXPERIENCE.    Prior to Listing, each Director shall have at least three years of relevant experience demonstrating the knowledge and experience required to successfully acquire and manage the type of assets being acquired by the Company and at least one (1) of the Independent Directors shall have three years of relevant real estate experience. At least one (1) of the Independent Directors shall be a financial expert with at least three years of relevant finance experience.

SECTION 6.3      COMMITTEES.    Subject to the MGCL, the Board may establish such committees as it deems appropriate, in its discretion, provided that, until Listing, the majority of the members of each committee are Independent Directors. Any Audit Committee established by the Board shall be composed solely of Independent Directors.

SECTION 6.4      TERM.    Each Director shall hold office for one (1) year, until the next annual meeting of Stockholders and until his successor is duly elected and qualifies. Directors may be elected to an unlimited number of successive terms.

SECTION 6.5      FIDUCIARY OBLIGATIONS.    Prior to Listing, the Directors serve in a fiduciary capacity to the Company and have a fiduciary duty to the Stockholders of the Company, including a specific fiduciary duty to supervise the relationship of the Company with the Advisor.

SECTION 6.6      RESIGNATION, REMOVAL OR DEATH.    Any Director may resign by delivering written notice to the Board, effective upon receipt by the Board of such written notice or upon any future date specified in the notice. Any Director or the entire Board may be removed from office at any time at a meeting of stockholders called for that purpose, with or without cause, by the affirmative vote of the holders of not less than a majority of the Shares then outstanding and entitled to vote generally in the election of directors, subject to the rights of any Preferred Shares to vote for such Directors.

ARTICLE VII

POWERS OF THE BOARD OF DIRECTORS

SECTION 7.1      GENERAL.    Subject to any express limitations contained in the Charter or Bylaws, the business and affairs of the Company shall be managed under the direction of the Board and the Board shall have full, exclusive and absolute power, control and authority over any and all assets of the Company. In accordance with the policies on investments and borrowing set forth in this Article VII and Article IX hereof, the Board shall monitor the administrative procedures, investment operations and performance of the Company and the Advisor to assure that such policies are carried out. The Board may take any action that, in its sole judgment and discretion, is necessary or desirable to conduct the business of the Company. The Charter shall be construed with a presumption in favor of the grant of power and authority to the Board. Any construction of the Charter or determination made in good faith by the Board concerning its powers and authority hereunder shall be conclusive. The enumeration and definition of particular powers of the Board included in this Article VII shall in no way be limited or restricted by reference to or inference from the terms of this or any other provision of the Charter or construed or deemed by inference or otherwise in any manner to exclude or limit the powers conferred upon the Board under the general laws of the State of Maryland as now or hereafter in force.

SECTION 7.2      AUTHORIZATION BY BOARD OF STOCK ISSUANCE.    The Board may authorize the issuance from time to time of Shares of any class or series, whether now or hereafter authorized, or securities or rights convertible into Shares of any class or series, whether now or hereafter authorized, for such consideration as the Board may deem advisable (or without consideration in the case of a stock split or stock dividend), subject to such restrictions or limitations, if any, as may be set forth in the Charter or the Bylaws; provided, however, that, prior to Listing, the issuance of Preferred Shares shall be approved by a majority of Independent Directors not otherwise interested in the transaction, who shall have access at the Corporation’s expense to the Corporation’s legal counsel or to independent legal counsel.

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SECTION 7.3       FINANCINGS.    The Board shall have the power and authority to borrow or, in any other manner, raise money for the purposes and on the terms it determines, which terms may (i) include evidencing the same by issuance of Securities of the Company and (ii) have such provisions as the Board may determine (a) to reacquire such Securities; (b) to enter into other contracts or obligations on behalf of the Company; (c) to guarantee, indemnify or act as surety with respect to payment or performance of obligations of any Person; and (d) to mortgage, pledge, assign, grant security interests in or otherwise encumber the Company’s assets to secure any such Securities of the Company, contracts or obligations (including guarantees, indemnifications and suretyships); and to renew, modify, release, compromise, extend, consolidate or cancel, in whole or in part, any obligation to or of the Company or participate in any reorganization of obligors to the Company.

SECTION 7.4      REIT QUALIFICATION.    The Board shall use its reasonable best efforts to take such actions as are necessary or appropriate to preserve the status of the Company as a REIT; however, if the Board determines that it is no longer in the best interests of the Company to continue to be qualified as a REIT, the Board may revoke or otherwise terminate the Company’s REIT election pursuant to Section 856(g) of the Code. The Board also may determine that compliance with any restriction or limitation on stock ownership and transfers set forth in Section 5.9 of Article V is no longer required for REIT qualification.

SECTION 7.5      DETERMINATIONS BY BOARD.    The determination as to any of the following matters, made in good faith by or pursuant to the direction of the Board consistent with the Charter, shall be final and conclusive and shall be binding upon the Company and every holder of Shares: the amount of the net income of the Company for any period and the amount of assets at any time legally available for the payment of dividends, redemption of Shares or the payment of other Distributions on Shares; the amount of paid-in surplus, net assets, other surplus, annual or other cash flow, funds from operations, net profit, net assets in excess of capital, undivided profits or excess of profits over losses on sales of assets; the amount, purpose, time of creation, increase or decrease, alteration or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation or liability for which such reserves or charges shall have been created shall have been paid or discharged); any interpretation of the terms, preferences, conversion or other rights, voting powers or rights, restrictions, limitations as to dividends or other Distributions, qualifications or terms or conditions of redemption of any class or series of Shares; the fair value, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by the Company or any Shares; the number of Shares of any class of the Company; any matter relating to the acquisition, holding and disposition of any assets by the Company; the application of any provision of the Charter in the case of any ambiguity, including, without limitation: (i) any provision of the definitions of any of the following: Affiliate, Independent Director and Sponsor, (ii) which amounts paid to the Advisor or its Affiliates are property-level expenses connected with the ownership of real estate interests, loans or other property, (iii) which expenses are excluded from the definition of Total Operating Expenses and (iv) whether expenses qualify as Organization and Offering Expenses; any conflict between the MGCL and the provisions set forth in the NASAA REIT Guidelines; or any other matter relating to the business and affairs of the Company or required or permitted by applicable law, the Charter or Bylaws or otherwise to be determined by the Board; provided, however, that any determination by the Board as to any of the preceding matters shall not render invalid or improper any action taken or omitted prior to such determination and no Director shall be liable for making or failing to make such a determination; and provided, further, that to the extent the Board determines that the MGCL conflicts with the provisions set forth in the NASAA REIT Guidelines, the NASAA REIT Guidelines control to the extent any provisions of the MGCL are not mandatory.

SECTION 7.6      STOCKHOLDER CONCURRENCE REQUIRED.    Notwithstanding the foregoing, without concurrence of a majority of the outstanding Shares entitled to vote thereon, the Board may not (i) amend the Charter, except for amendments that do not adversely affect the rights, preferences and privileges of Stockholders (including amendments to provisions relating to Director qualifications, fiduciary duty, liability and indemnification, conflicts of interest, investment policies or investment restrictions), (ii) sell all or substantially all of the Assets other than in the ordinary course of the Company’s business or in connection with liquidation and dissolution or as otherwise permitted by law, (iii) cause the merger or similar reorganization of the Company except as permitted by law or (iv) dissolve or liquidate the Company, other than before the Company’s initial investment in Assets.

SECTION 7.7      VOTE OF MAJORITY OF INDEPENDENT DIRECTORS REQUIRED.    Notwithstanding the foregoing, until Listing, the Directors and Independent Directors are bound by, and a majority of the Independent Directors must approve matters relating to, the following restrictions on and obligations of the Directors and the Independent Directors: (i) the requirement that a majority of Directors and of Independent

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Directors review and ratify the Charter at or before the first meeting of the Board; (ii) the duty of the Board to establish written policies on investments and borrowing and to monitor the administrative procedures, investment operations and performance of the Company and the Advisor to assure that such policies are carried out; (iii) the Company’s minimum capitalization; (iv) the Advisory Agreement; (v) liability and indemnification; (vi) reasonableness of the Company’s fees and expenses; (vii) limitations on Organization and Offering Expenses; (viii) limitations on Acquisition Fees and Acquisition Expenses; (viii) limitations on Total Operating Expenses; (ix) limitations on Real Estate commissions on resale of property; (x) limitations on incentive fees; (xi) Independent Director compensation, which may include Shares, and Advisor compensation; (xii) the Independent Directors’ periodic duty to review the Company’s investment policies; (xiii) the authority of a majority of the Independent Directors to select an Independent Appraiser to determine the fair market value that the Company pays for Real Estate that it acquires both (a) when a majority of the Independent Directors determine to appoint an Independent Appraiser to determine fair market value in connection with any acquisition by the Company and (b) whenever the Company acquires property from the Advisor, the Directors, the Sponsor or their Affiliates; (xiv) the restrictions and procedures contained herein relating to meetings of Stockholders; (xv) the authority of a majority of Stockholders present in person or by proxy at an annual meeting at which a quorum is present, without the necessity for concurrence by the Board, to vote to elect the Directors; (xvi) those requirements of any Reinvestment Plan that the Board establishes, relating to periodic distribution of certain material information to Stockholders and opportunity for participating Stockholders to withdraw; (xvii) the adoption of an Extension Amendment or a Plan of Liquidation; and (xviii) the requirement that a majority of Independent Directors must approve matters relating to the duties and restrictions enumerated in this Section 7.7.

ARTICLE VIII

ADVISOR

SECTION 8.1      APPOINTMENT AND INITIAL INVESTMENT OF ADVISOR.    The Board is responsible for setting the general policies of the Company and for the general supervision of its business conducted by officers, agents, employees, advisors or independent contractors of the Company. However, the Board is not required personally to conduct the business of the Company, and it may (but need not) appoint, employ or contract with any Person (including a Person Affiliated with any Director) as an Advisor and may grant or delegate such authority to the Advisor as the Board may, in its sole discretion, deem necessary or desirable. The term of retention of any Advisor shall not exceed one (1) year, although there is no limit to the number of times that a particular Advisor may be retained. The Advisor or its Affiliates have made an initial investment of $200,000 in the Company. The Advisor or any such Affiliate may not sell the Initial Investment while the Sponsor remains a Sponsor but may transfer the Initial Investment to its other Affiliates.

SECTION 8.2      SUPERVISION OF ADVISOR.    The Board shall evaluate the performance of the Advisor before entering into or renewing an Advisory Agreement, and the criteria used in such evaluation shall be reflected in the minutes of the meetings of the Board. The Board may exercise broad discretion in allowing the Advisor to administer and regulate the operations of the Company, to act as agent for the Company, to execute documents on behalf of the Company and to make executive decisions that conform to general policies and principles established by the Board. The Board shall monitor the Advisor to assure that the administrative procedures, operations and programs of the Company are in the best interests of the Stockholders and are fulfilled. The Independent Directors are responsible for reviewing the total fees and expenses of the Company at least annually or with sufficient frequency to determine that the expenses incurred are reasonable in light of the investment performance of the Company, its Net Assets, its Net Income and the fees and expenses of other comparable unaffiliated REITs. Each such determination shall be reflected in the minutes of the meetings of the Board. The Independent Directors also will be responsible for reviewing, from time to time and at least annually, the performance of the Advisor and determining that compensation to be paid to the Advisor is reasonable in relation to the nature and quality of services performed and the investment performance of the Company and that the provisions of the Advisory Agreement are being carried out. Specifically, the Independent Directors will consider factors such as (i) the amount of the fee paid to the Advisor in relation to the size, composition and performance of the Assets, (ii) the success of the Advisor in generating opportunities that meet the investment objectives of the Company, (iii) rates charged to other REITs and to investors other than REITs by advisors performing the same or similar services, (iv) additional revenues realized by the Advisor and its Affiliates through their relationship with the Company, including loan administration, underwriting or broker commissions, servicing, engineering, inspection and other fees, whether paid

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by the Company or by others with whom the Company does business, (v) the quality and extent of service and advice furnished by the Advisor, (vi) the performance of the Assets, including income, conservation or appreciation of capital, frequency of problem investments and competence in dealing with distress situations, and (vii) the quality of the Assets relative to the investments generated by the Advisor for its own account. The Independent Directors may also consider all other factors that they deem relevant, and the findings of the Independent Directors on each of the factors considered shall be recorded in the minutes of the Board. The Board shall determine whether any successor Advisor possesses sufficient qualifications to perform the advisory function for the Company and whether the compensation provided for in its contract with the Company is justified.

SECTION 8.3      FIDUCIARY OBLIGATIONS.    The Advisor shall have a fiduciary responsibility and duty to the Company and to the Stockholders.

SECTION 8.4      AFFILIATION AND FUNCTIONS.    The Board, by resolution or in the Bylaws, may provide guidelines, provisions or requirements concerning the affiliation and functions of the Advisor.

SECTION 8.5      TERMINATION.    Either a majority of the Independent Directors or the Advisor may terminate the Advisory Agreement on sixty (60) days’ written notice without cause or penalty, and, in such event, the Advisor will cooperate with the Company and the Board in making an orderly transition of the advisory function.

SECTION 8.6      DISPOSITION FEE ON SALE OF PROPERTY.    The Company may pay the Advisor a disposition fee upon Sale of one (1) or more Properties, in an amount equal to the lesser of (i) one-half (1/2) of the Competitive Real Estate Commission if a third party broker is also involved, or (ii) two percent (2%) of the sales price of such Property or Properties. Payment of such fee may be made only if the Advisor provides a substantial amount of services in connection with the Sale of a Property or Properties, as determined by a majority of the Independent Directors. In addition, the amount paid when added to all other real estate commissions paid to unaffiliated parties in connection with such Sale shall not exceed the lesser of the Competitive Real Estate Commission or an amount equal to six percent (6%) of the sales price of such Property or Properties.

SECTION 8.7      INCENTIVE FEES.    The Company may pay the Advisor an interest in the gain from the Sale of Assets, for which full consideration is not paid in cash or property of equivalent value, provided the amount or percentage of such interest is reasonable. Such an interest in gain from the Sale of Assets shall be considered presumptively reasonable if it does not exceed fifteen percent (15%) of the balance of such net proceeds remaining after payment to Stockholders, in the aggregate, of an amount equal to one hundred percent (100%) of the Invested Capital, plus an amount equal to eight percent (8%) of the Invested Capital per annum cumulative. In the case of multiple Advisors, such Advisor and any of their Affiliates shall be allowed such fees provided such fees are distributed by a proportional method reasonably designed to reflect the value added to the Company assets by each respective Advisor or any Affiliate.

SECTION 8.8      SUBORDINATED INCENTIVE LISTING FEE.    Upon Listing of the Common Shares, the Company shall pay the Advisor a fee equal to fifteen percent (15%) of the amount, if any, by which (1) the market value of the outstanding Shares plus Distributions paid by the Company prior to Listing, exceeds (2) the sum of the total amount of capital raised from investors and the amount of cash flow necessary to generate an eight percent (8%) annual cumulative, non-compounded return to investors.

SECTION 8.9      SUBORDINATED PARTICIPATION IN NET SALE PROCEEDS.    The Company shall pay the Advisor a fee equal to fifteen percent (15%) of remaining Net Sales Proceeds after return of capital contributions plus payment to investors of an eight percent (8%) cumulative, pre-tax, non-compounded return on the capital contributed by investors.

SECTION 8.10      ORGANIZATION AND OFFERING EXPENSES LIMITATION.    The Company shall reimburse the Advisor and its Affiliates for Organization and Offering Expenses incurred by the Advisor or its Affiliates; provided, however, that the total amount of all Organization and Offering Expenses shall be reasonable and shall in no event exceed fifteen percent (15%) of the Gross Proceeds of each Offering.

SECTION 8.11      ACQUISITION FEES.    The Company may pay the Advisor and its Affiliates fees for the review and evaluation of potential investments in Assets; provided, however, that the total of all Acquisition Fees and Acquisition Expenses shall be reasonable, and shall not exceed an amount equal to six percent (6%) of the

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Contract Purchase Price, or, in the case of a Mortgage, six percent (6%) of the funds advanced; provided, however, that a majority of the Directors (including a majority of the Independent Directors) not otherwise interested in the transaction may approve fees and expenses in excess of this limit if they determine the transaction to be commercially competitive, fair and reasonable to the Company.

SECTION 8.12      REIMBURSEMENT FOR TOTAL OPERATING EXPENSES.    The Company may reimburse the Advisor, at the end of each fiscal quarter, for Total Operating Expenses incurred by the Advisor; provided, however, that the Company shall not reimburse the Advisor at the end of any fiscal quarter for Total Operating Expenses that, in the four consecutive fiscal quarters then ended, exceed the greater of two percent (2%) of Average Invested Assets or twenty five percent (25%) of Net Income (the “2%/25% Guidelines”) for such year. The Independent Directors shall have the fiduciary responsibility of limiting Total Operating Expenses to amounts that do not exceed the 2%/25% Guidelines unless they have made a finding that, based on such unusual and non-recurring factors that they deem sufficient, a higher level of expenses (an “Excess Amount”) is justified. Any such finding and the reasons in support thereof shall be reflected in the minutes of the meetings of the Board. Within 60 days after the end of any fiscal quarter of the Company for which there is an Excess Amount which the Independent Directors conclude was justifiable and reimbursable to the Advisor, there shall be sent to the Stockholders a written disclosure of such fact, together with an explanation of the factors the Independent Directors considered in determining that such Excess Amount was justified. In the event that the Independent Directors do not determine that excess expenses are justified, the Advisor shall reimburse the Company the amount by which the expenses exceeded the 2%/25% Guidelines.

SECTION 8.13      REIMBURSEMENT LIMITATION.    No reimbursement shall be made for costs of personnel of the Advisor or its Affiliates to the extent that such personnel perform services in connection with services for which the Advisor receives the Acquisition Fee, and/or any real estate commissions or advisory fees.

SECTION 8.14      EFFECT OF LISTING.    This Article 8 shall expire upon Listing.

ARTICLE IX

INVESTMENT OBJECTIVES AND LIMITATIONS

SECTION 9.1      REVIEW OF OBJECTIVES.    Until Listing, the Independent Directors shall review the investment policies of the Company with sufficient frequency (not less often than annually) to determine that the policies being followed by the Company are in the best interests of its Stockholders. Each such determination and the basis therefor shall be set forth in the minutes of the meetings of the Board.

SECTION 9.2      CERTAIN PERMITTED INVESTMENTS.    Until such time as the Common Shares are Listed, the following shall apply:

(i) The Company may invest in Assets.

(ii) The Company may invest in Joint Ventures with the Sponsor, the Advisor, one (1) or more Directors or any of their Affiliates; provided, however, that, prior to Listing, a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction must approve such investment as being fair and reasonable to the Company and on substantially the same terms and conditions as those received by the other joint venturers.

(iii) Subject to any limitations in Section 9.3, the Company may invest in equity securities; provided, however, that, prior to Listing, such investment shall be permitted only if a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction approve such investment as being fair, competitive and commercially reasonable.

SECTION 9.3      INVESTMENT LIMITATIONS.    Until such time as the Common Shares are Listed, the following investment limitations shall apply. In addition to other investment restrictions imposed by the Board from time to time, consistent with the Company’s objective of qualifying as a REIT, the following shall apply to the Company’s investments:

(i) Not more than ten percent (10%) of the Company’s total assets shall be invested in Unimproved Real Property or mortgage loans on Unimproved Real Property.

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(ii) The Company shall not invest in commodities or commodity future contracts. This limitation is not intended to apply to futures contracts, when used solely for hedging purposes in connection with the Company’s ordinary business of investing in Real Estate assets and Mortgages.

(iii) Except for those Mortgages insured or guaranteed by a government or government agency, the Company shall not invest in or make any Mortgage if the transaction is with the Advisor, the Sponsor, any Director or any Affiliate thereof, unless an appraisal is obtained concerning the underlying property from an Independent Appraiser. Such appraisal shall be maintained in the Company’s records for at least five (5) years and shall be available for inspection and duplication by any Stockholder for a reasonable charge. In addition to the appraisal, a mortgagee’s or owner’s title insurance policy or commitment as to the priority of the mortgage or condition of the title must be obtained.

(iv) The Company shall not make or invest in any Mortgage, including a construction loan, on any one (1) property if the aggregate amount of all mortgage loans outstanding on the property, including the loans of the Company, would exceed an amount equal to eighty-five percent (85%) of the appraised value of the property as determined by the Board, including a majority of the Independent Directors, unless substantial justification exists because of the presence of other underwriting criteria. For purposes of this subsection, the “aggregate amount of all mortgage loans outstanding on the property, including the loans of the Company” shall include all interest (excluding contingent participation in income and/or appreciation in value of the mortgaged property), the current payment of which may be deferred pursuant to the terms of such loans, to the extent that deferred interest on each loan exceeds five percent (5%) per annum of the principal balance of the loan.

(v) The Company shall not invest in indebtedness secured by a mortgage on real property which is subordinate to liens or other indebtedness of the Advisor, the Sponsor, any Director or any Affiliate of the Company.

(vi) The Company shall not issue (A) equity Securities redeemable solely at the option of the holder (except that Stockholders may offer their Common Shares to the Company pursuant to any repurchase plan adopted by the Board on terms outlined in the Prospectus relating to any Offering, as such plan is thereafter amended in accordance with its terms); (B) debt Securities unless the historical debt service coverage (in the most recently completed fiscal year) as adjusted for known changes is sufficient to properly service that higher level of debt; (C) equity Securities on a deferred payment basis or under similar arrangements; (D) options or warrants to purchase Shares to the Advisor, the Directors, the Sponsor or any Affiliate thereof except on the same terms as such options or warrants, if any, are sold to the general public; or (E) equity securities that are assessable after the receipt of the consideration for which the Board authorized their issuance. Options or warrants may be issued to persons other than the Advisor, the Directors, the Sponsor or any Affiliate thereof, but not at exercise prices less than the fair market value of the underlying Securities on the date of grant and not for consideration (which may include services) that in the judgment of the Independent Directors has a market value less than the value of such option or warrant on the date of grant. Options or warrants issuable to the Advisor, the Directors, the Sponsor or any Affiliate thereof shall not exceed ten percent (10%) of the outstanding Shares on the date of grant. The voting rights per Share (other than any publicly held Share) sold in a private offering shall not exceed the voting rights which bear the same relationship to the voting rights of a publicly held Share as the consideration paid to the Company for each privately offered Share bears to the book value of each outstanding publicly held Share.

(vii) A majority of the Directors or a majority of a duly authorized committee of the Board shall authorize the consideration to be paid for each Asset, ordinarily based on the fair market value of the Asset. If a majority of the Independent Directors on the Board or such duly authorized committee determine, or if the Asset is acquired from the Advisor, a Director, the Sponsor or their Affiliates, such fair market value shall be determined by a qualified Independent Appraiser selected by such Independent Directors.

(viii) The Company will continually review its investment activity to attempt to ensure that it is not classified as an “investment company” under the Investment Company Act of 1940, as amended.

(ix) The Company will not make any investment that the Company believes will be inconsistent with its objectives of qualifying and remaining qualified as a REIT unless and until the Board determines, in its sole discretion, that REIT qualification is not in the best interests of the Company.

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(x) The Company shall not invest in real estate contracts of sale unless such contracts are in recordable form and appropriately recorded in the chain of title.

(xi) The Company will not, directly or indirectly, including through any subsidiary, extend or maintain credit, arrange for the extension of credit, or renew an extension of credit, in the form of a personal loan to or for any of the Directors or any of the Company’s executive officers.

(xii) The Company will not invest in any equity securities (including any preferred equity securities) that are not traded on a national securities exchange or included for quotation on an inter-dealer quotation system unless a majority of disinterested Directors, including a majority of disinterested Independent Directors, approves the transaction as being fair, competitive and commercially reasonable. Investments in entities affiliated with the Advisor, the Sponsor, any Director, or any of their Affiliates shall be subject to the restrictions on joint venture investments set forth in Section 9.2(ii).

(xiii) The aggregate amount of borrowing shall not exceed three hundred percent (300%) of the Company’s Net Assets as of the date of the borrowing, which is generally expected to be approximately 75% of the cost of the Company’s investments, unless the excess is approved by a majority of the Independent Directors and disclosed to the Stockholders in the Company’s next quarterly report to Stockholders following such borrowing along with justification for such excess. This limitation, however, shall not apply to individual real estate assets or investments.

(xiv) The Company shall not make an investment in a property or mortgage loan if the related acquisition fees and acquisition expenses are unreasonable or exceed six percent (6%) of the purchase price of the property or, in the case of a mortgage loan, 6% of the funds advanced; provided that the investment may be made if a majority of Independent Directors determines that the transaction is commercially competitive, fair and reasonable to the Company.

(xv) The Company shall not acquire securities in any entity holding investments or engaging in activities prohibited by the restrictions on investments set forth in the foregoing clauses (i) through (xv) of this Section 9.3.

ARTICLE X

CONFLICTS OF INTEREST

SECTION 10.1      SALES AND LEASES TO THE COMPANY.    Prior to Listing, the Company may purchase or lease an Asset or Assets from the Sponsor, the Advisor, a Director or any Affiliate thereof upon a finding by a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction (i) that such transaction is fair and reasonable to the Company and (ii) that such transaction is at a price to the Company no greater than the cost of the Asset to such Sponsor, Advisor, Director, or Affiliate or, if the price to the Company is in excess of such cost, substantial justification exists for the excess and the excess is reasonable. In no event shall the purchase price paid by the Company for any such Asset exceed the Asset’s current appraised value.

SECTION 10.2      SALES AND LEASES TO THE SPONSOR, ADVISOR, DIRECTORS OR AFFILIATES.    Prior to Listing, the Advisor, the Sponsor, a Director or any Affiliate thereof may only purchase or lease Assets from the Company if a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction determine that the transaction is fair and reasonable to the Company.

SECTION 10.3      OTHER TRANSACTIONS.

(i) Prior to Listing, the Company shall not engage in any other transaction with the Sponsor, a Director, the Advisor or any Affiliates thereof unless a majority of the Directors (including a majority of the Independent Directors) not otherwise interested in such transaction approve such transaction as fair and reasonable to the Company and on terms and conditions not less favorable to the Company than those available from unaffiliated third parties.

