Acquisitions and Dispositions

During 2016, the Company completed acquisitions of 95 operating healthcare properties (including 5 condominium units and the CHI Portfolio) and 1 land parcel, located in 23 states, for an aggregate purchase price of approximately $1.27 billion. In addition, the Company completed $0.9 million of joint venture investments, $10.2 million of loan transactions, $2.5 million of redeemable noncontrolling interest buyouts, and $0.6 million of equity buyouts, resulting in total investment activity of approximately $1.29 billion.

This aggregate purchase price does not include near-term capital expenditure commitments of $12.9 million and committed tenant improvement allowances of $8.9 million related to the Company’s acquisition of the CHI Portfolio.

Investment activity for the year ending December 31, 2016 is summarized below:



Property (1)			Location	Acquisition Date	Purchase Price (in thousands)
Tinseltown - Loan Draws			Jacksonville, FL		$	2,192
Randall Road MOB - Suite 380	(3)		Elgin, IL	January 14, 2016	704
Great Falls Hospital	(2)		Great Falls, MT	January 25, 2016	29,043
Monterey Medical Center ASC	(2)		Stuart, FL	February 1, 2016	6,900
Physicians Medical Plaza MOB	(2)	(4)	Indianapolis, IN	February 1, 2016	8,500
Mezzanine Loan - Davis			Minnetonka, MN	February 4, 2016	500
Park Nicollet Clinic	(2)		Chanhassen, MN	February 8, 2016	18,600
HEB Cancer Center	(2)		Bedford, TX	February 12, 2016	13,980
Riverview Medical Center	(2)		Lancaster, OH	February 26, 2016	12,800
St. Luke's Cornwall MOB	(2)		Cornwall, NY	February 26, 2016	14,550
HonorHealth Glendale	(3)		Glendale, AZ	March 15, 2016	9,820
Columbia MOB	(2)		Hudson, NY	March 21, 2016	18,450
St Vincent POB 1	(2)		Birmingham, AL	March 23, 2016	10,951
St Vincent POB 2	(2)		Birmingham, AL	March 23, 2016	7,945
St Vincent POB 3	(2)		Birmingham, AL	March 23, 2016	10,455
Emerson Medical Building	(2)		Creve Coeur, MO	March 24, 2016	14,250
Randall Road MOB - Suite 160	(3)		Elgin, IL	March 24, 2016	865
Patient Partners Surgery Center	(2)		Gallatin, TN	March 30, 2016	4,750
Eye Associates of NM - Santa Fe	(3)		Santa Fe, NM	March 31, 2016	8,739
Eye Associates of NM - Albuquerque	(3)		Albuquerque, NM	March 31, 2016	10,536
Gardendale Surgery Center	(2)		Gardendale, AL	April 11, 2016	7,450
HealthEast - Curve Crest	(2)		Stillwater, MN	April 14, 2016	4,144
HealthEast - Victor Gardens	(2)		Hugo, MN	April 14, 2016	6,025
NOMS - Clyde	(3)		Clyde, OH	May 10, 2016	6,342
Blandford MOB	(3)	(5)	Little Rock, AR	May 11, 2016	2,580
Cardwell MOB	(2)	(5)	Lufkin, TX	May 11, 2016	8,444
Dacono Neighborhood Health	(3)	(5)	Dacono, CO	May 11, 2016	5,152
Franciscan Health	(3)	(5)	Tacoma, WA	May 11, 2016	9,772
Grand Island Specialty Clinic	(3)	(5)	Grand Island, NE	May 11, 2016	2,891
Hot Springs MOB	(2)	(5)	Hot Springs Village, AR	May 11, 2016	3,626
Jewish Medical Center East	(3)	(5)	Louisville, KY	May 11, 2016	85,000
Jewish Medical Center South MOB - 1	(3)	(5)	Shepherdsville, KY	May 11, 2016	17,021
Jewish Medical Plaza I	(2)	(5)	Louisville, KY	May 11, 2016	9,650
Jewish Medical Plaza II	(2)	(5)	Louisville, KY	May 11, 2016	6,124
Jewish OCC	(3)	(5)	Louisville, KY	May 11, 2016	35,600



