10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to

Commission file number: 001-36007

PHYSICIANS REALTY TRUST

(Exact Name of Registrant as Specified in its Charter)

Maryland		46-2519850
(State of Organization)		(IRS Employer Identification No.)
309 N. Water Street, Suite 500		53202
Milwaukee,	Wisconsin
(Address of Principal Executive Offices)		(Zip Code)

(414) 367-5600

(Registrant’s Telephone Number, Including Area Code) 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, $0.01 par value per share	DOC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.         Yes ☒ No ☐                    

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).              Yes ☒ No ☐        

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒     Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes ☐ No ☒        

The number of Physicians Realty Trust’s common shares outstanding as of April 26, 2023 was 238,398,561.

PHYSICIANS REALTY TRUST

Quarterly Report on Form 10-Q

for the Quarter Ended March 31, 2023

Table of Contents

		Page Number
Part I	Financial Information
Item 1	Financial Statements (Unaudited)
	Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	3
	Consolidated Statements of Income for the Three Months Ended March 31, 2023 and 2022	4
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2023 and 2022	5
	Consolidated Statements of Equity for the Three Months Ended March 31, 2023 and 2022	6
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022	8
	Notes to Consolidated Financial Statements	9
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4	Controls and Procedures	34
Part II	Other Information
Item 1	Legal Proceedings	35
Item 1A	Risk Factors	35
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 6	Exhibits	36
SIGNATURES		37

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts may be forward-looking statements within the meaning of the federal securities laws. In particular, statements pertaining to our capital resources, property performance, and results of operations contain forward-looking statements. Likewise, all of our statements regarding anticipated growth in our funds from operations and anticipated market conditions, demographics, and results of operations are forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology such as “believe,” “expect,” “outlook,” “continue,” “project,” “may,” “will,” “should,” “seek,” “approximately,” “intend,” “plan,” “pro forma,” “estimate,” or “anticipate” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans, expectations, or intentions.

These forward-looking statements reflect the views of our management regarding current expectations and projections about future events and are based on currently available information. These forward-looking statements are not guarantees of future performance and involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data, or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

•general economic conditions, including inflation and recession;

•changes in our business or strategy;

•our ability to operate as a public company;

•adverse economic or real estate developments, either nationally or in the markets where our properties are located;

•our geographic concentration in Texas may cause us to be particularly exposed to downturns in the Texas economy or other changes in Texas market conditions;

•our concentration of investment in health care properties;

•the disruption of our business and the compromise of confidential information resulting from cybersecurity attacks, breaches, and other incidents;

•any adverse effects to the business, financial position or results of operations of CommonSpirit Health (“CommonSpirit”), or one or more of the CommonSpirit-affiliated tenants, that impact the ability of CommonSpirit-affiliated tenants to pay us rent;

•the degree and nature of our competition;

•competition for investment opportunities;

•difficulties in identifying health care properties to acquire and completing acquisitions;

•the unknown duration and economic, operational, and financial impacts of the global outbreak of a novel strain of the coronavirus and any variants that have emerged or that may emerge in the future, (the “COVID-19 pandemic”) and the actions taken by governmental authorities or others in connection with the COVID-19 pandemic will have on the Company’s business;

•changes in health care laws or government reimbursement rates;

•decreased rental rates or increased vacancy rates;

•defaults on or non-renewal of leases by tenants;

•the potential impact of severe weather events and climate change;

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•our failure to generate sufficient cash flows to service, pay down, or refinance our indebtedness or make distributions on our common shares;

•fluctuations and increases in interest rates and operating costs;

•the availability, terms, and issuance of debt and equity capital, including our unsecured revolving credit facility;

•general volatility of the market price of our common shares;

•our dependence upon key personnel whose continued service is not guaranteed;

•our ability to identify, hire, and retain highly qualified personnel in the future;

•the impact of our investments in joint ventures we have made and may make in the future;

•the financial condition and liquidity of, or disputes with, any joint venture and development partners with whom we may make co-investments in the future;

•changes in governmental regulations or interpretations thereof, such as real estate and zoning laws and increases in real property tax rates, taxation of real estate investment trusts (“REITs”), and similar matters;

•our failure to maintain our qualification as a REIT for U.S. federal income tax purposes;

•limitations imposed on our business and our ability to satisfy complex rules in order for us to qualify as a REIT for U.S. federal income tax purposes;

•changes in accounting principles generally accepted in the United States (“GAAP”);

•lack of or insufficient amounts of insurance;

•other factors affecting the real estate industry generally; and

•other factors that may materially adversely affect us, or the per share trading price of our common shares, including:

•the number of our common shares available for future issuance or sale;

•our issuance of equity securities or the perception that such issuance might occur;

•future debt;

•failure of securities analysts to publish research or reports about us or our industry; and

•securities analysts’ downgrade of our common shares or the health care-related real estate sector.

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events, or other changes after the date of this report, except as required by applicable law. You should not place undue reliance on any forward-looking statements that are based on information currently available to us or the third parties making the forward-looking statements. For a further discussion of these and other factors that could impact our future results, performance or transactions, see Part I, Item 1A (Risk Factors) of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission (the “Commission”) on February 24, 2023 (the “2022 Annual Report”).

As used in this report, unless the context otherwise requires, references to “we,” “us,” “our,” and the “Company” refer to Physicians Realty Trust (the “Trust”), a Maryland real estate investment trust, and Physicians Realty L.P. (the “Operating Partnership”), a Delaware limited partnership and the consolidated subsidiary of the Trust through which we conduct our business.

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PART I.                         Financial Information

Item 1.                             Financial Statements

Physicians Realty Trust

Consolidated Balance Sheets

(In thousands, except share and per share data)

	March 31, 2023		December 31, 2022
	(unaudited)
ASSETS
Investment properties:
Land and improvements	$	242,107	$	241,559
Building and improvements	4,678,995		4,674,011
Tenant improvements	96,527		92,906
Acquired lease intangibles	505,074		505,335
	5,522,703		5,513,811
Accumulated depreciation	(1,043,884)		(996,888)
Net real estate property	4,478,819		4,516,923
Right-of-use lease assets, net	230,254		231,225
Real estate loans receivable, net	115,764		104,973
Investments in unconsolidated entities	75,086		77,716
Net real estate investments	4,899,923		4,930,837
Cash and cash equivalents	3,364		7,730
Tenant receivables, net	10,830		11,503
Other assets	147,050		146,807
Total assets	$	5,061,167	$	5,096,877
LIABILITIES AND EQUITY
Liabilities:
Credit facility	$	147,762	$	188,328
Notes payable	1,450,798		1,465,437
Mortgage debt	164,130		164,352
Accounts payable	3,343		4,391
Dividends and distributions payable	59,824		60,148
Accrued expenses and other liabilities	85,007		87,720
Lease liabilities	104,856		105,011
Acquired lease intangibles, net	23,796		24,381
Total liabilities	2,039,516		2,099,768
Redeemable noncontrolling interests - partially owned properties	3,193		3,258
Equity:
Common shares, $0.01 par value, 500,000,000 common shares authorized, 238,395,869 and 233,292,030 common shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	2,384		2,333
Additional paid-in capital	3,810,504		3,743,876
Accumulated deficit	(926,790)		(881,672)
Accumulated other comprehensive income	4,162		5,183
Total shareholders’ equity	2,890,260		2,869,720
Noncontrolling interests:
Operating Partnership	119,187		123,015
Partially owned properties	9,011		1,116
Total noncontrolling interests	128,198		124,131
Total equity	3,018,458		2,993,851
Total liabilities and equity	$	5,061,167	$	5,096,877

The accompanying notes are an integral part of these consolidated financial statements.

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Physicians Realty Trust

Consolidated Statements of Income

(In thousands, except share and per share data) (Unaudited)

	Three Months Ended March 31,
	2023		2022
Revenues:
Rental and related revenues	$	131,398	$	127,791
Interest income on real estate loans and other	2,946		2,599
Total revenues	134,344		130,390
Expenses:
Interest expense	19,153		16,823
General and administrative	11,200		10,293
Operating expenses	45,394		41,752
Depreciation and amortization	47,677		47,260
Total expenses	123,424		116,128
Income before equity in loss of unconsolidated entities and gain (loss) on sale of investment properties, net:	10,920		14,262
Equity in loss of unconsolidated entities	(264)		(166)
Gain (loss) on sale of investment properties, net	13		(153)
Net income	10,669		13,943
Net income attributable to noncontrolling interests:
Operating Partnership	(423)		(692)
Partially owned properties (1)	(44)		(159)
Net income attributable to common shareholders	$	10,202	$	13,092
Net income per share:
Basic	$	0.04	$	0.06
Diluted	$	0.04	$	0.06
Weighted average common shares:
Basic	237,484,043		225,069,208
Diluted	248,756,672		238,340,243
Dividends and distributions declared per common share	$	0.23	$	0.23

(1)Includes amounts attributable to redeemable noncontrolling interests.

The accompanying notes are an integral part of these consolidated financial statements.

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Physicians Realty Trust

Consolidated Statements of Comprehensive Income

(In thousands) (Unaudited)

	Three Months Ended March 31,
	2023		2022
Net income	$	10,669	$	13,943
Other comprehensive income:
Change in fair value of interest rate swap agreements, net	(1,021)		1,379
Total other comprehensive (loss) income	(1,021)		1,379
Comprehensive income	9,648		15,322
Comprehensive income attributable to noncontrolling interests - Operating Partnership	(383)		(761)
Comprehensive income attributable to noncontrolling interests - partially owned properties	(44)		(159)
Comprehensive income attributable to common shareholders	$	9,221	$	14,402

The accompanying notes are an integral part of these consolidated financial statements.

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Physicians Realty Trust

Consolidated Statements of Equity

(In thousands) (Unaudited)

	Par Value		Additional Paid in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’  Equity		Operating Partnership Noncontrolling Interest		Partially Owned Properties  Noncontrolling Interest		Total Noncontrolling Interests		Total Equity
Balance at December 31, 2022	$	2,333	$	3,743,876	$	(881,672)	$	5,183	$	2,869,720	$	123,015	$	1,116	$	124,131	$	2,993,851
Net proceeds from sale of common shares	44		65,769		—		—		65,813		—		—		—		65,813
Restricted share award grants, net	5		(1,127)		(408)		—		(1,530)		—		—		—		(1,530)
Conversion of OP Units	2		2,417		—		—		2,419		(2,419)		—		(2,419)		—
Dividends/distributions declared	—		—		(54,912)		—		(54,912)		(2,263)		—		(2,263)		(57,175)
Contributions	—		—		—		—		—		—		7,884		7,884		7,884
Distributions	—		—		—		—		—		—		(53)		(53)		(53)
Change in fair value of interest rate swap agreement	—		—		—		(1,021)		(1,021)		—		—		—		(1,021)
Adjustment for Noncontrolling Interests ownership in Operating Partnership	—		(431)		—		—		(431)		431		—		431		—
Net income	—		—		10,202		—		10,202		423		64		487		10,689
Balance as of March 31, 2023	$	2,384	$	3,810,504	$	(926,790)	$	4,162	$	2,890,260	$	119,187	$	9,011	$	128,198	$	3,018,458

The accompanying notes are an integral part of these consolidated financial statements.

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Physicians Realty Trust

Consolidated Statements of Equity

(In thousands) (Unaudited)

	Par Value		Additional Paid in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’  Equity		Operating Partnership Noncontrolling Interest		Partially Owned Properties  Noncontrolling Interest		Total Noncontrolling Interests		Total Equity
Balance at December 31, 2021	$	2,247	$	3,610,954	$	(776,001)	$	(892)	$	2,836,308	$	150,241	$	484	$	150,725	$	2,987,033
Net proceeds from sale of common shares	3		5,029		—		—		5,032		—		—		—		5,032
Restricted share award grants, net	3		118		(421)		—		(300)		—		—		—		(300)
Purchase of OP Units	—		—		—		—		—		(184)		—		(184)		(184)
Dividends/distributions declared	—		—		(51,879)		—		(51,879)		(2,740)		—		(2,740)		(54,619)
Contributions	—		—		—		—		—		—		569		569		569
Distributions	—		—		—		—		—		—		(55)		(55)		(55)
Change in market value of Redeemable Noncontrolling Interest in partially owned properties	—		—		717		—		717		—		—		—		717
Change in fair value of interest rate swap agreement	—		—		—		1,379		1,379		—		—		—		1,379
Adjustment for Noncontrolling Interests ownership in Operating Partnership	—		(217)		—		—		(217)		217		—		217		—
Net income	—		—		13,092		—		13,092		692		82		774		13,866
Balance as of March 31, 2022	$	2,253	$	3,615,884	$	(814,492)	$	487	$	2,804,132	$	148,226	$	1,080	$	149,306	$	2,953,438

The accompanying notes are an integral part of these consolidated financial statements.

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Physicians Realty Trust

Consolidated Statements of Cash Flows

(In thousands) (Unaudited)

	Three Months Ended March 31,
	2023		2022
Cash Flows from Operating Activities:
Net income	$	10,669	$	13,943
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	47,677		47,260
Amortization of deferred financing costs	569		579
Amortization of lease inducements and above/below-market lease intangibles	1,364		1,575
Straight-line rental revenue, net	(1,235)		(2,154)
Amortization of discount on unsecured senior notes	272		262
Amortization of above market assumed debt	—		(10)
(Gain) loss on sale of investment properties, net	(13)		153
Equity in loss of unconsolidated entities	264		166
Distributions from unconsolidated entities	1,906		2,002
Provision for bad debts	281		87
Non-cash share compensation	4,667		4,253
Change in operating assets and liabilities:
Tenant receivables	567		(791)
Other assets	536		(266)
Accounts payable	(1,048)		(5,252)
Accrued expenses and other liabilities	(2,757)		(7,272)
Net cash provided by operating activities	63,719		54,535
Cash Flows from Investing Activities:
Proceeds from sale of investment properties	2,553		1,804
Acquisition of investment properties, net	(2,650)		(10)
Investment in unconsolidated entities	(180)		(5,045)
Development of real estate	(953)		—
Escrowed cash - acquisition deposits/earnest deposits	—		90
Capital expenditures on investment properties	(8,400)		(5,491)
Investment in real estate loans receivable	(10,956)		(904)
Repayment of real estate loans receivable	—		22,441
Leasing commissions	(782)		(704)
Lease inducements	(400)		—
Net cash (used in) provided by investing activities	(21,768)		12,181
Cash Flows from Financing Activities:
Net proceeds from sale of common shares	65,813		5,032
Proceeds from credit facility borrowings	55,000		64,000
Repayment of credit facility borrowings	(96,000)		(83,000)
Repayment of senior unsecured notes	(15,000)		—
Principal payments on mortgage debt	(253)		(420)
Debt issuance costs	(14)		(10)
Dividends paid - shareholders	(55,643)		(52,858)
Distributions to noncontrolling interests - Operating Partnership	(2,264)		(2,739)
Contributions from noncontrolling interest	7,884		569
Distributions to noncontrolling interests - partially owned properties	(98)		(161)
Payments of employee taxes for withheld stock-based compensation shares	(5,742)		(4,092)
Purchase of OP Units	—		(184)
Net cash used in financing activities	(46,317)		(73,863)
Net decrease in cash and cash equivalents	(4,366)		(7,147)
Cash and cash equivalents, beginning of period	7,730		9,876
Cash and cash equivalents, end of period	$	3,364	$	2,729
Supplemental disclosure of cash flow information—interest paid during the period	$	25,176	$	23,123
Supplemental disclosure of noncash activity—change in fair value of interest rate swap agreements	$	(1,021)	$	1,379
Supplemental disclosure of noncash activity—conversion of loan receivable in connection to the acquisition of investment property	$	—	$	3,000

The accompanying notes are an integral part of these consolidated financial statements.

