Note 3—Acquisitions and Disposition

During the six months ended June 30, 2015, the Trust completed acquisitions of 36 operating healthcare properties located in 17 states for an aggregate purchase price of approximately $382.1 million. In addition, the Trust completed a $9.0 million mezzanine loan transaction on June 1, 2015. Acquisition activity for the six months ended June 30, 2015 is summarized below:

Property (1)	Location	Acquisition Date	Purchase Price (in thousands)
Minnesota Portfolio (2)
Edina MOB (6)	Edina, MN	January 22, 2015	$	14,190
Savage MOB (6)	Savage, MN	January 22, 2015	12,800
Crystal MOB (6)	Crystal, MN	January 22, 2015	14,782
Dell Rd. MOB (6)	Chanhassen, MN	January 22, 2015	6,410
Vadnais Heights MOB (6)	Vadnais Heights, MN	January 29, 2015	18,422
Minnetonka MOB (3) (6)	Minnetonka, MN	February 5, 2015	26,000
Jamestown MOB (6)	Jamestown, ND	February 5, 2015	12,819
Minnesota Eye MOB (6)	Minnetonka, MN	February 17, 2015	10,882
Columbus MOB (4) (6)	Columbus, GA	January 23, 2015	6,540
Methodist Sports MOB (5) (7)	Greenwood, IN	January 28, 2015	10,000
Indianapolis South 4 MOBs (6)	Greenwood, IN	February 13, 2015	17,183
Bridgeport Medical Center (6)	Lakewood, WA	February 27, 2015	13,750
Baylor Cancer Center (6)	Dallas, TX	February 27, 2015	8,200
Renaissance Office Building (6)	Milwaukee, WI	March 27, 2015	6,500
University of Rochester Strong Memorial Portfolio 5 MOBs (6)	Rochester, NY	March 31, 2015	41,000
Avalon Park Florida Hospital MOB (6)	Avalon Park, FL	March 31, 2015	14,600
Premier Surgery Center of Louisville (6)	Louisville, KY	April 10, 2015	8,000
Baton Rouge MOB (6)	Baton Rouge, LA	April 15, 2015	10,486
Healthpark Medical Center (6)	Grand Blanc, MI	April 30, 2015	18,913
Plaza HCA MOB (6)	Jacksonville, FL	April 30, 2015	19,000
Northern Ohio Medical Center (5)	Sheffield, OH	May 28, 2015	11,236
University of Michigan - Northville MOB (6)	Livonia, MI	May 29, 2015	14,750
Coon Rapids Medical Center (6)	Coon Rapids, MN	June 1, 2015	7,298
Mezzanine Loan — UF Health MOB (8)	Jacksonville, FL	June 1, 2015	9,000
Premier Landmark MOB (5) (9)	Bloomington, IN	June 5, 2015	11,308
Palm Beach ASC (6)	Palm Beach, FL	June 26, 2015	14,070
Brookstone Physician Center (6)	Jacksonville, AL	June 30, 2015	2,800
Jackson Woman’s Clinic (6)	Jackson, TN	June 30, 2015	5,672
Hillside Medical Center (6)	Hanover, PA	June 30, 2015	11,400
Randall Road MOB (10)	Elgin, IL	June 30, 2015	13,045

			$	391,056

(1)

“MOB” means medical office building and “ASC” means ambulatory surgery center.

(2)

Through subsidiaries of the Operating Partnership, the Trust acquired seven medical office facilities located in the Minneapolis-St. Paul Metropolitan area and one additional medical office facility located in Jamestown, North Dakota from affiliates of The Davis Group and investors associated with The Davis Group. The Davis Group retained a less than 1% minority interest in the property holding entities.

(3)

The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 44,685 Series A Preferred Units valued at approximately $9.7 million in the aggregate on the date of issuance to affiliates of The Davis Group.

(4)

This is the final building acquired of the $34.5 million portfolio of 13 on-campus medical office facilities located in Columbus, Georgia. The first 12 buildings were acquired in 2014.

(5)

The Trust accounted for these acquisitions as asset acquisitions and capitalized a total of $0.3 million of acquisition costs to the basis of these properties.

(6)

The Trust accounted for these acquisitions as business combinations pursuant to the acquisition method and expensed total acquisition costs of $8.5 million.

(7)

The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 420,963 OP Units valued at approximately $7.3 million in the aggregate on the date of issuance.

(8)

This mezzanine loan is collateralized by an equity interest in the Trust’s Jacksonville, FL medical building development.

(9)

The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 210,820 OP Units valued at approximately $3.4 million in the aggregate on the date of issuance.

(10)

The Trust acquired 14 of 19 condominium units.

For the three months ended June 30, 2015, the Trust recorded revenues and net income of $7.4 million and $1.3 million, respectively, from its 2015 acquisitions. For the six months ended June 30, 2015, the Trust recorded revenues and net income of $10.2 million and $1.9 million, respectively, from its 2015 acquisitions.

The following table summarizes the acquisition date fair values of the assets acquired and the liabilities assumed, which the Trust determined using Level 2 and Level 3 inputs (in thousands):

	1st Quarter			2nd Quarter			Total
Land	$	21,075		$	10,401		$	31,476
Building and improvements	175,050			113,411			288,461
In-place lease intangible	32,398			13,651			46,049
Above market in-place lease intangible	3,679			7,950			11,629
Below market in-place lease intangible	(315		)	(258		)	(573		)
Below market in-place ground lease	158			1,482			1,640
Lease inducement	462			1,983			2,445
Contingent consideration	(1,482		)	—			(1,482		)
Receivables	3,564			—			3,564
Debt assumed	(6,323		)	(12,367		)	(18,690		)
Issuance of OP Units	(7,314		)	(3,420		)	(10,734		)
Issuance of Series A Preferred Units	(9,704		)	—			(9,704		)
Noncontrolling interest	(5,508		)	—			(5,508		)

Net assets acquired	$	205,740		$	132,833		$	338,573

These preliminary allocations are subject to revision within the measurement period, not to exceed one year from the date of the acquisitions.

Unaudited Pro Forma Financial Information

The following table illustrates the effect on net income, earnings per share — basic and diluted as if the Trust had acquired the above acquisitions as of January 1, 2015 (in thousands, except per share amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Revenue	$	31,495	$	14,548	$	62,197	$	37,660
Net income (loss)	6,234		239		12,377		(1,258		)
Net income (loss) available to common shareholders	6,051		191		11,910		(1,056		)
Earnings per share	$	0.08	$	0.00	$	0.17	$	(0.01	)
Common shares outstanding	71,329,378		71,329,378		71,329,378		71,329,378

Disposition

On March 26, 2015, the Trust sold a 20,329 square foot medical office building located in Ohio for approximately $1.6 million and recognized a loss on the sale of approximately $15,000. Due to the Trust’s adoption of Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), which raises the threshold for disposals to qualify as discontinued operations, the Trust did not report this disposition as a discontinued operation.