Property (1)			Location	Acquisition Date	Purchase Price (in thousands)
Lakeside Three Professional Center	(2)	(5)	Omaha, NE	May 11, 2016	1,581
Lexington Surgery Center	(2)	(5)	Lexington, KY	May 11, 2016	20,169
Medical Arts Pavilion	(2)	(5)	Lufkin, TX	May 11, 2016	6,304
Memorial Outpatient Center	(3)	(5)	Lufkin, TX	May 11, 2016	4,958
Midlands Two Professional Center	(2)	(5)	Papillion, NE	May 11, 2016	1,341
Parkview MOB	(2)	(5)	Little Rock, AR	May 11, 2016	5,060
Peak One ASC	(2)	(5)	Frisco, CO	May 11, 2016	6,587
Physicians Medical Center	(2)	(5)	Tacoma, WA	May 11, 2016	6,782
St. Alexius - Minot Medical Plaza	(3)	(5)	Minot, ND	May 11, 2016	26,570
St. Clare Medical Pavilion	(2)	(5)	Lakewood, WA	May 11, 2016	10,617
St. Joseph Medical Pavilion	(2)	(5)	Tacoma, WA	May 11, 2016	13,320
St. Joseph Office Park	(2)	(5)	Lexington, KY	May 11, 2016	17,228
St. Mary - Caritas Medical II	(2)	(5)	Louisville, KY	May 11, 2016	5,603
St. Mary - Caritas Medical III	(2)	(5)	Louisville, KY	May 11, 2016	842
Thornton Neighborhood Health	(3)	(5)	Thornton, CO	May 11, 2016	3,875
Medical Village at Kissimmee	(2)		Kissimmee, FL	May 26, 2016	4,923
Medical Village at Leesburg	(2)		Leesburg, FL	May 26, 2016	4,576
St. Francis MOB	(2)	(5)	Federal Way, WA	June 2, 2016	14,287
Children's Hospital MOB	(2)		Milwaukee, WI	June 3, 2016	5,850
Jewish Medical Center South MOB - 2	(2)		Shepherdsville, KY	June 8, 2016	4,343
Good Samaritan North Annex Building	(3)	(5)	Kearney, NE	June 28, 2016	2,874
NE Heart Institute Medical Building	(3)	(5)	Lincoln, NE	June 28, 2016	19,600
St. Vincent West MOB	(3)	(5)	Little Rock, AR	June 29, 2016	14,120
Meridan MOB	(3)	(5)	Englewood, CO	June 29, 2016	17,329
St. Mary - Caritas Medical I	(2)	(5)	Louisville, KY	June 29, 2016	8,864
St. Alexius - Medical Arts Pavilion	(3)	(5)	Bismarck, ND	June 29, 2016	12,983
St. Alexius - Mandan Clinic	(3)	(5)	Mandan, ND	June 29, 2016	8,390
St. Alexius - Orthopaedic Center	(2)	(5)	Bismarck, ND	June 29, 2016	14,727
St. Alexius - Rehab Center	(3)	(5)	Bismarck, ND	June 29, 2016	6,215
St. Alexius - Tech & Ed	(3)	(5)	Bismarck, ND	June 29, 2016	16,680
Good Samaritan MOB	(2)	(5)	Kearney, NE	June 29, 2016	24,198
Lakeside Two Professional Building	(2)	(5)	Omaha, NE	June 29, 2016	13,691
Lakeside Wellness Center	(3)	(5)	Omaha, NE	June 29, 2016	10,138
McAuley Center	(3)	(5)	Omaha, NE	June 29, 2016	18,382
Memorial Health Center	(3)	(5)	Grand Island, NE	June 29, 2016	34,042
Missionary Ridge MOB	(2)	(5)	Chattanooga, TN	June 29, 2016	7,635
Pilot Medical Center	(3)		Birmingham, AL	June 29, 2016	17,351
St. Joseph Medical Clinic	(2)	(5)	Tacoma, WA	June 30, 2016	16,444
Woodlands Medical Arts Center	(2)	(5)	The Woodlands, TX	June 30, 2016	21,227
FESC MOB	(3)	(5)	Tacoma, WA	June 30, 2016	16,748
Mezzanine Loan - Catalyst			Pensacola, FL	June 30, 2016	1,340
Prairie Care MOB	(2)		Maplewood, MN	July 6, 2016	4,886
RE Loan - El Paso			El Paso, TX	July 7, 2016	1,300
Springwoods MOB	(2)	(5)	Spring, TX	July 21, 2016	19,925
Equity Buyout - Foundation	(6)		TX / OK	July 26, 2016	611