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Physicians Realty Trust

Notes to Consolidated Financial Statements

Unless otherwise indicated or unless the context requires otherwise, the use of the words “we,” “us,” “our,” and the “Company,” refer to Physicians Realty Trust, together with its consolidated subsidiaries, including Physicians Realty L.P.

Note 1. Organization and Business

Physicians Realty Trust (the “Trust” or the “Company”) was organized in the state of Maryland on April 9, 2013. As of March 31, 2023, the Trust was authorized to issue up to 500,000,000 common shares of beneficial interest, par value $0.01 per share. The Trust filed a Registration Statement on Form S-11 with the Commission with respect to a proposed underwritten initial public offering (the “IPO”) and completed the IPO of its common shares and commenced operations on July 24, 2013.

The Trust contributed the net proceeds from the IPO to Physicians Realty L.P, a Delaware limited partnership (the “Operating Partnership”), and is the sole general partner of the Operating Partnership. The Trust’s operations are conducted through the Operating Partnership and wholly-owned and majority-owned subsidiaries of the Operating Partnership. The Trust, as the general partner of the Operating Partnership, controls the Operating Partnership and consolidates the assets, liabilities, and results of operations of the Operating Partnership.

The Trust is a self-managed REIT formed primarily to acquire, selectively develop, own, and manage health care properties that are leased to physicians, hospitals, and health care delivery systems.

ATM Program

In May 2021, the Trust and the Operating Partnership entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with KeyBanc Capital Markets Inc., Credit Agricole Securities (USA) Inc., BMO Capital Markets Corp., and Raymond James & Associates, Inc. in their capacity as agents for the Company and/or forward sellers and Stifel, Nicolaus & Company, Incorporated in its capacity as sales agent for the Company (collectively, the “Agents”) and Bank of Montreal, Credit Agricole Corporate and Investments Bank, KeyBanc Capital Markets Inc., and Raymond James & Associates, Inc. as forward purchasers for the Company (the “Forward Purchasers”), pursuant to which the Trust may issue and sell, from time to time, its common shares having an aggregate offering price of up to $500 million through the Agents (the “ATM Program”). The Sales Agreement contemplates that, in addition to the issuance and sale of the Trust’s common shares through the Agents, the Trust may also enter into one or more forward sales agreements from time to time in the future with each of the Forward Purchasers.

During the quarterly period ended March 31, 2023, the Trust sold 4,400,000 common shares pursuant to the ATM Program, at a weighted average price of $15.10 per share, resulting in total net proceeds of approximately $65.8 million. As of March 31, 2023, the Trust had $158.6 million remaining available under the ATM Program.

Note 2. Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the periods ended March 31, 2023 and 2022 pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited financial statements included in the Trust’s 2022 Annual Report. The Company has consistently applied its accounting policies to all periods presented in these consolidated financial statements.

Noncontrolling Interests

The Company presents the portion of any equity it does not own in entities that it controls (and thus consolidates) as noncontrolling interests and classifies such interests as a component of consolidated equity, separate from the Company’s total shareholders’ equity, on the consolidated balance sheets.

Operating Partnership: Noncontrolling interests in the Company include OP Units held by other investors. Net income or loss is allocated to noncontrolling interests (limited partners) based on their respective ownership percentage of the Operating Partnership. The ownership percentage is calculated by dividing the number of OP Units held by the noncontrolling interests by the total OP Units held by the noncontrolling interests and the Trust. Issuance of additional common shares and OP Units

9

changes the ownership interests of both the noncontrolling interests and the Trust. Such transactions and the related proceeds are treated as capital transactions. 

As of March 31, 2023, the Trust held a 96.0% interest in the Operating Partnership. As the sole general partner and the majority interest holder, the Trust consolidates the financial position and results of operations of the Operating Partnership.

Partially Owned Properties: The Trust reflects noncontrolling interests in partially owned properties on the consolidated balance sheets for the portion of consolidated properties that are not wholly owned by the Company. The earnings or losses from those properties attributable to the noncontrolling interests are reflected as noncontrolling interests in partially owned properties in the consolidated statements of income.

Redeemable Noncontrolling Interests - Partially Owned Properties

In connection with the Company’s acquisitions of the medical office building, ambulatory surgery center, and hospital located on the Great Falls Hospital campus in Great Falls, Montana, physicians affiliated with the sellers retained non-controlling interests which were, at the holders’ option, able to be redeemed at any time after May 1, 2023. Due to the redemption provision, which was outside of the control of the Trust, the Trust classified the investment in the mezzanine section of its consolidated balance sheets. On July 14, 2022, the Company disposed of these three properties and removed the related redeemable noncontrolling interests from its consolidated balance sheets.

Through a consolidated joint venture with MedProperties Realty Advisors, LLC (“MedProperties”), the Company acquired Calko Medical Center in Brooklyn, New York. As part of the joint venture, MedProperties can redeem its interest, at its option, at any time after September 9, 2025. Due to the redemption provision, which is outside of the control of the Company, the Company classifies the noncontrolling interests in the mezzanine section of its consolidated balance sheets. The Company records the carrying amount of the redeemable noncontrolling interests at the greater of the carrying value or redemption value.

Dividends and Distributions

On March 17, 2023, the Trust announced that its Board of Trustees authorized, and the Trust declared, a cash dividend of $0.23 per common share for the quarter ended March 31, 2023. The dividend was paid on April 18, 2023 to common shareholders and holders of record of partnership interests of the Operating Partnership (“OP Units”) as of the close of business on April 4, 2023.

Tax Status of Dividends and Distributions

The Company’s distributions of current and accumulated earnings and profits for U.S. federal income tax purposes generally are taxable to shareholders as ordinary income. Distributions in excess of these earnings and profits generally are treated as a non-taxable reduction of the shareholders’ basis in the shares to the extent thereof (non-dividend distributions) and thereafter as taxable gain.

Any cash distributions received by an OP Unit holder in respect of its OP Units generally will not be taxable to such OP Unit holder for U.S. federal income tax purposes, to the extent that such distribution does not exceed the OP Unit holder’s basis in its OP Units. Any such distribution will instead reduce the OP Unit holder’s basis in its OP Units (and OP Unit holders will be subject to tax on the taxable income allocated to them by the Operating Partnership in respect of their OP Units when such income is earned by the Operating Partnership, with such income allocation increasing the OP Unit holders’ basis in their OP Units).

The Company has elected taxable REIT subsidiary (“TRS”) status for certain of its corporate subsidiaries and, as a result, these entities will incur both federal and state income taxes on any taxable income of such entities after consideration of any net operating losses. To date, these income taxes have been de minimis.

Real Estate Loans Receivable, Net

Real estate loans receivable consists of eight mezzanine loans, six term loans, and two construction loans as of March 31, 2023. Generally, each mezzanine loan is collateralized by a pledge of the borrower’s ownership interest in the respective real estate owner, each term loan is secured by a mortgage on a related medical office building, and construction loans are secured by mortgages on the land and the improvements as constructed. The reserve for loan losses was $0.2 million as of March 31, 2023.

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Rental and Related Revenues

Rental revenue is recognized on a straight-line basis over the terms of the related leases when collectability is probable. Recognizing rental revenue on a straight-line basis for leases may result in recognizing revenue for amounts more or less than amounts currently due from tenants. Amounts recognized in excess of amounts currently due from tenants are included in other assets and were approximately $102.9 million and $101.3 million as of March 31, 2023 and December 31, 2022, respectively. If the Company determines that collectability of straight-line rents is not probable, income recognition is limited to the lesser of cash collected, or lease income reflected on a straight-line basis, plus variable rent when it becomes accruable.

In accordance with ASC 842, Leases, Topic 842, if the collectability of a lease changes after the commencement date, any difference between lease income that would have been recognized and the lease payments shall be recognized as an adjustment to lease income. Bad debt recognized as an adjustment to rental and related revenues was $0.4 million for the three months ended March 31, 2023 and $0.1 million for the three months ended March 31, 2022.

Rental revenue is adjusted by the amortization of lease inducements and above-market or below-market rents on certain leases. Lease inducements and above-market or below-market rents are amortized on a straight-line basis over the remaining lease term. Rental and related revenues also include expense recoveries, which relate to tenant reimbursement of real estate taxes, insurance, and other operating expenses that are recognized in the period the applicable expenses are incurred. The reimbursements are recorded gross, as these costs are incurred by the Company and reimbursed by the tenants. We have certain tenants with absolute net leases. Under these lease agreements, the tenant is responsible for operating and building expenses and we do not recognize expense recoveries.

New Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional relief to applying reference rate reform to changing reference rates, contracts, hedging relationships, and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”), which has been discontinued at the end of 2021. The amendments in this update may be applied through December 31, 2024. The Company will continue to use published LIBOR rates through June of 2023, or until all transactions referencing LIBOR have been amended.

On March 31, 2023, the Operating Partnership, as borrower, and the Trust, as guarantor, executed a First Amendment to the Third Amended and Restated Credit Agreement to update the benchmark provisions to replace LIBOR with the Secured Overnight Financing Rate (“SOFR”), as the reference rate for the purpose of calculating interest under the agreement. In connection with amending the unsecured credit agreement, we also amended our fixed interest rate swap agreement to update reference rate from LIBOR to SOFR. As a result, we elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients maintains the presentation of derivatives consistent with past presentation. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

Note 3. Investment and Disposition Activity

During the three months ended March 31, 2023, the Company executed contractual commitments related to a $40.5 million development project, with quarterly costs of $1.0 million, completed the acquisition of one medical condominium unit for an investment of $1.3 million and one parcel of land adjacent to one of its medical office facilities for an investment of $0.8 million, and paid $0.3 million of additional purchase consideration under two earn-out agreements. The Company also closed on a $35.8 million construction loan, funding $4.1 million to date, and funded one term loan for $5.4 million, $1.0 million of previous construction loan commitments, and $0.5 million of previous term loan commitments. Additionally, the Company invested $0.2 million in funds managed by a real estate technology private equity fund. Investment activity totaled approximately $14.4 million during the three months ended March 31, 2023. As part of these investments, the Company incurred approximately $0.2 million of capitalized costs.

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The following table summarizes the acquisition date fair values of the assets acquired and the liabilities assumed in connection with the acquisition of the medical condominium unit, a parcel of land adjacent to one of our medical office facilities, and two earn-out agreements, as well as follow-on capitalized costs during the three months ended March 31, 2023, which the Company determined using Level 2 and Level 3 inputs (in thousands):

Land	$	1,356
Building and improvements	1,294
Cash used in acquisition of investment property	$	2,650

Dispositions

During the three months ended March 31, 2023, the Company sold one medical facility for approximately $2.6 million, realizing an insignificant gain.

Note 4. Intangibles

The following is a summary of the carrying amount of intangible assets and liabilities as of March 31, 2023 and December 31, 2022 (in thousands):

	March 31, 2023						December 31, 2022
	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
Assets
In-place leases	$	445,322	$	(251,995)	$	193,327	$	445,583	$	(241,643)	$	203,940
Above-market leases	$	59,752	$	(31,511)	$	28,241	$	59,752	$	(30,096)	$	29,656
Liabilities
Below-market leases	$	36,409	$	(12,613)	$	23,796	$	37,002	$	(12,621)	$	24,381

The following is a summary of acquired lease intangible amortization for the three months ended March 31, 2023 and 2022 (in thousands):

	Three Months Ended March 31,
	2023		2022
Amortization expense related to in-place leases	$	10,612	$	11,040
Decrease in rental income related to above-market leases	1,415		1,502
Increase in rental income related to below-market leases	586		459

Future aggregate net amortization of acquired lease intangibles as of March 31, 2023, is as follows (in thousands):

	Net Decrease (Increase)  in Revenue		Net Increase in  Expenses
2023	$	2,361	$	30,004
2024	2,929		34,718
2025	2,357		29,208
2026	1,203		23,095
2027	1,036		20,173
Thereafter	(5,441)		56,129
Total	$	4,445	$	193,327

As of March 31, 2023, the weighted average remaining amortization period is 7 years for in-place and above-market lease intangibles assets and 15 years for below-market lease intangibles.

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Note 5. Other Assets

Other assets consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):

	March 31, 2023		December 31, 2022
Straight line rent receivable, net	$	102,856	$	101,306
Leasing commissions, net	13,449		13,231
Prepaid expenses	10,657		11,009
Lease inducements, net	8,065		7,894
Interest rate swap	1,645		2,045
Escrows	1,352		1,565
Notes receivable, net	367		370
Other	8,659		9,387
Total	$	147,050	$	146,807

Note 6. Debt

The following is a summary of debt as of March 31, 2023 and December 31, 2022 (in thousands):

	March 31, 2023		December 31, 2022
Fixed interest mortgage notes (1)	$	59,641	$	59,776
Variable interest mortgage notes (2)	105,035		105,153
Total mortgage debt	164,676		164,929
$1.0 billion unsecured revolving credit facility due September 2025 (3)	152,000		193,000
$400 million senior unsecured notes bearing fixed interest of 4.30%, due March 2027	400,000		400,000
$350 million senior unsecured notes bearing fixed interest of 3.95%, due January 2028	350,000		350,000
$500 million senior unsecured notes bearing fixed interest of 2.625%, due November 2031	500,000		500,000
$135 million senior unsecured notes bearing fixed interest of 4.43% to 4.74%, due January 2026 to 2031	135,000		150,000
$75 million senior unsecured notes bearing fixed interest of 4.09% to 4.24%, due August 2025 to 2027	75,000		75,000
Total principal	1,776,676		1,832,929
Unamortized deferred financing costs	(6,899)		(7,453)
Unamortized discounts	(7,087)		(7,359)
Total debt	$	1,762,690	$	1,818,117

(1)As of March 31, 2023, fixed interest mortgage notes bear interest from 3.25% to 4.63%, due in 2024, with a weighted average interest rate of 3.80%. As of December 31, 2022, fixed interest mortgage notes bear interest from 3.33% to 4.63%, due in 2024, with a weighted average interest rate of 3.85%. The notes are collateralized by two properties with a net book value of $93.1 million as of March 31, 2023 and two properties with a net book value of $94.9 million as of December 31, 2022. One mortgage bears interest at LIBOR + 1.90% and the Trust entered into a pay-fixed receive-variable interest rate swap, fixing the variable component at 1.35% as of March 31, 2023 and 1.43% as of December 31, 2022.

(2)Variable interest mortgage notes bear variable interest of SOFR + 1.85% and LIBOR + 2.75% for a weighted average interest rate of 6.76% and 6.20% as of March 31, 2023 and December 31, 2022, respectively. The notes are due in 2026 and 2028 and collateralized by four properties with a net book value of $291.1 million as of March 31, 2023 and $295.5 million as of December 31, 2022.