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(ii) Prior to Listing, the Company shall not make loans to the Sponsor, the Advisor, a Director, or any Affiliates thereof except Mortgages pursuant to Section 9.3(iii) hereof or loans to wholly owned subsidiaries of the Company. The Sponsor, the Advisor, the Directors and any Affiliates thereof shall not make loans to the Company, or to joint ventures in which the Company is a co-venturer, unless approved by a majority of the Directors (including a majority of the Independent Directors) not otherwise interested in such transaction as fair, competitive, and commercially reasonable, and no less favorable to the Company than comparable loans between unaffiliated parties.

(iii) Prior to Listing, the Company may enter into joint ventures with the Sponsor or its Affiliates provided that (a) a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction approves the transaction as being fair and reasonable to the Company and (b) the investment by the Company is on substantially the same terms as those received by other joint venturers.

SECTION 10.4      CONFLICT RESOLUTION PROCEDURES.

(i) Before the Advisor may take advantage of an investment opportunity for its own account or recommend it to others, the Advisor is obligated to present such opportunity to the Company if (a) such opportunity is compatible with the Company’s investment objectives and policies, (b) such opportunity is of a character which could be taken by the Company, and (c) the Company has the financial resources to take advantage of such opportunity.

(ii) In the event that an investment opportunity becomes available that is suitable for both the Company and a public or private entity with which the Advisor or its Affiliates are affiliated for which both entities have sufficient uninvested funds, and the requirements of Section 10.4(i) above have been satisfied, then the entity that has had the longest period of time elapse since it was offered an investment opportunity will first be offered the investment opportunity. An investment opportunity will not be considered suitable for an entity if the 2%/25% Guidelines could not be satisfied if the entity were to make the investment. In determining whether or not an investment opportunity is suitable for more than one (1) entity, the Board and the Advisor will examine such factors, among others, as the cash requirements of each entity, the effect of the acquisition both on diversification of each entity’s investments by type of property and geographic area and on diversification of the tenants of its properties, the policy of each entity relating to leverage of properties, the anticipated cash flow of each entity, the income tax effects of the purchase to each entity, the size of the investment and the amount of funds available to each program and the length of time such funds have been available for investment. If a subsequent development, such as a delay in the closing of the acquisition of such investment or a delay in the construction of a property, causes any such investment, in the opinion of the Board and the Advisor, to be more appropriate for an entity other than the entity that committed to make the investment, the Advisor may determine that the other entity affiliated with the Advisors or its Affiliates will make the investment. It shall be the duty of the Board, including the Independent Directors, to ensure that the method used by the Advisor for the allocation of the acquisition of investments by two or more affiliated programs seeking to acquire similar types of Assets is applied fairly to the Company.

ARTICLE XI

STOCKHOLDERS

SECTION 11.1      MEETINGS OF STOCKHOLDERS.    There shall be an annual meeting of the Stockholders, to be held on such date and at such time and place as shall be determined by or in the manner prescribed in the Bylaws, at which the Directors shall be elected and any other proper business may be conducted. Prior to Listing, the annual meeting will be held upon reasonable notice on a date that is within a reasonable period of time following the distribution of the Company’s annual report to Stockholders, but not less than thirty (30) days after delivery of such report. The Directors, including the Independent Directors, shall take reasonable steps to ensure that such notice is provided. Prior to Listing, the holders of a majority of Shares entitled to vote, present or by proxy, at an annual meeting at which a quorum is present may, without the necessity for concurrence by the Board, vote to elect Directors. Following Listing, a majority of the votes cast by the holders of Shares entitled to vote, present in person or by proxy, at an annual meeting at which a quorum is present may, without the necessity for concurrence by the Board, vote to elect the Directors. Prior to Listing, a quorum shall be the presence in person or by proxy of Stockholders entitled to cast at least 50% of all the votes entitled to be cast at such meeting on any matter. Special meetings of Stockholders may be called in the manner provided in the Bylaws, including by the Chairman of the Board, the President, the Chief Executive Officer, a majority of the Directors or a majority of the Independent Directors, and, prior to Listing, by the Secretary of the Company upon written request

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of Stockholders holding in the aggregate not less than ten percent (10%) of the outstanding Shares entitled to be voted on any issue proposed to be considered at any such special meeting. Notice of any special meeting of Stockholders shall be given as provided in the Bylaws, and, prior to Listing, the special meeting shall be held not less than 15 days nor more than 60 days after the delivery of such notice. If the meeting is called by written request of Stockholders as described in this Section 11.1, the special meeting shall be held at the time and place specified in the Stockholder request; provided, however, that if none is so specified, at such time and place convenient to the Stockholders. If there are no Directors, the Secretary of the Company shall promptly call a special meeting of the Stockholders entitled to vote for the election of successor Directors. Any meeting may be adjourned and reconvened as the Board may determine or as otherwise provided in the Bylaws. Without the approval of a majority of the Shares entitled to vote on the matter, the Board may not (i) amend the Charter to materially and adversely affect the rights, preferences and privileges of the Stockholders; (ii) amend provisions of the Charter relating to director qualifications, fiduciary duties, liability and indemnification, conflicts of interest, investment policies or investment restrictions; (iii) liquidate or dissolve the Company other than before the initial investment in Property; (iv) sell all or substantially all of the Company’s assets other than in the ordinary course of business or as otherwise permitted by law; or (v) cause the merger or similar reorganization of the Company except as permitted by law.

SECTION 11.2      VOTING RIGHTS OF STOCKHOLDERS.    Subject to the provisions of any class or series of Shares then outstanding and the mandatory provisions of any applicable laws or regulations, the Stockholders shall be entitled to vote only on the following matters: (a) election or removal of Directors, without the necessity for concurrence by the Board, as provided in Sections 11.1, 6.4 and 6.6 hereof; (b) amendment of the Charter, as provided in Article XIII hereof; (c) dissolution of the Company; (d) to the extent required under Maryland law, merger or consolidation of the Company or the sale or other disposition of all or substantially all of the Company’s assets; and (e) such other matters with respect to which the Board has adopted a resolution declaring that a proposed action is advisable and directing that the matter be submitted to the Stockholders for approval or ratification. Except with respect to the foregoing matters, no action taken by the Stockholders at any meeting shall in any way bind the Board. Without the approval of a majority of the Shares entitled to vote on the matter, the Board may not (i) amend the Charter to materially and adversely affect the rights, preferences and privileges of the Stockholders; (ii) amend provisions of the Charter relating to director qualifications, fiduciary duties, liability and indemnification, conflicts of interest, investment policies or investment restrictions; (iii) liquidate or dissolve the Company other than before the initial investment in property; (iv) sell all or substantially all of the Company’s assets other than in the ordinary course of business or as otherwise permitted by law; or (v) cause the merger or similar reorganization of the Company except as permitted by law.

SECTION 11.3      EXTRAORDINARY ACTIONS.    Notwithstanding any provision of law permitting or requiring any action to be taken or approved by the affirmative vote of the holders of Shares entitled to cast a greater number of votes, any such action shall be effective and valid if declared advisable by the Board and taken or approved by the affirmative vote of holders of Shares entitled to cast a majority of all the votes entitled to be cast on the matter.

SECTION 11.4      VOTING LIMITATIONS ON SHARES HELD BY THE ADVISOR, DIRECTORS AND AFFILIATES.     With respect to Shares owned by the Advisor, any Director or any of their Affiliates, neither the Advisor, nor such Director(s), nor any of their Affiliates may, prior to Listing, vote or consent on matters submitted to the Stockholders regarding the removal of the Advisor, such Director(s) or any of their Affiliates or any transaction between the Company and any of them. In determining the requisite percentage in interest of Shares necessary to approve a matter on which the Advisor, such Director(s) and any of their Affiliates may not vote or consent, any Shares owned by any of them shall not be included.

SECTION 11.5      RIGHT OF INSPECTION.    Any Stockholder and any designated representative thereof shall be permitted access to the records of the Company to which it is entitled under applicable law at all reasonable times, and may inspect and copy any of them for a reasonable charge. Inspection of the Company books and records by the office or agency administering the securities laws of a jurisdiction shall be provided upon reasonable notice and during normal business hours.

SECTION 11.6      ACCESS TO STOCKHOLDER LIST.    An alphabetical list of the names, addresses and telephone numbers of the Stockholders of the Company, along with the number of Shares held by each of them (the “Stockholder List”), shall be maintained as part of the books and records of the Company and, prior to Listing, shall be available for inspection by any Stockholder or the Stockholder’s designated agent at the home office of the

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Company upon the request of the Stockholder. The Stockholder List shall be updated at least quarterly to reflect changes in the information contained therein. A copy of the Stockholder List shall be mailed to any Stockholder so requesting within ten days of receipt by the Company of the request. The copy of the Stockholder List shall be printed in alphabetical order, on white paper, and in a readily readable type size (in no event smaller than 10-point type). The Company may impose a reasonable charge for expenses incurred in reproduction pursuant to the Stockholder request. A Stockholder may request a copy of the Stockholder List in connection with matters relating to Stockholders’ voting rights, and the exercise of Stockholder rights under federal proxy laws.

If the Advisor or the Board neglects or refuses to exhibit, produce or mail a copy of the Stockholder List as requested, the Advisor and/or the Board, as the case may be, shall be liable to any Stockholder requesting the Stockholder List for the costs, including reasonable attorneys’ fees, incurred by that Stockholder for compelling the production of the Stockholder List, and for actual damages suffered by any Stockholder by reason of such refusal or neglect. It shall be a defense that the actual purpose and reason for the requests for inspection or for a copy of the Stockholder List is to secure the Stockholder List or other information for the purpose of selling the Stockholder List or copies thereof, or of using the same for a commercial purpose, other than in the interest of the applicant as a Stockholder relative to the affairs of the Company. The Company may require the Stockholder requesting the Stockholder List to represent that the Stockholder List is not requested for a commercial purpose unrelated to the Stockholder’s interest in the Company. The remedies provided hereunder to Stockholders requesting copies of the Stockholder List are in addition to, and shall not in any way limit, other remedies available to Stockholders under federal law, or the laws of any state.

SECTION 11.7      REPORTS.    Prior to Listing, the Directors, including the Independent Directors, shall take reasonable steps to insure that the Company shall cause to be prepared and mailed or delivered to each Stockholder as of a record date after the end of the fiscal year and each holder of other publicly held Securities within one hundred twenty (120) days after the end of the fiscal year to which it relates an annual report for each fiscal year ending after the Commencement of the Initial Public Offering that shall include: (i) financial statements prepared in accordance with generally accepted accounting principles which are audited and reported on by independent certified public accountants; (ii) the ratio of the costs of raising capital during the period to the capital raised; (iii) the aggregate amount of advisory fees and the aggregate amount of other fees paid to the Advisor and any Affiliate of the Advisor by the Company and including fees or charges paid to the Advisor and any Affiliate of the Advisor by third parties doing business with the Company; (iv) the Total Operating Expenses of the Company, stated as a percentage of Average Invested Assets and as a percentage of Net Income; (v) a report from the Independent Directors that the policies being followed by the Company are in the best interests of its Stockholders and the basis for such determination; and (vi) separately stated, full disclosure of all material terms, factors and circumstances surrounding any and all transactions involving the Company, the Directors, the Advisors, the Sponsors and any Affiliate thereof occurring in the year for which the annual report is made, and the Independent Directors shall be specifically charged with a duty to examine and comment in the report on the fairness of such transactions.

SECTION 11.8      TENDER OFFERS.    Prior to Listing, if any Person makes a tender offer, including, without limitation, a “mini-tender” offer, such Person must comply with all of the provisions set forth in Regulation 14D of the Exchange Act, including, without limitation, disclosure and notice requirements, that would be applicable if the tender offer was for more than five percent (5%) of the outstanding Shares; provided, however, that unless otherwise required by the Exchange Act, such documents are not required to be filed with the Securities and Exchange Commission. In addition, any such Person must provide notice to the Company at least ten (10) business days prior to initiating any such tender offer. If any Person initiates a tender offer without complying with the provisions set forth above (a “Non-Compliant Tender Offer”), the Company, in its sole discretion, shall have the right to redeem such non-compliant Person’s Shares and any Shares acquired in such tender offer (collectively, the “Tendered Shares”) at the lesser of (i) the price then being paid per Share of Common Stock purchased in the Company’s latest Offering at full purchase price (not discounted for commission reductions or for reductions in sale price permitted pursuant to the Reinvestment Plan), (ii) the fair market value of the Shares as determined by an independent valuation obtained by the Company or (iii) the lowest tender offer price offered in such Non-Compliant Tender Offer. The Company may purchase such Tendered Shares upon delivery of the purchase price to the Person initiating such Non-Compliant Tender Offer and, upon such delivery, the Company may instruct any transfer agent to transfer such purchased Shares to the Company. In addition, any Person who makes a Non-Compliant Tender Offer shall be responsible for all expenses incurred by the Company in connection with the enforcement of the provisions of this Section 11.8, including, without limitation, expenses incurred in connection with the review of all

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documents related to such tender offer and expenses incurred in connection with any purchase of Tendered Shares by the Company. The Company maintains the right to offset any such expenses against the dollar amount to be paid by the Company for the purchase of Tendered Shares pursuant to this Section 11.8. In addition to the remedies provided herein, the Company may seek injunctive relief, including, without limitation, a temporary or permanent restraining order, in connection with any Non-Compliant Tender Offer. This Section 11.8 shall be of no force or effect with respect to any Shares that are then Listed.

ARTICLE XII

LIABILITY OF STOCKHOLDERS, DIRECTORS, ADVISORS AND AFFILIATES

SECTION 12.1      LIMITATION OF STOCKHOLDER LIABILITY.    No Stockholder shall be liable for any debt, claim, demand, judgment or obligation of any kind of, against or with respect to the Company by reason of being a Stockholder, nor shall any Stockholder be subject to any personal liability whatsoever, in tort, contract or otherwise, to any Person in connection with the Company’s assets or the affairs of the Company by reason of being a Stockholder. All Shares issued to Stockholders shall be non-assessable.

SECTION 12.2      LIMITATION OF DIRECTOR AND OFFICER LIABILITY; INDEMNIFICATION.

(a) To the maximum extent that Maryland law, in effect from time to time, permits limitation of the liability of Directors and officers of a corporation, no present or former Director or officer of the Company shall be liable to the Company or the Stockholders for money damages.

(b) To the maximum extent permitted by Maryland law in effect from time to time, the Company shall indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, shall pay or reimburse reasonable expenses in advance of final disposition of a proceeding to (a) any individual who is a present or former Director or officer of the Company and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity or (b) any individual who, while a Director or officer of the Company and at the request of the Company, serves or has served as a Director, officer, partner, trustee, member or manager of another corporation, real estate investment trust, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity. The rights to indemnification and advance of expenses provided by the Charter and the Bylaws shall vest immediately upon election of a Director or officer. The Company may, with the approval of the Board of Directors, provide such indemnification and advance for expenses to an individual who served a predecessor of the Company in any of the capacities described in (a) or (b) above and to any employee or agent of the Company or a predecessor of the Company. The indemnification and payment or reimbursement of expenses provided in the Charter or Bylaws shall not be deemed exclusive of or limit in any way other rights to which any person seeking indemnification or payment or reimbursement of expenses may be or may become entitled under any bylaw, resolution, insurance, agreement or otherwise.

(c) Neither the amendment nor repeal of Sections 12.2(a) and/or 12.2(b) hereof, nor the adoption or amendment of any other provision of the Charter or the Bylaws inconsistent with Sections 12.2(a) and/or 12.2(b) hereof, shall apply to or affect in any respect the applicability of said sections with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

SECTION 12.3      RESERVED.

SECTION 12.4      EXPRESS EXCULPATORY CLAUSES IN INSTRUMENTS.    Neither the Stockholders nor the Directors, officers, employees or agents of the Company shall be liable under any written instrument creating an obligation of the Company by reason of their being Stockholders, Directors, officers, employees or agents of the Company, and all Persons shall look solely to the Company’s assets for the payment of any claim under or for the performance of that instrument. The omission of the foregoing exculpatory language from any instrument shall not affect the validity or enforceability of such instrument and shall not render any Stockholder, Director, officer, employee or agent liable thereunder to any third party, nor shall the Directors or any officer, employee or agent of the Company be liable to anyone as a result of such omission.

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ARTICLE XIII

AMENDMENTS

The Company reserves the right from time to time to make any amendment to its Charter, now or hereafter authorized by law, including any amendment altering the terms or contract rights, as expressly set forth in the Charter, of any outstanding Shares. All rights and powers conferred by the Charter on Stockholders, Directors and officers are granted subject to this reservation. Except for amendments permitted to be made without Stockholder approval under Maryland law or by specific provision in this Charter, any amendment to the Charter shall be valid only if approved by the affirmative vote of a majority of all votes entitled to be cast on the matter, including, without limitation, (i) any amendment which would adversely affect the rights, preferences and privileges of the Stockholders and (ii) any amendment to Sections 6.2, 6.5 and 6.6 of Article VI, Article IX, Article X, Article XII, Article XIV, Article XV and this Article XIII (or any other amendment of the Charter that would have the effect of amending such sections).

ARTICLE XIV

DURATION

In the event that a Liquidity Event does not occur on or before the fifth anniversary of the Termination of the Initial Public Offering, then a majority of the Board and a majority of the Independent Directors must either (a) adopt a resolution that sets forth a proposed amendment to the Charter extending or eliminating this deadline (the “Extension Amendment”), declaring that the Extension Amendment is advisable and directing that the proposed Extension Amendment be submitted for consideration at either an annual or special meeting of the Stockholders, or (b) adopt a resolution that declares that a proposed liquidation of the Company is advisable on substantially the terms and conditions set forth in, or referred to, in the resolution (the “Plan of Liquidation”) and directing that the proposed Plan of Liquidation be submitted for consideration at either an annual or special meeting of the Stockholders. If the Board seeks the Extension Amendment as described above and the Stockholders do not approve such amendment, then the Board shall seek the Plan of Liquidation as described above. If the Stockholders do not then approve the Plan of Liquidation, the Corporation shall continue its business. If the Board seeks the Plan of Liquidation as described above and the Stockholders do not approve the Plan of Liquidation, then the Board shall seek the Extension Amendment as described above. If the Stockholders do not then approve the Extension Amendment, the Corporation shall continue its business. In the event that Listing occurs on or before the fifth anniversary of the Termination of the Initial Public Offering, the Company shall continue perpetually unless dissolved pursuant to any applicable provision of the MGCL.

THIRD:    The amendment and restatement of the charter as hereinabove set forth have been duly advised by the Board of Directors of the Company and approved by the stockholders of the Company as required by law.

FOURTH:    The current address of the principal office of the Company is as set forth in Article III of the foregoing amendment and restatement of the charter.

FIFTH:    The name and address of the Company’s current resident agent are as set forth in Article III of the foregoing amendment and restatement of the charter.

SIXTH:    The number of directors of the Company and the names of the directors currently in office are as set forth in Section 6.1 of Article VI of the foregoing amendment and restatement of the charter.

SEVENTH:    The total number of shares of stock which the Company had authority to issue immediately prior to the foregoing amendment and restatement of the charter was 350,000,000 shares, $0.01 par value per share, consisting of 300,000,000 shares of common stock, $0.01 par value per share, and 50,000,000 shares of preferred stock, $0.01 par value per share. The aggregate par value of all shares of stock having par value was $3,500,000. The total number of shares of stock which the Company has authority to issue pursuant to the foregoing amendment and restatement of the charter is 350,000,000, consisting of 300,000,000 shares of common stock, $0.01 par value per share, and 50,000,000 shares of preferred stock, $0.01 par value per share. The aggregate par value of all authorized shares of stock having par value is $3,500,000.

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EIGHTH:    The undersigned Chief Executive Officer acknowledges these Second Articles of Amendment and Restatement to be the corporate act of the Company and, as to all matters or facts required to be verified under oath, the undersigned Chief Executive Officer acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

[SIGNATURES ON FOLLOWING PAGE]

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IN WITNESS WHEREOF, Carter Validus Mission Critical REIT, Inc. has caused these Second Articles of Amendment and Restatement to be signed in its name and on its behalf by its Chief Executive Officer, and attested by its Secretary, on this 11^th day of August, 2015.

ATTEST:

By:	/s/ Lisa Drummond	By:	/s/ John Carter
Name:	Lisa Drummond	Name:	John Carter
Title:	Secretary	Title:	Chief Executive Officer and Chairman of the
			Board of Directors

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EX-3.5

Exhibit 3.5

CARTER VALIDUS MISSION CRITICAL REIT, INC.

AMENDED AND RESTATED BYLAWS

As of August 6, 2015

ARTICLE I

OFFICES

Section 1. PRINCIPAL OFFICE. The principal office of Carter Validus Mission Critical REIT, Inc. (the “Corporation”) in the State of Maryland shall be located at such place as the Board of Directors may designate.

Section 2. ADDITIONAL OFFICES. The Corporation may have additional offices, including a principal executive office, at such places as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 1. PLACE. All meetings of stockholders shall be held at the principal executive office of the Corporation or at such other place as shall be set by the Board of Directors and stated in the notice of the meeting.

Section 2. ANNUAL MEETING. An annual meeting of the stockholders for the election of directors and the transaction of any business within the powers of the Corporation shall be held on a date and at the time set by the Board of Directors, but prior to Listing (as defined in the charter of the Corporation (the “Charter”)), in no event shall such annual meeting be held less than 30 days after delivery of the Corporation’s annual report to its stockholders.

Section 3. SPECIAL MEETINGS.

(a) General. The chairman of the Board of Directors, the president, the chief executive officer, a majority of the Board of Directors or a majority of the Independent Directors (as defined in the Charter) may call a special meeting of the stockholders. Prior to Listing, a special meeting of stockholders may also be called by the secretary of the Corporation upon the written request of the stockholders entitled to cast not less than ten percent (10%) of all the votes entitled to be cast at such meeting on any matter that may properly be considered at a meeting of stockholders. Following Listing, subject to subsection (c) of this Section 3, a meeting of stockholders shall also be called by the secretary of the Corporation to act on any matter that may properly be considered at a special meeting of stockholders upon the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast on such matter at such meeting.

(b) Stockholder-Requested Special Meetings Prior to Listing. The written request must be delivered in person or by mail and must state the purpose of the meeting and the matters proposed to be acted upon at the meeting. Within ten (10) days after receipt of such written request, either in person or by mail, the secretary of the Corporation shall inform the stockholders who made such request of the reasonably estimated cost of preparing and mailing a notice of the proposed meeting; and within ten (10) days of his or her receipt of payment of such costs, the secretary of the Corporation shall provide all stockholders with written notice, either in person or by mail, of such meeting and the purpose of such meeting. Notwithstanding anything to the contrary herein, such meeting shall be held not less than fifteen (15) days nor more than sixty (60) days after the secretary’s delivery of such notice. Subject to the foregoing sentence, such meeting shall be held at the time and place specified in the stockholder request; provided, however, that if none is so specified, such meeting shall be held at a time and place convenient to the stockholders.

(c) Stockholder-Requested Special Meetings Following Listing.

(1)     Following Listing, any stockholder of record seeking to have stockholders request a special meeting shall, by sending written notice in proper form to the secretary of the Corporation (the “Record Date Request Notice”) at the principal executive office of the Corporation by registered mail, return receipt requested, request the Board of Directors to fix a record date to determine the stockholders entitled to request a special meeting (the “Request Record Date”). To be in proper form, the Record Date Request Notice shall (A) set forth the purpose of the meeting and the matters proposed to be acted on it, (B) be signed by one or more

stockholders of record as of the date of signature (or his, her or their agent or agents duly authorized in writing accompanying the Record Date Request Notice), (c) bear the date of signature of each stockholder (or such agent) and (D) set forth all information relating to each such stockholder and each matter proposed to be acted on at the special meeting that would be required to be disclosed in connection with the solicitation of proxies for the election of directors in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such a solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”). Upon receiving the Record Date Request Notice, the Board of Directors may fix a Record Request Date. The Record Request Date shall not precede and shall not be more than ten (10) days after the close of business on the date on which the resolution fixing the Request Record Date is adopted by the Board of Directors. If the Board of Directors, within 10 days after the date on which a valid Record Date Request Notice is received, fails to adopt a resolution fixing the Request Record Date, the Request Record Date shall be the close of business on the 10^th day after the first date on which such Record Date Request Notice is received by the secretary.

(2)     In order for a stockholder to request a special meeting to act on any matter that may properly be considered at a meeting of stockholders (a “Stockholder Requested Special Meeting”), one or more written requests for a special meeting (collectively, the “Special Meeting Request”) in proper form and signed by stockholders of record (or their agents duly authorized in writing accompanying the request) as of the Request Record Date entitled to cast not less than a majority of all of the votes entitled to be cast on such matter at such meeting (the “Special Meeting Percentage”) shall be delivered to the secretary at the principal executive office of the Corporation. To be in proper form, the Special Meeting Request shall (A) set forth the purpose of the meeting and the matters proposed to be acted on at it (which shall be limited to those lawful matters set forth in the Record Date Request Notice received by the secretary), including the text of the proposal or business (including the text of any resolutions proposed for consideration), (B) bear the date of signature of each such stockholder (or such agent) signing the Special Meeting Request, (C) set forth (i) the name and address, as they appear in the Corporation’s books, of each stockholder signing such request (or on whose behalf the Special Meeting Request is signed), (ii) the class, series and number of all shares of stock of the Corporation which are owned (beneficially or of record) by each such stockholder, (iii) the nominee holder for, and number of, shares of stock of the Corporation owned beneficially but not of record by such stockholder, (D) be sent to the secretary by registered mail, return receipt requested, and (E) be received by the secretary within 60 days after the Request Record Date. Any requesting stockholder (or agent duly authorized in writing accompanying the revocation of the Special Meeting Request) may revoke his, her or its request for a special meeting at any time by written revocation delivered to the secretary.

(3)     The secretary shall inform the requesting stockholders of the reasonably estimated cost of preparing and mailing or delivering the notice of the special meeting (including the Corporation’s proxy materials). The secretary shall not be required to call a special meeting upon stockholder request and such meeting shall not be held unless, in addition to the documents required by paragraph (c)(2) of this Section 3, the secretary receives payment of such reasonably estimated cost prior to the preparation and mailing or delivery of such notice of the meeting.