Property (1)			Location	Acquisition Date	Purchase Price (in thousands)
Mezzanine Loan - Hazelwood			Minnetonka, MN	July 29, 2016	3,375
Jackson, Tennessee Land	(3)		Jackson, TN	August 2, 2016	1,000
Unity Portfolio (4 MOBs)	(2)		West Lafayette, IN	August 8, 2016	28,751
Medical Village at Maitland	(2)		Orlando, FL	August 23, 2016	23,211
Tri-State Orthopaedics MOB	(2)		Evansville, IN	August 30, 2016	22,000
Noncontrolling Interest Buyout - Great Falls Clinic	(7)		Great Falls, MT	September 30, 2016	1,015
Maury Regional Healthcare MOB	(2)	(8)	Spring Hill, TN	September 30, 2016	18,500
Spring Ridge Medical Center	(2)		Wyomissing, PA	September 30, 2016	6,100
Doctors Community Hospital MOB	(2)		Lanham, MD	September 30, 2016	26,750
Gig Harbor Medical Pavilion	(3)	(5)	Gig Harbor, WA	September 30, 2016	4,766
Midlands One Professional Center	(2)	(5)	Papillion, NE	September 30, 2016	14,856
N.W. Michigan Surgery Center - Units #1 & #2	(3)	(9)	Traverse City, MI	October 28, 2016	29,448
United Surgical Partners Joint Venture	(10)		Scottsdale, AZ	October 31, 2016	903
N.W. Michigan Surgery Center - Unit #4	(3)	(11)	Traverse City, MI	November 4, 2016	2,715
Syracuse Portfolio (2 MOBs)	(2)		Syracuse, NY	November 23, 2016	54,239
Cincinnati Eye Institute	(3)		Cincinnati, OH	November 23, 2016	38,100
Curie Building Loan			El Paso, TX	December 2, 2016	1,500
HonorHealth - Scottsdale MOB	(3)		Scottsdale, AZ	December 2, 2016	6,900
Fox Valley Hematology & Oncology	(3)		Appleton, WI	December 8, 2016	28,200
Gastrointestinal Associates MOB	(2)		Powell, TN	December 9, 2016	6,287
Northern Vision Eye Center	(3)		Traverse City, MI	December 15, 2016	2,777
Noncontrolling Interest Buyout - Great Falls Clinic	(12)		Great Falls, MT	December 15, 2016	1,497
Flower Mound Portfolio (3 MOBs)	(3)		Flower Mound, TX	December 16, 2016	27,800
HonorHealth IRF	(3)		Scottsdale, AZ	December 22, 2016	25,628
					$	1,285,185


(1)	“MOB” means medical office building. “ASC” means ambulatory surgery center. “POB” means professional office building. “IRF” means inpatient rehabilitation facility.


(2)	The Company accounted for these acquisitions as business combinations pursuant to the acquisition method and expensed total acquisition costs of $14.8 million.


(3)	The Company accounted for these acquisitions as asset acquisitions and capitalized total acquisition costs of $3.0 million.


(4)	The Company partially funded the purchase price of this acquisition by issuing a total of 174,085 OP Units valued at approximately $2.9 million in the aggregate on the date of issuance.


(5)	These acquisitions are part of the CHI Portfolio.