(3)The unsecured revolving credit facility bears variable interest of SOFR plus 0.95%, inclusive of a 0.10% SOFR index adjustment, as of March 31, 2023 and LIBOR plus 0.85% as of December 31, 2022.

On September 24, 2021, the Operating Partnership, as borrower, and the Trust, as guarantor, executed a Third Amended and Restated Credit Agreement (the “Credit Agreement”) which extended the maturity date of the revolving credit facility under the Credit Agreement to September 24, 2025 and reduced the interest rate margin applicable to borrowings. The

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Credit Agreement includes an unsecured revolving credit facility of $1.0 billion and contains a term loan feature of $250.0 million, which the Company borrowed on, bringing total borrowing capacity to $1.25 billion. The Credit Agreement also includes a swingline loan commitment for up to 10% of the maximum principal amount and provides an accordion feature allowing the Operating Partnership to increase borrowing capacity by up to an additional $500.0 million, subject to customary terms and conditions, resulting in a maximum borrowing capacity of $1.75 billion. On October 13, 2021, the Company paid off the $250.0 million term loan feature of the Credit Agreement and the term loan feature is no longer available to the Company. The revolving credit facility under the Credit Agreement also includes two six-month extension options. Borrowings under the Credit Agreement bear interest on the outstanding principal amount at an adjusted LIBOR rate, which is based on the Trust’s investment grade rating under the Credit Agreement.

On March 31, 2023, the Operating Partnership, as borrower, and the Trust, as guarantor, executed a First Amendment to the Credit Agreement which expanded the accordion feature allowing the Operating Partnership to increase borrowing capacity by up to an additional $500.0 million, resulting in a maximum borrowing capacity of $2.25 billion, and replaced the LIBOR-based benchmark rates applicable to borrowings under the Credit Agreement with SOFR based benchmark rates plus a SOFR index adjustment of 0.10%.

As of March 31, 2023, the Trust had investment grade ratings of BBB from S&P and Baa2 from Moody’s. As such, borrowings under the revolving credit facility of the Credit Agreement accrue interest on the outstanding principal at a rate of SOFR + 0.95%, inclusive of a 0.10% SOFR index adjustment. The Credit Agreement includes a facility fee equal to 0.20% per annum, which is also determined by the Trust’s investment grade rating.

Base Rate Loans, Adjusted SOFR Loans, and Letters of Credit (each, as defined in the Credit Agreement) will be subject to interest rates, based upon the Trust’s investment grade rating as follows:

Credit Rating	Applicable Margin for Revolving Loans: SOFR Loans and Letter of Credit Fee	Applicable Margin for Revolving Loans: Base Rate Loans		Applicable Margin for Term Loans: SOFR Loans	Applicable Margin for Term Loans: Base Rate Loans
At Least A- or A3	SOFR + 0.725%	—	%	SOFR + 0.85%	—	%
At Least BBB+ or Baa1	SOFR + 0.775%	—	%	SOFR + 0.90%	—	%
At Least BBB or Baa2	SOFR + 0.85%	—	%	SOFR + 1.00%	—	%
At Least BBB- or Baa3	SOFR + 1.05%	0.05	%	SOFR + 1.25%	0.25	%
Below BBB- or Baa3	SOFR + 1.40%	0.40	%	SOFR + 1.65%	0.65	%

The Credit Agreement contains financial covenants that, among other things, require compliance with leverage and coverage ratios and maintenance of minimum tangible net worth, as well as covenants that may limit the Trust’s and the Operating Partnership’s ability to incur additional debt, grant liens, or make distributions. The Company may, at any time, voluntarily prepay any revolving or term loan under the Credit Agreement in whole or in part without premium or penalty. As of March 31, 2023, the Company was in compliance with all financial covenants related to the Credit Agreement.

The Credit Agreement includes customary representations and warranties by the Trust and the Operating Partnership and imposes customary covenants on the Operating Partnership and the Trust. The Credit Agreement also contains customary events of default, and if an event of default occurs and continues, the Operating Partnership is subject to certain actions by the administrative agent, including without limitation, the acceleration of repayment of all amounts outstanding under the Credit Agreement.

As of March 31, 2023, the Company had $152.0 million of borrowings outstanding under its unsecured revolving credit facility. As defined by the Credit Agreement, the current unencumbered borrowing base allows the Company to borrow an additional $848.0 million before reaching the maximum allowed under the credit facility.

Notes Payable

As of March 31, 2023, the Company had $1.5 billion aggregate principal amount of senior notes issued and outstanding by the Operating Partnership, comprised of $25.0 million maturing in 2025, $70.0 million maturing in 2026, $425.0 million maturing in 2027, $395.0 million maturing in 2028, and $545.0 million maturing in 2031.

Certain properties have mortgage debt that contains financial covenants. As of March 31, 2023, the Trust was in compliance with all mortgage debt financial covenants.

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Scheduled principal payments due on consolidated debt as of March 31, 2023 are as follows (in thousands):

2023	$	754
2024	59,719
2025	177,476
2026	170,476
2027	425,476
Thereafter	942,775
Total Payments	$	1,776,676

As of March 31, 2023, the Company had total consolidated indebtedness of approximately $1.8 billion. The weighted average interest rate on consolidated indebtedness was 4.03% (based on the 30-day LIBOR rate of 4.77% and a SOFR rate of 4.87% as of March 31, 2023).

For the three months ended March 31, 2023 and 2022, the Company incurred interest expense on its debt, exclusive of deferred financing cost amortization, of $18.6 million and $16.2 million, respectively.

Note 7. Derivatives

In the normal course of business, a variety of financial instruments are used to manage or hedge interest rate risk. The Company has implemented ASC 815, Derivatives and Hedging (“ASC 815”), which establishes accounting and reporting standards requiring that all derivatives, including certain derivative instruments embedded in other contracts, be recorded as either an asset or a liability measured at their fair value unless they qualify for a normal purchase or normal sales exception.

When specific hedge accounting criteria are not met, ASC 815 requires that changes in a derivative’s fair value be recognized currently in earnings. Changes in the fair market values of the Company’s derivative instruments are recorded in the consolidated statements of income if such derivatives do not qualify for, or the Company does not elect to apply for, hedge accounting. As a result of the Company’s adoption of ASU 2017-12 as of January 1, 2019, the entire change in the fair value of its derivatives designated and qualified as cash flow hedges are recorded in accumulated other comprehensive income on the consolidated balance sheets and are subsequently reclassified into earnings in the period in which the hedged forecasted transaction affects earnings.

To manage interest rate risk for certain of its variable-rate debt, the Company uses interest rate swaps as part of its risk management strategy. These derivatives are designed to mitigate the risk of future interest rate increases by providing a fixed interest rate for a limited, pre-determined period of time. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of March 31, 2023, the Company had one outstanding interest rate swap contract designated as a cash flow hedge of interest rate risk. See Note 2 (Summary of Significant Accounting Policies) of the 2022 Annual Report for a further discussion of our derivatives. In addition, the Company recognizes its share of other comprehensive income related to derivative instruments held by unconsolidated entities.

The following table summarizes the location and aggregate fair value of the interest rate swaps on the Company’s consolidated balance sheets (in thousands):

Total notional amount		$	36,050
Effective fixed interest rate	(1)	3.25		%
Effective date		10/31/2019
Maturity date		10/31/2024
Asset balance at March 31, 2023 (included in Other assets)		$	1,645
Asset balance at December 31, 2022 (included in Other assets)		$	2,045

(1)1.35% effective swap rate plus 1.90% spread per hedging agreement.

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Note 8. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):

	March 31, 2023		December 31, 2022
Prepaid rent	$	29,041	$	21,062
Real estate taxes payable	18,982		23,303
Accrued interest	11,540		18,196
Accrued expenses	8,524		7,920
Security deposits	4,382		4,338
Accrued incentive compensation	1,579		2,700
Tenant improvement allowances	1,401		1,831
Other	9,558		8,370
Total	$	85,007	$	87,720

Note 9. Stock-based Compensation

The Company follows ASC 718, Compensation - Stock Compensation (“ASC 718”), in accounting for its share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee’s requisite service period. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized when incurred. Share-based payments classified as liability awards are marked to fair value at each reporting period. Any common shares issued pursuant to the Company's incentive equity compensation and employee stock purchase plans will result in the Operating Partnership issuing OP Units to the Trust on a one-for-one basis, with the Operating Partnership receiving the net cash proceeds of such issuances.

Certain of the Company’s employee stock awards vest only upon the achievement of performance targets. ASC 718 requires recognition of compensation cost only when achievement of performance conditions is considered probable. Consequently, the Company’s determination of the amount of stock compensation expense requires judgment in estimating the probability of achievement of these performance targets. Subsequent changes in actual experience are monitored and estimates are updated as information is available.

In connection with the IPO, the Trust adopted the Physicians Realty Trust 2013 Equity Incentive Plan, which made shares available for awards for participants. On April 30, 2019, at the Annual Meeting of Shareholders of Physicians Realty Trust, the Trust’s shareholders approved the Amended and Restated Physicians Realty Trust 2013 Equity Incentive Plan (“2013 Plan”). The amendment increased the number of common shares authorized for issuance under the 2013 Plan to a total of 7,000,000 common shares authorized for issuance. The 2013 Plan term was also extended to 2029.

Restricted Common Shares

Restricted common shares granted under the 2013 Plan are eligible for dividends as well as the right to vote. In the three months ended March 31, 2023, the Trust granted a total of 291,324 restricted common shares with a total value of $4.3 million to its officers and certain of its employees. In January 2023, under the 2013 Plan, the Company granted restricted common shares to certain of its officers under a salary deferral program, part of which vests after one year, with the remainder vesting after two years. The remaining awards have a vesting period of one year.

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A summary of the status of the Trust’s non-vested restricted common shares as of March 31, 2023 and changes during the three month period then ended follow:

	Common Shares	Weighted Average Grant Date Fair Value
Non-vested at December 31, 2022	272,898	$	16.69
Granted	291,324	14.67
Vested	(210,380)	16.37
Forfeited	(364)	17.45
Non-vested at March 31, 2023	353,478	$	15.21

For all service awards, the Company records compensation expense for the entire award on a straight-line basis over the requisite service period. For the three months ended March 31, 2023 and 2022, the Company recognized non-cash share compensation of $1.1 million and $0.9 million, respectively. Unrecognized compensation expense at March 31, 2023 was $4.5 million.

Restricted Share Units

In January 2023, under the 2013 Plan, the Company granted 11,274 restricted share units to certain of its trustees in lieu of all or a portion of such trustee’s 2023 cash retainer. These units are subject to certain timing conditions and a one-year service period. Each restricted share unit contains one dividend equivalent. Each recipient will accrue dividend equivalents on awarded share units equal to the cash dividend that would have been paid on the awarded share unit had the awarded share unit been an issued and outstanding common share on the record date for the dividend. With respect to the performance and timing conditions of the January 2023 grants, the grant date fair value of $14.47 per unit was based on the share price at the date of grant.

In March 2023, under the 2013 Plan, the Company granted restricted share units at a target level of 355,388 to its officers and certain of its employees and 62,586 to its trustees. Units granted to officers and certain employees under the Company’s 2013 Plan are subject to certain performance and market conditions and a three-year service period. Units granted to trustees are subject to certain timing conditions and a two-year service period for full vesting. Each restricted share unit contains one dividend equivalent. Each recipient will accrue dividend equivalents on awarded share units equal to the cash dividend that would have been paid on the awarded share unit had the awarded share unit been an issued and outstanding common share on the record date for the dividend.

Approximately 30% of the restricted share units issued to officers and certain employees under the Company’s 2013 Plan in 2023 vest based on a certain market condition. The awards containing the market condition were valued with the assistance of independent valuation specialists. The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $18.71 per unit for the March 2023 grant using the following assumptions:

Volatility	23.4		%
Dividend assumption	reinvested
Expected term in years	2.83 years
Risk-free rate	4.70		%
Share price (per share)	$	14.70

The remaining 70% of the restricted share units issued to officers and certain employees under the Company’s 2013 Plan, and 100% of other restricted share units issued to trustees vest based upon certain performance or timing conditions. With respect to the performance and timing conditions of the March 2023 grants, the grant date fair value of $14.70 per unit was based on the share price at the date of grant. The combined weighted average grant date fair value of the March 2023 restricted share units issued to officers and certain employees was $15.90 per unit.

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The following is a summary of the activity in the Trust’s restricted share units during the three months ended March 31, 2023: 

	Executive Awards				Trustee Awards
	Restricted Share Units		Weighted Average Grant Date Fair Value		Restricted Share Units	Weighted Average Grant Date Fair Value
Non-vested at December 31, 2022	1,046,940		$	21.41	77,992	$	16.60
Granted	355,388		15.90		73,860	14.66
Vested	(223,579)	(1)	24.36		(49,890)	16.74
Non-vested at March 31, 2023	1,178,749		$	19.19	101,962	$	15.13

(1)Restricted units vested by Company executives in 2023 resulted in the issuance of 652,851 common shares, less 290,380 common shares withheld to cover minimum withholding tax obligations.

For the three months ended March 31, 2023 and 2022, the Company recognized non-cash share compensation of $3.5 million and $3.3 million, respectively. Unrecognized compensation expense at March 31, 2023 was $16.3 million.

Note 10. Fair Value Measurements

ASC Topic 820, Fair Value Measurement (“ASC 820”), requires certain assets and liabilities be reported and/or disclosed at fair value in the financial statements and provides a framework for establishing that fair value. The framework for determining fair value is based on a hierarchy that prioritizes the valuation techniques and inputs used to measure fair value.

In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset. These Level 3 fair value measurements are based primarily on management’s own estimates using pricing models, discounted cash flow methodologies, or similar techniques taking into account the characteristics of the asset or liability. In instances where inputs used to measure fair value fall into different levels of the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability. As part of the Company’s acquisition process, Level 3 inputs are used to measure the fair value of the assets acquired and liabilities assumed.

The Company’s derivative instruments as of March 31, 2023 consist of one interest rate swap, as detailed in the Derivative Instruments section of Note 7 (Derivatives) of this report and Note 2 (Summary of Significant Accounting Policies) of Part II, Item 8 (Financial Statements and Supplementary Data) of our 2022 Annual Report.

The interest rate swap is not traded on an exchange. The Company’s derivative assets and liabilities are recorded at fair value based on a variety of observable inputs including contractual terms, interest rate curves, yield curves, measure of volatility, and correlations of such inputs. The Company measures its derivatives at fair value on a recurring basis. The fair values are based on Level 2 inputs described above. The Company considers its own credit risk, as well as the credit risk of its counterparties, when evaluating the fair value of its derivatives.

The Company also has assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. This generally includes assets subject to impairment. There were no such assets measured at fair value as of March 31, 2023.

The carrying amounts of cash and cash equivalents, tenant receivables, payables, and accrued interest are reasonable estimates of fair value because of the short-term maturities of these instruments. Fair values for real estate loans receivable and mortgage debt are estimated based on rates currently prevailing for similar instruments of similar maturities and are based primarily on Level 2 inputs.