(4)     In the case of any special meeting called by the secretary upon the request of stockholders (a “Stockholder-Requested Meeting”), such meeting shall be held at such place, date and time as may be designated by the Board of Directors; provided, however, that the date of any Stockholder-Requested Meeting shall be not more than 90 days after the record date for such meeting (the “Meeting Record Date”); and provided further that if the Board of Directors fails to designate, within 10 days after the date that a valid Special Meeting Request is actually received by the secretary (the “Delivery Date”), a date and time for a Stockholder-Requested Meeting, then such meeting shall be held at 2:00 p.m., local time, on the 90th day after the Meeting Record Date or, if such 90th day is not a Business Day (as defined below), on the first preceding Business Day; and provided further that in the event that the Board of Directors fails to designate a place for a Stockholder-Requested Meeting within ten (10) days after the Delivery Date, then such meeting shall be held at the principal executive office of the Corporation. In fixing a date for a Stockholder-Requested Meeting, the Board of Directors may consider such factors as it deems relevant, including, without limitation, the nature of the matters to be considered, the facts and circumstances surrounding any request for the meeting and any plan of the Board of Directors to call an annual meeting or a special meeting. In the case of any Stockholder-Requested Meeting, if the Board of Directors fails to fix a Meeting Record Date that is a date within 30 days after the Delivery Date, then the close of business on the 30th day after the Delivery Date shall be the Meeting Record Date. The Board of Directors may revoke the notice for any Stockholder-Requested Meeting in the event that the requesting stockholders fail to comply with the provisions of paragraph (c)(3) of this Section 3. Notwithstanding anything to the contrary in these bylaws, the Board of Directors may submit its own proposal or proposals for consideration at any such special meeting.

(5)     If written revocations of the Special Meeting Request have been delivered to the secretary and the result is that stockholders of record (or their agents duly authorized in writing), as of the Request Record Date, entitled to cast less than the Special Meeting Percentage have delivered, and not revoked, requests for a special meeting on the matter to the secretary: (A) if the notice of meeting has not already been delivered to the stockholders of the Corporation, the secretary shall refrain from delivering the notice of the meeting and shall deliver to all requesting stockholders who have not revoked such requests written notice of any revocation of a request for a special meeting on the matter, or (B) if the notice of meeting has been delivered to the stockholders of the Corporation, and if the secretary first delivers to all requesting stockholders who have not revoked requests for a special meeting on the matter written notice of any revocation of a request for the special meeting and written notice of the Corporation’s intention to revoke the notice of and to cancel the meeting or for the chairman of the meeting to adjourn the meeting without acting on the matter, (i) the secretary may revoke the notice of and cancel the meeting at any time before ten (10) days before the commencement of the meeting or (ii) the chairman of the meeting may call the meeting to order and adjourn the meeting without acting on the matter. Any request for a special meeting received after a revocation by the secretary of a notice of a meeting shall be considered a request for a new special meeting.

(6)     The chairman of the Board of Directors, the chief executive officer, the president or the Board of Directors may appoint independent inspectors of elections to act as the agent of the Corporation for the purpose of promptly performing a ministerial review of the validity of any purported Special Meeting Request received by the secretary. For the purpose of permitting the inspectors to perform such review, no such purported Special Meeting Request shall be deemed to have been received by the secretary until the earlier of (A) five Business Days after actual receipt by the secretary of such purported request and (B) such date as the independent inspectors certify to the Corporation that the valid requests received by the secretary.

(7)     The secretary shall not accept, and the secretary and the Corporation shall consider ineffective, any request from any stockholder to hold a special meeting or to establish a Request Record Date or Meeting Record Date that (A) does not comply with this Section 3(c) or (B) proposes or includes an item of business to be transacted at such special meeting that is not a proper subject for stockholder action under the Charter these Bylaws or applicable law.

(8)     For purposes of these Bylaws, “Business Day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York or the State of Maryland are authorized or obligated by law or executive order to close.

Section 4. NOTICE. Except as provided otherwise in Section 3 of this Article II, not less than ten (10) nor more than ninety (90) days before each meeting of stockholders, the secretary shall give to each stockholder entitled to vote at such meeting and to each stockholder not entitled to vote who is entitled to notice of the meeting notice in writing or by electronic transmission stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any statute, the purpose for which the meeting is called, either by mail, by electronic mail, by presenting it to such stockholder personally, by leaving it at the stockholder’s residence or usual place of business or by any other means permitted by Maryland law. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at the stockholder’s address as it appears on the records of the Corporation, with postage thereon prepaid. Electronic mail notice shall be deemed to be given upon transmission of the message to the electronic mail address given to the Corporation by the stockholder. A single notice as to all stockholders who share an address shall be effective as to any stockholder at such address who consents to such notice or after having been notified of the Corporation’s intent to give a single notice fails to object in writing within sixty (60) days. Failure to give notice of any meeting to one or more stockholders, or any irregularity in such notice, shall not affect the validity of any meeting fixed in accordance with this Article II, or the validity of any proceedings at any such meeting.

Subject to Section 11(a) of this Article II, any business of the Corporation may be transacted at an annual meeting of stockholders without being specifically designated in the notice, except such business as is required by any statute to be stated in such notice. No business shall be transacted at a special meeting of stockholders except as specifically designated in the notice. The Corporation may postpone or cancel a meeting of stockholders by making a Public Announcement (as defined below) of such postponement or cancellation prior to the meeting. Notice of the date to which the meeting is postponed shall be given not less than ten (10) days prior to such date and otherwise in the manner set forth in this Section 4.

Section 5. ORGANIZATION AND CONDUCT. Every meeting of stockholders shall be conducted by an individual appointed by the Board of Directors to be chairman of the meeting or, in the absence of such appointment, by the chairman of the board or, in the case of a vacancy in the office or absence of the chairman of the board, by one of the following officers present at the meeting: the vice chairman of the board, if there is one, the chief executive officer, the president, the vice presidents in their order of rank and seniority, the secretary or, in the absence of such officers, a chairman chosen by the stockholders by the vote of a majority of the votes cast by stockholders present in person or by proxy. The secretary or, in the secretary’s absence, an assistant secretary, or in the absence of both the secretary and assistant secretaries, an individual appointed by the Board of Directors or, in the absence of such appointment, an individual appointed by the chairman of the meeting, shall act as secretary. In the event that the secretary presides at a meeting of the stockholders, an assistant secretary, or in the absence of assistant secretaries, an individual appointed by the Board of Directors or the chairman of the meeting, shall record the minutes of the meeting. The order of business and all other matters of procedure at any meeting of stockholders shall be determined by the chairman of the meeting. The chairman of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of the chairman and without any action by the stockholders, are appropriate for the proper conduct of the meeting, including, without limitation, (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance at the meeting to stockholders of record of the Corporation, their duly authorized proxies and other such individuals as the chairman of the meeting may determine; (c) limiting participation at the meeting on any matter to stockholders of record of the Corporation entitled to vote on such matter, their duly authorized proxies and other such individuals as the chairman of the meeting may determine; (d) limiting the time allotted to questions or comments by participants; (e) determining when and for how long the polls should be opened and when the polls should be closed; (f) maintaining order and security at the meeting; (g) removing any stockholder or any other individual who refuses to comply with meeting procedures, rules or guidelines as set forth by the chairman of the meeting; (h) concluding a meeting or recessing or adjourning the meeting to a later date and time and at a place announced at the meeting; and (i) complying with any state and local laws and regulations concerning safety and security. Unless otherwise determined by the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

Section 6. QUORUM. Prior to Listing, at any meeting of stockholders, the presence in person or by proxy of stockholders entitled to cast fifty percent (50% ) of all the votes entitled to be cast at such meeting on any matter shall constitute a quorum; provided, however, that this section shall not affect any requirement under any statute or the Charter for the vote necessary for the adoption of any measure. If, however, such quorum shall not be present at any meeting of the stockholders, the chairman of the meeting may adjourn the meeting from time to time to a date not more than 120 days after the original record date without notice other than announcement at the meeting. At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.

The stockholders present, either in person or by proxy, at a meeting which has been duly called and at which a quorum was established, may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave fewer than were required to establish a quorum.

Section 7. VOTING. Prior to Listing, the holders of a majority of the shares of stock of the Corporation entitled to vote who are present, in person or by proxy, at an annual meeting at which a quorum is present may, without the necessity for concurrence by the Board of Directors, vote to elect a director. Following Listing, a majority of the votes cast by the holders of shares entitled to vote, present in person or by proxy, at an annual meeting at which a quorum is present may, without the necessity for concurrence by the Board of Directors, vote to elect a director. Each share may be voted for as many individuals as there are directors to be elected and for whose election the share is entitled to be voted. A majority of the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast is required by statute or the Charter. Unless otherwise provided by statute or the Charter, each outstanding share, regardless of class, shall be entitled to one (1) vote on each matter submitted to a vote at a meeting of stockholders. Voting on any question or in any election may be viva voce unless the chairman of the meeting shall order that voting be by ballot.

Section 8. PROXIES. A stockholder may cast the votes entitled to be cast by the holder of the shares of stock owned of record by the stockholder in person or by proxy executed by the stockholder or by the stockholder’s duly authorized agent in any manner permitted by law. Such proxy or evidence of authorization of such proxy shall be filed with the secretary of the Corporation before or at the meeting. No proxy shall be valid more than eleven (11) months after its date unless otherwise provided in the proxy.

Section 9. VOTING OF STOCK BY CERTAIN HOLDERS. Stock of the Corporation registered in the name of a corporation, partnership, trust or other entity, if entitled to be voted, may be voted by the president or a vice president, a general partner or a trustee thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such stock pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or agreement of the partners of a partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such stock. Any trustee or other fiduciary may vote stock registered in his or her name in his or her capacity as such trustee or fiduciary, either in person or by proxy.

Shares of stock of the Corporation directly or indirectly owned by it shall not be voted at any meeting and shall not be counted in determining the total number of outstanding shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted in determining the total number of outstanding shares at any given time.

The Board of Directors may adopt by resolution a procedure by which a stockholder may certify in writing to the Corporation that any shares of stock registered in the name of the stockholder are held for the account of a specified person other than the stockholder. The resolution shall set forth (i) the class of stockholders who may make the certification, (ii) the purpose for which the certification may be made, (iii) the form of certification, (iv) the information to be contained in the certification, and (v) any other provisions with respect to the procedure which the Board of Directors considers necessary or desirable. Additionally, if the certification is with respect to a record date, the time after the record date within which the certification must be received by the Corporation shall be included therein in addition to the requirements set forth in the foregoing sentence. On receipt of such certification, the person specified in the certification shall be regarded as, for the purposes set forth in the certification, the stockholder of record of the specified stock in place of the stockholder who makes the certification.

Section 10. INSPECTORS. The Board of Directors or the chairman of the meeting may appoint, before or at the meeting, one or more inspectors for the meeting and any successor thereto. The inspector(s), if any, shall (i) determine the number of shares of stock represented at the meeting, in person or by proxy and the validity and effect of proxies, (ii) receive and tabulate all votes, ballots or consents, (iii) report such tabulation to the chairman of the meeting, (iv) hear and determine all challenges and questions arising in connection with the right to vote, and (v) do such acts as are proper to conduct the election or vote with fairness to all stockholders. Each such report shall be in writing and signed by the inspector, or by a majority of the inspectors if there is more than one (1) inspector acting at such meeting. If there is more than one (1) inspector, the report of a majority of the inspectors shall be the report of the inspectors. The report of the inspector(s) on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof.

Section 11. ADVANCE NOTICE OF STOCKHOLDER NOMINEES FOR DIRECTOR AND OTHER STOCKHOLDER PROPOSALS.

(a) Annual Meetings of Stockholders. (1) Nominations of individuals for election to the Board of Directors and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Corporation’s notice of meeting, (ii) by or at the direction of the Board of Directors, or (iii) by any stockholder of the Corporation who was a stockholder of record both at the time of giving of notice by the stockholder as provided for in this Section 11(a) and at the time of the annual meeting, who is entitled to vote at the meeting in the election of each individual so nominated or any such other business and who has complied with this Section 11(a).

(2) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(1) of this Section 11, the stockholder must have given timely notice thereof in writing to the secretary of the Corporation and such other business must otherwise be a proper matter for action by the stockholders. To be timely, a stockholder’s notice shall set forth all information required under this Section 11 and shall be delivered to the secretary at the principal executive office of the Corporation not earlier than the 150th day nor later than 5:00 p.m., Eastern Time, on the 120th day prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced or delayed by more than thirty (30) days from the first anniversary of the date of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the 150th day prior to the date of such annual meeting and not later than 5:00 p.m., Eastern Time, on the later of the 120th day prior to the date of such annual meeting or the tenth day following the day on which Public Announcement of the date of such meeting is first made. The Public Announcement of a postponement or adjournment of an annual meeting shall not commence a new time period for the giving of a stockholder’s notice as described above. Such stockholder’s notice shall set forth:

(i) as to each individual whom the stockholder proposes to nominate for election or reelection as a director (each a “Proposed Nominee”), all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election

contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act and the rules thereunder (including the Proposed Nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected);

(ii) as to any other business that the stockholder proposes to bring before the meeting, a description of such business, the stockholder’s reasons for proposing such business at the meeting and any material interest in such business of such stockholder and any Stockholder Associated Person (as defined below), individually or in the aggregate, including any anticipated benefit to the stockholder or the Stockholder Associated Person therefrom;

(iii) as to the stockholder giving the notice, any Proposed Nominee and any Stockholder Associated Person, (A) the class, series and number of all shares of stock or other securities of the Corporation (collectively, the “Company Securities”), if any, which are owned (beneficially or of record) by such stockholder, Proposed Nominee or Stockholder Associated Person and the date on which each such Company Security was acquired and the investment intent of such acquisition and (B) the nominee holder for, and number of, any Company Securities owned beneficially but not of record by such stockholder, Proposed Nominee or Stockholder Associated Person; (C) whether and the extent to which such stockholder, Proposed Nominee or Stockholder Associated Person, directly or indirectly (through brokers, nominees or otherwise) is subject to or during the last six months has engaged in any hedging, derivative or other transaction or series of transactions or entered into any agreement, arrangement or understanding (including any short interest, any borrowing or lending of securities or any proxy or voting agreement), the effect or intent of which is to (1) manage risk or benefit from changes in the price of Company Securities or (2) increase or decrease the voting power of such stockholder, Proposed Nominee or Stockholder Associated Person in the Corporation or any affiliate thereof disproportionately to such person’s economic interest in the Company Securities and (3) any substantial interest, direct or indirect (including, without limitation, any existing or prospective commercial, business or contractual relationship with the Corporation), by security holdings or otherwise, of such stockholder, Proposed Nominee or Stockholder Associated Person, in the Corporation or any affiliate thereof, other than an interest arising from the ownership of Company Securities where such stockholder, Proposed Nominee or Stockholder Associated Person receives no extra or special benefit not shared on a pro rata basis by all other holders of the same class or series;

(iv) as to the stockholder giving the notice and any Stockholder Associated Person with an interest or ownership referred to in clauses (ii) or (iii) of this paragraph (2) of this Section 11(a) and any Proposed Nominee, (A) the name and address of such stockholder, as they appear on the Corporation’s stock ledger, and the current name and business address, if different, of each such Stockholder Associated Person and any Proposed Nominee and (B) the investment strategy or objective, if any, of such stockholder and each such Stockholder Associated Person who is not an individual and a copy of the prospectus, offering memorandum or similar document, if any, provided to investors or potential investors in such stockholder and each such Stockholder Associated Person; and

(v) the name and address of any person who contacted or was contacted by the stockholder giving the notice or any Stockholder Associated Person about the Proposed Nominee or other business proposal; and

(vi) to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the nominee for election or reelection as a director or the proposal of other business.

(3) Such stockholder’s notice shall, with respect to any Proposed Nominee, be accompanied by a certificate executed by the Proposed Nominee (i) certifying that such Proposed Nominee (a) is not, and will not become, a party to any agreement, arrangement or understanding with any person or entity other than the Corporation in connection with service or action as a director that has not been disclosed to the Corporation and (b) will serve as a director of the Corporation if elected; and (ii) attaching a completed Proposed Nominee questionnaire (which questionnaire shall be provided by the Corporation, upon request, to the stockholder providing the notice and shall include all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act and the rules thereunder, or would be required pursuant to the rules of any national securities exchange on which any securities of the Corporation are listed or over-the-counter market on which any securities of the Corporation are traded).

(4) Notwithstanding anything in this subsection (a) of this Section 11 to the contrary, in the event the number of directors to be elected to the Board of Directors is increased, and there is no Public Announcement of such action at least 130 days prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting, a stockholder’s notice required by this Section 11(a) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the secretary at the principal executive office of the Corporation not later than 5:00 p.m., Eastern Time, on the tenth day following the day on which such public announcement is first made by the Corporation.

(5) For purposes of this Section 11, “Stockholder Associated Person” of any stockholder shall mean (i) any person acting in concert with such stockholder, (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder (other than a stockholder that is a depositary) and (iii) any person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such stockholder or such person(s) described in clauses (i) and (ii) of this Section 11(a)(4).

(b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of individuals for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected only (i) by or at the direction of the Board of Directors or (ii) provided that the special meeting has been called in accordance with Section 3 of this Article II for the purpose of electing directors, by any stockholder of the Corporation who is a stockholder of record both at the time of giving of notice provided for in this Section 11 and at the time of the special meeting, who is entitled to vote at the meeting in the election of each individual so nominated and who has complied with the notice procedures set forth in this Section 11. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one (1) or more individuals to the Board of Directors, any such stockholder may nominate an individual or individuals (as the case may be) for election as a director as specified in the Corporation’s notice of meeting, if the stockholder’s notice containing the information required by paragraph (a)(2) of this Section 11 shall be delivered to the secretary at the principal executive office of the Corporation not earlier than the 120th day prior to such special meeting and not later than 5:00 p.m., Eastern Time, on the later of the 90th day prior to such special meeting or the tenth day following the day on which Public Announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. The Public Announcement of a postponement or adjournment of a special meeting shall not commence a new time period for the giving of a stockholder’s notice as described above.

(c) General. (1) If information submitted pursuant to this Section 11 by any stockholder proposing a nominee for election as a director or any proposal for other business at a meeting of stockholders shall be inaccurate in any material respect, such information may be deemed not to have been provided in accordance with this Section 11. Any such stockholder shall notify the Corporation of any inaccuracy or change (within two (2) business days of becoming aware of such inaccuracy or change) in any such information. Upon written request by the secretary or the Board of Directors, any stockholder proposing a nominee for election as a director or any proposal for other business at a meeting of stockholders shall provide, within five (5) business days of delivery of such request (or such other period as may be specified in such request), (A) written verification, satisfactory, in the discretion of the Board of Directors or any authorized officer of the Corporation, to demonstrate the accuracy of any information submitted by the stockholder pursuant to this Section 11, and (B) a written update of any information submitted by the stockholder pursuant to this Section 11 as of an earlier date. If a stockholder fails to provide such written verification or written update within such period, the information as to which written verification or a written update was requested may be deemed not to have been provided in accordance with this Section 11.

(2) Only such individuals who are nominated in accordance with this Section 11 shall be eligible for election by stockholders as directors, and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with this Section 11. The chairman of the meeting shall have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with this Section 11.

(3) For purposes of this Section 11, “the date of the proxy statement” shall have the same meaning as “the date of the company’s proxy statement released to shareholders” as used in Rule 14a-8(e) promulgated under the Exchange Act, as interpreted by the United States Securities and Exchange Commission from time to time. “Public Announcement” shall mean disclosure (i) in a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or other widely circulated news or wire service or (ii) in a document publicly filed by the Corporation with the United States Securities and Exchange Commission pursuant to the Exchange Act.

(4) Notwithstanding the foregoing provisions of this Section 11, a stockholder shall also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 11. Nothing in this Section 11 shall be deemed to affect any right of a stockholder to request inclusion of a proposal in, nor the right of the Corporation to omit a proposal from, the Corporation’s proxy statement pursuant to Rule 14a-8 (or any successor provision) under the Exchange Act. Nothing in this Section 11 shall require disclosure of revocable proxies after the filing of an effective Schedule 14A by such stockholder or Stockholder Associated Person under Section 14(a) of the Exchange Act.

Section 12. STOCKHOLDERS’ CONSENT IN LIEU OF MEETING. Any action required or permitted to be taken at any meeting of stockholders may be taken without a meeting if a unanimous consent setting forth the action is given in writing or by electronic transmission by each stockholder entitled to vote on the matter and filed with the minutes of the proceedings of the stockholders.

Section 13. CONTROL SHARE ACQUISITION ACT. Notwithstanding any other provision of the Charter or these Bylaws, Title 3, Subtitle 7 of the Maryland General Corporation Law (the “MGCL”) (or any successor statute) shall not apply to any acquisition by any person of shares of stock of the Corporation. This section may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent control share acquisition.

ARTICLE III

DIRECTORS

Section 1. GENERAL POWERS. The business and affairs of the Corporation shall be managed under the direction of its Board of Directors.

Section 2. NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors shall have at least one (1) director. At any regular meeting or at any special meeting called for that purpose, a majority of the entire Board of Directors may establish, increase or decrease the number of directors, provided that prior to Listing, from and after the Commencement of the Initial Public Offering (as defined in the Charter), the number thereof shall never be less than three (3), and following Listing, the number thereof shall never be fewer than the minimum number required by the MGCL. The number of directors shall never be nor more than 15, further provided that the tenure of office of a director shall not be affected by any decrease in the number of directors. Prior to Listing,, a majority of the directors shall be Independent Directors (as defined in the Charter) except for a period of up to sixty (60) days after the death, removal or resignation of an Independent Director. Any director of the Corporation may resign at any time by delivering his or her written resignation to the Board of Directors, the chairman of the board, the chief executive officer or the secretary. Any resignation shall take effect immediately upon its receipt or at such later time specified in the resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation.

Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board of Directors shall be held immediately after and at the same place as the annual meeting of stockholders, no notice other than this Bylaw being necessary. In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors. The Board of Directors may provide, by resolution, the time and place for the holding of regular meetings of the Board of Directors without other notice than such resolution.

Section 4. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by or at the request of the chairman of the board, the chief executive officer or the president or by a majority of the directors or Independent Directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix any place as the place for holding any special meeting of the Board of Directors called by them. The Board of Directors may provide, by resolution, the time and place for the holding of special meetings of the Board of Directors without other notice than such resolution.

Section 5. NOTICE. Notice of any special meeting of the Board of Directors shall be delivered personally or by telephone, electronic mail, facsimile transmission, courier or United States mail to each director at his or her business or residence address. Notice by personal delivery, telephone, electronic mail or facsimile transmission shall be given at least twenty-four (24) hours prior to the meeting. Notice by United States mail shall be given at least three (3) days prior to the meeting. Notice by courier shall be given at least two (2) days prior to the meeting. Telephone notice shall be deemed to be given when the director or his or her agent is personally given such notice in a telephone call to which the director or his or her agent is a party. Electronic mail notice shall be deemed to be given upon transmission of the message to the electronic mail address given to the Corporation by the director. Facsimile transmission notice shall be deemed to be given upon completion of the transmission of the message to the number given to the Corporation by the director and receipt of a completed answer-back indicating receipt. Notice by United States mail shall be deemed to be given when deposited in the United States mail properly addressed, with postage thereon prepaid. Notice by courier shall be deemed to be given when deposited with or delivered to a courier properly addressed. Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Board of Directors need be stated in the notice, unless specifically required by statute or these Bylaws.

Section 6. QUORUM. A majority of the directors shall constitute a quorum for transaction of business at any meeting of the Board of Directors, provided that, if less than a majority of such directors is present at such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice, and provided further that if, pursuant to applicable law, the Charter or these Bylaws, the vote of a majority or other percentage of a particular group of directors is required for action, a quorum must also include a majority or such percentage of such group.

The directors present at a meeting which has been duly called and at which a quorum was established may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough directors to leave fewer than were required to establish a quorum.

Section 7. VOTING. The action of a majority of the directors present at a meeting at which a quorum is present shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable law, the Charter, or these Bylaws. If enough directors have withdrawn from a meeting to leave fewer than were required to establish a quorum but the meeting is not adjourned, the action of the majority of that number of directors necessary to constitute a quorum at such meeting shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable law, the Charter or these Bylaws. Prior to Listing, on any matter for which the Charter requires the approval of the Independent Directors, the action of a majority of the total number of Independent Directors shall be the action of the Independent Directors.

Section 8. ORGANIZATION. At each meeting of the Board of Directors, the chairman of the board or, in the absence of the chairman, the vice chairman of the board, if any, shall act as chairman of the meeting. In the absence of both the chairman and vice chairman of the board, the chief executive officer or, in the absence of the chief executive officer, the president or, in the absence of the president, a director chosen by a majority of the directors present, shall act as chairman of the meeting. The secretary or, in his or her absence, an assistant secretary of the Corporation, or in the absence of the secretary and all assistant secretaries, an individual appointed by the chairman of the meeting, shall act as secretary of the meeting.

Section 9. TELEPHONE MEETINGS. Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.

Section 10. CONSENT BY DIRECTORS WITHOUT A MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each director and is filed with the minutes of the proceedings of the Board of Directors.

Section 11. VACANCIES. If, for any reason, any or all the directors cease to be directors, such event shall not terminate the Corporation or affect these Bylaws or the powers of the remaining directors hereunder. Except as may be provided by the Board of Directors in setting the terms of any class or series of preferred stock, any vacancy on the Board of Directors may be filled only by a majority of the remaining directors, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which the vacancy occurred and until a successor is elected and qualifies. Until Listing, Independent Directors shall nominate replacements for vacancies among the Independent Directors’ positions.

Section 12. COMPENSATION. Directors shall not receive any stated salary for their services as directors but, by resolution of the Board of Directors, may receive compensation per year and/or per meeting and/or per visit to real property or other facilities owned or leased by the Corporation and for any service or activity they performed or engaged in as directors. Directors may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the Board of Directors or of any committee thereof and for their expenses, if any, in connection with each property visit and any other service or activity they performed or engaged in as directors; provided, that nothing herein contained shall be construed to preclude any directors from serving the Corporation in any other capacity and receiving compensation therefor.