(6)	The Company acquired the previously outstanding 1% noncontrolling interest retained by the predecessor owner on three properties in El Paso, Texas and Oklahoma City, Oklahoma.


(7)	The Company acquired an additional 3% interest in the Great Falls Clinic joint venture from the predecessor owner, increasing the Company’s total interest to 77.3%.


(8)	The Company acquired 99.7% of the ownership interest in this property, the remainder of which was retained by the seller.


(9)	The Company partially funded the purchase price of the acquisition of two condominium units within the Northwest Michigan Surgery Center through the unregistered issuance of 947,936 common shares of beneficial interest.


(10)	The Company’s investment in the United Surgical Partners J.V. represents a 43% ownership interest.


(11)	The Company partially funded the purchase price of the acquisition of one additional condominium unit within the Northwest Michigan Surgery Center through the unregistered issuance of 88,602 common shares of beneficial interest.


(12)	The Company acquired an additional 5% interest in the Great Falls Clinic joint venture from the predecessor owner, increasing the Company’s total interest to 81.8%.

For 2016, the Company recorded revenues and net income of $66.7 million and $14.9 million, respectively, from its 2016 acquisitions.

During 2015, the Company completed acquisitions of 66 properties located in 22 states for an aggregate purchase price of approximately $818.6 million. In addition, the Company completed loan investments totaling $22.4 million. Investment activity for the year ending December 31, 2015 is summarized below:



Property (1)			Location	Acquisition Date	Purchase Price (in thousands)
Minnesota Portfolio	(2)
Edina MOB	(5)		Edina MN	January 22, 2015	$	14,190
Crystal MOB	(5)		Crystal, MN	January 22, 2015	14,782
Savage MOB	(5)		Savage, MN	January 22, 2015	12,800
Dell Road MOB	(5)		Chanhassen, MN	January 22, 2015	6,410
Vadnais Heights MOB	(5)		Vadnais Heights, MN	January 29, 2015	18,422
Minnetonka MOB	(3)	(5)	Minnetonka, MN	February 5, 2015	26,000
Jamestown MOB	(5)		Jamestown, ND	February 5, 2015	12,819
Minnesota Eye MOB	(5)		Minnetonka, MN	February 17, 2015	10,882
Columbus MOB	(5)		Columbus, GA	January 23, 2015	6,540
Methodist Sports MOB	(4)	(6)	Greenwood, IN	January 28, 2015	10,000
Indianapolis South (4 MOBs)	(5)		Greenwood, IN	February 13, 2015	17,183
Baylor Cancer Center	(5)		Dallas, TX	February 27, 2015	8,200
Bridgeport Medical Center	(5)		Lakewood, WA	February 27, 2015	13,750
Renaissance Office Building	(5)		Milwaukee, WI	March 27, 2015	6,500
University of Rochester Strong Memorial Portfolio (5 MOBs)	(5)		Rochester, NY	March 31, 2015	41,000
Avalon Park Florida Hospital MOB	(5)		Avalon Park, FL	March 31, 2015	14,600
Premier Surgery Center of Louisville	(5)		Louisville, KY	April 10, 2015	8,000
Baton Rouge MOB	(5)		Baton Rouge, LA	April 15, 2015	10,486
Healthpark Medical Center	(5)		Grand Blanc, MI	April 30, 2015	18,913
Plaza HCA MOB	(5)		Jacksonville, FL	April 30, 2015	19,000
Northern Ohio Medical Center	(4)		Sheffield, OH	May 28, 2015	11,236
University of Michigan - Northville MOB	(5)		Livonia, MI	May 29, 2015	14,750
Coon Rapids Medical Center MOB	(5)		Coon Rapids, MN	June 1, 2015	7,298
Mezzanine Loan - UF Health MOB	(7)		Jacksonville, FL	June 1, 2015	9,000
Premier Landmark MOB	(4)	(8)	Bloomington, IN	June 5, 2015	11,308
Palm Beach ASC	(5)		Palm Beach, FL	June 26, 2015	14,070
Brookstone Physician Center MOB	(5)		Jacksonville, AL	June 30, 2015	2,800
Jackson Woman's Clinic MOB	(5)		Jackson, TN	June 30, 2015	5,672
Hillside Medical Center MOB	(5)		Hanover, PA	June 30, 2015	11,400
Randall Road MOB	(5)		Elgin, IL	June 30, 2015	13,045
Randall Road MOB - Unit 140	(4)		Elgin, IL	July 17, 2015	1,750
Medical Specialists of Palm Beach MOB	(5)		Atlantis, FL	July 24, 2015	11,051
OhioHealth - SW Health Center MOB	(5)		Grove City, OH	July 31, 2015	11,460
Trios Health MOB	(5)		Kennewick, WA	July 31, 2015	64,000
Integrated Medical Services (IMS) Portfolio
IMS - Paradise Valley MOB	(5)		Phoenix, AZ	August 14, 2015	31,814
IMS - Avondale MOB	(5)		Avondale, AZ	August 19, 2015	22,144
IMS - Palm Valley MOB	(5)		Goodyear, AZ	August 19, 2015	35,184