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The following table presents the fair value of the Company’s financial instruments (in thousands):

	March 31, 2023				December 31, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Real estate loans receivable, net	$	115,764	$	113,453	$	104,973	$	102,162
Notes receivable, net	$	367	$	367	$	370	$	370
Derivative assets	$	1,645	$	1,645	$	2,045	$	2,045
Liabilities:
Credit facility	$	(152,000)	$	(152,000)	$	(193,000)	$	(193,000)
Notes payable	$	(1,460,000)	$	(1,307,272)	$	(1,475,000)	$	(1,302,767)
Mortgage debt	$	(164,676)	$	(163,429)	$	(164,929)	$	(163,129)

Note 11. Tenant Operating Leases

The Company is a lessor of medical office buildings and other health care facilities. Leases have expirations from 2023 through 2042. As of March 31, 2023, the future minimum rental payments on non-cancelable leases, exclusive of expense recoveries and minimum rental payments for assets classified as held for sale, if applicable, were as follows (in thousands):

2023	$	270,431
2024	352,374
2025	334,894
2026	278,001
2027	226,004
Thereafter	764,694
Total	$	2,226,398

For the three months ended March 31, 2023 and 2022, the Company recognized $131.4 million and $127.8 million, respectively, of rental and other lease-related income related to our operating leases, of which $37.9 million and $35.1 million, respectively, were variable lease payments.

Note 12. Rent Expense

The Company leases the rights to parking structures at two of its properties, the air that one property occupies, and the land upon which 97 of its properties are located from third party landowners pursuant to separate leases. In addition, the Company has nine corporate leases, primarily for office space.

The Company’s leases include both fixed and variable rental payments and may also include escalation clauses and renewal options. These leases have terms of up to 93 years remaining, excluding extension options, with a weighted average remaining term of 44 years.

At the inception of a new lease, the Company establishes an operating or finance lease asset and operating or finance lease liability calculated as the present value of future minimum lease payments. As our leases do not provide an implicit rate, we calculate a discount rate that approximates our incremental borrowing rate available at lease commencement to determine the present value of future minimum lease payments. The approximated weighted average discount rate was 4.4% as of March 31, 2023. There are no operating or finance leases that have not yet commenced that would have a significant impact on the Company’s consolidated balance sheets.

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As of March 31, 2023, the future minimum lease obligations under non-cancelable parking, air, ground, and corporate leases were as follows (in thousands):

2023	$	3,539
2024	4,819
2025	4,798
2026	4,787
2027	4,789
Thereafter	239,130
Total undiscounted lease payments	$	261,862
Less: Interest	(157,006)
Present value of lease liabilities	$	104,856

Lease costs consisted of the following for the three months ended March 31, 2023 (in thousands):

Fixed lease cost	$	817
Variable lease cost	338
Total lease cost	$	1,155

Note 13. Credit Concentration

The Company uses annualized base rent (“ABR”) as its credit concentration metric. ABR is calculated by multiplying contractual base rent for the month ended March 31, 2023 by 12, excluding the impact of concessions and straight-line rent. The following table summarizes certain information about the Company’s top five tenant credit concentrations as of March 31, 2023 (in thousands):

Tenant	Total ABR		Percent of ABR
CommonSpirit - CHI - Nebraska	$	18,142	5.0	%
Northside Hospital	16,238		4.5	%
UofL Health - Louisville, Inc.	14,373		4.0	%
US Oncology	11,443		3.2	%
HonorHealth	11,220		3.1	%
Remaining portfolio	289,558		80.2	%
Total	$	360,974	100.0	%

ABR collected from the Company’s top five tenant relationships comprises 19.8% of its total ABR as of March 31, 2023. Total ABR from CommonSpirit-affiliated tenants totals 14.8%, including the affiliates disclosed above.

The following table summarizes certain information about the Company’s top five geographic concentrations as of March 31, 2023:

State	Total ABR		Percent of ABR
Texas	$	49,397	13.7	%
Georgia	26,570		7.4	%
Florida	25,512		7.1	%
Indiana	23,379		6.5	%
Arizona	21,542		6.0	%
Other	214,574		59.3	%
Total	$	360,974	100.0	%

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Note 14. Earnings Per Share

The following table shows the amounts used in computing the Trust’s basic and diluted earnings per share (in thousands, except share and per share data):

	Three Months Ended March 31,
	2023		2022
Numerator for earnings per share - basic:
Net income	$	10,669	$	13,943
Net income attributable to noncontrolling interests:
Operating Partnership	(423)		(692)
Partially owned properties	(44)		(159)
Numerator for earnings per share - basic	$	10,202	$	13,092
Numerator for earnings per share - diluted:
Numerator for earnings per share - basic	$	10,202	$	13,092
Noncontrolling interest - Operating Partnership income	423		692
Numerator for earnings per share - diluted	$	10,625	$	13,784
Denominator for earnings per share - basic and diluted:
Weighted average number of shares outstanding - basic	237,484,043		225,069,208
Effect of dilutive securities:
Noncontrolling interest - Operating Partnership units	9,842,219		11,912,099
Restricted common shares	130,172		104,910
Restricted share units	1,300,238		1,254,026
Denominator for earnings per share - diluted:	248,756,672		238,340,243
Earnings per share - basic	$	0.04	$	0.06
Earnings per share - diluted	$	0.04	$	0.06

Note 15. Subsequent Events

Since March 31, 2023, the Company completed the acquisition of two medical condominium units located in an Atlanta “Pill Hill” medical office building (“MOB”) for an aggregate purchase price of approximately $1.4 million and funded additional costs of $0.8 million related to our development project.

The Company also contributed $2.0 million to our existing Davis Joint Venture for our pro-rata share of two earn-out agreements. Additionally, we funded a $3.4 million term loan with the Davis Joint Venture related to these earn-out agreements.

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Item 2.                                 Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our unaudited consolidated financial statements, including the notes to those statements, included in Part I, Item 1 of this report, and the Section entitled “Cautionary Statement Regarding Forward-Looking Statements” in this report. As discussed in more detail in the Section entitled “Cautionary Statement Regarding Forward-Looking Statements,” this discussion contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause those differences include those discussed in Part I, Item 1 (Business) and Part I, Item 1A (Risk Factors) of our 2022 Annual Report.

First Quarter Highlights:

•Reported first quarter 2023 total revenue of $134.3 million, an increase of 3.0% over the prior year period.

•Reported net income of $10.7 million for the first quarter ended 2023, a decrease of 23.5% over the prior year period, and first quarter net income per share of $0.04 on a fully diluted basis.

•Generated first quarter Normalized Funds From Operations (“Normalized FFO”) of $0.24 per share on a fully diluted basis.

•Completed $14.4 million in investments, including the funding of previous loan commitments in the first quarter.

•Executed contractual commitments of a $40.5 million development located in the Atlanta MSA.

•First quarter MOB Same-Store Cash Net Operating Income growth was 1.0% year-over-year.

•Declared a quarterly dividend of $0.23 per share and OP Unit for the first quarter 2023, paid on April 18, 2023.

•Disposed of a 30,000 square foot medical office building on January 17, 2023 for $2.6 million, recognizing an insignificant net gain on the sale.

•Sold 4,400,000 common shares pursuant to the ATM Program at a weighted average price of $15.10 during the first quarter, resulting in net proceeds of $65.8 million.

Overview

We are a self-managed health care real estate company organized in April 2013 to acquire, selectively develop, own, and manage health care properties that are leased to physicians, hospitals, and health care delivery systems. We invest in real estate that is integral to providing high quality health care services. Our properties are typically located on a campus with a hospital or other health care facilities or strategically affiliated with a hospital or other health care facilities. We believe the impact of government programs and continuing trends in the health care industry create attractive opportunities for us to invest in health care related real estate. In particular, we believe the demand for health care will continue to increase as a result of the aging population as older persons generally utilize health care services at a rate well in excess of younger people. Our management team has significant public health care REIT experience and has long-established relationships with physicians, hospitals, and health care delivery system decision makers that we believe will provide quality investment and growth opportunities. Our principal investments include medical office buildings, outpatient treatment facilities, as well as other real estate integral to health care providers. In recent years, we have seen increased competition for health care properties and we expect this trend to continue. We seek to generate attractive risk-adjusted returns for our shareholders through a combination of stable and increasing dividends and potential long-term appreciation in the value of our properties and our common shares.

We grew our portfolio of gross real estate investments from approximately $124 million at the time of our IPO in July 2013 to approximately $5.8 billion as of March 31, 2023. As of March 31, 2023, our consolidated portfolio consisted of 275 health care properties located in 32 states with approximately 15,516,476 net leasable square feet, which were approximately 95% leased with a weighted average remaining lease term of approximately 5.5 years. As of March 31, 2023, approximately 91% of the net leasable square footage of our portfolio was either on the campus of a hospital or strategically affiliated with a health system.

We receive a cash rental stream from the health care providers under our leases. Approximately 93% of the annualized base rent payments from our properties as of March 31, 2023 were from absolute net and triple net leases, pursuant to which the tenants are responsible for operating expenses subject to specific lease terms relating to the property, including but not limited to real estate taxes, utilities, property insurance, routine maintenance and repairs, and property management. This structure helps insulate us from increases in certain operating expenses and provides more predictable cash flow. Approximately 6% of the ABR payments from our properties as of March 31, 2023 were from modified gross leases which allow us to pass through certain increases in future operating expenses (e.g., property tax and insurance) to tenants for reimbursement, thus protecting us from increases in such operating expenses.

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We seek to structure our triple-net leases to generate attractive returns on a long-term basis. Our leases typically have initial terms of 5 to 15 years and include annual rent escalators of approximately 1.5% to 4.0%, with an annual weighted average rent escalator of approximately 2.4%. However, certain of the Company’s leases contain annual rent escalators indexed to changes in the Consumer Price Index (“CPI”), often with a floor or ceiling. As of March 31, 2023, approximately 5.8% of the Company’s annual rent escalators had CPI provisions. Our operating results depend significantly upon the ability of our tenants to make required rental payments. We believe that our portfolio of medical office buildings and other health care facilities will enable us to generate stable cash flows over time because of the diversity of our tenants, staggered lease expiration schedule, long-term leases, and low historical occurrence of tenants defaulting under their leases. As of March 31, 2023, leases representing approximately 3.1%, 5.5%, and 7.0% of leased square feet will expire in 2023, 2024, and 2025, respectively.

We intend to grow our portfolio of high-quality health care properties leased to physicians, hospitals, health care delivery systems, and other health care providers primarily through acquisitions of existing health care facilities that provide stable revenue growth and predictable long-term cash flows. We may also selectively finance the development of new health care facilities through joint venture or fee arrangements with health care real estate developers or health system development professionals. Generally, we expect to make investments in new development properties when approximately 80% or more of the development property has been pre-leased before construction commences. We seek to invest in properties where we can develop strategic alliances with financially sound health care providers and health care delivery systems that offer need-based health care services in sustainable health care markets. We focus our investment activity on medical office buildings and ambulatory surgery centers.

We believe that trends such as shifting consumer preferences, limited space in hospitals, the desire of patients and health care providers to limit non-essential services provided in a hospital setting, and cost considerations, continue to drive the industry towards performing more procedures in outpatient facilities versus the hospital setting. As these trends continue, we believe that demand for medical office buildings and similar health care properties away from hospital settings and in convenient locations to patients will continue to rise. We intend to exploit this trend and seek outpatient properties consistent with our investment philosophy and strategies.

While not our focus, we may choose to invest opportunistically in life science facilities, senior housing properties, skilled nursing facilities, specialty hospitals, and treatment centers. Consistent with our qualification as a REIT, we may also opportunistically invest in companies that provide health care services, and in joint venture entities with operating partners, structured to comply with the REIT Investment Diversification Act of 2007.

The Trust is a Maryland real estate investment trust and elected to be taxed as a REIT for U.S. federal income tax purposes. We conduct our business through an UPREIT structure in which our properties are owned by our Operating Partnership directly or through limited partnerships, limited liability companies, or other subsidiaries. The Trust is the sole general partner of our Operating Partnership and, as of March 31, 2023, owned approximately 96.0% of the OP Units. As of April 26, 2023, there were 238,398,561 common shares outstanding.

Key Transactions in First Quarter 2023

Investment Activity

During the three months ended March 31, 2023, the Company executed contractual commitments related to a $40.5 million development project, with quarterly costs of $1.0 million, completed the acquisition of one medical condominium unit for an investment of $1.3 million and one parcel of land adjacent to one of its medical office facilities for an investment of $0.8 million, and paid $0.3 million of additional purchase consideration under two earn-out agreements. The Company also closed on a $35.8 million construction loan, funding $4.1 million to date, and funded one term loan for $5.4 million, $1.0 million of previous construction loan commitments, and $0.5 million of previous term loan commitments. Additionally, the Company invested $0.2 million in funds managed by a real estate technology private equity fund. Investment activity for the three months ended March 31, 2023 totaled approximately $14.4 million.

During the three months ended March 31, 2023, the Company sold one 30,000 square foot medical facility for approximately $2.6 million, realizing an insignificant net gain.

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Recent Developments

Quarterly Distribution

On March 17, 2023, we announced that our Board of Trustees authorized and declared a cash distribution of $0.23 per common share for the quarterly period ended March 31, 2023. The dividend was paid on April 18, 2023 to common shareholders and OP Unit holders of record as of the close of business on April 4, 2023.

Recent Events

Since March 31, 2023, the Company completed the acquisition of two medical condominium units located in an Atlanta “Pill Hill” MOB for an aggregate purchase price of approximately $1.4 million and funded additional costs of $0.8 million related to our development project.

The Company also contributed $2.0 million to our existing Davis Joint Venture for our pro-rata share of two earn-out agreements. Additionally, we funded a $3.4 million term loan with the Davis Joint Venture related to these earn-out agreements.

Results of Operations

Three months ended March 31, 2023 compared to the three months ended March 31, 2022.

The following table summarizes our results of operations for the three months ended March 31, 2023 and 2022 (in thousands):

	2023		2022		Change		%
Revenues:
Rental and related revenues	$	131,398	$	127,791	$	3,607	2.8	%
Interest income on real estate loans and other	2,946		2,599		347		13.4	%
Total revenues	134,344		130,390		3,954		3.0	%
Expenses:
Interest expense	19,153		16,823		2,330		13.9	%
General and administrative	11,200		10,293		907		8.8	%
Operating expenses	45,394		41,752		3,642		8.7	%
Depreciation and amortization	47,677		47,260		417		0.9	%
Total expenses	123,424		116,128		7,296		6.3	%
Income before equity in loss of unconsolidated entities and gain (loss) on sale of investment properties, net:	10,920		14,262		(3,342)		(23.4)	%
Equity in loss of unconsolidated entities	(264)		(166)		(98)		NM
Gain (loss) on sale of investment properties, net	13		(153)		166		NM
Net income	$	10,669	$	13,943	$	(3,274)	(23.5)	%

NM = Not Meaningful

Revenues

Total revenues increased $4.0 million, or 3.0%, for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022. An analysis of selected revenues follows.