Section 13. [RESERVED]

Section 14. [RESERVED]

Section 15. RELIANCE. Each director and officer of the Corporation shall, in the performance of his or her duties with respect to the Corporation, be entitled to rely on any information, opinion, report or statement, including any financial statement or other financial data, prepared or presented by an officer or employee of the Corporation whom the director or officer reasonably believes to be reliable and competent in the matters presented, by a lawyer, certified public accountant or other person, as to a matter which the director or officer reasonably believes to be within the person’s professional or expert competence, or with respect to a director, by a committee of the Board of Directors on which the director does not serve, as to a matter within its designated authority, if the director reasonably believes the committee to merit confidence.

Section 16. RATIFICATION. The Board of Directors or the stockholders may ratify and make binding on the Corporation any action or inaction by the Corporation or its officers to the extent that the Board of Directors or the stockholders could have originally authorized the matter. Moreover, any action or inaction questioned in any stockholders’ derivative proceeding or any other proceeding on the ground of lack of authority, defective or irregular execution, adverse interest of a director, officer or stockholder, non-disclosure, miscomputation, the application of improper principles or practices of accounting, or otherwise, may be ratified, before or after judgment, by the Board of Directors or by the stockholders, and if so ratified, shall have the same force and effect as if the questioned action or inaction had been originally duly authorized, and such ratification shall be binding upon the Corporation and its stockholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned action or inaction.

Section 17. CERTAIN RIGHTS OF DIRECTORS. A director who is not also an officer of the Corporation shall have no responsibility to devote his or her full time to the affairs of the Corporation. Any director or officer, in his or her personal capacity or in a capacity as an affiliate, employee, or agent of any other person, or otherwise, may have business interests and engage in business activities similar to, in addition to or in competition with those of or relating to the Corporation.

Section 18. EMERGENCY PROVISIONS. Notwithstanding any other provision in the Charter or these Bylaws, this Section 18 shall apply during the existence of any catastrophe, or other similar emergency condition, as a result of which a quorum of the Board of Directors under Article III of these Bylaws cannot readily be obtained (an “Emergency”). During any Emergency, unless otherwise provided by the Board of Directors, (i) a meeting of the Board of Directors or a committee thereof may be called by any director or officer by any means feasible under the circumstances; (ii) notice of any meeting of the Board of Directors during such an Emergency may be given less than twenty-four (24) hours prior to the meeting to as many directors and by such means as may be feasible at the time, including publication, television or radio; and (iii) the number of directors necessary to constitute a quorum shall be one-third of the entire Board of Directors.

Section 19. INTERESTED DIRECTOR TRANSACTIONS. Section 2-419 of the MGCL shall be available for and apply to any contract or other transaction between the Corporation and any of its directors or between the Corporation and any other corporation, trust, firm or other entity in which any of its directors is a director or trustee or has a material financial interest.

ARTICLE IV

COMMITTEES

Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors may appoint, from among its members, committees, composed of one (1) or more directors (until Listing, the majority of whom shall at all times be Independent Directors) to serve at the pleasure of the Board of Directors.

Section 2. POWERS. The Board of Directors may delegate to committees appointed under Section 1 of this Article IV any of the powers of the Board of Directors, except as prohibited by law.

Section 3. MEETINGS. Notice of committee meetings shall be given in the same manner as notice for special meetings of the Board of Directors. A majority of the members of the committee shall constitute a quorum for the transaction of business at any meeting of the committee. The act of a majority of the committee members present at a meeting shall be the act of such committee. The Board of Directors may designate a chairman of any committee, and such chairman or, in the absence of a chairman, any two (2) members of any committee (if there are at least two (2) members of the committee) may fix the time and place of its meeting unless the Board shall otherwise provide. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint another director to act in the place of such absent member. Each committee shall keep minutes of its proceedings.

Section 4. TELEPHONE MEETINGS. Members of a committee of the Board of Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.

Section 5. CONSENT BY COMMITTEES WITHOUT A MEETING. Any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each member of the committee and is filed with the minutes of the proceedings of such committee.

Section 6. VACANCIES. Subject to the provisions hereof, the Board of Directors shall have the power at any time to change the membership of any committee, to fill any vacancy, to designate an alternate member to replace any absent or disqualified member or to dissolve any such committee.

ARTICLE V

OFFICERS

Section 1. GENERAL PROVISIONS. The officers of the Corporation shall include a president, a secretary, a treasurer and a chairman of the Board of Directors and may include a vice chairman of the Board of Directors, a chief executive officer, one (1) or more vice presidents, a chief operating officer, a chief financial officer, one (1) or more assistant secretaries and one (1) or more assistant treasurers. In addition, the Board of Directors may, from time to time, elect such other officers with such powers and duties as it shall deem necessary or desirable. The officers of the Corporation shall be elected annually by the Board of Directors, except that the chief executive officer or president may, from time to time, appoint one (1) or more vice presidents, assistant secretaries and assistant treasurers or other officers. Each officer shall serve until his or her successor is elected and qualifies or until his or her death, or his or her resignation or removal in the manner hereinafter provided. Any two (2) or more offices, except president and vice president, may be held by the same person. Election of an officer or agent shall not of itself create contract rights between the Corporation and such officer or agent.

Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the Corporation may be removed, with or without cause, by the Board of Directors if in its judgment the best interests of the Corporation would be served thereby, provided, that such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer of the Corporation may resign at any time by delivering his or her resignation to the Board of Directors, the chairman of the Board of Directors, the president or the secretary. Any resignation shall take effect immediately upon its receipt or at such later time specified in the resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation. Such resignation shall be without prejudice to the contract rights, if any, of the Corporation.

Section 3. VACANCIES. A vacancy in any office may be filled by the Board of Directors for the balance of the term.

Section 4. CHIEF EXECUTIVE OFFICER. The Board of Directors may designate a chief executive officer. In the absence of such designation, the chairman of the Board of Directors shall be the chief executive officer of the Corporation. The chief executive officer shall have general responsibility for implementation of the policies of the Corporation, as determined by the Board of Directors, and for the management of the business and affairs of the Corporation. The chief executive officer may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and, in general, shall perform all duties incident to the office of chief executive officer and such other duties as may be prescribed by the Board of Directors from time to time.

Section 5. CHIEF OPERATING OFFICER. The Board of Directors may designate a chief operating officer. The chief operating officer shall have the responsibilities and duties as determined by the Board of Directors or the chief executive officer.

Section 6. CHIEF FINANCIAL OFFICER. The Board of Directors may designate a chief financial officer. The chief financial officer shall have the responsibilities and duties as determined by the Board of Directors or the chief executive officer.

Section 7. CHAIRMAN OF THE BOARD OF DIRECTORS. The Board of Directors shall designate a chairman of the Board of Directors, who shall not, solely by reason of these Bylaws, be an officer of the Corporation. The Board of Directors may designate the chairman of the Board of Directors as an executive or non-executive chairman. The chairman of the Board of Directors shall preside over the meetings of the Board of Directors and of the stockholders at which he or she shall be present. The chairman of the Board of Directors shall perform such other duties as may be assigned to him or her by the Board of Directors.

Section 8. PRESIDENT. In the absence of a chief executive officer, the president shall in general supervise and control all of the business and affairs of the Corporation. In the absence of a designation of a chief operating officer by the Board of Directors, the president shall be the chief operating officer. The president may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and, in general, shall perform all duties incident to the office of president and such other duties as may be prescribed by the Board of Directors from time to time.

Section 9. VICE PRESIDENTS. In the absence of the president or in the event of a vacancy in such office, the vice president (or in the event there be more than one (1) vice president, the vice presidents in the order designated at the time of their election or, in the absence of any designation, then in the order of their election) shall perform the duties of the president and when so acting shall have all the powers of and be subject to all the restrictions upon the president; and shall perform such other duties as, from time to time, may be assigned to such vice president by the chief executive officer, president or by the Board of Directors. The Board of Directors may designate one (1) or more vice presidents as executive vice president, senior vice president or vice president for particular areas of responsibility.

Section 10. SECRETARY. The secretary shall (a) keep the minutes of the proceedings of the stockholders, the Board of Directors and committees of the Board of Directors in one (1) or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation; (d) keep a register of the post office address of each stockholder which shall be furnished to the secretary by such stockholder; (e) have general charge of the stock transfer books of the Corporation; and (f) in general perform such other duties as, from time to time, may be assigned to him or her by the chief executive officer, the president or the Board of Directors.

Section 11. TREASURER. The treasurer shall have the custody of the funds and securities of the Corporation and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors and in general perform such other duties as from time to time may be assigned to him or her by the chief executive officer, the president or the Board of Directors. In the absence of a designation of a chief financial officer by the Board of Directors, the treasurer shall be the chief financial officer of the Corporation.

The treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the president and Board of Directors, at the regular meetings of the Board of Directors or whenever it may so require, an account of all his or her transactions as treasurer and of the financial condition of the Corporation.

Section 12. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary or treasurer, respectively, or by the chief executive officer, the president or the Board of Directors.

Section 13. COMPENSATION. The compensation of the officers shall be fixed, from time to time, by or under the authority of the Board of Directors and no officer shall be prevented from receiving such compensation by reason of the fact that he or she is also a director.

ARTICLE VI

CONTRACTS, LOANS, CHECKS AND DEPOSITS

Section 1. CONTRACTS. The Board of Directors may authorize any officer or agent to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation and such authority may be general or confined to specific instances. Any agreement, deed, mortgage, lease or other document shall be valid and binding upon the Corporation when duly authorized or ratified by action of the Board of Directors and executed by an authorized person.

Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or agent of the Corporation in such manner as shall, from time to time, be determined by the Board of Directors.

Section 3. DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited or invested from time to time to the credit of the Corporation as the Board of Directors, the chief executive officer, the chief financial officer or any other officer designated by the Board of Directors may determine.

ARTICLE VII

STOCK

Section 1. CERTIFICATES. Except as may otherwise be provided by the Board of Directors or required by the Charter, stockholders of the Corporation are not entitled to certificates representing the shares of stock held by them. In the event that the Corporation issues shares of stock represented by certificates, such certificates shall be in such form as prescribed by the Board of Directors or a duly authorized officer, shall contain the statements and information required by the MGCL and shall be signed by the officers of the Corporation in the manner permitted by the MGCL. In the event that the Corporation issues shares of stock without certificates, to the extent then required by the MGCL, the Corporation shall provide to the record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates. There shall be no differences in the rights and obligations of stockholders based on whether or not their shares are represented by certificates.

Section 2. TRANSFERS. All transfers of shares of stock shall be made on the books of the Corporation, by the holder of the shares, in person or by his or her attorney, in such manner as the Board of Directors or any officer of the Corporation may prescribe and, if such shares are certificated, upon surrender of certificates duly endorsed. The issuance of a new certificate upon the transfer of certificated shares is subject to the determination of the Board of Directors that such shares shall no longer be represented by certificates. Upon the transfer of uncertificated shares, to the extent then required by the MGCL, the Corporation shall provide to record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates.

The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by Maryland law.

Notwithstanding the foregoing, transfers of shares of any class or series of stock will be subject in all respects to the Charter and all of the terms and conditions contained therein.

Section 3. REPLACEMENT CERTIFICATE. Any officer of the Corporation may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, destroyed, stolen or mutilated, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, destroyed, stolen or mutilated; provided, however, if such shares have ceased to be certificated, no new certificate shall be issued unless requested in writing by such stockholder and the Board of Directors has determined such certificates may be issued. Unless otherwise determined by an officer of the Corporation, the owner of such lost, destroyed, stolen or mutilated certificate or certificates, or his or her legal representative, shall be required, as a condition precedent to the issuance of a new certificate or certificates, to give the Corporation a bond in such sums as it may direct as indemnity against any claim that may be made against the Corporation.

Section 4. FIXING OF RECORD DATE. The Board of Directors may set, in advance, a record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or determining stockholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination of stockholders for any other proper purpose. Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than ninety (90) days and, in the case of a meeting of stockholders, not less than ten (10) days, before the date on which the meeting or particular action requiring such determination of stockholders of record is to be held or taken.

When a record date for the determination of stockholders entitled to notice of and to vote at any meeting of stockholders has been set as provided in this section, such record date shall continue to apply to the meeting if adjourned or postponed, except if the meeting is adjourned or postponed to a date more than 120 days after the record date originally fixed for the meeting, in which case a new record date for such meeting may be determined as set forth herein.

Section 5. STOCK LEDGER. The Corporation shall maintain at its principal office or at the office of its counsel, accountants or transfer agent, an original or duplicate stock ledger containing the name and address of each stockholder and the number of shares of each class of stock held by such stockholder.

Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS. The Board of Directors may issue fractional stock or provide for the issuance of scrip, all on such terms and under such conditions as it may determine. Notwithstanding any other provision of the Charter or these Bylaws, the Board of Directors may issue units consisting of different securities of the Corporation. Any security issued in a unit shall have the same characteristics as any identical securities issued by the Corporation, except that the Board of Directors may provide that, for a specified period, securities of the Corporation issued in such unit may be transferred on the books of the Corporation only in such unit.

ARTICLE VIII

ACCOUNTING YEAR

The fiscal year of the Corporation shall end on December 31st of each calendar year, unless otherwise determined by the Board of Directors by a duly adopted resolution.

ARTICLE IX

DISTRIBUTIONS

Section 1. AUTHORIZATION. Dividends and other distributions upon the stock of the Corporation may be authorized by the Board of Directors, subject to the provisions of law and the Charter. Dividends and other distributions may be paid in cash, property or stock of the Corporation, subject to the provisions of law and the Charter.

Section 2. CONTINGENCIES. Before payment of any dividends or other distributions, there may be set aside out of any assets of the Corporation available for dividends or other distributions such sum or sums as the Board of Directors may, from time to time, in its absolute discretion, think proper as a reserve fund for contingencies, for equalizing dividends, for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall determine, and the Board of Directors may modify or abolish any such reserve.

ARTICLE X

INVESTMENT POLICY

Subject to the provisions of the Charter, the Board of Directors may, from time to time, adopt, amend, revise or terminate any policy or policies with respect to investments by the Corporation as it shall deem appropriate in its sole discretion.

ARTICLE XI

SEAL

Section 1. SEAL. The Board of Directors may authorize the adoption of a seal by the Corporation. The seal shall contain the name of the Corporation and the year of its incorporation and the words “Incorporated Maryland.” The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof.

Section 2. AFFIXING SEAL. Whenever the Corporation is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word “(SEAL)” adjacent to the signature of the person authorized to execute the document on behalf of the Corporation.

ARTICLE XII

INDEMNIFICATION AND ADVANCE OF EXPENSES

To the maximum extent permitted by Maryland law in effect from time to time (but subject to the provisions of this Article XII and the Charter), the Corporation shall indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, shall pay or reimburse reasonable expenses in advance of final disposition of a proceeding to (a) any individual who is a present or former director or officer of the Corporation and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity, (b) any individual who, while a director or officer of the Corporation and at the request of the Corporation, serves or has served as a director, officer, partner, member, manager or trustee of another corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity, and (c) Carter/Validus Advisors, LLC, the Corporation’s advisor, and its affiliates from and against any claim, liability or expense to which they may become subject or which they may incur by reason of their service in such capacity. The rights of a director or officer to indemnification and advance of expenses provided by the Charter and these Bylaws shall vest immediately upon election of such director or officer. The Corporation may, with the approval of its Board of Directors, provide such indemnification and advance for expenses to an individual who served a predecessor of the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent of the Corporation or a predecessor of the Corporation or Carter/Validus Advisors, LLC. The indemnification and payment or reimbursement of expenses provided in these Bylaws shall not be deemed exclusive of or limit in any way other rights to which any person seeking indemnification or payment or reimbursement of expenses may be or may become entitled under any bylaw, regulation, insurance, agreement or otherwise.

Neither the amendment nor repeal of this Article, nor the adoption or amendment of any other provision of these Bylaws or Charter inconsistent with this Article, shall apply to or affect in any respect the applicability of the preceding paragraph with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

ARTICLE XIII

WAIVER OF NOTICE

Whenever any notice of a meeting is required to be given pursuant to the Charter or these Bylaws or pursuant to applicable law, a waiver thereof in writing or by electronic transmission, given by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice, unless specifically required by statute. The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

ARTICLE XIV

AMENDMENT OF BYLAWS

The Board of Directors shall have the exclusive power to adopt, alter or repeal any provision of these Bylaws and to make new Bylaws.

EX-31.1

Exhibit 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

        I, John E. Carter, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Carter Validus Mission Critical REIT, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 16, 2015

/s/ John E. Carter

John E. Carter

Chief Executive Officer

EX-31.2

Exhibit 31.2

CHIEF FINANCIAL OFFICER CERTIFICATION

      I, Todd M. Sakow, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Carter Validus Mission Critical REIT, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 16, 2015

/s/ Todd M. Sakow

Todd M. Sakow

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATIONS OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C 1350)

Each of the undersigned officers of Carter Validus Mission Critical REIT, Inc. (the “Company”) hereby certifies, for purposes of Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

(i) the accompanying Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2015 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 16, 2015
	By:	/s/ John E. Carter
	Name:	John E. Carter
	Title:	Chief Executive Officer
Date: November 16, 2015		(Principal Executive Officer)
	By:	/s/ Todd M. Sakow
	Name:	Todd M. Sakow
	Title:	Chief Financial Officer and Treasurer
		(Principal Financial Officer)

The foregoing certification is being furnished with the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2015 pursuant to 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general information language in such filing, except to the extent that the Company specifically incorporates by reference.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Real Estate Investments (Schedule of Business Combinations) (Details) - property		Apr. 20, 2015	Mar. 31, 2015	Jan. 15, 2015	Sep. 30, 2015
Business Acquisition [Line Items]
Number of Company owned properties					79
Landmark Hospital of Savannah [Member]
Business Acquisition [Line Items]
Date Acquired				Jan. 15, 2015
Ownership Percentage					100.00%
21st Century Oncology Portfolio [Member]
Business Acquisition [Line Items]
Date Acquired	[1]	Apr. 20, 2015	Mar. 31, 2015
Ownership Percentage					100.00%
Number of Company owned properties					20
Number of properties acquired		2	18

[1] Portfolio consists of 20 real estate properties, 18 of which were purchased on March 31, 2015 and two of which were purchased on April 20, 2015.

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Segment Reporting (Schedule of Assets by Reportable Segments) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Assets by segment [Line Items]
Total assets	$ 2,399,645	$ 2,190,842
Operating Segments [Member] | Data Centers [Member]
Assets by segment [Line Items]
Total assets	1,110,250	1,130,131
Operating Segments [Member] | Healthcare [Member]
Assets by segment [Line Items]
Total assets	1,115,858	933,257
All Other [Member]
Assets by segment [Line Items]
Total assets	$ 173,537	$ 127,454

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Intangible Lease Liabilities, Net (Schedule of Intangible Lease Liabilities, Net) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Intangible Lease Liabilities, Net [Abstract]
Below-market leases, net of accumulated amortization of $14,700 and $10,721, respectively (with a weighted average remaining life of 17.1 years and 17.5 years, respectively)	$ 52,297	$ 55,406
Ground leasehold liabilities, net of accumulated amortization of $146 and $53, respectively (with a weighted average remaining life of 43.4 years and 44.1 years, respectively)	5,179	5,272
Total intangible lease liabilities, net	57,476	60,678
Below-market leases, accumulated amortization	$ 14,700	$ 10,721
Below-market leases, weighted average remaining life	17 years 1 month 6 days	17 years 6 months
Ground leasehold liabilities, accumulated amortization	$ 146	$ 53
Ground leasehold liabilities, weighted average remaining life	43 years 4 months 24 days	44 years 1 month 6 days
Intangible lease liabilities, weighted average remaining life	19 years 4 months 24 days	19 years 9 months 18 days

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Segment Reporting (Schedule of Capital Additions and Acquisitions by Reportable Segments) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Capital additions and acquisitions by segment [Line Items]
Total capital additions and acquisitions	$ 181,605	$ 986,024
Operating Segments [Member] | Data Centers [Member]
Capital additions and acquisitions by segment [Line Items]
Total capital additions and acquisitions	2,793	438,539
Operating Segments [Member] | Healthcare [Member]
Capital additions and acquisitions by segment [Line Items]
Total capital additions and acquisitions	$ 178,812	$ 547,485

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Notes Payable and Unsecured Credit Facility (Schedule of Debt) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Notes payable:
Notes payable	$ 546,597	$ 490,909
Unsecured credit facility:
Credit facility	283,000	75,000
Total debt outstanding	829,597	565,909
Fixed Rate [Member]
Notes payable:
Notes payable	132,010	134,271
Variable Rate Debt, Subject To Interest Rate Swap [Member]
Notes payable:
Notes payable	371,106	206,162
Unsecured credit facility:
Credit facility	55,000	55,000
Variable Rate [Member]
Notes payable:
Notes payable	43,481	150,476
Unsecured credit facility:
Credit facility	228,000	20,000
Revolving Line Of Credit [Member]
Unsecured credit facility:
Credit facility	73,000	0
Term Loan [Member]
Unsecured credit facility:
Credit facility	$ 210,000	$ 75,000

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Fair Value (Tables)

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014 (amounts in thousands):

	September 30, 2015
	Fair Value Hierarchy
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Derivative assets	$	—	$	—		$	—		$	—
Total assets at fair value	$	—	$	—		$	—		$	—
Liabilities:
Derivative liabilities	$	—	$	(6,494	)	$	—		$	(6,494	)
Contingent consideration obligations	—		—			(7,030		)	(7,030		)
Total liabilities at fair value	$	—	$	(6,494	)	$	(7,030	)	$	(13,524	)
	December 31, 2014
	Fair Value Hierarchy
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Derivative assets	$	—	$	273		$	—		$	273
Total assets at fair value	$	—	$	273		$	—		$	273
Liabilities:
Derivative liabilities	$	—	$	(1,808	)	$	—		$	(1,808	)
Contingent consideration obligations	—		—			(6,570		)	(6,570		)
Total liabilities at fair value	$	—	$	(1,808	)	$	(6,570	)	$	(8,378	)

Schedule of Reconciliation of Fair Value of Recurring Level 3 Fair Value Measurements

The following table provides a rollforward of the fair value of recurring Level 3 fair value measurements for the three and nine months ended September 30, 2015 and 2014 (amounts in thousands):

	Three Months Ended   September 30,				Nine Months Ended   September 30,
	2015		2014		2015		2014
Liabilities:
Contingent consideration obligations:
Beginning balance	$	6,870	$	5,030	$	6,570	$	—
Additions to contingent consideration obligations	—		—		—		5,030
Total changes in fair value included in earnings	160		—		460		—
Ending balance	$	7,030	$	5,030	$	7,030	$	5,030
Unrealized losses still held (1)	$	160	$	—	$	460	$	—

(1) Represents the unrealized losses recorded in earnings or other comprehensive income (loss) during the period for liabilities classified as Level 3 that are still held at the end of the period.

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Fair Value (Narrative) (Details) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Fair Value [Line Items]
Preferred equity investment, carrying value	$ 127,147,000	$ 0
Notes payable, carrying value	546,597,000	490,909,000
Credit facility, carrying value	283,000,000	75,000,000
Contingent consideration obligations, fair value and carrying value	7,030,000	6,570,000
Contingent consideration obligations, maximum payout	9,069,000
Contingent consideration obligations, minimum payout	0
Fixed Rate [Member]
Fair Value [Line Items]
Notes payable, carrying value	132,010,000	134,271,000
Variable Rate Debt, Subject To Interest Rate Swap [Member]
Fair Value [Line Items]
Notes payable, carrying value	371,106,000	206,162,000
Credit facility, carrying value	55,000,000	55,000,000
Variable Rate [Member]
Fair Value [Line Items]
Notes payable, carrying value	43,481,000	150,476,000
Credit facility, carrying value	228,000,000	20,000,000
Significant Other Observable Inputs (Level 2) [Member] | Estimated Fair Value [Member] | Fixed Rate [Member]
Fair Value [Line Items]
Notes payable, fair value disclosure	132,700,000	134,837,000
Significant Other Observable Inputs (Level 2) [Member] | Estimated Fair Value [Member] | Variable Rate Debt, Subject To Interest Rate Swap [Member]
Fair Value [Line Items]
Notes payable, fair value disclosure	366,062,000	208,889,000
Credit facility, fair value disclosure	$ 51,422,000	$ 50,505,000

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Real Estate Investments (Tables)

9 Months Ended

Sep. 30, 2015

Real Estate Properties [Line Items]

Schedule of Business Combinations

The following table summarizes the 2015 Acquisitions:

Property Description	Date Acquired	Ownership Percentage
Landmark Hospital of Savannah	1/15/2015	100%
21st Century Oncology Portfolio (1)	3/31/2015; 04/20/2015	100%

(1) Portfolio consists of 20 real estate properties, 18 of which were purchased on March 31, 2015 and two of which were purchased on April 20, 2015.

