Acquisitions and Dispositions

During the nine months ended September 30, 2015, the Trust completed acquisitions of 47 operating healthcare properties located in 18 states for an aggregate purchase price of approximately $676.0 million. In addition, the Trust completed a $9.0 million mezzanine loan transaction on June 1, 2015 and a $3.1 million mezzanine loan transaction on August 21, 2015.

Investment activity for the three months ended September 30, 2015 is summarized below:



Property (1)	Location	Acquisition Date	Purchase Price (in thousands)
Randall Road MOB - Suite 140 (2)	Elgin, IL	July 17, 2015	$	1,750
Medical Specialists of Palm Beach (2)	Atlantis, FL	July 24, 2015	11,051
Trios Health MOB (2)	Kennewick, WA	July 31, 2015	64,000
OhioHealth - SW Health Center (2)	Grove City, OH	July 31, 2015	11,460
Integrated Medical Services (IMS) Portfolio
IMS - Paradise Valley MOB (2)	Phoenix, AZ	August 14, 2015	31,814
IMS - Avondale MOB (2)	Avondale, AZ	August 19, 2015	22,144
IMS - Palm Valley MOB (2)	Goodyear, AZ	August 19, 2015	35,184
IMS - North Mountain MOB (2)	Phoenix, AZ	August 31, 2015	51,740
Warm Springs Rehab Hospital Mezz Loan (3)	Kyle, TX	August 21, 2015	3,138
Memorial Hermann Medical Complex (2 MOBs) (2)	Katy, TX	September 1, 2015	40,400
New Albany Medical Center (2) (4)	New Albany, OH	September 9, 2015	11,200
Fountain Hills Medical Campus (2)	Fountain Hills, AZ	September 30, 2015	13,250
			$	297,131


(1)	“MOB” means medical office building.


(2)	The Trust accounted for these acquisitions as business combinations pursuant to the acquisition method and expensed total acquisition costs of $3.3 million.


(3)	The Trust made a $3.1 million mezzanine term loan to partially fund the borrower's acquisition of the 54,500 square foot Warm Springs Rehabilitation Hospital in Kyle, Texas. The mezzanine loan is collateralized by an equity interest in the property and accrues interest at a rate of 8.5% per year. The Trust has an option to purchase the property.


(4)	The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 16,866 OP Units valued at approximately $0.2 million in the aggregate on the date of issuance.

For the three months ended September 30, 2015, the Trust recorded revenues and net income from its 2015 acquisitions of $13.0 million and $3.8 million, respectively. For the nine months ended September 30, 2015, the Trust recorded revenues and net income from its 2015 acquisitions of $23.1 million and $5.7 million, respectively.

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			3rd Quarter			Total
Land	$	21,075		$	10,401		$	13,199		$	44,675
Building and improvements	175,050			113,411			238,209			526,670
In-place lease intangible	32,398			13,651			31,125			77,174
Above market in-place lease intangible	3,679			7,950			2,288			13,917
Below market in-place lease intangible	(315		)	(258		)	(2,052		)	(2,625		)
Below market in-place ground lease	158			1,482			11,230			12,870
Lease inducement	462			1,983			33			2,478
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		)	(239		)	(10,973		)
Issuance of Series A Preferred Units	(9,704		)	—			—			(9,704		)
Noncontrolling interest	(5,508		)	—			—			(5,508		)
Net assets acquired	$	205,740		$	132,833		$	293,793		$	632,366

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, 2014 (in thousands, except per share amounts):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Revenue	$	38,473	$	21,134	$	113,673	$	81,413
Net income	8,680		838		25,672		6,339
Net income available to common shareholders	8,161		646		24,118		5,560
Earnings per share	$	0.11	$	0.01	$	0.34	$	0.08
Common shares outstanding	71,320,174		71,320,174		71,320,174		71,320,174

Dispositions

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.

On July 31, 2015, the Trust sold a 26,783 square foot medical office building located in Michigan for approximately $1.5 million and recognized a gain on the sale of approximately $0.1 million.

Due to the Trust’s adoption of Accounting Standards Update 2014-8, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-8”), which raises the threshold for disposals to qualify as discontinued operations, the Trust did not report these dispositions as discontinued operations.