Acquisitions and Dispositions

Effective January 1, 2018, with our adoption of ASU 2017-01, transaction costs incurred for asset acquisitions are capitalized as a component of purchase price and all other non-capitalizable costs are reflected in “General and Administrative Expenses” on our consolidated statements of income. Certain acquisitions that occurred prior to January 1, 2018 were accounted for as business combinations.

During the nine months ended September 30, 2018, the Company completed acquisitions of 4 operating healthcare properties and 1 land parcel located in 5 states for an aggregate purchase price of approximately $252.8 million. The Company completed a noncontrolling interest buyout for $6.4 million, and a $2.0 million loan transaction, resulting in total investment activity of approximately $261.3 million. The Company also acquired 2 properties and an adjacent land parcel through the conversion and satisfaction of a previously outstanding construction loan. Additionally, the Company acquired 2 parcels of land, which it had previously leased, as the result of a lease restructuring arrangement and equity recapitalization.

During the three months ended September 30, 2018, the Company completed the acquisition of the Northside Medical Midtown MOB located in Atlanta, GA for approximately $82.1 million. The Company also acquired 2 properties and an adjacent land parcel through the conversion and satisfaction of a previously outstanding construction loan, valued at an aggregate $18.8 million. Additionally, the Company acquired 2 parcels of land, which it had previously leased, as the result of a lease restructuring arrangement and equity recapitalization.

For the three months ended September 30, 2018, the Company recorded revenues and net income from its 2018 acquisitions of $3.9 million and $1.4 million, respectively. For the nine months ended September 30, 2018, the Company recorded revenues and net income from its 2018 acquisitions of $9.3 million and $3.4 million, respectively.

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	$	7,684		$	—	$	9,632	$	17,316
Building and improvements	82,180			64,197		67,772		214,149
In-place lease intangibles	13,202			8,923		11,777		33,902
Above market in-place lease intangibles	969			—		98		1,067
Below market in-place lease intangibles	(959		)	—		—		(959		)
Below market in-place ground lease	—			—		5,329		5,329
Mortgage escrow	—			—		7,862		7,862
Prepaid expenses	(2,628		)	—		—		(2,628		)
Issuance of Series A Preferred Units	(22,651		)	—		—		(22,651		)
Net assets acquired	$	77,797		$	73,120	$	102,470	$	253,387

Dispositions

During the three months ended March 31, 2018, the Company sold 2 medical office buildings located in Michigan and Florida for approximately $2.5 million and recognized a net gain on the sale of approximately $0.1 million. During the three months ended June 30, 2018, the Company sold 15 medical office buildings located in 3 states for approximately $90.7 million and recognized a net loss on the sale of approximately $2.6 million. During the three months ended September 30, 2018, the Company sold 17 medical office buildings located in 7 states for approximately $127.2 million and recognized a net gain on the sale of approximately $14.2 million.

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Revenues	$	947	$	5,770	$	12,295	$	17,906

Income before net gain on sale of investment properties:	$	1,827	$	1,411	$	5,030	$	4,956
Gain on sale of investment properties, net	14,227		—		11,664		—
Net income	$	16,054	$	1,411	$	16,694	$	4,956

Assets Held for Sale

As of September 30, 2018, the Company classified one portfolio comprised of two properties as held for sale. In accordance with this classification, the following assets are classified as held for sale in the accompanying consolidated balance sheets at September 30, 2018.



Land and improvements	$	3,780
Building and improvements	28,127
Acquired lease intangibles	6,077
Other assets	3,491
Real estate held for sale before accumulated deprecation	41,475
Accumulated depreciation	(6,049		)
Real estate held for sale	$	35,426