Schedule of Allocation of Fair Value of Business Combinations

As of September 30, 2015, the Company completed its fair value purchase price allocation for the 2015 Acquisitions. The following table summarizes the Company’s allocation of the fair value purchase price of the 2015 Acquisitions acquired during the nine months ended September 30, 2015 (amounts in thousands):

	Total
Land	$	19,469
Buildings and improvements	101,251
In-place leases	15,819
Tenant improvements	1,123
Above-market leases	635
Total assets acquired	138,297
Below-market leases	(870		)
Total liabilities acquired	(870		)
Net assets acquired	$	137,427

Schedule of Business Combinations on a Pro Forma Basis

Assuming the 2015 Acquisitions described above had occurred on January 1, 2014, pro forma revenues, net income and net income attributable to common stockholders would have been as follows (amounts in thousands, unaudited):

	Three Months Ended   September 30,				Nine Months Ended   September 30,
	2015		2014		2015		2014
Pro forma basis:
Revenues	$	48,714	$	47,489	$	155,842	$	130,852
Net income	$	14,435	$	14,993	$	51,184	$	43,912
Net income attributable to common stockholders	$	13,572	$	13,841	$	47,127	$	41,475
Net income per common share attributable to common stockholders:
Basic	$	0.08	$	0.08	$	0.27	$	0.26
Diluted	$	0.08	$	0.08	$	0.27	$	0.26

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Related-Party Transactions and Arrangements (Narrative) (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($) employee	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) employee property	Sep. 30, 2014 USD ($)
Related Party Transaction [Line Items]
Asset management fees incurred	$ 4,708,000	$ 4,078,000	$ 13,274,000	$ 9,538,000
Number of direct employees | employee	0		0
Cumulative non-compounded annual return rate to investors, as a percent			8.00%
Carter/Validus Advisors, LLC [Member]
Related Party Transaction [Line Items]
Acquisition fee, as percentage of contract purchase price of each property or asset acquired			2.00%
Acquisition fee, as percentage of amount advanced on mortgage loan			2.00%
Annual asset management fee, as percentage of aggregate asset value plus costs and expenses incurred by Advisor			0.85%
Monthly asset management fee, as percentage of aggregate asset value as of the last day of the immediately preceding month			0.07083%
Asset management fees incurred	$ 4,708,000	4,078,000	$ 13,274,000	9,538,000
Operating expenses allocated to the Company by the advisor	376,000	410,000	$ 941,000	1,279,000
Percentage of remaining net sales proceeds Advisor will receive after investors receive return			15.00%
Carter/Validus Advisors, LLC And/Or Its Affiliates [Member]
Related Party Transaction [Line Items]
Acquisition fees incurred related to investments in real estate	0	9,379,000	$ 2,748,000	18,684,000
Acquisition fees incurred related to investments in real estate-related notes receivables	0	136,000	$ 5,000	293,000
Minimum number of properties required to be sold to incur brokerage commission | property			1
Maximum brokerage commission paid by Company, as percentage of contract sales price			6.00%
Disposition fees incurred	0	0	$ 0	0
Subordinated participation in net sale proceeds	0	0	$ 0	0
Listing fee percentage			15.00%
Listing fees incurred	0	0	$ 0	0
Carter/Validus Advisors, LLC And/Or Its Affiliates [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Disposition fee, as percentage of contract sales price			1.00%
Percentage of brokerage commission paid by Company for properties sold that required a substantial amount of services			50.00%
Carter Validus Real Estate Management Services, LLC [Member]
Related Party Transaction [Line Items]
Leasing and management fees, as percentage of gross revenues from single-tenant properties			3.00%
Leasing and management fees, as percentage of gross revenues from multi-tenant properties			4.00%
Oversight fee, as percentage of gross revenues from properties managed			1.00%
Property management fees incurred	$ 1,139,000	$ 936,000	$ 3,585,000	$ 2,328,000

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Acquired Intangible Assets, Net (Schedule of Acquired Intangible Assets, Net) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Acquired Intangible Assets, Net [Line Items]
Acquired intangible asset, net of accumulated amortization	$ 204,179	$ 204,436
Acquired intangible asset, accumulated amortization	$ 34,997	$ 21,759
Acquired intangible asset, weighted average remaining life	15 years	15 years 7 months 6 days
In-place leases [Member]
Acquired Intangible Assets, Net [Line Items]
Acquired intangible asset, net of accumulated amortization	$ 198,078	$ 198,635
Acquired intangible asset, accumulated amortization	$ 34,002	$ 21,099
Acquired intangible asset, weighted average remaining life	14 years 4 months 24 days	15 years 1 month 6 days
Above-market leases [Member]
Acquired Intangible Assets, Net [Line Items]
Acquired intangible asset, net of accumulated amortization	$ 3,457	$ 3,118
Acquired intangible asset, accumulated amortization	$ 825	$ 529
Acquired intangible asset, weighted average remaining life	11 years 2 months 12 days	11 years 4 months 24 days
Ground lease interest [Member]
Acquired Intangible Assets, Net [Line Items]
Acquired intangible asset, net of accumulated amortization	$ 2,644	$ 2,683
Acquired intangible asset, accumulated amortization	$ 170	$ 131
Acquired intangible asset, weighted average remaining life	60 years 7 months 6 days	61 years 2 months 12 days

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Summary of Significant Accounting Policies (Details) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015 tenants real_estate_investment metropolitan shares	Sep. 30, 2014 shares	Sep. 30, 2015 USD ($) tenants real_estate_investment metropolitan $ / shares shares	Sep. 30, 2014 USD ($) $ / shares shares
Summary of Significant Accounting Policies [Line Items]
Number of metropolitan statistical areas in which Company owns real estate investments | metropolitan	44		44
Number of Company owned real estate investments | real_estate_investment	48		48
Period of notice required for changes to share repurchase program			30 days
Maximum number of shares available for repurchase during any calendar year, as percentage of common stock outstanding at end of prior year			5.00%
Repurchase of common stock | $			$ 5,521	$ 2,837
Repurchase of common stock, average price per share (in dollars per share) | $ / shares			$ 9.57	$ 9.62
Diluted earnings per share outstanding adjustment (in shares)	17,000	17,000	19,000	19,000
Rental Revenue [Member] | Geographic Concentration Risk [Member]
Summary of Significant Accounting Policies [Line Items]
Number of metropolitan statistical areas in which Company owns real estate investments | metropolitan	4		4
Rental Revenue [Member] | Customer Concentration Risk [Member]
Summary of Significant Accounting Policies [Line Items]
Number of tenants | tenants	2		2
Dallas-Ft. Worth-Arlington, Texas MSA [Member] | Rental Revenue [Member] | Geographic Concentration Risk [Member]
Summary of Significant Accounting Policies [Line Items]
Concentration risk, percentage			13.80%
Chicago-Naperville-Elgin, Illinois-Indiana-Wisconsin MSA [Member] | Rental Revenue [Member] | Geographic Concentration Risk [Member]
Summary of Significant Accounting Policies [Line Items]
Concentration risk, percentage			12.10%
Atlanta-Sandy Springs-Roswell, Georgia MSA [Member] | Rental Revenue [Member] | Geographic Concentration Risk [Member]
Summary of Significant Accounting Policies [Line Items]
Concentration risk, percentage			10.10%
Houston-The Woodlands-Sugar Land, Texas MSA [Member] | Rental Revenue [Member] | Geographic Concentration Risk [Member]
Summary of Significant Accounting Policies [Line Items]
Concentration risk, percentage			10.60%
AT&T Services, Inc. [Member] | Rental Revenue [Member] | Customer Concentration Risk [Member]
Summary of Significant Accounting Policies [Line Items]
Concentration risk, percentage			13.20%
Bay Area Regional Medical Center, LLC [Member] | Rental Revenue [Member] | Customer Concentration Risk [Member]
Summary of Significant Accounting Policies [Line Items]
Concentration risk, percentage			10.40%
Common Stock [Member]
Summary of Significant Accounting Policies [Line Items]
Repurchase of common stock (in shares)			576,632	295,000
Repurchase of common stock | $			$ 6
Consolidated Partnerships [Member]
Summary of Significant Accounting Policies [Line Items]
Number of Company owned real estate investments | real_estate_investment	1		1

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Segment Reporting (Narrative) (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) segment	Sep. 30, 2014 USD ($)
Segment Reporting Information [Line Items]
Number of reportable business segments | segment			2
Revenues	$ 48,714,000	$ 42,393,000	$ 153,168,000	$ 103,720,000
Intersegment Elimination [Member]
Segment Reporting Information [Line Items]
Revenues	$ 0	$ 0	$ 0	$ 0

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Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Thousands				3 Months Ended		9 Months Ended
	Nov. 05, 2015	Nov. 02, 2015	Oct. 01, 2015	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Subsequent Event [Line Items]
Distributions paid in cash						$ 42,407	$ 30,312
Common stock issued through distribution reinvestment plan						$ 50,720	$ 33,684
Distributions declared per common share (in dollars per share)				$ 0.18	$ 0.18	$ 0.52	$ 0.52
Subsequent Event [Member] | September 1, 2015 To September 30, 2015 [Member]
Subsequent Event [Line Items]
Aggregate distributions paid			$ 10,348
Distributions paid in cash			4,716
Common stock issued through distribution reinvestment plan			$ 5,632
Subsequent Event [Member] | October 1, 2015 To October 31, 2015 [Member]
Subsequent Event [Line Items]
Aggregate distributions paid		$ 10,722
Distributions paid in cash		4,901
Common stock issued through distribution reinvestment plan		$ 5,821
Subsequent Event [Member] | December 1, 2015 To December 31, 2015 [Member]
Subsequent Event [Line Items]
Number of days, distribution calculation	365 days
Distributions declared per common share (in dollars per share)	$ 0.001917808
Annualized distribution rate, as a percent	7.00%
Assumed purchase price per share (in dollars per share)	$ 10.00
Subsequent Event [Member] | January 1, 2016 To February 29, 2016 [Member]
Subsequent Event [Line Items]
Number of days, distribution calculation	366 days
Distributions declared per common share (in dollars per share)	$ 0.001912568
Annualized distribution rate, as a percent	7.00%
Assumed purchase price per share (in dollars per share)	$ 10.00

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Derivative Instruments and Hedging Activities (Schedule of the Notional Amount and Fair Value of Derivative Instruments) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015		Dec. 31, 2014
Derivatives, Fair Value [Line Items]
Fair Value of Asset	$ 0		$ 273
Fair Value of (Liability)	(6,494)		(1,808)
Interest Rate Swaps [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Outstanding Notional Amount	426,106		261,162
Other Assets [Member] | Interest Rate Swaps [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Fair Value of Asset	0		273	[1]
Accounts Payable and Other Liabilities [Member] | Interest Rate Swaps [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Fair Value of (Liability)	$ (6,494)	[2]	(1,808)	[3]
Minimum [Member] | Interest Rate Swaps [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Effective Dates	Oct. 12, 2012
Maturity Dates	Oct. 11, 2017
Maximum [Member] | Interest Rate Swaps [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Effective Dates	Aug. 03, 2015
Maturity Dates	Jul. 11, 2019
Parent [Member]
Derivatives, Fair Value [Line Items]
Fair Value of Asset			273
Fair Value of (Liability)	$ (6,494)		(1,434)
Noncontrolling Interests [Member]
Derivatives, Fair Value [Line Items]
Fair Value of (Liability)			$ (374)

[1] Of this amount, $273,000 related to controlling interests.

[2] Of this amount, $(6,494,000) related to controlling interests.

[3] Of this amount, $(1,434,000) related to controlling interests and $(374,000) related to noncontrolling interests.

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Notes Payable and Unsecured Credit Facility (Schedule of Future Principal Payments Due on Debt) (Details) - USD ($) $ in Thousands		Sep. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Three months ending December 31, 2015		$ 3,278
2016		26,448
2017		265,430
2018		150,588
2019		197,691
Thereafter		186,162
Total debt outstanding		829,597	$ 565,909
Principal Payments [Member]
Debt Instrument [Line Items]
Three months ending December 31, 2015		3,278
2016		13,007
2017		12,378
2018		10,454
2019		3,548
Thereafter		2,540
Total debt outstanding		45,205
Balloon Payments [Member]
Debt Instrument [Line Items]
Three months ending December 31, 2015	[1]	0
2016	[1]	13,441
2017	[1]	253,052
2018	[1]	140,134
2019	[1]	194,143
Thereafter	[1]	183,622
Total debt outstanding	[1]	$ 784,392

[1] Includes the unsecured credit facility.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

The summary of significant accounting policies presented below is designed to assist in understanding the Company’s condensed consolidated financial statements. Such condensed consolidated financial statements and the accompanying notes thereto are the representation of management. The accompanying condensed consolidated unaudited financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in the United States, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal and recurring nature considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

The condensed consolidated balance sheet at December 31, 2014 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by GAAP for complete financial statements. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements as of and for the year ended December 31, 2014 and related notes thereto set forth in the Company’s Annual Report on Form 10-K, filed with the SEC on March 26, 2015.

Principles of Consolidation and Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of the Company, the Operating Partnership, all majority-owned subsidiaries and controlled subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the financial statements in conformity with GAAP necessarily requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Concentration of Credit Risk and Significant Leases

As of September 30, 2015, the Company had cash on deposit, including restricted cash, in certain financial institutions which had deposits in excess of current federally insured levels; however, the Company has not experienced any losses in such accounts. The Company limits its cash investments to financial institutions with high credit standings; therefore, the Company believes it is not exposed to any significant credit risk on its cash deposits. To date, the Company has experienced no loss or lack of access to cash in its accounts. Concentration of credit risk with respect to accounts receivable from tenants is limited.

As of September 30, 2015, the Company owned real estate investments in 44 MSAs, (including one real estate investment owned through a consolidated partnership), four of which accounted for 10.0% or more of rental revenue. Real estate investments located in the Dallas-Ft. Worth-Arlington, Texas MSA, the Chicago-Naperville-Elgin, Illinois-Indiana-Wisconsin MSA, the Atlanta-Sandy Springs-Roswell, Georgia MSA and the Houston-The Woodlands-Sugar Land, Texas MSA accounted for an aggregate of 13.8%, 12.1%, 10.1% and 10.6%, respectively, of rental revenue for the nine months ended September 30, 2015.

As of September 30, 2015, the Company had two tenants that accounted for 10.0% or more of rental revenue. The leases with AT&T Services, Inc. and the lease with Bay Area Regional Medical Center, LLC accounted for 13.2% and 10.4%, respectively, of rental revenue for the nine months ended September 30, 2015.

Share Repurchase Program

The Company’s share repurchase program allows for repurchases of shares of the Company’s common stock when certain criteria are met. The share repurchase program provides that all redemptions during any calendar year, including those redeemable upon death or a qualifying disability of a stockholder, are limited to those that can be funded with proceeds raised from the DRIP Offering during the prior calendar year and other operating funds, if any, as the board of directors, in its sole discretion, may reserve for this purpose.

Repurchases of shares of the Company’s common stock are at the sole discretion of the Company’s board of directors. In addition, the Company’s board of directors, at its sole discretion, may amend, suspend, reduce, terminate or otherwise change the share repurchase program upon 30 days' prior notice to the Company’s stockholders for any reason it deems appropriate. The share repurchase program provides that the Company will limit the number of shares repurchased during any calendar year to 5.0% of the number of shares of common stock outstanding as of December 31st of the previous calendar year. During the nine months ended September 30, 2015, the Company received valid redemption requests related to approximately 577,000 shares of common stock, all of which were redeemed in full for an aggregate purchase price of approximately $5,521,000 (an average of $9.57 per share). During the nine months ended September 30, 2014, the Company received valid redemption requests related to approximately 295,000 shares of common stock, all of which were redeemed in full for an aggregate purchase price of approximately $2,837,000 (an average of $9.62 per share).

Earnings Per Share

Basic earnings per share attributable for all periods presented are computed by dividing net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Shares of non-vested restricted common stock give rise to potentially dilutive shares of common stock. Diluted earnings per share are computed based on the weighted average number of shares outstanding and all potentially dilutive securities. Diluted earnings per share reflect the effect of approximately 17,000 shares for the three months ended September 30, 2015 and 2014 and approximately 19,000 shares for the nine months ended September 30, 2015 and 2014 of non-vested shares of restricted common stock that were outstanding as of such period.

Preferred Equity Investment

The Company accounts for its Preferred Equity Investment as an asset under the cost method of accounting, as the Company exercises no influence over the investee. The Company recognizes dividends as other income in the condensed consolidated statements of comprehensive income.

Recently Issued Accounting Pronouncements

On May 28, 2014, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update, or ASU, 2014-09, Revenue from Contracts with Customers, or ASU 2014-09. The objective of ASU 2014-09 is to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle, which may require more judgment and estimates within the revenue recognition process than are required under existing GAAP. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) Deferral of the Effective Date, or ASU 2015-14. ASU 2015-14 defers the effective date of ASU 2014-09 by one year to fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted as of the original effective date, which was annual reporting periods beginning after December 15, 2016, and the interim periods within that year. The Company is in the process of evaluating the impact ASU 2014-09 will have on the Company’s condensed consolidated financial statements.

On February 18, 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, or ASU 2015-02, that changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The amendment affects the following areas: limited partnerships and similar legal entities, evaluating fees paid to a decision maker or a service provider as a variable interest, the effect of fee arrangements on the primary beneficiary determination and certain investment funds. Under the amendment, all reporting entities are within the scope of ASC Subtopic 810-10, Consolidation—Overall, unless a scope exception applies. The presumption that a general partner controls a limited partnership has been eliminated. In addition, fees paid to decision makers that meet certain conditions no longer cause decision makers to consolidate variable interest entities in certain instances. The amendment is effective for public business entities for periods beginning after December 15, 2015. Early adoption of ASU 2015-02 is permitted. The Company is in the process of evaluating the impact ASU 2015-02 will have on the Company’s condensed consolidated financial statements.

On April 7, 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, or ASU 2015-03, that intends to simplify the presentation of debt issuance costs. The amendment requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. On August 18, 2015, the FASB issued ASU 2015-15, Interest—Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated With Line-of-Credit Arrangements—Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 Emerging Issues Task Force Meeting (SEC Update), or ASU 2015-15, which clarified that the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. Both ASU 2015-03 and ASU 2015-15 are effective for public business entities for fiscal years beginning after December 15, 2015, and are to be applied retrospectively, with early adoption permitted. The Company is in the process of evaluating the impact ASU 2015-03 and ASU 2015-15 will have on the Company’s condensed consolidated financial statements.

On September 25, 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, or ASU 2015-16, which eliminates the requirement for an acquirer to retrospectively adjust the financial statements for measurement-period adjustments that occur in periods after a business combination is consummated. ASU 2015-16 requires that the acquirer recognize adjustments to the provisional amounts recorded in the reporting period when the adjustments are determined. The effects of adjustments (such as depreciation, amortization, or other income effects) to provisional amounts to periods after the acquisition date are included in the earnings of the current reporting period. The amendment is effective for public business entities for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Early adoption of ASU 2015-16 is permitted. The Company is in the process of evaluating the impact ASU 2015-16 will have on the Company’s condensed consolidated financial statements.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the Company’s condensed consolidated financial position or results of operations.

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Derivative Instruments and Hedging Activities (Schedule of Gains or Losses Recognized on Derivative Instruments) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Loss Recognized in OCI on Derivatives (Effective Portion)	$ (5,246)	$ (59)	$ (7,999)	$ (2,513)
Amount of Loss Reclassified From Accumulated Other Comprehensive Loss to Net Income (Effective Portion)	(1,215)	(841)	(3,040)	(1,787)
Interest Rate Swaps [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Loss Recognized in OCI on Derivatives (Effective Portion)	(5,246)	(59)	(7,999)	(2,513)
Interest Rate Swaps [Member] | Interest Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Loss Reclassified From Accumulated Other Comprehensive Loss to Net Income (Effective Portion)	$ (1,215)	$ (841)	$ (3,040)	$ (1,787)

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Other Assets (Schedule of Other Assets) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Other Assets [Abstract]
Deferred financing costs, net of accumulated amortization of $7,326 and $4,532, respectively	$ 10,793	$ 11,172
Lease commissions, net of accumulated amortization of $144 and $54, respectively	3,704	394
Investments in unconsolidated partnerships	99	106
Tenant receivable	4,248	3,361
Notes receivables	11,000	0
Straight-line rent receivable	41,353	25,566
Restricted cash held in escrow	13,696	13,382
Real estate escrow deposits	0	250
Restricted cash	661	734
Derivative assets	0	273
Prepaid and other assets	4,946	2,189
Total other assets	90,500	57,427
Deferred financing costs, accumulated amortization	7,326	4,532
Lease commissions, accumulated amortization	$ 144	$ 54

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Notes Payable and Unsecured Credit Facility (Tables)

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Schedule of Debt

The Company’s debt outstanding as of September 30, 2015 and December 31, 2014 consisted of the following (amounts in thousands):

	September 30, 2015		December 31, 2014
Notes payable:
Fixed rate notes payable	$	132,010	$	134,271
Variable rate notes payable fixed through interest rate swaps	371,106		206,162
Variable rate notes payable	43,481		150,476
Total notes payable	546,597		490,909
Unsecured credit facility:
Revolving line of credit	73,000		—
Term loan	210,000		75,000
Total unsecured credit facility	283,000		75,000
Total debt outstanding	$	829,597	$	565,909

Schedule of Future Principal Payments Due on Debt

The principal payments and balloon payments due on the notes payable and the unsecured credit facility for the three months ending December 31, 2015 and for each of the next four years ending December 31 and thereafter, are as follows (amounts in thousands):

Year	Principal Payments		Balloon Payments (1)		Total Amount
Three months ending December 31, 2015	$	3,278	$	—	$	3,278
2016	13,007		13,441		26,448
2017	12,378		253,052		265,430
2018	10,454		140,134		150,588
2019	3,548		194,143		197,691
Thereafter	2,540		183,622		186,162
	$	45,205	$	784,392	$	829,597

(1) Includes the unsecured credit facility.

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Future Minimum Rent (Tables)

9 Months Ended

Sep. 30, 2015

Leases [Abstract]

Schedule of Future Minimum Rental Income from Non-Cancelable Operating Leases

The future minimum rental income from the Company’s investment in real estate assets under non-cancelable operating leases including optional renewal periods for which exercise is reasonably assured for the three months ending December 31, 2015 and for each of the next four years ending December 31 and thereafter, are as follows (amounts in thousands):

Year	Amount
Three months ending December 31, 2015	$	41,745
2016	171,576
2017	175,139
2018	178,500
2019	181,081
Thereafter	1,814,128
	$	2,562,169

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Preferred Equity Investment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Preferred Equity Investment [Line Items]
Preferred equity investment, aggregate amount invested			$ 127,147	$ 0
Preferred equity investment, dividend income	$ 2,709	$ 277	5,828	$ 477
Series B Redeemable Cumulative Preferred Stock [Member] | Private Real Estate Corporation [Member]
Preferred Equity Investment [Line Items]
Preferred equity investment, aggregate amount invested			$ 127,147
Preferred equity investment, dividend rate percentage			7.875%
Preferred equity investment, principal amount	125,000		$ 125,000
Preferred equity investment, origination costs	2,772		2,772
Preferred equity investment, closing fee	625		625
Preferred equity investment, dividend income	$ 2,461		$ 5,359

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Future Minimum Rent (Schedule of Future Minimum Rental Income from Non-Cancelable Operating Leases) (Details) $ in Thousands	Sep. 30, 2015 USD ($)
Leases [Abstract]
Three months ending December 31, 2015	$ 41,745
2016	171,576
2017	175,139
2018	178,500
2019	181,081
Thereafter	1,814,128
Total	$ 2,562,169

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Intangible Lease Liabilities, Net (Tables)

9 Months Ended

Sep. 30, 2015

Intangible Lease Liabilities, Net [Abstract]

Schedule of Intangible Lease Liabilities, Net

Intangible lease liabilities, net, consisted of the following as of September 30, 2015 and December 31, 2014 (amounts in thousands, except weighted average life amounts):

	September 30, 2015		December 31, 2014
Below-market leases, net of accumulated amortization of $14,700 and $10,721, respectively (with a weighted average remaining life of 17.1 years and 17.5 years, respectively)	$	52,297	$	55,406
Ground leasehold liabilities, net of accumulated amortization of $146 and $53, respectively (with a weighted average remaining life of 43.4 years and 44.1 years, respectively)	5,179		5,272
	$	57,476	$	60,678

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Related-Party Transactions and Arrangements (Tables)

9 Months Ended

Sep. 30, 2015

Related Party Transactions [Abstract]

Schedule of Accounts Payable Due to Affiliates

The following amounts were outstanding due to affiliates as of September 30, 2015 and December 31, 2014 (amounts in thousands):

Entity	Fee	September 30, 2015		December 31, 2014
Carter/Validus Advisors, LLC and its affiliates	Asset management fees	$	1,575	$	1,307
Carter Validus Real Estate Management Services, LLC	Property management fees	382		385
Carter/Validus Advisors, LLC and its affiliates	General, administrative and other costs	235		141
		$	2,192	$	1,833

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Organization and Business Operations

9 Months Ended

Sep. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Business Operations

Organization and Business Operations

Carter Validus Mission Critical REIT, Inc., or the Company, a Maryland corporation, was incorporated on December 16, 2009 and elected to be taxed and currently qualifies as a real estate investment trust, or a REIT, under the Internal Revenue Code of 1986, as amended, for federal income tax purposes. The Company was organized to acquire and operate a diversified portfolio of income-producing commercial real estate, with a focus on the data center and healthcare property sectors, net leased to investment grade and other creditworthy tenants, as well as to make other real estate-related investments that relate to such property types. The Company operates through two reportable segments—commercial real estate investments in data centers and healthcare. Substantially all of the Company’s business is conducted through Carter/Validus Operating Partnership, LP, a Delaware limited partnership, or the Operating Partnership. The Company is the sole general partner of the Operating Partnership. Carter/Validus Advisors, LLC, or the Advisor, the Company’s affiliated advisor, is the sole limited partner of the Operating Partnership.

As of September 30, 2015, the Company owned 48 real estate investments (including one real estate investment owned through a consolidated partnership), consisting of 79 properties located in 44 metropolitan statistical areas, or MSAs. As of September 30, 2015, the Company had investments in 7.875% Series B Redeemable Cumulative Preferred Stock with a $0.01 par value per share in a private real estate corporation, or the Preferred Equity Investment, in an aggregate amount of $127,147,000.

The Company ceased offering shares of common stock in its $1,746,875,000 initial public offering, or the Offering, on June 6, 2014. At the completion of the Offering, the Company raised gross proceeds of approximately $1,716,046,000 (including shares of common stock issued pursuant to a distribution reinvestment plan, or the DRIP). The Company will continue to issue shares of common stock under the DRIP Offering (as defined below) until such time as the Company sells all of the shares registered for sale under the DRIP Offering, unless the Company files a new registration statement with the Securities and Exchange Commission, or the SEC, or the DRIP Offering is terminated by the Company’s board of directors.

In addition, the Company registered $100,000,000 in shares of common stock under the DRIP pursuant to a registration statement on Form S-3 (Registration No. 333-195258), or the DRIP Offering, and collectively with the Offering, the Offerings, which was filed with the SEC on April 14, 2014 and automatically became effective with the SEC upon filing. As of September 30, 2015, the Company had issued approximately 180,863,000 shares of common stock in the Offerings for gross proceeds of $1,794,581,000, before share redemptions of $10,587,000 and offering costs, selling commissions and dealer manager fees of $174,708,000.