Property (1)			Location	Acquisition Date	Purchase Price (in thousands)
IMS - North Mountain MOB	(5)		Phoenix, AZ	August 31, 2015	51,740
Mezzanine Loan - Warm Springs Rehab Hospital	(9)		Kyle, TX	August 21, 2015	3,138
Memorial Hermann Medical Complex (2 MOBs)	(5)		Katy, TX	September 1, 2015	40,400
Construction Loan - Tinseltown	(10)		Jacksonville, FL	September 4, 2015	1,005
New Albany Medical Center MOB	(5)	(11)	New Albany, OH	September 9, 2015	11,200
Fountain Hills Medical Campus MOB	(5)		Fountain Hills, AZ	September 30, 2015	13,250
Catalyst Portfolio (12 MOBs)	(5)		AL & FL	October 13, 2015	23,805
Mezzanine Loan - Truman Medical Center	(12)		Kansas City, MO	October 16, 2015	4,500
Arete Surgical Center	(5)		Johnstown, CO	October 19, 2015	9,100
Cambridge Professional Center MOB	(5)		Waldorf, MD	October 30, 2015	11,550
Mezzanine Loan - Great Falls Replacement Surgical Hospital	(13)		Great Falls, MT	November 2, 2015	4,500
HonorHealth 44th Street MOB	(5)		Phoenix, AZ	November 13, 2015	7,163
Mercy Medical Center MOB	(5)		Fenton, MO	December 1, 2015	9,850
Nashville MOB	(5)	(14)	Nashville, TN	December 17, 2015	45,440
Mezzanine Loan - Wilson Surgery Center	(15)		Wilson, NC	December 17, 2015	216
Hillside Medical Center - Suite 100	(4)		Hanover, PA	December 18, 2015	4,240
Randall Road MOB - Suite 170	(4)		Elgin, IL	December 21, 2015	408
KSF Orthopaedic MOB	(5)		Houston, TX	December 22, 2015	6,250
Great Falls Clinic MOB	(5)	(16)	Great Falls, MT	December 29, 2015	24,244
Randall Road MOB - Suite 320	(4)		Elgin, IL	December 30, 2015	500
					$	840,958


(1)	“MOB” means medical office building and “ASC” means ambulatory surgical center.

(2)

Through subsidiaries of the Operating Partnership, the Company 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.


(4)	The Company accounted for these acquisitions as asset acquisitions and capitalized $0.4 million of total acquisition costs to the basis of the properties.


(5)	The Company accounted for these acquisitions as business combinations pursuant to the acquisition method and expensed total acquisition costs of $14.9 million.


(6)	The Company 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.


(7)	The Company made a $9.0 million mezzanine term loan to fund the development of a MOB in Jacksonville, Florida. The loan is collateralized by an equity interest in the medical building development and accrues interest at a rate of 8.4% per year.


(8)	The Company 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.


(9)	The Company 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 Company has an option to purchase the property.


