Acquisitions and Dispositions (Tables)

9 Months Ended

Sep. 30, 2017

Business Combinations [Abstract]

Schedule of acquisitions and aggregate purchase price

Investment activity for the three months ended September 30, 2017 is summarized below:

Property (1)		Location	Acquisition Date	Purchase Price (in thousands)
Clearview Cancer Institute	(2)	Huntsville, AL	August 4, 2017	$	53,250
Northside Cherokee/Towne Lake MOB	(2)	Atlanta, GA	August 15, 2017	37,127
HonorHealth Mesa MOB	(2)	Mesa, AZ	August 15, 2017	4,800
2017 CHI Portfolio - Tranche 2 (5 MOBs)	(2)	AR, MN, NE, TX	August 24, 2017 & August 31, 2017	33,694
NCI Buyout - Great Falls Clinic	(4)	Great Falls, MT	September 21, 2017	1,061
Legends Park MOB & ASC	(2)	Midland, TX	September 27, 2017	30,000
Loan Investments	(3)	Various	Various	30,251
				$	190,183

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

(2) The Company accounted for three of these facilities as asset acquisitions and capitalized total acquisition costs of $0.1 million. The remaining six facilities were accounted for as business combinations pursuant to the acquisition method, with acquisition expense totaling $2.2 million, which includes costs related to properties pursued but not acquired.

(3) Loan investments listed here include two separate transactions at a weighted average interest rate of 8.0%.

(4)

The Company acquired an additional 3.2% interest in the Great Falls Clinic joint venture from the predecessor owner, increasing the Company’s total interest to 85.0%.Since September 30, 2017, the Trust, through subsidiaries of its Operating Partnership, closed on the below acquisitions:

Property (1)	Location	Acquisition Date	Purchase Price (in thousands)
Franklin MOB & ASC	Franklin, TN	October 10, 2017	$	9,950
Davis Portfolio 2.0 (2 MOBs)	Minneapolis, MN	October 31, 2017	18,749
			$	28,699

(1)

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

Schedule of preliminary purchase price allocations of assets acquired and liabilities assumed

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

	1st Quarter			2nd Quarter			3rd Quarter			Total
Land	$	14,190		$	5,662		$	5,004		$	24,856
Building and improvements	187,239			537,952			134,305			859,496
In-place lease intangible	27,670			38,766			19,233			85,669
Above market in-place lease intangible	13,406			2,815			550			16,771
Below market in-place lease intangible	(757		)	(2,097		)	(705		)	(3,559		)
Above market in-place ground lease	—			(4,172		)	(448		)	(4,620		)
Below market in-place ground lease	1,042			3,245			1,471			5,758
Receivables	480			(46		)	—			434
Debt assumed	(26,379		)	—			—			(26,379		)
Issuance of OP Units	(44,978		)	—			—			(44,978		)
Net assets acquired	$	171,913		$	582,125		$	159,410		$	913,448

Revenues and net income related to disposition

The following table summarizes revenues and net income related to the Georgia Portfolio for the periods presented (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016
Revenues	—	425	438	1,259
Income before gain on sale of investment properties:	—	112	87	308
Gain on sale of investment properties	—	—	5,303	—
Net income	—	112	5,390	308

Schedule of pro forma combined revenue, net income, and earnings per share-basic and diluted

The following table illustrates the pro forma consolidated revenue, net income, and earnings per share as if the Company had acquired the 2017 acquisitions as of January 1, 2016 (in thousands, except share and per share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Revenue	$	95,623	$	89,349	$	283,152	$	230,026
Net income	13,174		15,799		37,179		28,509
Net income available to common shareholders	12,635		14,772		35,251		25,743
Earnings per share - basic	$	0.07	$	0.08	$	0.22	$	0.16
Earnings per share - diluted	$	0.07	$	0.08	$	0.22	$	0.16
Weighted average number of shares outstanding - basic	177,847,424		177,847,424		157,542,167		157,542,167
Weighted average number of shares outstanding - diluted	183,298,145		183,298,145		162,480,918		162,480,918

Physicians Realty L.P.

The following table illustrates the pro forma consolidated revenue, net income, and earnings per share as if the Company had acquired the 2017 acquisitions as of January 1, 2016 (in thousands, except unit and per unit amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Revenue	$	95,623	$	89,349	$	283,152	$	230,026
Net income	13,174		15,799		37,179		28,509
Net income available to common unitholders	13,015		15,187		36,295		26,535
Earnings per unit - basic	$	0.07	$	0.08	$	0.22	$	0.16
Earnings per unit - diluted	$	0.07	$	0.08	$	0.22	$	0.16
Weighted average number of units outstanding - basic	183,227,405		183,227,405		162,205,324		162,205,324
Weighted average number of units outstanding - diluted	183,298,145		183,298,145		162,480,918		162,480,918