Except as the context otherwise requires, “we,” “our,” “us,” and the “Company” refer to Carter Validus Mission Critical REIT, Inc., the Operating Partnership, all majority-owned subsidiaries and controlled subsidiaries.

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Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Schedule of Information for Reportable Segments

Summary information for the reportable segments during the three and nine months ended September 30, 2015 and 2014, are as follows (amounts in thousands):

	Data Centers			Healthcare			Three Months Ended   September 30, 2015
Revenue:
Rental, parking and tenant reimbursement revenue	$	28,407		$	20,289		$	48,696
Expenses:
Rental and parking expenses	(4,847		)	(1,562		)	(6,409		)
Segment net operating income	$	23,560		$	18,727		42,287
Revenue:
Real estate-related notes receivables interest income							18
Expenses:
General and administrative expenses							(1,609		)
Change in fair value of contingent consideration							(160		)
Acquisition related expenses							—
Asset management fees							(4,708		)
Depreciation and amortization							(16,369		)
Income from operations							19,459
Other income (expense):
Other income							2,709
Interest expense							(7,733		)
Net income							$	14,435

	Data Centers			Healthcare			Three Months Ended   September 30, 2014
Revenue:
Rental, parking and tenant reimbursement revenue	$	24,752		$	17,898		$	42,650
Expenses:
Rental and parking expenses	(5,123		)	(985		)	(6,108		)
Segment net operating income	$	19,629		$	16,913		36,542
Revenue:
Real estate-related notes receivables interest expense							(257		)
Expenses:
General and administrative expenses							(1,411		)
Acquisition related expenses							(4,087		)
Asset management fees							(4,078		)
Depreciation and amortization							(13,002		)
Income from operations							13,707
Other income (expense):
Other income							277
Interest expense							(5,478		)
Net income							$	8,506

	Data Centers			Healthcare			Nine Months Ended   September 30, 2015
Revenue:
Rental, parking and tenant reimbursement revenue	$	86,226		$	66,569		$	152,795
Expenses:
Rental and parking expenses	(15,287		)	(5,805		)	(21,092		)
Segment net operating income	$	70,939		$	60,764		131,703
Revenue:
Real estate-related notes receivables interest income							373
Expenses:
General and administrative expenses							(4,469		)
Change in fair value of contingent consideration							(460		)
Acquisition related expenses							(3,654		)
Asset management fees							(13,274		)
Depreciation and amortization							(48,597		)
Income from operations							61,622
Other income (expense):
Other income							5,828
Interest expense							(21,043		)
Net income							$	46,407

	Data Centers			Healthcare			Nine Months Ended   September 30, 2014
Revenue:
Rental, parking and tenant reimbursement revenue	$	60,569		$	40,977		$	101,546
Expenses:
Rental and parking expenses	(12,104		)	(2,325		)	(14,429		)
Segment net operating income	$	48,465		$	38,652		87,117
Revenue:
Real estate-related notes receivables interest income							2,174
Expenses:
General and administrative expenses							(3,212		)
Acquisition related expenses							(10,598		)
Asset management fees							(9,538		)
Depreciation and amortization							(31,275		)
Income from operations							34,668
Other income (expense):
Other income							477
Interest expense							(13,905		)
Net income							$	21,240

Schedule of Assets by Reportable Segments

Assets by reportable segments as of September 30, 2015 and December 31, 2014 are as follows (amounts in thousands):

	September 30, 2015		December 31, 2014
Assets by segment:
Data centers	$	1,110,250	$	1,130,131
Healthcare	1,115,858		933,257
All other	173,537		127,454
Total assets	$	2,399,645	$	2,190,842

Schedule of Capital Additions and Acquisitions by Reportable Segments

Capital additions and acquisitions by reportable segments for the nine months ended September 30, 2015 and 2014 are as follows (amounts in thousands):

	Nine Months Ended   September 30,
	2015		2014
Capital additions and acquisitions by segment:
Data centers	$	2,793	$	438,539
Healthcare	178,812		547,485
Total capital additions and acquisitions	$	181,605	$	986,024

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Real Estate Investments (Schedule of Allocation of Fair Value of Business Combinations) (Details) $ in Thousands	Sep. 30, 2015 USD ($)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract]
Land	$ 19,469
Buildings and improvements	101,251
In-place leases	15,819
Tenant improvements	1,123
Above-market leases	635
Total assets acquired	138,297
Below-market leases	(870)
Total liabilities acquired	(870)
Net assets acquired	$ 137,427

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Segment Reporting (Schedule of Information for Reportable Segments) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Segment Reporting Information [Line Items]
Rental and parking expenses	$ (6,409)	$ (6,108)	$ (21,092)	$ (14,429)
Income from operations	19,459	13,707	61,622	34,668
Real estate-related notes receivables interest income (expense)	18	(257)	373	2,174
General and administrative expenses	(1,609)	(1,411)	(4,469)	(3,212)
Change in fair value of contingent consideration	(160)	0	(460)	0
Acquisition related expenses	0	(4,087)	(3,654)	(10,598)
Asset management fees	(4,708)	(4,078)	(13,274)	(9,538)
Depreciation and amortization	(16,369)	(13,002)	(48,597)	(31,275)
Other income	2,709	277	5,828	477
Interest expense	(7,733)	(5,478)	(21,043)	(13,905)
Net income	14,435	8,506	46,407	21,240
Operating Segments [Member]
Segment Reporting Information [Line Items]
Rental, parking and tenant reimbursement revenue	48,696	42,650	152,795	101,546
Rental and parking expenses	(6,409)	(6,108)	(21,092)	(14,429)
Income from operations	42,287	36,542	131,703	87,117
Operating Segments [Member] | Data Centers [Member]
Segment Reporting Information [Line Items]
Rental, parking and tenant reimbursement revenue	28,407	24,752	86,226	60,569
Rental and parking expenses	(4,847)	(5,123)	(15,287)	(12,104)
Income from operations	23,560	19,629	70,939	48,465
Operating Segments [Member] | Healthcare [Member]
Segment Reporting Information [Line Items]
Rental, parking and tenant reimbursement revenue	20,289	17,898	66,569	40,977
Rental and parking expenses	(1,562)	(985)	(5,805)	(2,325)
Income from operations	$ 18,727	$ 16,913	$ 60,764	$ 38,652

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Real estate:
Land ($4,280 and $4,280, respectively, related to VIE)	$ 173,467	$ 153,998
Buildings and improvements, less accumulated depreciation of $87,990 and $52,785, respectively ($86,106 and $87,850, respectively, related to VIE)	1,664,472	1,584,801
Construction in process	97,986	53,552
Acquired intangible assets, less accumulated amortization of $34,997 and $21,759, respectively ($10,078 and $11,314, respectively, related to VIE)	204,179	204,436
Total real estate, net ($100,464 and $103,444, respectively, related to VIE)	2,140,104	1,996,787
Cash and cash equivalents ($2,475 and $1,397, respectively, related to VIE)	41,380	113,093
Preferred equity investment	127,147	0
Real estate-related notes receivables	514	23,535
Other assets ($6,669 and $5,126, respectively, related to VIE)	90,500	57,427
Total assets	2,399,645	2,190,842
Liabilities:
Notes payable ($52,467 and $53,031, respectively, related to VIE)	546,597	490,909
Credit facility	283,000	75,000
Accounts payable due to affiliates ($71 and $17, respectively, related to VIE)	2,192	1,833
Accounts payable and other liabilities ($1,796 and $1,473, respectively, related to VIE)	55,498	31,829
Intangible lease liabilities, less accumulated amortization of $14,846 and $10,774, respectively ($12,972 and $14,445, respectively, related to VIE)	57,476	60,678
Total liabilities	$ 944,763	$ 660,249
Stockholders’ equity:
Preferred stock, $0.01 par value per share, 50,000,000 shares authorized; none issued and outstanding
Common stock, $0.01 par value per share, 300,000,000 shares authorized; 180,911,195 and 175,561,681 shares issued, respectively; 179,810,937 and 175,038,055 shares outstanding, respectively	$ 1,798	$ 1,750
Additional paid-in capital	1,576,948	1,557,623
Accumulated distributions in excess of earnings	(150,989)	(100,273)
Accumulated other comprehensive loss	(6,494)	(1,161)
Total stockholders’ equity	1,421,263	1,457,939
Noncontrolling interests	33,619	72,654
Total equity	1,454,882	1,530,593
Total liabilities and stockholders’ equity	$ 2,399,645	$ 2,190,842

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Notes Payable and Unsecured Credit Facility (Narrative) (Details)	9 Months Ended
	Sep. 30, 2015 USD ($) tenants loan lenders	Sep. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Debt Instrument [Line Items]
Proceeds from notes payable	$ 64,305,000	$ 191,466,000
Number of tenants in violation of financial covenants | tenants	2
Proceeds from credit facility	$ 235,000,000	20,000,000
Payments on credit facility	27,000,000	$ 97,000,000
Total unencumbered pool availability	458,975,000
Remaining aggregate unencumbered pool availability	175,975,000
AT&T California Data Center Loan [Member]
Debt Instrument [Line Items]
Proceeds from notes payable	$ 37,000,000
Debt instrument, variable rate basis	30-day London interbank offered rate
Notes payable, maturity date	Feb. 26, 2019
Notes payable, fixed interest rate through interest rate swap agreement	3.70%
AT&T California Data Center Loan [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate	2.25%
AT&T Tennessee Data Center Loan [Member]
Debt Instrument [Line Items]
Proceeds from notes payable	$ 27,305,000
Debt instrument, variable rate basis	30-day LIBOR rate
Notes payable, maturity date	Dec. 10, 2018
Notes payable, fixed interest rate through interest rate swap agreement	3.50%
AT&T Tennessee Data Center Loan [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate	2.25%
Unsecured Credit Facility [Member]
Debt Instrument [Line Items]
Number of lenders added to credit facility | lenders	6
Credit facility, maximum commitments available	$ 475,000,000		$ 365,000,000
Credit facility, maximum commitments available after available increase	500,000,000
Unsecured Credit Facility [Member] | Revolving Line Of Credit [Member]
Debt Instrument [Line Items]
Credit facility, maximum commitments available	$ 400,000,000
Credit facility, maturity date	May 28, 2017
Credit facility, available extension period	12 months
Unsecured Credit Facility [Member] | Term Loan [Member]
Debt Instrument [Line Items]
Credit facility, maximum commitments available	$ 75,000,000
Credit facility, maturity date	May 28, 2018
Credit facility, available extension period	12 months
Unsecured Term Loan Facility [Member]
Debt Instrument [Line Items]
Credit facility, maximum commitments available	$ 135,000,000
Credit facility, maturity date	Aug. 21, 2020
Credit facility, maximum commitments available after available increase	$ 300,000,000
Unsecured Term Loan Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member]
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate	1.75%
Unsecured Term Loan Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member]
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate	2.25%
Unsecured Term Loan Facility [Member] | Base Rate [Member] | Minimum [Member]
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate	0.75%
Unsecured Term Loan Facility [Member] | Base Rate [Member] | Maximum [Member]
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate	1.25%
Variable Rate Debt, Subject To Interest Rate Swap [Member]
Debt Instrument [Line Items]
Number of notes payable | loan	7

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Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities:
Net income	$ 46,407	$ 21,240
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	48,597	31,275
Amortization of deferred financing costs	2,794	1,893
Amortization of above-market leases	296	145
Amortization of intangible lease liabilities	(4,072)	(3,147)
Amortization of real estate-related notes receivables origination costs and commitment fees	114	1,167
Bad debt expense	6,497	0
Straight-line rent	(15,787)	(11,634)
Stock-based compensation	67	68
Change in fair value of contingent consideration	460	0
Changes in operating assets and liabilities:
Accounts payable and other liabilities	4,698	4,635
Accounts payable due to affiliates	359	8,949
Other assets	(9,136)	(1,244)
Net cash provided by operating activities	81,294	53,347
Cash flows from investing activities:
Investment in real estate	(123,753)	(952,950)
Capital expenditures	(44,178)	(13,074)
Real estate deposits, net	166	(1,560)
Real estate-related notes receivables advances	(267)	(14,644)
Collections of real estate-related notes receivables	9,500	27,500
Preferred equity investment	(127,147)	0
Investment in notes receivables	(11,000)	0
Origination costs net of commitment fees related to real estate-related notes receivables	0	(293)
Net cash used in investing activities	(296,679)	(955,021)
Cash flows from financing activities:
Proceeds from notes payable	64,305	191,466
Payments on notes payable	(8,617)	(4,913)
Proceeds from credit facility	235,000	20,000
Payments on credit facility	(27,000)	(97,000)
Payments of deferred financing costs	(2,415)	(7,047)
Repurchase of common stock	(5,521)	(2,837)
Offering costs on issuance of common stock	(82)	(94,938)
Distributions to stockholders	(42,407)	(30,312)
Proceeds from issuance of common stock	0	966,209
Payments to escrow funds	(2,152)	(12,137)
Collections of escrow funds	1,838	3,471
Purchase of noncontrolling interest in consolidated partnerships	(67,224)	0
Proceeds from noncontrolling interest in consolidated partnerships	0	39,914
Distributions to noncontrolling interests in consolidated partnerships	(2,053)	(2,470)
Net cash provided by financing activities	143,672	969,406
Net change in cash and cash equivalents	(71,713)	67,732
Cash and cash equivalents - Beginning of period	113,093	7,511
Cash and cash equivalents - End of period	41,380	75,243
Supplemental cash flow disclosure:
Interest paid, net of interest capitalized of $3,739 and $1,362, respectively	21,352	12,491
Supplemental disclosure of non-cash transactions:
Common stock issued through distribution reinvestment plan	50,720	33,684
Net unrealized loss on interest rate swap	(4,959)	(726)
Real estate-related notes receivables converted to investment in real estate	13,674	20,000
Accrued contingent consideration	$ 0	$ 5,030

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Fair Value (Schedule of Reconciliation of Fair Value of Recurring Level 3 Fair Value Measurements) (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance		$ 6,870	$ 5,030	$ 6,570	$ 0
Additions to contingent consideration obligations		0	0	0	5,030
Total changes in fair value included in earnings		160	0	460	0
Ending balance		7,030	5,030	7,030	5,030
Unrealized losses still held	[1]	$ 160	$ 0	$ 460	$ 0

[1] Represents the unrealized losses recorded in earnings or other comprehensive income (loss) during the period for liabilities classified as Level 3 that are still held at the end of the period.

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Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Sep. 30, 2015

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Amounts Recognized in Accumulated Other Comprehensive Loss

The following table presents a rollforward of amounts recognized in accumulated other comprehensive loss, net of noncontrolling interests, by component for the nine months ended September 30, 2015 (amounts in thousands):

	Unrealized Loss on Derivative Instruments			Accumulated Other Comprehensive Loss
Balance as of December 31, 2014	$	(1,161	)	$	(1,161	)
Other comprehensive loss before reclassification	(7,661		)	(7,661		)
Amount of loss reclassified from accumulated other comprehensive loss to net income (effective portion)	2,808			2,808
Other comprehensive loss	(4,853		)	(4,853		)
Purchase of noncontrolling interests	—			(480		)
Balance as of September 30, 2015	$	(6,014	)	$	(6,494	)

Schedule of Reclassifications Out of Accumulated Other Comprehensive Loss

The following table presents reclassifications out of accumulated other comprehensive loss for the nine months ended September 30, 2015 (amounts in thousands):

Details about Accumulated Other Comprehensive Loss Components	Amounts Reclassified from Accumulated Other Comprehensive Loss to Net Income		Affected Line Items in the Condensed Consolidated Statements of Comprehensive Income
Interest rate swap contracts	$	3,040	Interest expense

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Accumulated Other Comprehensive Loss (Schedule of Amounts Recognized in Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance as of December 31, 2014			$ (1,161)
Other comprehensive loss before reclassification			(7,661)
Amount of loss reclassified from accumulated other comprehensive loss to net income (effective portion)			2,808
Other comprehensive (loss) income attributable to common stockholders	$ (4,017)	$ 782	(4,853)	$ (726)
Purchase of noncontrolling interests			(480)
Balance as of September 30, 2015	(6,494)		(6,494)
Unrealized Loss On Derivative Instruments [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance as of December 31, 2014			(1,161)
Other comprehensive loss before reclassification			(7,661)
Amount of loss reclassified from accumulated other comprehensive loss to net income (effective portion)			2,808
Other comprehensive (loss) income attributable to common stockholders			(4,853)
Purchase of noncontrolling interests			0
Balance as of September 30, 2015	$ (6,014)		$ (6,014)

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Accumulated Other Comprehensive Loss

9 Months Ended

Sep. 30, 2015

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

The following table presents a rollforward of amounts recognized in accumulated other comprehensive loss, net of noncontrolling interests, by component for the nine months ended September 30, 2015 (amounts in thousands):

	Unrealized Loss on Derivative Instruments			Accumulated Other Comprehensive Loss
Balance as of December 31, 2014	$	(1,161	)	$	(1,161	)
Other comprehensive loss before reclassification	(7,661		)	(7,661		)
Amount of loss reclassified from accumulated other comprehensive loss to net income (effective portion)	2,808			2,808
Other comprehensive loss	(4,853		)	(4,853		)
Purchase of noncontrolling interests	—			(480		)
Balance as of September 30, 2015	$	(6,014	)	$	(6,494	)

The following table presents reclassifications out of accumulated other comprehensive loss for the nine months ended September 30, 2015 (amounts in thousands):

Details about Accumulated Other Comprehensive Loss Components	Amounts Reclassified from Accumulated Other Comprehensive Loss to Net Income		Affected Line Items in the Condensed Consolidated Statements of Comprehensive Income
Interest rate swap contracts	$	3,040	Interest expense

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Organization and Business Operations (Details) $ / shares in Units, shares in Thousands			9 Months Ended
	Sep. 30, 2015 USD ($) real_estate_investment metropolitan property $ / shares shares	Jun. 06, 2014 USD ($)	Sep. 30, 2015 USD ($) real_estate_investment metropolitan segment property $ / shares	Sep. 30, 2014 USD ($)	Dec. 31, 2014 USD ($) $ / shares	Apr. 14, 2014 USD ($)
Organization and Business Operations [Line Items]
Number of reportable business segments | segment			2
Number of Company owned real estate investments | real_estate_investment	48		48
Number of Company owned properties | property	79		79
Number of metropolitan statistical areas in which Company owns real estate investments | metropolitan	44		44
Preferred stock, par value (in dollars per share) | $ / shares	$ 0.01		$ 0.01		$ 0.01
Preferred equity investment	$ 127,147,000		$ 127,147,000		$ 0
Redemption of common stock			$ 5,521,000	$ 2,837,000
Consolidated Partnerships [Member]
Organization and Business Operations [Line Items]
Number of Company owned real estate investments | real_estate_investment	1		1
Initial Public Offering [Member]
Organization and Business Operations [Line Items]
Common stock offering, value authorized		$ 1,746,875,000
Common stock offering, gross proceeds raised		$ 1,716,046,000
DRIP Offering [Member]
Organization and Business Operations [Line Items]
Common stock offering, value authorized						$ 100,000,000
Initial Public Offering and DRIP Offering [Member]
Organization and Business Operations [Line Items]
Common stock offering, gross proceeds raised	$ 1,794,581,000
Common stock offering, shares issued | shares	180,863
Redemption of common stock	$ 10,587,000
Offering costs, selling commissions and dealer manager fees	$ 174,708,000
Private Real Estate Corporation [Member] | Series B Redeemable Cumulative Preferred Stock [Member]
Organization and Business Operations [Line Items]
Preferred equity investment, dividend rate percentage			7.875%
Preferred stock, par value (in dollars per share) | $ / shares	$ 0.01		$ 0.01
Preferred equity investment	$ 127,147,000		$ 127,147,000

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Principles of Consolidation and Basis of Presentation

Principles of Consolidation and Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of the Company, the Operating Partnership, all majority-owned subsidiaries and controlled subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates

The preparation of the financial statements in conformity with GAAP necessarily requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Concentration of Credit Risk and Significant Leases

Concentration of Credit Risk and Significant Leases

As of September 30, 2015, the Company had cash on deposit, including restricted cash, in certain financial institutions which had deposits in excess of current federally insured levels; however, the Company has not experienced any losses in such accounts. The Company limits its cash investments to financial institutions with high credit standings; therefore, the Company believes it is not exposed to any significant credit risk on its cash deposits. To date, the Company has experienced no loss or lack of access to cash in its accounts. Concentration of credit risk with respect to accounts receivable from tenants is limited.

As of September 30, 2015, the Company owned real estate investments in 44 MSAs, (including one real estate investment owned through a consolidated partnership), four of which accounted for 10.0% or more of rental revenue. Real estate investments located in the Dallas-Ft. Worth-Arlington, Texas MSA, the Chicago-Naperville-Elgin, Illinois-Indiana-Wisconsin MSA, the Atlanta-Sandy Springs-Roswell, Georgia MSA and the Houston-The Woodlands-Sugar Land, Texas MSA accounted for an aggregate of 13.8%, 12.1%, 10.1% and 10.6%, respectively, of rental revenue for the nine months ended September 30, 2015.

As of September 30, 2015, the Company had two tenants that accounted for 10.0% or more of rental revenue. The leases with AT&T Services, Inc. and the lease with Bay Area Regional Medical Center, LLC accounted for 13.2% and 10.4%, respectively, of rental revenue for the nine months ended September 30, 2015.

Share Repurchase Program

Share Repurchase Program

The Company’s share repurchase program allows for repurchases of shares of the Company’s common stock when certain criteria are met. The share repurchase program provides that all redemptions during any calendar year, including those redeemable upon death or a qualifying disability of a stockholder, are limited to those that can be funded with proceeds raised from the DRIP Offering during the prior calendar year and other operating funds, if any, as the board of directors, in its sole discretion, may reserve for this purpose.

Repurchases of shares of the Company’s common stock are at the sole discretion of the Company’s board of directors. In addition, the Company’s board of directors, at its sole discretion, may amend, suspend, reduce, terminate or otherwise change the share repurchase program upon 30 days' prior notice to the Company’s stockholders for any reason it deems appropriate. The share repurchase program provides that the Company will limit the number of shares repurchased during any calendar year to 5.0% of the number of shares of common stock outstanding as of December 31st of the previous calendar year. During the nine months ended September 30, 2015, the Company received valid redemption requests related to approximately 577,000 shares of common stock, all of which were redeemed in full for an aggregate purchase price of approximately $5,521,000 (an average of $9.57 per share). During the nine months ended September 30, 2014, the Company received valid redemption requests related to approximately 295,000 shares of common stock, all of which were redeemed in full for an aggregate purchase price of approximately $2,837,000 (an average of $9.62 per share).

Earnings Per Share

Earnings Per Share

Basic earnings per share attributable for all periods presented are computed by dividing net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Shares of non-vested restricted common stock give rise to potentially dilutive shares of common stock. Diluted earnings per share are computed based on the weighted average number of shares outstanding and all potentially dilutive securities. Diluted earnings per share reflect the effect of approximately 17,000 shares for the three months ended September 30, 2015 and 2014 and approximately 19,000 shares for the nine months ended September 30, 2015 and 2014 of non-vested shares of restricted common stock that were outstanding as of such period.

Preferred Equity Investment

Preferred Equity Investment

The Company accounts for its Preferred Equity Investment as an asset under the cost method of accounting, as the Company exercises no influence over the investee. The Company recognizes dividends as other income in the condensed consolidated statements of comprehensive income.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

On May 28, 2014, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update, or ASU, 2014-09, Revenue from Contracts with Customers, or ASU 2014-09. The objective of ASU 2014-09 is to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle, which may require more judgment and estimates within the revenue recognition process than are required under existing GAAP. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) Deferral of the Effective Date, or ASU 2015-14. ASU 2015-14 defers the effective date of ASU 2014-09 by one year to fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted as of the original effective date, which was annual reporting periods beginning after December 15, 2016, and the interim periods within that year. The Company is in the process of evaluating the impact ASU 2014-09 will have on the Company’s condensed consolidated financial statements.

On February 18, 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, or ASU 2015-02, that changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The amendment affects the following areas: limited partnerships and similar legal entities, evaluating fees paid to a decision maker or a service provider as a variable interest, the effect of fee arrangements on the primary beneficiary determination and certain investment funds. Under the amendment, all reporting entities are within the scope of ASC Subtopic 810-10, Consolidation—Overall, unless a scope exception applies. The presumption that a general partner controls a limited partnership has been eliminated. In addition, fees paid to decision makers that meet certain conditions no longer cause decision makers to consolidate variable interest entities in certain instances. The amendment is effective for public business entities for periods beginning after December 15, 2015. Early adoption of ASU 2015-02 is permitted. The Company is in the process of evaluating the impact ASU 2015-02 will have on the Company’s condensed consolidated financial statements.

On April 7, 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, or ASU 2015-03, that intends to simplify the presentation of debt issuance costs. The amendment requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. On August 18, 2015, the FASB issued ASU 2015-15, Interest—Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated With Line-of-Credit Arrangements—Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 Emerging Issues Task Force Meeting (SEC Update), or ASU 2015-15, which clarified that the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. Both ASU 2015-03 and ASU 2015-15 are effective for public business entities for fiscal years beginning after December 15, 2015, and are to be applied retrospectively, with early adoption permitted. The Company is in the process of evaluating the impact ASU 2015-03 and ASU 2015-15 will have on the Company’s condensed consolidated financial statements.

On September 25, 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, or ASU 2015-16, which eliminates the requirement for an acquirer to retrospectively adjust the financial statements for measurement-period adjustments that occur in periods after a business combination is consummated. ASU 2015-16 requires that the acquirer recognize adjustments to the provisional amounts recorded in the reporting period when the adjustments are determined. The effects of adjustments (such as depreciation, amortization, or other income effects) to provisional amounts to periods after the acquisition date are included in the earnings of the current reporting period. The amendment is effective for public business entities for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Early adoption of ASU 2015-16 is permitted. The Company is in the process of evaluating the impact ASU 2015-16 will have on the Company’s condensed consolidated financial statements.