Rental and related revenues. Rental and related revenues increased $3.6 million, or 2.8%, for the three months ended March 31, 2023 compared to the three months ended March 31, 2022. Rental and related revenues were comprised of the following based upon contractual billing terms (in thousands):

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	2023		2022		Change		%
Rental revenues	$	93,543	$	92,665	$	878	0.9	%
Expense recoveries	37,855		35,126		2,729		7.8	%
Rental and related revenues	$	131,398	$	127,791	$	3,607	2.8	%

Rental revenues increased $0.9 million, or 0.9%, for the three months ended March 31, 2023 compared to the three months ended March 31, 2022. Rental revenues increased $1.7 million from properties acquired in 2022 and $0.7 million related to net increases on our existing portfolio. These increases were partially offset by a decrease of $1.5 million related to properties sold in 2022.

Expense recoveries increased $2.7 million, or 7.8%, for the three months ended March 31, 2023 compared to the three months ended March 31, 2022. Expense recoveries increased $2.0 million related to net increases on our existing portfolio and $0.8 million from properties acquired in 2022.

Interest income on real estate loans and other. Interest income on real estate loans and other increased $0.3 million, or 13.4%, for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022. Interest income on real estate loans and other increased $0.2 million due to property management income related to the management for our unconsolidated joint ventures and $0.1 million due to higher average real estate loan balances in 2023 compared to 2022.

Expenses

Total expenses increased $7.3 million, or 6.3%, for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022. An analysis of selected expenses follows.

Interest expense. Interest expense increased $2.3 million, or 13.9%, for the three months ended March 31, 2023 compared to the three months ended March 31, 2022. Interest expense increased primarily due to a higher weighted average effective interest rate on our credit facility by $2.0 million and higher interest on our existing variable mortgage debts of $0.8 million. Our weighted average effective interest rate on our credit facility was 5.4% and 1.0% for the three months ended March 31, 2023 and 2022, respectively, and our weighted average effective interest rate on our variable mortgage debt was 6.8% and 2.2% for the three months ended March 31, 2023 and 2022, respectively. These increases were partially offset by $0.4 million of net proceeds from the Company’s outstanding interest rate swap.

General and administrative. General and administrative expenses increased $0.9 million, or 8.8%, for the three months ended March 31, 2023 compared to the three months ended March 31, 2022. The increase was primarily due to higher payroll and benefits of $0.6 million, of which $0.4 million was non-cash compensation, and $0.3 million of administrative and professional fees.

Operating expenses. Operating expenses increased $3.6 million, or 8.7%, for the three months ended March 31, 2023 compared to the three months ended March 31, 2022. Net operating expenses from properties acquired in 2022 increased by $0.8 million. Operating expenses on the existing portfolio increased by $2.8 million, or 6.7% quarter over quarter, mainly due to higher maintenance costs of $1.3 million, utility costs of $1.0 million, and property management costs of $0.5 million.

Depreciation and amortization. Depreciation and amortization increased $0.4 million, or 0.9%, for the three months ended March 31, 2023 compared to the three months ended March 31, 2022. Depreciation and amortization increased $1.2 million for properties purchased in 2022. These increases were partially offset by $0.5 million related to properties sold during 2022 and $0.2 million related to our existing portfolio primarily due to fully amortized lease intangibles.

Equity in loss of unconsolidated entities. The change in equity in loss of unconsolidated entities for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 is insignificant.

Gain (loss) on sale of investment properties, net. During the three months ended March 31, 2023, we sold one property in Pennsylvania, containing 30,000 square feet for approximately $2.6 million, realizing an insignificant gain. During the three months ended March 31, 2022, we sold one property containing 9,997 net leasable square feet located in Michigan for approximately $2.0 million, realizing an insignificant net loss.

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Cash Flows

Three months ended March 31, 2023 compared to the three months ended March 31, 2022 (in thousands).

	2023		2022
Cash provided by operating activities	$	63,719	$	54,535
Cash (used in) provided by investing activities	(21,768)		12,181
Cash used in financing activities	(46,317)		(73,863)
Decrease in cash and cash equivalents	$	(4,366)	$	(7,147)

Cash flows from operating activities. Cash flows provided by operating activities was $63.7 million during the three months ended March 31, 2023 compared to $54.5 million during the three months ended March 31, 2022, representing an increase of $9.2 million. The increase in cash provided by operating activities is primarily due the timing of our payments on accounts payable and other liabilities.

Cash flows from investing activities. Cash flows used in investing activities was $21.8 million during the three months ended March 31, 2023 compared to cash flows provided by investing activities of $12.2 million during the three months ended March 31, 2022, representing a change of $33.9 million. The change in cash used in investing activities was primarily due to a decrease in repayment of real estate loans receivables of $22.4 million and an increase of $10.1 million from cash used in the investment of real estate loan receivables. Additionally, cash spent on capital expenditures and lease inducements increased by $2.9 million and $0.4 million, respectively. This was partially offset by a net decrease of $1.2 million of cash spent on development and acquisitions of investment properties and unconsolidated entities. Further, there was an increase of $0.7 million from the proceeds on sales of investment properties.

Cash flows from financing activities. Cash flows used in financing activities was $46.3 million during the three months ended March 31, 2023 compared to $73.9 million during the three months ended March 31, 2022, representing a decrease of $27.5 million. The decrease in cash used in financing activities was primarily due to an increase in net proceeds from the sale of common shares pursuant to the ATM Program of $60.8 million and an increase of $7.3 million from contributions from noncontrolling interests. Additionally, cash used in financing activities decreased due to a decrease of distributions to noncontrolling interests of $0.5 million, a decrease in purchases of OP units of $0.2 million and a decrease in principal payments on mortgage debt of $0.2 million. This is partially offset by an increase of $22.0 million in net paydowns under the credit facility and $15.0 million from the repayment of senior unsecured notes. Further, there was an increase of dividends paid to shareholders of $2.8 million and an increase of $1.7 million for payments of employee taxes withheld for stock-based compensation.

Non-GAAP Financial Measures

This report includes Funds From Operations (“FFO”), Normalized FFO, Normalized Funds Available For Distribution (“FAD”), Net Operating Income (“NOI”), Cash NOI, MOB Same-Store Cash NOI, Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (“EBITDAre”) and Adjusted EBITDAre, which are non-GAAP financial measures. For purposes of Item 10(e) of Regulation S-K promulgated under the Securities Act, a non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable financial measure calculated and presented in accordance with GAAP in the statement of operations, balance sheet or statement of cash flows (or equivalent statements) of the company, or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable financial measure so calculated and presented. As used in this report, GAAP refers to generally accepted accounting principles in the United States of America. Pursuant to the requirements of Item 10(e) of Regulation S-K promulgated under the Securities Act, we have provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

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FFO and Normalized FFO

We believe that information regarding FFO is helpful to shareholders and potential investors because it facilitates an understanding of the operating performance of our properties without giving effect to real estate depreciation and amortization, which assumes that the value of real estate assets diminishes ratably over time. We calculate FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (“Nareit”). Nareit defines FFO as net income or loss (computed in accordance with GAAP) before noncontrolling interests of holders of OP units, excluding preferred distributions, gains (or losses) on sales of depreciable operating property, impairment write-downs on depreciable assets, plus real estate related depreciation and amortization (excluding amortization of deferred financing costs). Our FFO computation includes our share of required adjustments from our unconsolidated joint ventures and may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the Nareit definition or that interpret the Nareit definition differently than we do. The GAAP measure that we believe to be most directly comparable to FFO, net income, includes depreciation and amortization expenses, gains or losses on property sales, impairments, and noncontrolling interests. In computing FFO, we eliminate these items because, in our view, they are not indicative of the results from the operations of our properties. To facilitate a clear understanding of our historical operating results, FFO should be examined in conjunction with net income (determined in accordance with GAAP) as presented in our financial statements. FFO does not represent cash generated from operating activities in accordance with GAAP, should not be considered to be an alternative to net income or loss (determined in accordance with GAAP) as a measure of our liquidity and is not indicative of funds available for our cash needs, including our ability to make cash distributions to shareholders.

We use Normalized FFO, which excludes from FFO net change in fair value of derivative financial instruments, acceleration of deferred financing costs, net change in fair value of contingent consideration, and other normalizing items. Our Normalized FFO computation includes our share of required adjustments from our unconsolidated joint ventures and our use of the term Normalized FFO may not be comparable to that of other real estate companies as they may have different methodologies for computing this amount. Normalized FFO should not be considered as an alternative to net income or loss (computed in accordance with GAAP), as an indicator of our financial performance or of cash flow from operating activities (computed in accordance with GAAP), or as an indicator of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions. Normalized FFO should be reviewed in connection with other GAAP measurements.

The following is a reconciliation from net income, the most direct financial measure calculated and presented in accordance with GAAP, to FFO and Normalized FFO (in thousands, except per share data):

	Three Months Ended March 31,
	2023		2022
Net income	$	10,669	$	13,943
Earnings per share - diluted	$	0.04	$	0.06
Net income	$	10,669	$	13,943
Net income attributable to noncontrolling interests - partially owned properties	(44)		(159)
Depreciation and amortization expense	47,560		47,149
Depreciation and amortization expense - partially owned properties	(138)		(70)
(Gain) loss on sale of investment properties, net	(13)		153
Proportionate share of unconsolidated joint venture adjustments	2,306		2,383
FFO applicable to common shares	$	60,340	$	63,399
Proportionate share of unconsolidated joint venture adjustments	—		(8)
Normalized FFO applicable to common shares	$	60,340	$	63,391
FFO per common share - diluted	$	0.24	$	0.27
Normalized FFO per common share - diluted	$	0.24	$	0.27
Weighted average common shares outstanding - diluted	248,756,672		238,340,243

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Normalized Funds Available for Distribution (“FAD”)

We define Normalized FAD, a non-GAAP measure, which excludes from Normalized FFO non-cash share compensation expense, straight-line rent adjustments, amortization of acquired above-market or below-market leases and assumed debt, amortization of lease inducements, amortization of deferred financing costs, and loan reserve adjustments, including our share of all required adjustments from unconsolidated joint ventures. We also adjust for recurring capital expenditures related to building, site, and tenant improvements, leasing commissions, cash payments from seller master leases, and rent abatement payments, including our share of all required adjustments for unconsolidated joint ventures. Other REITs or real estate companies may use different methodologies for calculating Normalized FAD, and accordingly, our computation may not be comparable to those reported by other REITs. Although our computation of Normalized FAD may not be comparable to that of other REITs, we believe Normalized FAD provides a meaningful supplemental measure of our performance due to its frequency of use by analysts, investors, and other interested parties in the evaluation of our performance as a REIT. Normalized FAD should not be considered as an alternative to net income or loss attributable to controlling interest (computed in accordance with GAAP) or as an indicator of our financial performance. Normalized FAD should be reviewed in connection with other GAAP measurements.

The following is a reconciliation from net income, the most direct financial measure calculated and presented in accordance with GAAP, to Normalized FAD (in thousands):

	Three Months Ended March 31,
	2023		2022
Net income	$	10,669	$	13,943
Normalized FFO applicable to common shares	$	60,340	$	63,391
Normalized FFO applicable to common shares	$	60,340	$	63,391
Non-cash share compensation expense	4,667		4,253
Straight-line rent adjustments	(1,235)		(2,154)
Amortization of acquired above/below-market leases/assumed debt	1,135		1,339
Amortization of lease inducements	229		225
Amortization of deferred financing costs	569		579
Recurring capital expenditures and lease commissions	(5,786)		(5,663)
Loan reserve adjustments	3		3
Proportionate share of unconsolidated joint venture adjustments	(219)		(431)
Normalized FAD applicable to common shares	$	59,703	$	61,542

Net Operating Income (“NOI”), Cash NOI, and MOB Same-Store Cash NOI

NOI is a non-GAAP financial measure that is defined as net income or loss, computed in accordance with GAAP, generated from our total portfolio of properties and other investments before general and administrative expenses, depreciation and amortization expense, interest expense, net change in the fair value of derivative financial instruments, gain or loss on the sale of investment properties, and impairment losses, including our share of all required adjustments from our unconsolidated joint ventures. We believe that NOI provides an accurate measure of operating performance of our operating assets because NOI excludes certain items that are not associated with management of the properties. Our use of the term NOI may not be comparable to that of other real estate companies as they may have different methodologies for computing this amount.

Cash NOI is a non-GAAP financial measure which excludes from NOI straight-line rent adjustments, amortization of acquired above and below market leases, and other non-cash and normalizing items, including our share of all required adjustments from unconsolidated joint ventures. Other non-cash and normalizing items include items such as the amortization of lease inducements, loan reserve adjustments, payments received from seller master leases and rent abatements, and changes in fair value of contingent consideration. We believe that Cash NOI provides an accurate measure of the operating performance of our operating assets because it excludes certain items that are not associated with management of the properties. Additionally, we believe that Cash NOI is a widely accepted measure of comparative operating performance in the real estate community. Our use of the term Cash NOI may not be comparable to that of other real estate companies as such other companies may have different methodologies for computing this amount.

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MOB Same-Store Cash NOI is a non-GAAP financial measure which excludes from Cash NOI assets not held for the entire preceding five quarters, non-MOB assets, and other normalizing items not specifically related to the same-store property portfolio. Management considers MOB Same-Store Cash NOI a supplemental measure because it allows investors, analysts, and Company management to measure unlevered property-level operating results. Our use of the term MOB Same-Store Cash NOI may not be comparable to that of other real estate companies, as such other companies may have different methodologies for computing this amount.

The following is a reconciliation from the Trust’s net income, the most direct financial measure calculated and presented in accordance with GAAP, to NOI, Cash NOI, and MOB Same-Store Cash NOI (in thousands):

	Three Months Ended March 31,
	2023		2022
Net income	$	10,669	$	13,943
General and administrative	11,200		10,293
Depreciation and amortization expense	47,677		47,260
Interest expense	19,153		16,823
(Gain) loss on sale of investment properties, net	(13)		153
Proportionate share of unconsolidated joint venture adjustments	3,644		3,422
NOI	$	92,330	$	91,894
NOI	$	92,330	$	91,894
Straight-line rent adjustments	(1,235)		(2,154)
Amortization of acquired above/below-market leases	1,135		1,349
Amortization of lease inducements	229		225
Loan reserve adjustments	3		3
Proportionate share of unconsolidated joint venture adjustments	(108)		(71)
Cash NOI	$	92,354	$	91,246
Cash NOI	$	92,354	$	91,246
Assets not held for all periods or held for sale	(1,458)		(1,504)
Non-MOB health care properties	(2,798)		(2,758)
Lease termination fees	(31)		(4)
Interest income on real estate loans	(2,282)		(2,199)
Joint venture and other income	(3,768)		(3,576)
MOB Same-Store Cash NOI	$	82,017	$	81,205

Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (“EBITDAre”) and Adjusted EBITDAre

We calculate EBITDAre in accordance with standards established by Nareit and define EBITDAre as net income or loss computed in accordance with GAAP plus depreciation and amortization, interest expense, gain or loss on the sale of investment properties, and impairment loss, including our share of all required adjustments from unconsolidated joint ventures. We define Adjusted EBITDAre, which excludes from EBITDAre non-cash share compensation expense, non-cash changes in fair value, pursuit costs, non-cash intangible amortization, the pro forma impact of investment activity, and other normalizing items. We consider EBITDAre and Adjusted EBITDAre important measures because they provide additional information to allow management, investors, and our current and potential creditors to evaluate and compare our core operating results and our ability to service debt.