(10)	The Company made additional advances on a construction loan to Tinseltown Partners, LLC to fund the renovations and additions of two re-purposed buildings in Jacksonville, Florida. The additional advances total $1.0 million and accrue at an interest rate of 9.0% per year.


(11)	The Company 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.


(12)	The Company made a $4.5 million mezzanine term loan to partially fund the owner’s permanent financing of the Truman Medical Center in Kansas City, Missouri. The loan accrues interest at the rate of 8.02% per year. The Company has rights of first offer and first refusal to purchase the property.


(13)	The Company made a $4.5 million mezzanine term loan to partially fund the construction of the Great Falls Hospital in Great Falls, Montana. The loan accrues interest at the rate of 9.0% per year. The Company has a contract to purchase the property upon completion of construction.

(14)

The Operating Partnership partially funded the purchase price of this acquisition by issuing a total of 91,236 Series A Preferred Units valued at approximately $19.7 million in the aggregate on the date of issuance. Holders of the Series A Preferred Units issued in connection with the acquisition of the Nashville MOB are entitled to certain redemption rights under the partnership agreement of the Operating Partnership which allow them to cause the Operating Partnership to redeem the Series A Preferred Units in exchange for cash, or at the Trust’s option, for common shares, pursuant to a formula provided in the partnership agreement. The investors in the Series A Preferred Units have agreed not cause the Operating Partnership to redeem their Series A Preferred Units prior to December 17, 2016.


(15)	The Company made a $0.2 million short term mezzanine loan to partially fund the owner’s acquisition of a 9,890 square foot ambulatory surgery center in Wilson, North Carolina. The loan accrues interest at the rate of 8.8% per year.


(16)	The Company’s $24.2 million investment represents the acquisition of an approximate 75% membership interest in the entity which owns the Great Falls Clinic.

For 2015, the Company recorded revenues and net income of $41.4 million and $10.6 million , respectively, from its 2015 acquisitions.

The following table summarizes the preliminary purchase price allocations of the assets acquired and the liabilities assumed, which the Company determined using Level 2 and Level 3 inputs (in thousands):



	December 31, 2016			December 31, 2015
Land	$	57,847		$	52,224
Building and improvements	1,112,746			643,470
In-place lease intangible	58,666			99,763
Above market in-place lease intangible	9,359			19,337
Below market in-place lease intangible	(4,518		)	(3,738		)
Above market in-place ground lease	(644		)	—
Below market in-place ground lease	28,937			13,941
Lease inducement	8,945			2,478
Contingent consideration	(156		)	(2,718		)
Receivable	104			3,564
Debt assumed	—			(18,690		)
Prepaid expenses	2,659			—
Issuance of Common Shares	(20,980		)	—
Issuance of OP Units	(2,869		)	(10,973		)
Issuance of Series A Preferred Units	—			(29,403		)
Noncontrolling interest	(50		)	(13,970		)
Investment in unconsolidated entity	903			—
Net assets acquired	$	1,250,949		$	755,285

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

Physicians Realty Trust

The following table illustrates the pro forma consolidated revenue, net income, and earnings per share as if the Company had acquired the 2016 acquisitions detailed above as of January 1, 2015 (in thousands, except share and per share amounts):



	Year Ended December 31,
	2016		2015
Revenue	$	303,590	$	258,657
Net income	47,154		37,288
Net income available to common shareholders	43,372		34,090
Earnings per share - basic	$	0.34	$	0.27
Earnings per share - diluted	$	0.34	$	0.27
Weighted average number of shares outstanding - basic	126,143,114		126,143,114
Weighted average number of shares outstanding - diluted	130,466,893		130,466,893

Physicians Realty L.P.



	Year Ended December 31,
	2016		2015
Revenue	$	303,590	$	258,657
Net income	47,154		37,288
Net income available to common unitholders	44,580		35,720
Earnings per unit - basic	$	0.34	$	0.28
Earnings per unit - diluted	$	0.34	$	0.27
Weighted average number of units outstanding - basic	129,835,209		129,835,209
Weighted average number of units outstanding - diluted	130,466,893		130,466,893