Reclassifications

Reclassifications

Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the Company’s condensed consolidated financial position or results of operations.

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Condensed Consolidated Statements Of Cash Flows (Parenthetical) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Statement of Cash Flows [Abstract]
Interest capitalized	$ 3,739	$ 1,362

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Land	$ 173,467	$ 153,998
Buildings and improvements, accumulated depreciation	87,990	52,785
Buildings and improvements, net	1,664,472	1,584,801
Acquired intangible assets, accumulated amortization	34,997	21,759
Acquired intangible assets, net	204,179	204,436
Total real estate, net	2,140,104	1,996,787
Cash and cash equivalents	41,380	113,093
Other assets	90,500	57,427
Notes payable	546,597	490,909
Accounts payable due to affiliates	2,192	1,833
Accounts payable and other liabilities	55,498	31,829
Intangible lease liabilities, accumulated amortization	14,846	10,774
Intangible lease liabilities, net	$ 57,476	$ 60,678
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	180,911,195	175,561,681
Common stock, shares outstanding	179,810,937	175,038,055
Variable Interest Entity, Primary Beneficiary [Member]
Land	$ 4,280	$ 4,280
Buildings and improvements, net	86,106	87,850
Acquired intangible assets, net	10,078	11,314
Total real estate, net	100,464	103,444
Cash and cash equivalents	2,475	1,397
Other assets	6,669	5,126
Notes payable	52,467	53,031
Accounts payable due to affiliates	71	17
Accounts payable and other liabilities	1,796	1,473
Intangible lease liabilities, net	$ 12,972	$ 14,445

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Related-Party Transactions and Arrangements

9 Months Ended

Sep. 30, 2015

Related Party Transactions [Abstract]

Related-Party Transactions and Arrangements

Related-Party Transactions and Arrangements

The Company pays to the Advisor 2.0% of the contract purchase price of each property or asset acquired and 2.0% of the amount advanced with respect to a mortgage loan. For the three months ended September 30, 2015 and 2014, the Company incurred $0 and $9,379,000, respectively, and for the nine months ended September 30, 2015 and 2014, the Company incurred $2,748,000 and $18,684,000, respectively, in acquisition fees to the Advisor or its affiliates related to investments in real estate. During the three months ended September 30, 2015 and 2014, the Company incurred $0 and $136,000, respectively, and during the nine months ended September 30, 2015 and 2014, the Company incurred $5,000 and $293,000, respectively, in acquisition fees to the Advisor or its affiliates related to investments in real estate-related notes receivables.

The Company pays the Advisor an annual asset management fee of 0.85% of the aggregate asset value plus costs and expenses incurred by the Advisor in providing asset management services. The fee is payable monthly in an amount equal to 0.07083% of the aggregate asset value as of the last day of the immediately preceding month. For the three months ended September 30, 2015 and 2014, the Company incurred $4,708,000 and $4,078,000, respectively, and for the nine months ended September 30, 2015 and 2014, the Company incurred $13,274,000 and $9,538,000, respectively, in asset management fees to the Advisor.

The Company reimburses the Advisor for all expenses it paid or incurred in connection with the services provided to the Company, subject to certain limitations. The Company will not reimburse the Advisor for personnel costs in connection with services for which the Advisor receives an acquisition and advisory fee or a disposition fee. For the three months ended September 30, 2015 and 2014, the Advisor allocated $376,000 and $410,000, respectively, and for the nine months ended September 30, 2015 and 2014, the Advisor allocated $941,000 and $1,279,000, respectively, in operating expenses on the Company’s behalf.

The Company has no direct employees. The employees of the Advisor and other affiliates provide services to the Company related to acquisitions, property management, asset management, accounting, investor relations, and all other administrative services. If the Advisor or its affiliates provides a substantial amount of services, as determined by a majority of the Company’s independent directors, in connection with the sale of one or more properties, the Company will pay the Advisor a disposition fee up to the lesser of 1.0% of the contract sales price and one-half of the brokerage commission paid if a third party broker is involved. In no event will the combined real estate commission paid to the Advisor, its affiliates and unaffiliated third parties exceed 6.0% of the contract sales price. In addition, after investors have received a return on their net capital contributions and an 8.0% cumulative non-compounded annual return, then the Advisor is entitled to receive 15.0% of the remaining net sale proceeds. For the three and nine months ended September 30, 2015 and 2014, the Company did not incur a disposition fee or a subordinated participation in net sale proceeds to the Advisor or its affiliates.

Upon listing of the Company’s common stock on a national securities exchange, a listing fee equal to 15.0% of the amount by which the market value of the Company’s outstanding stock plus all distributions paid by the Company prior to listing exceeds the sum of the total amount of capital raised from investors and the amount of cash flow necessary to generate an 8.0% cumulative, non-compounded annual return to investors will be paid to the Advisor. For the three and nine months ended September 30, 2015 and 2014, the Company did not incur a listing fee.

The Company pays Carter Validus Real Estate Management Services, LLC, or the Property Manager, leasing and management fees for the Company’s properties. Such fees equal 3.0% of gross revenues from single-tenant properties and 4.0% of gross revenues from multi-tenant properties. The Company will reimburse the Property Manager and its affiliates for property-level expenses that any of them pay or incur on the Company’s behalf, including salaries, bonuses and benefits of persons employed by the Property Manager and its affiliates, except for the salaries, bonuses and benefits of persons who also serve as one of the Company’s executive officers. The Property Manager and its affiliates may subcontract the performance of their duties to third parties and pay all or a portion of the property management fee to the third parties with whom they contract for these services. If the Company contracts directly with third parties for such services at customary market fees, the Company may pay the Property Manager an oversight fee equal to 1.0% of the gross revenues of the property managed. In no event will the Company pay the Property Manager, the Advisor or its affiliates both a property management fee and an oversight fee with respect to any particular property. The Company will pay the Property Manager a separate fee for the one-time initial rent-up, lease renewals or leasing-up of newly constructed properties in an amount not to exceed the fee customarily charged in arm’s length transactions by others rendering similar services in the same geographic area for similar properties as determined by a survey of brokers and agents in such area. For the three months ended September 30, 2015 and 2014, the Company incurred $1,139,000 and $936,000, respectively, and for the nine months ended September 30, 2015 and 2014, the Company incurred $3,585,000 and $2,328,000, respectively, in property management fees to the Property Manager.

Accounts Payable Due to Affiliates

The following amounts were outstanding due to affiliates as of September 30, 2015 and December 31, 2014 (amounts in thousands):

Entity	Fee	September 30, 2015		December 31, 2014
Carter/Validus Advisors, LLC and its affiliates	Asset management fees	$	1,575	$	1,307
Carter Validus Real Estate Management Services, LLC	Property management fees	382		385
Carter/Validus Advisors, LLC and its affiliates	General, administrative and other costs	235		141
		$	2,192	$	1,833

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Document And Entity Information - shares shares in Thousands	9 Months Ended
	Sep. 30, 2015	Nov. 16, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Entity Registrant Name	Carter Validus Mission Critical REIT, Inc.
Entity Central Index Key	0001482974
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		180,703

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Segment Reporting

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

Management reviews the performance of individual properties and aggregates individual properties based on operating criteria into two reportable segments—commercial real estate investments in data centers and healthcare, and makes operating decisions based on these two reportable segments. The Company’s commercial real estate investments in data centers and healthcare are based on certain underwriting assumptions and operating criteria, which are different for data centers and healthcare. There were no intersegment sales or transfers during the three and nine months ended September 30, 2015 and 2014.

The Company evaluates performance based on net operating income of the individual properties in each segment. Net operating income, a non-GAAP financial measure, is defined as total revenues, less rental expenses, which excludes depreciation and amortization, general and administrative expenses, acquisition related expenses, asset management fees, change in fair value of contingent consideration, interest expense and interest income. The Company believes that segment net operating income serves as a useful supplement to net income because it allows investors and management to measure unlevered property-level operating results and to compare operating results to the operating results of other real estate companies and between periods on a consistent basis. Segment net operating income should not be considered as an alternative to net income determined in accordance with GAAP as an indicator of financial performance, and accordingly, the Company believes that in order to facilitate a clear understanding of the consolidated historical operating results, segment net operating income should be examined in conjunction with net income as presented in the accompanying condensed consolidated financial statements and data included elsewhere in this Quarterly Report on Form 10-Q.

Real estate-related notes receivables interest income, general and administrative expenses, change in fair value of contingent consideration, acquisition related expenses, asset management fees, depreciation and amortization, other income and interest expense are not allocated to individual segments for purposes of assessing segment performance.

Non-segment assets primarily consist of corporate assets, including cash and cash equivalents, real estate and escrow deposits, deferred financing costs, real estate-related notes receivables, the Preferred Equity Investment and other assets not attributable to individual properties.

Summary information for the reportable segments during the three and nine months ended September 30, 2015 and 2014, are as follows (amounts in thousands):

	Data Centers			Healthcare			Three Months Ended   September 30, 2015
Revenue:
Rental, parking and tenant reimbursement revenue	$	28,407		$	20,289		$	48,696
Expenses:
Rental and parking expenses	(4,847		)	(1,562		)	(6,409		)
Segment net operating income	$	23,560		$	18,727		42,287
Revenue:
Real estate-related notes receivables interest income							18
Expenses:
General and administrative expenses							(1,609		)
Change in fair value of contingent consideration							(160		)
Acquisition related expenses							—
Asset management fees							(4,708		)
Depreciation and amortization							(16,369		)
Income from operations							19,459
Other income (expense):
Other income							2,709
Interest expense							(7,733		)
Net income							$	14,435

	Data Centers			Healthcare			Three Months Ended   September 30, 2014
Revenue:
Rental, parking and tenant reimbursement revenue	$	24,752		$	17,898		$	42,650
Expenses:
Rental and parking expenses	(5,123		)	(985		)	(6,108		)
Segment net operating income	$	19,629		$	16,913		36,542
Revenue:
Real estate-related notes receivables interest expense							(257		)
Expenses:
General and administrative expenses							(1,411		)
Acquisition related expenses							(4,087		)
Asset management fees							(4,078		)
Depreciation and amortization							(13,002		)
Income from operations							13,707
Other income (expense):
Other income							277
Interest expense							(5,478		)
Net income							$	8,506

	Data Centers			Healthcare			Nine Months Ended   September 30, 2015
Revenue:
Rental, parking and tenant reimbursement revenue	$	86,226		$	66,569		$	152,795
Expenses:
Rental and parking expenses	(15,287		)	(5,805		)	(21,092		)
Segment net operating income	$	70,939		$	60,764		131,703
Revenue:
Real estate-related notes receivables interest income							373
Expenses:
General and administrative expenses							(4,469		)
Change in fair value of contingent consideration							(460		)
Acquisition related expenses							(3,654		)
Asset management fees							(13,274		)
Depreciation and amortization							(48,597		)
Income from operations							61,622
Other income (expense):
Other income							5,828
Interest expense							(21,043		)
Net income							$	46,407

	Data Centers			Healthcare			Nine Months Ended   September 30, 2014
Revenue:
Rental, parking and tenant reimbursement revenue	$	60,569		$	40,977		$	101,546
Expenses:
Rental and parking expenses	(12,104		)	(2,325		)	(14,429		)
Segment net operating income	$	48,465		$	38,652		87,117
Revenue:
Real estate-related notes receivables interest income							2,174
Expenses:
General and administrative expenses							(3,212		)
Acquisition related expenses							(10,598		)
Asset management fees							(9,538		)
Depreciation and amortization							(31,275		)
Income from operations							34,668
Other income (expense):
Other income							477
Interest expense							(13,905		)
Net income							$	21,240

Assets by reportable segments as of September 30, 2015 and December 31, 2014 are as follows (amounts in thousands):

	September 30, 2015		December 31, 2014
Assets by segment:
Data centers	$	1,110,250	$	1,130,131
Healthcare	1,115,858		933,257
All other	173,537		127,454
Total assets	$	2,399,645	$	2,190,842

Capital additions and acquisitions by reportable segments for the nine months ended September 30, 2015 and 2014 are as follows (amounts in thousands):

	Nine Months Ended   September 30,
	2015		2014
Capital additions and acquisitions by segment:
Data centers	$	2,793	$	438,539
Healthcare	178,812		547,485
Total capital additions and acquisitions	$	181,605	$	986,024

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Condensed Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenue:
Rental and parking revenue	$ 44,528	$ 38,486	$ 138,542	$ 91,287
Tenant reimbursement revenue	4,168	4,164	14,253	10,259
Real estate-related notes receivables interest income	18	(257)	373	2,174
Total revenue	48,714	42,393	153,168	103,720
Expenses:
Rental and parking expenses	6,409	6,108	21,092	14,429
General and administrative expenses	1,609	1,411	4,469	3,212
Change in fair value of contingent consideration	160	0	460	0
Acquisition related expenses	0	4,087	3,654	10,598
Asset management fees	4,708	4,078	13,274	9,538
Depreciation and amortization	16,369	13,002	48,597	31,275
Total expenses	29,255	28,686	91,546	69,052
Income from operations	19,459	13,707	61,622	34,668
Other income (expense):
Other income	2,709	277	5,828	477
Interest expense	(7,733)	(5,478)	(21,043)	(13,905)
Total other expense	(5,024)	(5,201)	(15,215)	(13,428)
Net income	14,435	8,506	46,407	21,240
Net income attributable to noncontrolling interests in consolidated partnerships	(863)	(1,152)	(4,057)	(2,437)
Net income attributable to common stockholders	13,572	7,354	42,350	18,803
Other comprehensive income (loss):
Unrealized (loss) income on interest rate swaps, net	(4,031)	782	(4,959)	(726)
Other comprehensive (loss) income	(4,031)	782	(4,959)	(726)
Other comprehensive loss attributable to noncontrolling interests in consolidated partnerships	14	0	106	0
Other comprehensive (loss) income attributable to common stockholders	(4,017)	782	(4,853)	(726)
Comprehensive income	10,404	9,288	41,448	20,514
Comprehensive income attributable to noncontrolling interests in consolidated partnerships	(849)	(1,152)	(3,951)	(2,437)
Comprehensive income attributable to common stockholders	$ 9,555	$ 8,136	$ 37,497	$ 18,077
Weighted average number of common shares outstanding:
Basic (in shares)	179,270,022	172,914,286	177,717,870	133,908,958
Diluted (in shares)	179,286,709	172,931,516	177,736,797	133,928,250
Net income per common share attributable to common stockholders:
Basic (in dollars per share)	$ 0.08	$ 0.04	$ 0.24	$ 0.14
Diluted (in dollars per share)	0.08	0.04	0.24	0.14
Distributions declared per common share (in dollars per share)	$ 0.18	$ 0.18	$ 0.52	$ 0.52

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Other Assets

9 Months Ended

Sep. 30, 2015

Other Assets [Abstract]

Other Assets

Other Assets

Other assets consisted of the following as of September 30, 2015 and December 31, 2014 (amounts in thousands):

	September 30, 2015		December 31, 2014
Deferred financing costs, net of accumulated amortization of $7,326 and $4,532, respectively	$	10,793	$	11,172
Lease commissions, net of accumulated amortization of $144 and $54, respectively	3,704		394
Investments in unconsolidated partnerships	99		106
Tenant receivable	4,248		3,361
Notes receivables	11,000		—
Straight-line rent receivable	41,353		25,566
Restricted cash held in escrow	13,696		13,382
Real estate escrow deposits	—		250
Restricted cash	661		734
Derivative assets	—		273
Prepaid and other assets	4,946		2,189
	$	90,500	$	57,427

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Acquired Intangible Assets, Net

9 Months Ended

Sep. 30, 2015

Finite-Lived Intangible Assets, Net [Abstract]

Acquired Intangible Assets, Net

Acquired Intangible Assets, Net

Acquired intangible assets, net, which are included in real estate in the accompanying condensed consolidated balance sheets, consisted of the following as of September 30, 2015 and December 31, 2014 (amounts in thousands, except weighted average life amounts):

	September 30, 2015		December 31, 2014
In-place leases, net of accumulated amortization of $34,002 and $21,099, respectively (with a weighted average remaining life of 14.4 years and 15.1 years, respectively)	$	198,078	$	198,635
Above-market leases, net of accumulated amortization of $825 and $529, respectively (with a weighted average remaining life of 11.2 years and 11.4 years, respectively)	3,457		3,118
Ground lease interest, net of accumulated amortization of $170 and $131, respectively (with a weighted average remaining life of 60.6 years and 61.2 years, respectively)	2,644		2,683
	$	204,179	$	204,436

The aggregate weighted average remaining life of the acquired intangible assets was 15.0 years and 15.6 years as of September 30, 2015 and December 31, 2014, respectively.

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Subsequent Events

9 Months Ended

Sep. 30, 2015

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Distributions Paid

On October 1, 2015, the Company paid aggregate distributions of $10,348,000 ($4,716,000 in cash and $5,632,000 in shares of the Company’s common stock issued pursuant to the DRIP Offering), which related to distributions declared for each day in the period from September 1, 2015 through September 30, 2015. On November 2, 2015, the Company paid aggregate distributions of $10,722,000 ($4,901,000 in cash and $5,821,000 in shares of the Company’s common stock issued pursuant to the DRIP Offering), which related to distributions declared for each day in the period from October 1, 2015 through October 31, 2015.

Distributions Declared

On November 5, 2015, the board of directors of the Company approved and declared a distribution to the Company’s stockholders of record as of the close of business on each day of the period commencing on December 1, 2015 and ending on February 29, 2016. The distributions for December 2015 will be calculated based on 365 days in the calendar year and equal to $0.001917808 per share of common stock, which will be equal to an annualized distribution rate of 7.0%, assuming a purchase price of $10.00 per share. The distributions for January 2016 and February 2016 will be calculated based on 366 days in the calendar year and will be equal to $0.001912568 per share of common stock, which will be equal to an annualized distribution rate of 7.0%, assuming a purchase price of $10.00 per share. The distributions declared for each record date in December 2015, January 2016 and February 2016 will be paid in January 2016, February 2016 and March 2016, respectively. The distributions will be payable to stockholders from legally available funds therefor.

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Preferred Equity Investment

9 Months Ended

Sep. 30, 2015

Investments, All Other Investments [Abstract]

Preferred Equity Investment

Preferred Equity Investment

During the nine months ended September 30, 2015, the Company invested an aggregate amount of $127,147,000 in 7.875% Series B Redeemable Cumulative Preferred Stock. The Preferred Equity Investment is stated at cost and consisted of a principal amount of $125,000,000, plus origination costs of $2,772,000, offset by closing fees of $625,000. During the three and nine months ended September 30, 2015, the Company recognized dividend income related to the Preferred Equity Investment of approximately $2,461,000 and $5,359,000, respectively.

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Intangible Lease Liabilities, Net

9 Months Ended

Sep. 30, 2015

Intangible Lease Liabilities, Net [Abstract]

Intangible Lease Liabilities, Net

Intangible Lease Liabilities, Net

Intangible lease liabilities, net, consisted of the following as of September 30, 2015 and December 31, 2014 (amounts in thousands, except weighted average life amounts):

	September 30, 2015		December 31, 2014
Below-market leases, net of accumulated amortization of $14,700 and $10,721, respectively (with a weighted average remaining life of 17.1 years and 17.5 years, respectively)	$	52,297	$	55,406
Ground leasehold liabilities, net of accumulated amortization of $146 and $53, respectively (with a weighted average remaining life of 43.4 years and 44.1 years, respectively)	5,179		5,272
	$	57,476	$	60,678

The aggregate weighted average remaining life of intangible lease liabilities was 19.4 years and 19.8 years as of September 30, 2015 and December 31, 2014, respectively.

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Derivative Instruments and Hedging Activities (Narrative) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Gain (loss) recognized due to ineffectiveness of hedges of interest rate risk	$ 0	$ 0	$ 0	$ 0
Additional amount expected to be reclassified from AOCI into earnings during next twelve months	4,257,000		4,257,000
Fair value of derivatives in a net liability position	$ 7,285,000		$ 7,285,000

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Future Minimum Rent

9 Months Ended

Sep. 30, 2015

Leases [Abstract]

Future Minimum Rent

Future Minimum Rent

The Company’s real estate assets are leased to tenants under operating leases with varying terms. The leases frequently have provisions to extend the lease agreement. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants.

The future minimum rental income from the Company’s investment in real estate assets under non-cancelable operating leases including optional renewal periods for which exercise is reasonably assured for the three months ending December 31, 2015 and for each of the next four years ending December 31 and thereafter, are as follows (amounts in thousands):

Year	Amount
Three months ending December 31, 2015	$	41,745
2016	171,576
2017	175,139
2018	178,500
2019	181,081
Thereafter	1,814,128
	$	2,562,169

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Notes Payable and Unsecured Credit Facility

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Notes Payable and Unsecured Credit Facility

Notes Payable and Unsecured Credit Facility

The Company’s debt outstanding as of September 30, 2015 and December 31, 2014 consisted of the following (amounts in thousands):

	September 30, 2015		December 31, 2014
Notes payable:
Fixed rate notes payable	$	132,010	$	134,271
Variable rate notes payable fixed through interest rate swaps	371,106		206,162
Variable rate notes payable	43,481		150,476
Total notes payable	546,597		490,909
Unsecured credit facility:
Revolving line of credit	73,000		—
Term loan	210,000		75,000
Total unsecured credit facility	283,000		75,000
Total debt outstanding	$	829,597	$	565,909

Significant loan and unsecured credit facility activities since December 31, 2014, excluding scheduled principal payments, include:

• The Company exercised its option to draw an additional $37,000,000 under a certain note payable with a variable interest rate at the 30-day London interbank offered rate, or LIBOR, plus 225 basis points with a maturity date of February 26, 2019, or the AT&T California Data Center Loan. Coincident with the AT&T California Data Center Loan, the Company entered into an interest rate swap agreement to effectively fix the variable interest rate on the AT&T California Data Center Loan at 3.7% per annum.

• The Company exercised its option to draw an additional $27,305,000 under a certain note payable with a variable interest rate at the 30-day LIBOR rate plus 225 basis points with a maturity date of December 10, 2018, or the AT&T Tennessee Data Center Loan. Coincident with the AT&T Tennessee Data Center Loan, the Company entered into an interest rate swap agreement to effectively fix the variable interest rate on the AT&T Tennessee Data Center Loan at 3.5% per annum.

• The Company is required by the terms of applicable loan documents to meet certain financial covenants, such as coverage ratios and reporting requirements. In addition, certain loan agreements include a cross-default provision to financial covenants in lease agreements with the Company’s tenants so a default in the financial covenant in the lease agreement is a default for the Company’s loan. As of September 30, 2015, the Company was in compliance with all such covenants and requirements, with the exception of two tenants. As of September 30, 2015, two of the Company’s tenants were in non-compliance with certain financial covenants in their respective lease agreements, which violated the covenants in the Company’s respective loan agreements. The lender waived compliance with these covenants for the quarter ended September 30, 2015. In the event the Company is not in compliance with these covenants in future periods and is unable to obtain a consent or waiver, the lender may choose to pursue remedies under the respective loan agreements, which could include, at the lender's discretion, declaring the loans to be immediately due and payable and payment of termination fees and costs incurred by the lender, among other potential remedies. The Company and its lenders are working to modify certain financial covenants with respect to the Company’s tenants’ coverage ratios.

• The Company made a draw of $235,000,000 on its unsecured credit facility and paid down $27,000,000 on its unsecured credit facility.

• The Operating Partnership amended certain agreements related to its unsecured credit facility to add six new lenders and to increase the maximum commitments available under the unsecured credit facility from $365,000,000 to an aggregate of up to $475,000,000, consisting of a $400,000,000 revolving line of credit, with a maturity date of May 28, 2017, subject to the Operating Partnership's right to a 12-month extension, and a $75,000,000 term loan, with a maturity date of May 28, 2018, subject to the Operating Partnership's right to a 12-month extension. The new and existing lenders agreed to continue to make the loans on an unsecured basis. Subject to certain conditions, the unsecured credit facility can be increased to $500,000,000.

• The Operating Partnership entered into an agreement to obtain an unsecured term loan facility in the aggregate principal amount of $135,000,000, with a maturity date of August 21, 2020. Subject to certain conditions, the unsecured term loan facility can be increased to $300,000,000. The unsecured term loan facility shall bear interest at per annum rates equal to, at the Operating Partnership's option, either (a) LIBOR, plus an applicable margin ranging from 1.75% to 2.25%, which is determined by the overall leverage of the Operating Partnership; or (b) a base rate, which means, for any day, a fluctuating rate per annum equal to the prime rate for such day, plus an applicable margin ranging from 0.75% to 1.25%, which is determined based on the overall leverage of the Operating Partnership.

• As of September 30, 2015, the total unencumbered pool availability under the credit facility was $458,975,000 and the remaining aggregate unencumbered pool availability was $175,975,000.

• As of September 30, 2015, the Company had 7 variable rate notes payable that were fixed through interest rate swaps.

The principal payments and balloon payments due on the notes payable and the unsecured credit facility for the three months ending December 31, 2015 and for each of the next four years ending December 31 and thereafter, are as follows (amounts in thousands):

Year	Principal Payments		Balloon Payments (1)		Total Amount
Three months ending December 31, 2015	$	3,278	$	—	$	3,278
2016	13,007		13,441		26,448
2017	12,378		253,052		265,430
2018	10,454		140,134		150,588
2019	3,548		194,143		197,691
Thereafter	2,540		183,622		186,162
	$	45,205	$	784,392	$	829,597

(1) Includes the unsecured credit facility.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation

In the ordinary course of business, the Company may become subject to litigation or claims. As of September 30, 2015, there were, and currently there are, no material pending legal proceedings to which the Company is a party.