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The following is a reconciliation from the Trust’s net income, the most direct financial measure calculated and presented in accordance with GAAP, to EBITDAre and Adjusted EBITDAre (in thousands):

	Three Months Ended March 31,
	2023		2022
Net income	$	10,669	$	13,943
Depreciation and amortization expense	47,677		47,260
Interest expense	19,153		16,823
(Gain) loss on sale of investment properties, net	(13)		153
Proportionate share of unconsolidated joint venture adjustments	3,590		3,420
EBITDAre	$	81,076	$	81,599
Non-cash share compensation expense	4,667		4,253
Pursuit costs	63		74
Non-cash intangible amortization	1,364		1,575
Proportionate share of unconsolidated joint venture adjustments	—		(8)
Pro forma adjustments for investment activity	89		68
Adjusted EBITDAre	$	87,259	$	87,561

Liquidity and Capital Resources

Our short-term liquidity requirements consist primarily of operating and interest expenses and other expenditures directly associated with our properties, including:

•property expenses;

•interest expense and scheduled principal payments on outstanding indebtedness;

•general and administrative expenses; and

•capital expenditures for tenant improvements and leasing commissions.

In addition, we will require funds for future distributions expected to be paid to our common shareholders and OP Unit holders in our Operating Partnership.

As of March 31, 2023, we had a total of $3.4 million of cash and cash equivalents and $848.0 million of near-term availability on our unsecured revolving credit facility. Our primary sources of cash include rent we collect from our tenants, borrowings under our unsecured credit facility, and financings of debt and equity securities. We believe that our existing cash and cash equivalents, cash flow from operating activities, and borrowings available under our unsecured revolving credit facility will be adequate to fund any existing contractual obligations to purchase properties and other obligations through the next year. However, because of the 90% distribution requirement under the REIT tax rules under the Internal Revenue Code, we may not be able to fund all of our future capital needs from cash retained from operations, including capital needed to make investments and to satisfy or refinance maturing obligations. As a result, we expect to rely upon external sources of capital, including debt and equity financing, to fund future capital needs. If we are unable to obtain needed capital on satisfactory terms or at all, we may not be able to make the investments needed to expand our business or to meet our obligations and commitments as they mature. We will rely upon external sources of capital to fund future capital needs, and, if we encounter difficulty in obtaining such capital, we may not be able to make future acquisitions necessary to grow our business or meet maturing obligations.

Our long-term liquidity needs consist primarily of funds necessary to pay for acquisitions, recurring and non-recurring capital expenditures, and scheduled debt maturities. We expect to satisfy our long-term liquidity needs through cash flow from operations, unsecured borrowings, issuances of equity and debt securities, proceeds from select property dispositions and joint venture transactions, and, in connection with acquisitions of additional properties, the issuance of OP Units of our Operating Partnership.

Our ability to access capital in a timely and cost-effective manner is essential to the success of our business strategy as it affects our ability to satisfy existing obligations, including repayment of maturing indebtedness, and to make future investments and acquisitions. Factors such as general market conditions, interest rates, credit ratings on our debt and equity securities, expectations of our potential future earnings and cash distributions, and the market price of our common shares, each

30

of which are beyond our control and vary or fluctuate over time, all impact our access to and cost of capital. In particular, to the extent interest rates continue to rise, we may continue to experience a decline in the trading price of our common shares, which may impact our decision to conduct equity offerings for capital raising purposes. We have experienced and will likely continue to experience higher borrowing costs as interest rates rise, which may also impact our decisions to incur additional indebtedness, or to engage in transactions that we may need to fund through borrowing. We expect to continue to utilize equity and debt financings to support our future growth and investment activity.

We also continuously evaluate opportunities to finance future investments. New investments are generally funded from temporary borrowings under our primary unsecured credit facility and the proceeds from financing transactions such as those discussed above. Our investments generate cash from net operating income and principal payments on loans receivable. Permanent financing for future investments, which generally replaces funds drawn under our primary unsecured credit facility, has historically been provided through a combination of the issuance of debt and equity securities and the incurrence or assumption of secured debt.

We intend to invest in additional properties as suitable opportunities arise and adequate sources of financing are available. We are currently evaluating additional potential investments consistent with the normal course of our business. There can be no assurance as to whether or when any portion of these investments will be completed. Our ability to complete investments is subject to a number of risks and variables, including our ability to negotiate mutually agreeable terms with sellers and our ability to finance the investment. We may not be successful in identifying and consummating suitable acquisitions or investment opportunities, which may impede our growth and negatively affect our results of operations and may result in the use of a significant amount of management’s resources. We expect that future investments in properties will depend on and will be financed by, in whole or in part, our existing cash, borrowings, including under our unsecured revolving credit facility, or the proceeds from additional issuances of equity or debt securities.

We currently do not expect to sell any of our properties to meet our liquidity needs, although we may do so in the future. 

We currently are in compliance with all debt covenants on our outstanding indebtedness.

Credit Facility

On September 24, 2021, the Operating Partnership, as borrower, and the Trust, as guarantor, executed the Credit Agreement which extended the maturity date of the revolving credit facility under the Credit Agreement to September 24, 2025 and reduced the interest rate margin applicable to borrowings. The Credit Agreement includes an unsecured revolving credit facility of $1.0 billion and contains a term loan feature of $250 million, which the Company borrowed on, bringing total borrowing capacity to $1.25 billion. The Credit Agreement also includes a swingline loan commitment for up to 10% of the maximum principal amount and provides an accordion feature allowing the Trust to increase borrowing capacity by up to an additional $500 million, subject to customary terms and conditions, resulting in a maximum borrowing capacity of $1.75 billion. On October 13, 2021, the Company paid off the $250.0 million term loan feature of the Credit Agreement and the term loan feature is no longer available to the Company. The revolving credit facility under the Credit Agreement also includes two six-month extension options.

On March 31, 2023, the Operating Partnership, as borrower, and the Trust, as guarantor, executed a First Amendment to the Credit Agreement which expanded the accordion feature allowing the Operating Partnership to increase borrowing capacity by up to an additional $500.0 million, resulting in a maximum borrowing capacity of $2.25 billion, and replaced the LIBOR-based benchmark rates applicable to borrowings under the Amended Credit Agreement with SOFR based benchmark rates.

As of March 31, 2023, the Company had $152.0 million of borrowings outstanding under its unsecured revolving credit facility. As defined by the Credit Agreement, $848.0 million is available to borrow without adding additional properties to the unencumbered borrowing base of assets. See Note 6 (Debt) to our accompanying consolidated financial statements for a further discussion of our credit facility.

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Senior Notes

As of March 31, 2023, we had $1.5 billion aggregate principal amount of senior notes issued and outstanding by the Operating Partnership, comprised of $25.0 million maturing in 2025, $70.0 million maturing in 2026, $425.0 million maturing in 2027, $395.0 million maturing in 2028, and $545.0 million maturing in 2031. See Note 6 (Debt) to our accompanying consolidated financial statements for a further discussion of our senior notes.

ATM Program

In May 2021, the Company entered into the Sales Agreement, pursuant to which the Trust may issue and sell, from time to time, its common shares having an aggregate offering price of up to $500 million. In accordance with the Sales Agreement, the Trust may offer and sell its common shares through the Agents, from time to time, by any method deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended, which includes sales made directly on the New York Stock Exchange or other existing trading market, or sales made to or through a market maker.

During the quarterly period ended March 31, 2023, the Trust sold 4,400,000 common shares pursuant to the ATM Program, at a weighted average price of $15.10 per share resulting in total net proceeds of approximately $65.8 million. As of March 31, 2023, the Trust has $158.6 million remaining available under the ATM Program.

Dividend Reinvestment and Share Purchase Plan

In December 2014, the Company adopted a Dividend Reinvestment and Share Purchase Plan (“DRIP”). Under the DRIP:

•existing shareholders may purchase additional common shares by reinvesting all or a portion of the dividends paid on their common shares and by making optional cash payments of not less than $50 and up to a maximum of $10,000 per month;

•new investors may join the DRIP by making an initial investment of not less than $1,000 and up to a maximum of $10,000; and

•once enrolled in the DRIP, participants may authorize electronic deductions from their bank account for optional cash payments to purchase additional shares.

The DRIP is administered by our transfer agent, Computershare Trust Company, N.A. Our common shares sold under the DRIP are newly issued or purchased in the open market, as further described in the DRIP. As of March 31, 2023, the Company had issued 218,084 common shares under the DRIP since its inception.

Critical Accounting Policies

Our consolidated financial statements included in Part I, Item 1 of this report are prepared in conformity with GAAP for interim financial information set forth in the ASC, as published by the FASB, which require us to make estimates and assumptions regarding future events that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. We base these estimates on our experience and assumptions we believe to be reasonable under the circumstances. However, if our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, we may have applied a different accounting treatment, resulting in a different presentation of our financial statements. We periodically reevaluate our estimates and assumptions, and in the event they prove to be different from actual results, we make adjustments in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. Please refer to our 2022 Annual Report for further information regarding the critical accounting policies that affect our more significant estimates and judgments used in the preparation of our consolidated financial statements included in Part I, Item 1 of this report.

REIT Qualification Requirements

We are subject to a number of operational and organizational requirements necessary to qualify and maintain our qualification as a REIT. If we fail to qualify as a REIT or fail to remain qualified as a REIT in any taxable year, our income would be subject to federal income tax at regular corporate rates and potentially increased state and local taxes and we could incur substantial tax liabilities which could have an adverse impact upon our results of operations, liquidity, and distributions to our shareholders.

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Off-Balance Sheet Arrangements

As of March 31, 2023, we have investments in two unconsolidated joint ventures with ownership interests of 45.1% and 12.3%, respectively. The aggregate carrying amount of debt, including both our and our partners’ share, incurred by these ventures was approximately $808.5 million (of which our proportionate share is approximately $144.5 million). See Note 2 (Summary of Significant Accounting Policies) of Part II, Item 8 (Financial Statements and Supplementary Data) of our 2022 Annual Report for the fiscal year ended December 31, 2022 for additional information. We have no other off-balance sheet arrangements that we expect would materially affect our liquidity and capital resources.

Item 3.                                 Quantitative and Qualitative Disclosures about Market Risk

Our future income, cash flows, and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. We use certain derivative financial instruments to manage, or hedge, interest rate risks related to our borrowings. We do not use derivatives for trading or speculative purposes and only enter into contracts with major financial institutions based upon their credit rating and other factors. Our derivative instruments consist of one interest rate swap. See Note 7 (Derivatives) in Part I, Item I of this report and Note 2 (Summary of Significant Accounting Policies) of Part II, Item 8 (Financial Statements and Supplementary Data) of our 2022 Annual Report for further detail on our interest rate swap.

Interest rate risk amounts are our management’s estimates and were determined by considering the effect of hypothetical interest rates on our consolidated financial instruments. These analyses do not consider the effect of any change in overall economic activity that could occur in that environment. Further, in the event of a change of that magnitude, we may take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure.

Fixed Interest Rate Debt

As of March 31, 2023, our consolidated fixed interest rate debt totaled $1.5 billion, which represented 83.5% of our total consolidated debt, excluding the impact of the interest rate swap. We entered into a pay-fixed receive-variable rate swap for $36.1 million of our mortgage debt, fixing the variable component of the borrowing rate to 1.35%, for an all-in fixed rate as of March 31, 2023 of 3.25%. Both the borrowing and pay-fixed receive-variable swap have a maturity date of October 31, 2024.

Assuming the effects of our interest rate swap agreement, our fixed interest rate debt would represent 85.5% of our total consolidated debt. Interest rate fluctuations on our fixed interest rate debt will generally not affect our future earnings or cash flows unless such instruments mature or are otherwise terminated. However, interest rate changes could affect the fair value of our fixed interest rate debt.

As of March 31, 2023, the fair value and the carrying value of our consolidated fixed interest rate debt were approximately $1.4 billion and $1.5 billion, respectively. The fair value estimate of our fixed interest rate debt was estimated using a discounted cash flow analysis utilizing rates we would expect to pay for debt of a similar type and remaining maturity if the loans were originated on March 31, 2023. As we expect to hold our fixed interest rate debt instruments to maturity, based on the underlying structure of the debt instrument, and the amounts due under such instruments are limited to the outstanding principal balance and any accrued and unpaid interest, we do not expect that market fluctuations in interest rates, and the resulting change in fair value of our fixed interest rate debt instruments, would have a significant impact on our operating cash flows.

Variable Interest Rate Debt

As of March 31, 2023, our consolidated variable interest rate debt totaled $293.1 million, which represented 16.5% of our total consolidated debt. Assuming the effects of our interest rate swap agreement, our variable interest rate debt would represent 14.5% of our total consolidated debt. Interest rate changes on our variable rate debt could impact our future earnings and cash flows but would not significantly affect the fair value of such debt. As of March 31, 2023, we were exposed to market risks related to fluctuations in interest rates on $257.0 million of consolidated borrowings. Assuming no increase in the amount of our variable rate debt, if LIBOR and SOFR were to change by 100 basis points, interest expense on our variable rate debt as of March 31, 2023 would change by approximately $0.1 million and $2.5 million annually, respectively.

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Derivative Instruments

As of March 31, 2023, we had one outstanding interest rate swap that was designated as a cash flow hedge of interest rate risk, with a total notional amount of $36.1 million. See Note 7 (Derivatives) within our consolidated financial statements for further detail on our interest rate swap. We are exposed to credit risk of the counterparty to our interest rate swap agreement in the event of non-performance under the terms of the agreements. If we were not able to replace the swap in the event of non-performance by the counterparty, we would be subject to variability of the interest rate on the amount outstanding under our debt that is fixed through the use of the swap.

Indebtedness

As of March 31, 2023, we had total consolidated indebtedness of approximately $1.8 billion. The weighted average interest rate on our consolidated indebtedness was 4.03% (based on the 30-day LIBOR rate of 4.77% and a SOFR rate of 4.87% as of March 31, 2023). As of March 31, 2023, we had approximately $257.0 million, or approximately 14.5%, of our outstanding long-term debt exposed to fluctuations in short-term interest rates. See Note 6 (Debt) to our consolidated financial statements included in Part I, Item 1 to this report for a summary of our indebtedness as of March 31, 2023.

Item 4.                                 Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Trust’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Trust’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this report. Based on such evaluation, the Trust’s Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2023, the Trust’s disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information it is required to disclose in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to the Trust’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in the Trust’s system of internal control over financial reporting during the quarter ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Trust’s internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures and the Trust’s internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and the Trust’s internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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PART II.       Other Information

Item 1.                                 Legal Proceedings

From time to time, we are party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. We are not currently a party, as plaintiff or defendant, to any legal proceedings which, individually or in the aggregate, would be expected to have a material effect on our business, financial condition, or results of operations if determined adversely to us.

Item 1A.                       Risk Factors

Information on risk factors can be found in Part I, Item 1A (Risk Factors) of our 2022 Annual Report. There have been no material changes from the risk factors previously disclosed in our 2022 Annual Report.