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Derivative Instruments and Hedging Activities (Schedule of Offsetting of Derivative Liabilities) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Gross Amounts of Recognized Liabilities	$ 6,494	$ 1,808
Gross Amounts Offset in the Balance Sheet	0	0
Net Amounts Of Liabilities Presented in the Balance Sheet	6,494	1,808
Gross Amounts Not Offset in the Balance Sheet, Financial Instruments Collateral	0	0
Gross Amounts Not Offset in the Balance Sheet, Cash Collateral	0	0
Net Amount	$ 6,494	$ 1,808

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Accumulated Other Comprehensive Loss (Schedule of Reclassifications Out of Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Reclassification Adjustment Out Of Accumulated Other Comprehensive Loss [Line Items]
Interest expense	$ 7,733	$ 5,478	$ 21,043	$ 13,905
Reclassification Out Of Accumulated Other Comprehensive Loss [Member] | Unrealized Loss On Derivative Instruments [Member] | Interest Rate Swaps [Member]
Reclassification Adjustment Out Of Accumulated Other Comprehensive Loss [Line Items]
Interest expense			$ 3,040

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Derivative Instruments and Hedging Activities (Schedule of Offsetting of Derivative Assets) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Gross Amounts of Recognized Assets	$ 0	$ 273
Gross Amounts Offset in the Balance Sheet	0	0
Net Amounts of Assets Presented in the Balance Sheet	0	273
Gross Amounts Not Offset in the Balance Sheet, Financial Instruments Collateral	0	0
Gross Amounts Not Offset in the Balance Sheet, Cash Collateral	0	0
Net Amount	$ 0	$ 273

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Derivative Instruments and Hedging Activities (Tables)

9 Months Ended

Sep. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of the Notional Amount and Fair Value of Derivative Instruments

The following table summarizes the notional amount and fair value of the Company’s derivative instruments (amounts in thousands):

Derivatives Designated as Hedging Instruments	Balance Sheet Location	Effective Dates	Maturity Dates	September 30, 2015							December 31, 2014
				Outstanding Notional Amount		Fair Value of					Outstanding Notional Amount		Fair Value of
						Asset		(Liability) (1)					Asset (2)		(Liability) (3)
Interest rate swaps	Other assets/Accounts payable and other liabilities	10/12/2012 to 08/03/2015	10/11/2017 to 07/11/2019	$	426,106	$	—	$	(6,494	)	$	261,162	$	273	$	(1,808	)

(1) Of this amount, $(6,494,000) related to controlling interests.

(2) Of this amount, $273,000 related to controlling interests.

(3) Of this amount, $(1,434,000) related to controlling interests and $(374,000) related to noncontrolling interests.

Schedule of Gains or Losses Recognized on Derivative Instruments

The table below summarizes the amount of gains or losses recognized on interest rate derivatives designated as cash flow hedges for the three and nine months ended September 30, 2015 and 2014 (amounts in thousands):

Derivatives in Cash Flow Hedging Relationships	Amount of Loss Recognized in OCI on Derivatives (Effective Portion)			Location Of Loss Reclassified From Accumulated Other Comprehensive Loss to Net Income (Effective Portion)	Amount of Loss Reclassified From Accumulated Other Comprehensive Loss to Net Income (Effective Portion)
Three Months Ended September 30, 2015
Interest rate swaps	$	(5,246	)	Interest Expense	$	(1,215	)
Total	$	(5,246	)		$	(1,215	)
Three Months Ended September 30, 2014
Interest rate swaps	$	(59	)	Interest Expense	$	(841	)
Total	$	(59	)		$	(841	)
Nine Months Ended September 30, 2015
Interest rate swaps	$	(7,999	)	Interest Expense	$	(3,040	)
Total	$	(7,999	)		$	(3,040	)
Nine Months Ended September 30, 2014
Interest rate swaps	$	(2,513	)	Interest Expense	$	(1,787	)
Total	$	(2,513	)		$	(1,787	)

Schedule of Offsetting of Derivative Assets

The following table presents the effect on the Company’s financial position had the Company made the election to offset its derivative positions as of September 30, 2015 and December 31, 2014 (amounts in thousands):

Offsetting of Derivative Assets
							Gross Amounts Not Offset in the Balance Sheet
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Balance Sheet		Net Amounts of Assets Presented in the Balance Sheet		Financial Instruments Collateral		Cash Collateral		Net Amount
September 30, 2015	$	—	$	—	$	—	$	—	$	—	$	—
December 31, 2014	$	273	$	—	$	273	$	—	$	—	$	273

Schedule of Offsetting of Derivative Liabilities

Offsetting of Derivative Liabilities
							Gross Amounts Not Offset in the Balance Sheet
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Balance Sheet		Net Amounts of Liabilities Presented in the Balance Sheet		Financial Instruments Collateral		Cash Collateral		Net Amount
September 30, 2015	$	6,494	$	—	$	6,494	$	—	$	—	$	6,494
December 31, 2014	$	1,808	$	—	$	1,808	$	—	$	—	$	1,808

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Related-Party Transactions And Arrangements (Schedule of Accounts Payable Due to Affiliates) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Related Party Transaction [Line Items]
Accounts payable due to affiliates	$ 2,192	$ 1,833
Carter/Validus Advisors, LLC And/Or Its Affiliates [Member] | Asset Management Fees [Member]
Related Party Transaction [Line Items]
Accounts payable due to affiliates	1,575	1,307
Carter/Validus Advisors, LLC And/Or Its Affiliates [Member] | General, Administrative and Other Costs [Member]
Related Party Transaction [Line Items]
Accounts payable due to affiliates	235	141
Carter Validus Real Estate Management Services, LLC [Member] | Property Management Fees [Member]
Related Party Transaction [Line Items]
Accounts payable due to affiliates	$ 382	$ 385

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Derivative Instruments and Hedging Activities

9 Months Ended

Sep. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. 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.

The effective portion of changes in the fair value of derivatives designated, and that qualify, as cash flow hedges is recorded in accumulated other comprehensive loss in the accompanying condensed consolidated statement of stockholders’ equity and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the nine months ended September 30, 2015, such derivatives were used to hedge the variable cash flows associated with variable rate debt. The ineffective portion of changes in fair value of the derivatives is recognized directly in earnings. During the three and nine months ended September 30, 2015 and 2014, no gains or losses were recognized due to ineffectiveness of hedges of interest rate risk.

Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next twelve months, the Company estimates that an additional $4,257,000 will be reclassified from accumulated other comprehensive loss as an increase to interest expense.

See Note 13—“Fair Value” for a further discussion of the fair value of the Company’s derivative instruments.

The following table summarizes the notional amount and fair value of the Company’s derivative instruments (amounts in thousands):

Derivatives Designated as Hedging Instruments	Balance Sheet Location	Effective Dates	Maturity Dates	September 30, 2015							December 31, 2014
				Outstanding Notional Amount		Fair Value of					Outstanding Notional Amount		Fair Value of
						Asset		(Liability) (1)					Asset (2)		(Liability) (3)
Interest rate swaps	Other assets/Accounts payable and other liabilities	10/12/2012 to 08/03/2015	10/11/2017 to 07/11/2019	$	426,106	$	—	$	(6,494	)	$	261,162	$	273	$	(1,808	)

(1) Of this amount, $(6,494,000) related to controlling interests.

(2) Of this amount, $273,000 related to controlling interests.

(3) Of this amount, $(1,434,000) related to controlling interests and $(374,000) related to noncontrolling interests.

The notional amount under the agreements is an indication of the extent of the Company’s involvement in each instrument at the time, but does not represent exposure to credit, interest rate or market risks.

Accounting for changes in the fair value of a derivative instrument depends on the intended use and designation of the derivative instrument. The Company designated the interest rate swaps as cash flow hedges to hedge the variability of the anticipated cash flows on its variable rate notes payable. The change in fair value of the effective portion of the derivative instrument that is designated as a hedge is recorded in other comprehensive income (loss), or OCI, in the accompanying condensed consolidated statements of comprehensive income.

The table below summarizes the amount of gains or losses recognized on interest rate derivatives designated as cash flow hedges for the three and nine months ended September 30, 2015 and 2014 (amounts in thousands):

Derivatives in Cash Flow Hedging Relationships	Amount of Loss Recognized in OCI on Derivatives (Effective Portion)			Location Of Loss Reclassified From Accumulated Other Comprehensive Loss to Net Income (Effective Portion)	Amount of Loss Reclassified From Accumulated Other Comprehensive Loss to Net Income (Effective Portion)
Three Months Ended September 30, 2015
Interest rate swaps	$	(5,246	)	Interest Expense	$	(1,215	)
Total	$	(5,246	)		$	(1,215	)
Three Months Ended September 30, 2014
Interest rate swaps	$	(59	)	Interest Expense	$	(841	)
Total	$	(59	)		$	(841	)
Nine Months Ended September 30, 2015
Interest rate swaps	$	(7,999	)	Interest Expense	$	(3,040	)
Total	$	(7,999	)		$	(3,040	)
Nine Months Ended September 30, 2014
Interest rate swaps	$	(2,513	)	Interest Expense	$	(1,787	)
Total	$	(2,513	)		$	(1,787	)

Credit Risk-Related Contingent Features

The Company has agreements with each of its derivative counterparties that contain cross-default provisions, whereby if the Company defaults on certain of its unsecured indebtedness, then the Company could also be declared in default on its derivative obligations, resulting in an acceleration of payment thereunder.

In addition, the Company is exposed to credit risk in the event of non-performance by its derivative counterparties. The Company believes it mitigates its credit risk by entering into agreements with creditworthy counterparties. The Company records credit risk valuation adjustments on its interest rate swaps based on the respective credit quality of the Company and the counterparty. As of September 30, 2015, the fair value of derivatives in a net liability position, including accrued interest but excluding any adjustment for nonperformance risk related to these agreements, was $7,285,000. As of September 30, 2015, there were no termination events or events of default related to the interest rate swaps.

Tabular Disclosure Offsetting Derivatives

The Company has elected not to offset derivative positions in its condensed consolidated financial statements. The following table presents the effect on the Company’s financial position had the Company made the election to offset its derivative positions as of September 30, 2015 and December 31, 2014 (amounts in thousands):

Offsetting of Derivative Assets
							Gross Amounts Not Offset in the Balance Sheet
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Balance Sheet		Net Amounts of Assets Presented in the Balance Sheet		Financial Instruments Collateral		Cash Collateral		Net Amount
September 30, 2015	$	—	$	—	$	—	$	—	$	—	$	—
December 31, 2014	$	273	$	—	$	273	$	—	$	—	$	273

Offsetting of Derivative Liabilities
							Gross Amounts Not Offset in the Balance Sheet
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Balance Sheet		Net Amounts of Liabilities Presented in the Balance Sheet		Financial Instruments Collateral		Cash Collateral		Net Amount
September 30, 2015	$	6,494	$	—	$	6,494	$	—	$	—	$	6,494
December 31, 2014	$	1,808	$	—	$	1,808	$	—	$	—	$	1,808

The Company reports derivatives in the accompanying condensed consolidated balance sheets as other assets and accounts payable and other liabilities.

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Acquired Intangible Assets, Net (Tables)

9 Months Ended

Sep. 30, 2015

Finite-Lived Intangible Assets, Net [Abstract]

Schedule of Acquired Intangible Assets, Net

Acquired intangible assets, net, which are included in real estate in the accompanying condensed consolidated balance sheets, consisted of the following as of September 30, 2015 and December 31, 2014 (amounts in thousands, except weighted average life amounts):

	September 30, 2015		December 31, 2014
In-place leases, net of accumulated amortization of $34,002 and $21,099, respectively (with a weighted average remaining life of 14.4 years and 15.1 years, respectively)	$	198,078	$	198,635
Above-market leases, net of accumulated amortization of $825 and $529, respectively (with a weighted average remaining life of 11.2 years and 11.4 years, respectively)	3,457		3,118
Ground lease interest, net of accumulated amortization of $170 and $131, respectively (with a weighted average remaining life of 60.6 years and 61.2 years, respectively)	2,644		2,683
	$	204,179	$	204,436

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Commitments and Contingencies (Details)	Sep. 30, 2015 case
Commitments and Contingencies Disclosure [Abstract]
Number of material pending legal proceedings to which the Company is a party	0

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Real Estate Investments (Schedule of Business Combinations on a Pro Forma Basis) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Pro forma basis:
Revenues	$ 48,714	$ 47,489	$ 155,842	$ 130,852
Net income	14,435	14,993	51,184	43,912
Net income attributable to common stockholders	$ 13,572	$ 13,841	$ 47,127	$ 41,475
Net income per common share attributable to common stockholders:
Basic (in dollars per share)	$ 0.08	$ 0.08	$ 0.27	$ 0.26
Diluted (in dollars per share)	$ 0.08	$ 0.08	$ 0.27	$ 0.26

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Condensed Consolidated Statement Of Stockholders' Equity - 9 months ended Sep. 30, 2015 - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid in Capital [Member]	Accumulated Distributions in Excess of Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Total Stockholders' Equity [Member]	Noncontrolling Interests [Member]
Balance, (in shares) at Dec. 31, 2014	175,038,055	175,038,055
Balance, at Dec. 31, 2014	$ 1,530,593	$ 1,750	$ 1,557,623	$ (100,273)	$ (1,161)	$ 1,457,939	$ 72,654
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Vesting of restricted stock (in shares)		10,500
Issuance of common stock under the distribution reinvestment plan (in shares)		5,339,014
Issuance of common stock under the distribution reinvestment plan	50,720	$ 54	50,666			50,720	0
Purchase of noncontrolling interests	(67,224)		(25,811)		(480)	(26,291)	(40,933)
Distributions to noncontrolling interests	(2,053)					0	(2,053)
Distributions declared to common stockholders	(93,066)			(93,066)		(93,066)	0
Other offering costs	(82)		(82)			(82)	0
Redemption of common stock (in shares)		(576,632)
Redemption of common stock	(5,521)	$ (6)	(5,515)			(5,521)	0
Stock-based compensation	67		67			67	0
Other comprehensive loss	(4,959)				(4,853)	(4,853)	(106)
Net income	$ 46,407			42,350		42,350	4,057
Balance, (in shares) at Sep. 30, 2015	179,810,937	179,810,937
Balance, at Sep. 30, 2015	$ 1,454,882	$ 1,798	$ 1,576,948	$ (150,989)	$ (6,494)	$ 1,421,263	$ 33,619

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Real Estate Investments

9 Months Ended

Sep. 30, 2015

Real Estate [Abstract]

Real Estate Investments

Real Estate Investments

During the nine months ended September 30, 2015, the Company completed the acquisition of two healthcare real estate investments, which were determined to be business combinations, for an aggregate purchase price of $137,427,000, plus closing costs, or the 2015 Acquisitions. The aggregate purchase price was settled net of the outstanding balance of real estate-related notes receivables due to the Company in the amount of $13,674,000, which reduced the total cash paid to $123,753,000. The Company funded the purchase price of the 2015 Acquisitions using net cash proceeds from the Offerings and its unsecured credit facility. The following table summarizes the 2015 Acquisitions:

Property Description	Date Acquired	Ownership Percentage
Landmark Hospital of Savannah	1/15/2015	100%
21st Century Oncology Portfolio (1)	3/31/2015; 04/20/2015	100%

(1) Portfolio consists of 20 real estate properties, 18 of which were purchased on March 31, 2015 and two of which were purchased on April 20, 2015.

Results of operations for the 2015 Acquisitions are reflected in the accompanying condensed consolidated statements of comprehensive income for the nine months ended September 30, 2015 for the period subsequent to the acquisition date of each property. For the period from the acquisition date through September 30, 2015, the Company recognized $6,333,000 of revenues and a net loss of $463,000 for the 2015 Acquisitions. In addition, during the nine months ended September 30, 2015, the Company incurred aggregate charges related to acquisition fees and costs of $3,478,000 in connection with the 2015 Acquisitions, which are included in the accompanying condensed consolidated statements of comprehensive income. The total amount of all acquisition fees and expenses are limited to 6.0% of the contract purchase price of the property. The contract purchase price is the amount actually paid or allocated in respect of the purchase, development, construction or improvement of a property, exclusive of acquisition fees and acquisition expenses. For the nine months ended September 30, 2015 and 2014, acquisition fees and expenses did not exceed 6.0% of the purchase price of the Company’s acquisitions during such periods.

As of September 30, 2015, the Company completed its fair value purchase price allocation for the 2015 Acquisitions. The following table summarizes the Company’s allocation of the fair value purchase price of the 2015 Acquisitions acquired during the nine months ended September 30, 2015 (amounts in thousands):

	Total
Land	$	19,469
Buildings and improvements	101,251
In-place leases	15,819
Tenant improvements	1,123
Above-market leases	635
Total assets acquired	138,297
Below-market leases	(870		)
Total liabilities acquired	(870		)
Net assets acquired	$	137,427

Assuming the 2015 Acquisitions described above had occurred on January 1, 2014, pro forma revenues, net income and net income attributable to common stockholders would have been as follows (amounts in thousands, unaudited):

	Three Months Ended   September 30,				Nine Months Ended   September 30,
	2015		2014		2015		2014
Pro forma basis:
Revenues	$	48,714	$	47,489	$	155,842	$	130,852
Net income	$	14,435	$	14,993	$	51,184	$	43,912
Net income attributable to common stockholders	$	13,572	$	13,841	$	47,127	$	41,475
Net income per common share attributable to common stockholders:
Basic	$	0.08	$	0.08	$	0.27	$	0.26
Diluted	$	0.08	$	0.08	$	0.27	$	0.26

The pro forma information for the three and nine months ended September 30, 2015 was adjusted to exclude $0 and $3,478,000, respectively, of acquisition expenses recorded during such periods. The pro forma information may not be indicative of what actual results of operations would have been had the transactions occurred at the beginning of 2014, nor is it necessarily indicative of future operating results.

Consolidated Partnership

Bay Area Regional Medical Center

On July 8, 2015, the Company acquired the remaining noncontrolling interests in the Bay Area Regional Medical Center for a total cost of $102,475,000. As a result, the Bay Area Regional Medical Center became a wholly-owned property of the Company. In connection with the acquisition of the noncontrolling interests in the Bay Area Regional Medical Center, the borrower paid off the outstanding principal and accrued interest in the amount of $9,805,000 on the revolving credit agreement loan.

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Fair Value (Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Assets:
Derivative assets	$ 0	$ 273
Liabilities:
Derivative liabilities	(6,494)	(1,808)
Contingent consideration obligations	(7,030)	(6,570)
Recurring Basis [Member]
Assets:
Derivative assets	0	273
Total assets at fair value	0	273
Liabilities:
Derivative liabilities	(6,494)	(1,808)
Contingent consideration obligations	(7,030)	(6,570)
Total liabilities at fair value	(13,524)	(8,378)
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Recurring Basis [Member]
Assets:
Derivative assets	0	0
Total assets at fair value	0	0
Liabilities:
Derivative liabilities	0	0
Contingent consideration obligations	0	0
Total liabilities at fair value	0	0
Significant Other Observable Inputs (Level 2) [Member] | Recurring Basis [Member]
Assets:
Derivative assets	0	273
Total assets at fair value	0	273
Liabilities:
Derivative liabilities	(6,494)	(1,808)
Contingent consideration obligations	0	0
Total liabilities at fair value	(6,494)	(1,808)
Significant Unobservable Inputs (Level 3) [Member] | Recurring Basis [Member]
Assets:
Derivative assets	0	0
Total assets at fair value	0	0
Liabilities:
Derivative liabilities	0	0
Contingent consideration obligations	(7,030)	(6,570)
Total liabilities at fair value	$ (7,030)	$ (6,570)

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Other Assets (Tables)

9 Months Ended

Sep. 30, 2015

Other Assets [Abstract]

Schedule of Other Assets

Other assets consisted of the following as of September 30, 2015 and December 31, 2014 (amounts in thousands):

	September 30, 2015		December 31, 2014
Deferred financing costs, net of accumulated amortization of $7,326 and $4,532, respectively	$	10,793	$	11,172
Lease commissions, net of accumulated amortization of $144 and $54, respectively	3,704		394
Investments in unconsolidated partnerships	99		106
Tenant receivable	4,248		3,361
Notes receivables	11,000		—
Straight-line rent receivable	41,353		25,566
Restricted cash held in escrow	13,696		13,382
Real estate escrow deposits	—		250
Restricted cash	661		734
Derivative assets	—		273
Prepaid and other assets	4,946		2,189
	$	90,500	$	57,427

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Real Estate Investments (Narrative) (Details) $ in Thousands		3 Months Ended		9 Months Ended
	Jul. 08, 2015 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) real_estate_investment	Sep. 30, 2014 USD ($)
Real Estate Properties [Line Items]
Purchase price		$ 137,427		$ 137,427
Real estate-related notes receivables converted to investment in real estate				13,674	$ 20,000
Cash paid for investments in real estate				123,753	952,950
Revenues				6,333
Net loss				463
Acquisition related expenses		0	$ 4,087	$ 3,654	$ 10,598
Bay Area Regional Medical Center [Member]
Real Estate Properties [Line Items]
Cost of remaining noncontrolling interests acquired	$ 102,475
Revolving credit agreement loan, outstanding principal and accrued interest paid off	$ 9,805
Maximum [Member]
Real Estate Properties [Line Items]
Acquisition fee and expense reimbursement, as percentage of purchase price of properties				6.00%
2015 Acquisitions [Member]
Real Estate Properties [Line Items]
Acquisition related expenses		$ 0		$ 3,478
Healthcare [Member] | 2015 Acquisitions [Member]
Real Estate Properties [Line Items]
Number of acquisitions | real_estate_investment				2

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Fair Value

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value

Fair Value

Preferred Equity Investment—The carrying value of the Preferred Equity Investment was $127,147,000 as of September 30, 2015, which approximated its fair value.

Notes payable – Fixed Rate—The estimated fair value of notes payable – fixed rate measured using quoted prices and observable inputs from similar liabilities (Level 2) was approximately $132,700,000 and $134,837,000 as of September 30, 2015 and December 31, 2014, respectively, as compared to the carrying value of $132,010,000 and $134,271,000 as of September 30, 2015 and December 31, 2014, respectively.

Notes payable – Variable—The estimated fair value of notes payable – variable rate fixed through interest rate swap agreements (Level 2) was approximately $366,062,000 and $208,889,000 as of September 30, 2015 and December 31, 2014, respectively, as compared to the carrying value of $371,106,000 and $206,162,000 as of September 30, 2015 and December 31, 2014, respectively. The carrying value of the notes payable – variable was $43,481,000 and $150,476,000 as of September 30, 2015 and December 31, 2014, respectively, which approximated its fair value.

Unsecured credit facility—The carrying value of the unsecured credit facility – variable was $228,000,000 and $20,000,000, which approximated its fair value, as of September 30, 2015 and December 31, 2014, respectively. The estimated fair value of the unsecured credit facility – variable rate fixed through interest rate swap agreements (Level 2) was approximately $51,422,000 and $50,505,000 as of September 30, 2015 and December 31, 2014, respectively, as compared to the carrying value of $55,000,000 and $55,000,000 as of September 30, 2015 and December 31, 2014, respectively.

Contingent consideration—The Company has contingent obligations to transfer cash payments to the former owner in conjunction with a certain acquisition if specified future operational objectives are met over future reporting periods. Liabilities for contingent consideration will be measured at fair value each reporting period, with the acquisition-date fair value included as part of the consideration transferred, and subsequent changes in fair value recorded in earnings as change in fair value of contingent consideration.

The estimated fair value and the carrying value of the contingent consideration was $7,030,000 and $6,570,000 as of September 30, 2015 and December 31, 2014, respectively, which is reported in the accompanying condensed consolidated balance sheets in accounts payable and other liabilities. The Company uses an income approach to value the contingent consideration liability, which is determined based on the present value of probability-weighted future cash flows. The Company has classified the contingent consideration liability as Level 3 of the fair value hierarchy due to the lack of relevant observable market data over fair value inputs such as probability-weighting for payment outcomes. Increases in the assessed likelihood of a high payout under a contingent consideration arrangement contributes to increases in the fair value of the related liability. Conversely, decreases in the assessed likelihood of a higher payout under a contingent consideration arrangement contributes to decreases in the fair value of the related liability. Changes in assumptions could have an impact on the payout of contingent consideration arrangements with a maximum payout of $9,069,000 in cash and a minimum payout of $0 as of September 30, 2015.

Derivative instruments— Considerable judgment is necessary to develop estimated fair values of financial instruments. Accordingly, the estimates presented herein are not necessarily indicative of the amount the Company could realize, or be liable for, on disposition of the financial instruments. The Company has determined that the majority of the inputs used to value its interest rate swaps fall within Level 2 of the fair value hierarchy. The credit valuation adjustment associated with these instruments utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and the respective counterparty. However, as of September 30, 2015, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions, and has determined that the credit valuation adjustments are not significant to the overall valuation of its interest rate swaps. As a result, the Company determined that its interest rate swaps valuation in its entirety is classified in Level 2 of the fair value hierarchy.

In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014 (amounts in thousands):

	September 30, 2015
	Fair Value Hierarchy
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Derivative assets	$	—	$	—		$	—		$	—
Total assets at fair value	$	—	$	—		$	—		$	—
Liabilities:
Derivative liabilities	$	—	$	(6,494	)	$	—		$	(6,494	)
Contingent consideration obligations	—		—			(7,030		)	(7,030		)
Total liabilities at fair value	$	—	$	(6,494	)	$	(7,030	)	$	(13,524	)
	December 31, 2014
	Fair Value Hierarchy
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Derivative assets	$	—	$	273		$	—		$	273
Total assets at fair value	$	—	$	273		$	—		$	273
Liabilities:
Derivative liabilities	$	—	$	(1,808	)	$	—		$	(1,808	)
Contingent consideration obligations	—		—			(6,570		)	(6,570		)
Total liabilities at fair value	$	—	$	(1,808	)	$	(6,570	)	$	(8,378	)

The following table provides a rollforward of the fair value of recurring Level 3 fair value measurements for the three and nine months ended September 30, 2015 and 2014 (amounts in thousands):

	Three Months Ended   September 30,				Nine Months Ended   September 30,
	2015		2014		2015		2014
Liabilities:
Contingent consideration obligations:
Beginning balance	$	6,870	$	5,030	$	6,570	$	—
Additions to contingent consideration obligations	—		—		—		5,030
Total changes in fair value included in earnings	160		—		460		—
Ending balance	$	7,030	$	5,030	$	7,030	$	5,030
Unrealized losses still held (1)	$	160	$	—	$	460	$	—

(1) Represents the unrealized losses recorded in earnings or other comprehensive income (loss) during the period for liabilities classified as Level 3 that are still held at the end of the period.