Item 2.                       Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

From time to time the Operating Partnership issues OP Units to the Trust, as required by the Partnership Agreement, to reflect additional issuances of common shares by the Trust and to preserve equitable ownership ratios.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table sets forth information relating to repurchases of our common shares of beneficial interest and OP Units during the three months ended March 31, 2023:

ISSUER PURCHASES OF EQUITY SECURITIES

Period	(a) Total Number of Shares (or Units) Purchased		(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
January 1, 2023 - January 31, 2023	167,779	(1)	$	14.42	N/A	N/A
February 1, 2023 - February 28, 2023	290,380	(2)	15.07		N/A	N/A
March 1, 2023 - March 31, 2023	92,895	(2)	14.70		N/A	N/A
Total	551,054		$	14.81	—	—

(1)Represents OP Units redeemed by holders in exchange for common shares of the Company.

(2)Represents repurchased common shares to satisfy employee withholding tax obligations related to stock-based compensation.

35

Item 6.                                 Exhibits

Exhibit No.		Description
10.1	(1)	First Amendment to Third Amended and Restated Credit Agreement, dated March 31, 2023, among Physicians Realty L.P., as Borrower, Physicians Realty Trust, as Guarantor, KeyBank National Association, as Administrative Agent, and the Lenders party thereto
22.1		List of Subsidiary Issuers and Guaranteed Securities**
31.1		Certification of John T. Thomas, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Physicians Realty Trust**
31.2		Certification of Jeffrey N. Theiler, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Physicians Realty Trust**
32.1		Certification of John T. Thomas and Jeffrey N. Theiler, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) for Physicians Realty Trust**
101.INS		This instance document does not appear in the interactive data file because of XBRL tags are embedded within the inline XBRL document.
101.SCH		Inline XBRL Extension Schema Document (+)
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document (+)
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document (+)
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document (+)
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document (+)
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

**    Filed herewith

(+) Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement for purposes of Section 11 or 12 of the Securities Act, is deemed not filed for purposes of Section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.

(1) Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on April 3, 2023 (File No. 001-36007).

36

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PHYSICIANS REALTY TRUST
Date: May 4, 2023	/s/ John T. Thomas
	John T. Thomas
	President and Chief Executive Officer
	(Principal Executive Officer)
Date: May 4, 2023	/s/ Jeffrey N. Theiler
	Jeffrey N. Theiler
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

37

EX-22.1

Exhibit 22.1

LIST OF SUBSIDIARY ISSUERS OF GUARANTEED SECURITIES

As of March 31, 2023, Physicians Realty Trust is the guarantor of the outstanding guaranteed debt securities of its subsidiaries, as listed below.

Debt Instrument	Issuer
4.300% Senior Notes due 2027	Physicians Realty L.P.
3.950% Senior Notes due 2028	Physicians Realty L.P.
2.625% Senior Notes due 2031	Physicians Realty L.P.

EX-31.1

Exhibit 31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John T. Thomas, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Physicians Realty Trust for the three month period ended March 31, 2023;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2023	/s/ John T. Thomas
	John T. Thomas
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jeffrey N. Theiler, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Physicians Realty Trust for the three month period ended March 31, 2023;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2023	/s/ Jeffrey N. Theiler
	Jeffrey N. Theiler
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned hereby certifies, for the purposes of 18 U.S.C. Section 1350, in his capacity as an officer of Physicians Realty Trust (the “Company”), that, to such person’s knowledge:

a.    the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended March 31, 2023, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

b.    the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 4, 2023

/s/ John T. Thomas

John T. Thomas

President and Chief Executive Officer

/s/ Jeffrey N. Theiler

Jeffrey N. Theiler

Executive Vice President and Chief Financial Officer

This certification is not deemed to be “filed” for purposes of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liability under the Exchange Act. This certification is not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

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	Mar. 31, 2023	Apr. 26, 2023
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Entity Registrant Name	PHYSICIANS REALTY TRUST
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Entity Address, Address Line One	309 N. Water Street, Suite 500
Entity Address, City or Town	Milwaukee,
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Entity Address, Postal Zip Code	53202
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Entity Small Business	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		238,398,561
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Entity Central Index Key	0001574540
Current Fiscal Year End Date	--12-31

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Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Investment properties:
Land and improvements	$ 242,107	$ 241,559
Building and improvements	4,678,995	4,674,011
Tenant improvements	96,527	92,906
Acquired lease intangibles	505,074	505,335
Gross real estate property	5,522,703	5,513,811
Accumulated depreciation	(1,043,884)	(996,888)
Net real estate property	4,478,819	4,516,923
Right-of-use lease assets, net	230,254	231,225
Real estate loans receivable, net	115,764	104,973
Investments in unconsolidated entities	75,086	77,716
Net real estate investments	4,899,923	4,930,837
Cash and cash equivalents	3,364	7,730
Tenant receivables, net	10,830	11,503
Other assets	147,050	146,807
Total assets	5,061,167	5,096,877
Liabilities:
Credit facility	147,762	188,328
Notes payable	1,450,798	1,465,437
Mortgage debt	164,130	164,352
Accounts payable	3,343	4,391
Dividends and distributions payable	59,824	60,148
Accrued expenses and other liabilities	85,007	87,720
Lease liabilities	104,856	105,011
Acquired lease intangibles, net	23,796	24,381
Total liabilities	2,039,516	2,099,768
Redeemable noncontrolling interest - Series A Preferred Units and partially owned properties	3,193	3,258
Equity:
Common shares, $0.01 par value, 500,000,000 common shares authorized, 238,395,869 and 233,292,030 common shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	2,384	2,333
Additional paid-in capital	3,810,504	3,743,876
Accumulated deficit	(926,790)	(881,672)
Accumulated other comprehensive income	4,162	5,183
Total shareholders’ equity	2,890,260	2,869,720
Noncontrolling interests:
Operating Partnership	119,187	123,015
Partially owned properties	9,011	1,116
Total noncontrolling interests	128,198	124,131
Total equity	3,018,458	2,993,851
Total liabilities and equity	$ 5,061,167	$ 5,096,877

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Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2023	Dec. 31, 2022
Equity:
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares outstanding (in shares)	238,395,869	233,292,030
Common stock, shares issued (in shares)	238,395,869	233,292,030

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Consolidated Statements of Income - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2023	Mar. 31, 2022
Revenues:
Rental and related revenues		$ 131,398	$ 127,791
Interest income on real estate loans and other		2,946	2,599
Total revenues		134,344	130,390
Expenses:
Interest expense		19,153	16,823
General and administrative		11,200	10,293
Operating expenses		45,394	41,752
Depreciation and amortization		47,677	47,260
Total expenses		123,424	116,128
Income before equity in loss of unconsolidated entities and gain (loss) on sale of investment properties, net:		10,920	14,262
Equity in loss of unconsolidated entities		(264)	(166)
Gain (loss) on sale of investment properties, net		13	(153)
Net income		10,669	13,943
Net income attributable to noncontrolling interests:
Operating Partnership		(423)	(692)
Partially owned properties	[1]	(44)	(159)
Net income attributable to common shareholders		$ 10,202	$ 13,092
Net income per share:
Basic (in dollars per share)		$ 0.04	$ 0.06
Diluted (in dollars per share)		$ 0.04	$ 0.06
Weighted average common shares:
Weighted average common shares - basic (in shares)		237,484,043	225,069,208
Weighted average common shares - diluted (in shares)		248,756,672	238,340,243
Dividends and distributions declared per common share (in usd per share)		$ 0.23	$ 0.23

[1] Includes amounts attributable to redeemable noncontrolling interests.

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Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Statement of Comprehensive Income [Abstract]
Net income	$ 10,669	$ 13,943
Other comprehensive income:
Change in fair value of interest rate swap agreements, net	(1,021)	1,379
Total other comprehensive (loss) income	(1,021)	1,379
Comprehensive income	9,648	15,322
Comprehensive income attributable to noncontrolling interests - Operating Partnership	(383)	(761)
Comprehensive income attributable to noncontrolling interests - partially owned properties	(44)	(159)
Comprehensive income attributable to common shareholders	$ 9,221	$ 14,402

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Consolidated Statement of Equity - USD ($) $ in Thousands	Total	Total Shareholders’  Equity	Par Value	Additional Paid in Capital	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)	Total Noncontrolling Interests	Operating Partnership Noncontrolling Interest	Partially Owned Properties Noncontrolling Interest
Balance at beginning of period at Dec. 31, 2021	$ 2,987,033	$ 2,836,308	$ 2,247	$ 3,610,954	$ (776,001)	$ (892)	$ 150,725	$ 150,241	$ 484
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net proceeds from sale of common shares	5,032	5,032	3	5,029
Restricted share award grants, net	(300)	(300)	3	118	(421)
Purchase of OP Units	(184)						(184)	(184)
Dividends/distributions declared	(54,619)	(51,879)			(51,879)		(2,740)	(2,740)
Contributions	569						569		569
Distributions	(55)						(55)		(55)
Change in market value of Redeemable Noncontrolling Interest in partially owned properties	717	717			717
Change in fair value of interest rate swap agreements	1,379	1,379				1,379
Adjustment for Noncontrolling Interests ownership in Operating Partnership	0	(217)		(217)			217	217
Net income	13,866	13,092			13,092		774	692	82
Balance at end of period at Mar. 31, 2022	2,953,438	2,804,132	2,253	3,615,884	(814,492)	487	149,306	148,226	1,080
Balance at beginning of period at Dec. 31, 2022	2,993,851	2,869,720	2,333	3,743,876	(881,672)	5,183	124,131	123,015	1,116
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net proceeds from sale of common shares	65,813	65,813	44	65,769
Restricted share award grants, net	(1,530)	(1,530)	5	(1,127)	(408)
Conversion of OP Units	0	2,419	2	2,417			(2,419)	(2,419)
Dividends/distributions declared	(57,175)	(54,912)			(54,912)		(2,263)	(2,263)
Contributions	7,884						7,884		7,884
Distributions	(53)						(53)		(53)
Change in fair value of interest rate swap agreements	(1,021)	(1,021)				(1,021)
Adjustment for Noncontrolling Interests ownership in Operating Partnership	0	(431)		(431)			431	431
Net income	10,689	10,202			10,202		487	423	64
Balance at end of period at Mar. 31, 2023	$ 3,018,458	$ 2,890,260	$ 2,384	$ 3,810,504	$ (926,790)	$ 4,162	$ 128,198	$ 119,187	$ 9,011

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash Flows from Operating Activities:
Net income	$ 10,669	$ 13,943
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	47,677	47,260
Amortization of deferred financing costs	569	579
Amortization of lease inducements and above/below-market lease intangibles	1,364	1,575
Straight-line rental revenue, net	(1,235)	(2,154)
Amortization of discount on unsecured senior notes	272	262
Amortization of above market assumed debt	0	(10)
(Gain) loss on sale of investment properties, net	(13)	153
Equity in loss of unconsolidated entities	264	166
Distributions from unconsolidated entities	1,906	2,002
Provision for bad debts	281	87
Non-cash share compensation	4,667	4,253
Change in operating assets and liabilities:
Tenant receivables	567	(791)
Other assets	536	(266)
Accounts payable	(1,048)	(5,252)
Accrued expenses and other liabilities	(2,757)	(7,272)
Net cash provided by operating activities	63,719	54,535
Cash Flows from Investing Activities:
Proceeds from sale of investment properties	2,553	1,804
Acquisition of investment properties, net	(2,650)	(10)
Investment in unconsolidated entities	(180)	(5,045)
Development of real estate	(953)	0
Escrowed cash - acquisition deposits/earnest deposits	0	90
Capital expenditures on investment properties	(8,400)	(5,491)
Investment in real estate loans receivable	(10,956)	(904)
Repayment of real estate loans receivable	0	22,441
Leasing commissions	(782)	(704)
Lease inducements	(400)	0
Net cash (used in) provided by investing activities	(21,768)	12,181
Cash Flows from Financing Activities:
Net proceeds from sale of common shares	65,813	5,032
Proceeds from credit facility borrowings	55,000	64,000
Repayment of credit facility borrowings	(96,000)	(83,000)
Repayment of senior unsecured notes	(15,000)	0
Principal payments on mortgage debt	(253)	(420)
Debt issuance costs	(14)	(10)
Dividends paid - shareholders	(55,643)	(52,858)
Distributions to noncontrolling interests - Operating Partnership	(2,264)	(2,739)
Contributions from noncontrolling interest	7,884	569
Distributions to noncontrolling interests - partially owned properties	(98)	(161)
Payments of employee taxes for withheld stock-based compensation shares	(5,742)	(4,092)
Purchase of OP Units	0	(184)
Net cash used in financing activities	(46,317)	(73,863)
Net decrease in cash and cash equivalents	(4,366)	(7,147)
Cash and cash equivalents, beginning of period	7,730	9,876
Cash and cash equivalents, end of period	3,364	2,729
Supplemental Cash Flow Information [Abstract]
Supplemental disclosure of cash flow information - interest paid during the period	25,176	23,123
Supplemental disclosure of noncash activity—change in fair value of interest rate swap agreements	(1,021)	1,379
Supplemental disclosure of noncash activity—conversion of loan receivable in connection to the acquisition of investment property	$ 0	$ 3,000

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Organization and Business

3 Months Ended

Mar. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Business

Organization and Business

Physicians Realty Trust (the “Trust” or the “Company”) was organized in the state of Maryland on April 9, 2013. As of March 31, 2023, the Trust was authorized to issue up to 500,000,000 common shares of beneficial interest, par value $0.01 per share. The Trust filed a Registration Statement on Form S-11 with the Commission with respect to a proposed underwritten initial public offering (the “IPO”) and completed the IPO of its common shares and commenced operations on July 24, 2013.

The Trust contributed the net proceeds from the IPO to Physicians Realty L.P, a Delaware limited partnership (the “Operating Partnership”), and is the sole general partner of the Operating Partnership. The Trust’s operations are conducted through the Operating Partnership and wholly-owned and majority-owned subsidiaries of the Operating Partnership. The Trust, as the general partner of the Operating Partnership, controls the Operating Partnership and consolidates the assets, liabilities, and results of operations of the Operating Partnership.

The Trust is a self-managed REIT formed primarily to acquire, selectively develop, own, and manage health care properties that are leased to physicians, hospitals, and health care delivery systems.

ATM Program

In May 2021, the Trust and the Operating Partnership entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with KeyBanc Capital Markets Inc., Credit Agricole Securities (USA) Inc., BMO Capital Markets Corp., and Raymond James & Associates, Inc. in their capacity as agents for the Company and/or forward sellers and Stifel, Nicolaus & Company, Incorporated in its capacity as sales agent for the Company (collectively, the “Agents”) and Bank of Montreal, Credit Agricole Corporate and Investments Bank, KeyBanc Capital Markets Inc., and Raymond James & Associates, Inc. as forward purchasers for the Company (the “Forward Purchasers”), pursuant to which the Trust may issue and sell, from time to time, its common shares having an aggregate offering price of up to $500 million through the Agents (the “ATM Program”). The Sales Agreement contemplates that, in addition to the issuance and sale of the Trust’s common shares through the Agents, the Trust may also enter into one or more forward sales agreements from time to time in the future with each of the Forward Purchasers.

During the quarterly period ended March 31, 2023, the Trust sold 4,400,000 common shares pursuant to the ATM Program, at a weighted average price of $15.10 per share, resulting in total net proceeds of approximately $65.8 million. As of March 31, 2023, the Trust had $158.6 million remaining available under the ATM Program.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the periods ended March 31, 2023 and 2022 pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited financial statements included in the Trust’s 2022 Annual Report. The Company has consistently applied its accounting policies to all periods presented in these consolidated financial statements.

Noncontrolling Interests

The Company presents the portion of any equity it does not own in entities that it controls (and thus consolidates) as noncontrolling interests and classifies such interests as a component of consolidated equity, separate from the Company’s total shareholders’ equity, on the consolidated balance sheets.

Operating Partnership: Noncontrolling interests in the Company include OP Units held by other investors. Net income or loss is allocated to noncontrolling interests (limited partners) based on their respective ownership percentage of the Operating Partnership. The ownership percentage is calculated by dividing the number of OP Units held by the noncontrolling interests by the total OP Units held by the noncontrolling interests and the Trust. Issuance of additional common shares and OP Units

changes the ownership interests of both the noncontrolling interests and the Trust. Such transactions and the related proceeds are treated as capital transactions. 

As of March 31, 2023, the Trust held a 96.0% interest in the Operating Partnership. As the sole general partner and the majority interest holder, the Trust consolidates the financial position and results of operations of the Operating Partnership.

Partially Owned Properties: The Trust reflects noncontrolling interests in partially owned properties on the consolidated balance sheets for the portion of consolidated properties that are not wholly owned by the Company. The earnings or losses from those properties attributable to the noncontrolling interests are reflected as noncontrolling interests in partially owned properties in the consolidated statements of income.

Redeemable Noncontrolling Interests - Partially Owned Properties

In connection with the Company’s acquisitions of the medical office building, ambulatory surgery center, and hospital located on the Great Falls Hospital campus in Great Falls, Montana, physicians affiliated with the sellers retained non-controlling interests which were, at the holders’ option, able to be redeemed at any time after May 1, 2023. Due to the redemption provision, which was outside of the control of the Trust, the Trust classified the investment in the mezzanine section of its consolidated balance sheets. On July 14, 2022, the Company disposed of these three properties and removed the related redeemable noncontrolling interests from its consolidated balance sheets.

Through a consolidated joint venture with MedProperties Realty Advisors, LLC (“MedProperties”), the Company acquired Calko Medical Center in Brooklyn, New York. As part of the joint venture, MedProperties can redeem its interest, at its option, at any time after September 9, 2025. Due to the redemption provision, which is outside of the control of the Company, the Company classifies the noncontrolling interests in the mezzanine section of its consolidated balance sheets. The Company records the carrying amount of the redeemable noncontrolling interests at the greater of the carrying value or redemption value.

Dividends and Distributions

On March 17, 2023, the Trust announced that its Board of Trustees authorized, and the Trust declared, a cash dividend of $0.23 per common share for the quarter ended March 31, 2023. The dividend was paid on April 18, 2023 to common shareholders and holders of record of partnership interests of the Operating Partnership (“OP Units”) as of the close of business on April 4, 2023.

Tax Status of Dividends and Distributions

The Company’s distributions of current and accumulated earnings and profits for U.S. federal income tax purposes generally are taxable to shareholders as ordinary income. Distributions in excess of these earnings and profits generally are treated as a non-taxable reduction of the shareholders’ basis in the shares to the extent thereof (non-dividend distributions) and thereafter as taxable gain.

Any cash distributions received by an OP Unit holder in respect of its OP Units generally will not be taxable to such OP Unit holder for U.S. federal income tax purposes, to the extent that such distribution does not exceed the OP Unit holder’s basis in its OP Units. Any such distribution will instead reduce the OP Unit holder’s basis in its OP Units (and OP Unit holders will be subject to tax on the taxable income allocated to them by the Operating Partnership in respect of their OP Units when such income is earned by the Operating Partnership, with such income allocation increasing the OP Unit holders’ basis in their OP Units).

The Company has elected taxable REIT subsidiary (“TRS”) status for certain of its corporate subsidiaries and, as a result, these entities will incur both federal and state income taxes on any taxable income of such entities after consideration of any net operating losses. To date, these income taxes have been de minimis.

Real Estate Loans Receivable, Net

Real estate loans receivable consists of eight mezzanine loans, six term loans, and two construction loans as of March 31, 2023. Generally, each mezzanine loan is collateralized by a pledge of the borrower’s ownership interest in the respective real estate owner, each term loan is secured by a mortgage on a related medical office building, and construction loans are secured by mortgages on the land and the improvements as constructed. The reserve for loan losses was $0.2 million as of March 31, 2023.

Rental and Related Revenues

Rental revenue is recognized on a straight-line basis over the terms of the related leases when collectability is probable. Recognizing rental revenue on a straight-line basis for leases may result in recognizing revenue for amounts more or less than amounts currently due from tenants. Amounts recognized in excess of amounts currently due from tenants are included in other assets and were approximately $102.9 million and $101.3 million as of March 31, 2023 and December 31, 2022, respectively. If the Company determines that collectability of straight-line rents is not probable, income recognition is limited to the lesser of cash collected, or lease income reflected on a straight-line basis, plus variable rent when it becomes accruable.

In accordance with ASC 842, Leases, Topic 842, if the collectability of a lease changes after the commencement date, any difference between lease income that would have been recognized and the lease payments shall be recognized as an adjustment to lease income. Bad debt recognized as an adjustment to rental and related revenues was $0.4 million for the three months ended March 31, 2023 and $0.1 million for the three months ended March 31, 2022.

Rental revenue is adjusted by the amortization of lease inducements and above-market or below-market rents on certain leases. Lease inducements and above-market or below-market rents are amortized on a straight-line basis over the remaining lease term. Rental and related revenues also include expense recoveries, which relate to tenant reimbursement of real estate taxes, insurance, and other operating expenses that are recognized in the period the applicable expenses are incurred. The reimbursements are recorded gross, as these costs are incurred by the Company and reimbursed by the tenants. We have certain tenants with absolute net leases. Under these lease agreements, the tenant is responsible for operating and building expenses and we do not recognize expense recoveries.

New Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional relief to applying reference rate reform to changing reference rates, contracts, hedging relationships, and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”), which has been discontinued at the end of 2021. The amendments in this update may be applied through December 31, 2024. The Company will continue to use published LIBOR rates through June of 2023, or until all transactions referencing LIBOR have been amended.

On March 31, 2023, the Operating Partnership, as borrower, and the Trust, as guarantor, executed a First Amendment to the Third Amended and Restated Credit Agreement to update the benchmark provisions to replace LIBOR with the Secured Overnight Financing Rate (“SOFR”), as the reference rate for the purpose of calculating interest under the agreement. In connection with amending the unsecured credit agreement, we also amended our fixed interest rate swap agreement to update reference rate from LIBOR to SOFR. As a result, we elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients maintains the presentation of derivatives consistent with past presentation. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

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Investment and Disposition Activity

3 Months Ended

Mar. 31, 2023

Business Combination and Asset Acquisition [Abstract]

Investment and Disposition Activity

Investment and Disposition ActivityDuring the three months ended March 31, 2023, the Company executed contractual commitments related to a $40.5 million development project, with quarterly costs of $1.0 million, completed the acquisition of one medical condominium unit for an investment of $1.3 million and one parcel of land adjacent to one of its medical office facilities for an investment of $0.8 million, and paid $0.3 million of additional purchase consideration under two earn-out agreements. The Company also closed on a $35.8 million construction loan, funding $4.1 million to date, and funded one term loan for $5.4 million, $1.0 million of previous construction loan commitments, and $0.5 million of previous term loan commitments. Additionally, the Company invested $0.2 million in funds managed by a real estate technology private equity fund. Investment activity totaled approximately $14.4 million during the three months ended March 31, 2023. As part of these investments, the Company incurred approximately $0.2 million of capitalized costs.

The following table summarizes the acquisition date fair values of the assets acquired and the liabilities assumed in connection with the acquisition of the medical condominium unit, a parcel of land adjacent to one of our medical office facilities, and two earn-out agreements, as well as follow-on capitalized costs during the three months ended March 31, 2023, which the Company determined using Level 2 and Level 3 inputs (in thousands):

Land	$	1,356
Building and improvements	1,294
Cash used in acquisition of investment property	$	2,650

Dispositions

During the three months ended March 31, 2023, the Company sold one medical facility for approximately $2.6 million, realizing an insignificant gain.

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Intangibles

3 Months Ended

Mar. 31, 2023

Finite-Lived Intangible Assets, Net [Abstract]

Intangibles

Intangibles

The following is a summary of the carrying amount of intangible assets and liabilities as of March 31, 2023 and December 31, 2022 (in thousands):

	March 31, 2023						December 31, 2022
	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
Assets
In-place leases	$	445,322	$	(251,995)	$	193,327	$	445,583	$	(241,643)	$	203,940
Above-market leases	$	59,752	$	(31,511)	$	28,241	$	59,752	$	(30,096)	$	29,656
Liabilities
Below-market leases	$	36,409	$	(12,613)	$	23,796	$	37,002	$	(12,621)	$	24,381

The following is a summary of acquired lease intangible amortization for the three months ended March 31, 2023 and 2022 (in thousands):

	Three Months Ended March 31,
	2023		2022
Amortization expense related to in-place leases	$	10,612	$	11,040
Decrease in rental income related to above-market leases	1,415		1,502
Increase in rental income related to below-market leases	586		459

Future aggregate net amortization of acquired lease intangibles as of March 31, 2023, is as follows (in thousands):

	Net Decrease (Increase)  in Revenue		Net Increase in  Expenses
2023	$	2,361	$	30,004
2024	2,929		34,718
2025	2,357		29,208
2026	1,203		23,095
2027	1,036		20,173
Thereafter	(5,441)		56,129
Total	$	4,445	$	193,327

As of March 31, 2023, the weighted average remaining amortization period is 7 years for in-place and above-market lease intangibles assets and 15 years for below-market lease intangibles.

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Other Assets

3 Months Ended

Mar. 31, 2023

Other Assets, Unclassified [Abstract]

Other Assets

Other Assets

Other assets consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):

	March 31, 2023		December 31, 2022
Straight line rent receivable, net	$	102,856	$	101,306
Leasing commissions, net	13,449		13,231
Prepaid expenses	10,657		11,009
Lease inducements, net	8,065		7,894
Interest rate swap	1,645		2,045
Escrows	1,352		1,565
Notes receivable, net	367		370
Other	8,659		9,387
Total	$	147,050	$	146,807

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Debt

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Debt

Debt

The following is a summary of debt as of March 31, 2023 and December 31, 2022 (in thousands):

	March 31, 2023		December 31, 2022
Fixed interest mortgage notes (1)	$	59,641	$	59,776
Variable interest mortgage notes (2)	105,035		105,153
Total mortgage debt	164,676		164,929
$1.0 billion unsecured revolving credit facility due September 2025 (3)	152,000		193,000
$400 million senior unsecured notes bearing fixed interest of 4.30%, due March 2027	400,000		400,000
$350 million senior unsecured notes bearing fixed interest of 3.95%, due January 2028	350,000		350,000
$500 million senior unsecured notes bearing fixed interest of 2.625%, due November 2031	500,000		500,000
$135 million senior unsecured notes bearing fixed interest of 4.43% to 4.74%, due January 2026 to 2031	135,000		150,000
$75 million senior unsecured notes bearing fixed interest of 4.09% to 4.24%, due August 2025 to 2027	75,000		75,000
Total principal	1,776,676		1,832,929
Unamortized deferred financing costs	(6,899)		(7,453)
Unamortized discounts	(7,087)		(7,359)
Total debt	$	1,762,690	$	1,818,117

(1)As of March 31, 2023, fixed interest mortgage notes bear interest from 3.25% to 4.63%, due in 2024, with a weighted average interest rate of 3.80%. As of December 31, 2022, fixed interest mortgage notes bear interest from 3.33% to 4.63%, due in 2024, with a weighted average interest rate of 3.85%. The notes are collateralized by two properties with a net book value of $93.1 million as of March 31, 2023 and two properties with a net book value of $94.9 million as of December 31, 2022. One mortgage bears interest at LIBOR + 1.90% and the Trust entered into a pay-fixed receive-variable interest rate swap, fixing the variable component at 1.35% as of March 31, 2023 and 1.43% as of December 31, 2022.

(2)Variable interest mortgage notes bear variable interest of SOFR + 1.85% and LIBOR + 2.75% for a weighted average interest rate of 6.76% and 6.20% as of March 31, 2023 and December 31, 2022, respectively. The notes are due in 2026 and 2028 and collateralized by four properties with a net book value of $291.1 million as of March 31, 2023 and $295.5 million as of December 31, 2022.

(3)The unsecured revolving credit facility bears variable interest of SOFR plus 0.95%, inclusive of a 0.10% SOFR index adjustment, as of March 31, 2023 and LIBOR plus 0.85% as of December 31, 2022.

On September 24, 2021, the Operating Partnership, as borrower, and the Trust, as guarantor, executed a Third Amended and Restated Credit Agreement (the “Credit Agreement”) which extended the maturity date of the revolving credit facility under the Credit Agreement to September 24, 2025 and reduced the interest rate margin applicable to borrowings. The

Credit Agreement includes an unsecured revolving credit facility of $1.0 billion and contains a term loan feature of $250.0 million, which the Company borrowed on, bringing total borrowing capacity to $1.25 billion. The Credit Agreement also includes a swingline loan commitment for up to 10% of the maximum principal amount and provides an accordion feature allowing the Operating Partnership to increase borrowing capacity by up to an additional $500.0 million, subject to customary terms and conditions, resulting in a maximum borrowing capacity of $1.75 billion. On October 13, 2021, the Company paid off the $250.0 million term loan feature of the Credit Agreement and the term loan feature is no longer available to the Company. The revolving credit facility under the Credit Agreement also includes two six-month extension options. Borrowings under the Credit Agreement bear interest on the outstanding principal amount at an adjusted LIBOR rate, which is based on the Trust’s investment grade rating under the Credit Agreement.

On March 31, 2023, the Operating Partnership, as borrower, and the Trust, as guarantor, executed a First Amendment to the Credit Agreement which expanded the accordion feature allowing the Operating Partnership to increase borrowing capacity by up to an additional $500.0 million, resulting in a maximum borrowing capacity of $2.25 billion, and replaced the LIBOR-based benchmark rates applicable to borrowings under the Credit Agreement with SOFR based benchmark rates plus a SOFR index adjustment of 0.10%.

As of March 31, 2023, the Trust had investment grade ratings of BBB from S&P and Baa2 from Moody’s. As such, borrowings under the revolving credit facility of the Credit Agreement accrue interest on the outstanding principal at a rate of SOFR + 0.95%, inclusive of a 0.10% SOFR index adjustment. The Credit Agreement includes a facility fee equal to 0.20% per annum, which is also determined by the Trust’s investment grade rating.

Base Rate Loans, Adjusted SOFR Loans, and Letters of Credit (each, as defined in the Credit Agreement) will be subject to interest rates, based upon the Trust’s investment grade rating as follows:

Credit Rating	Applicable Margin for Revolving Loans: SOFR Loans and Letter of Credit Fee	Applicable Margin for Revolving Loans: Base Rate Loans		Applicable Margin for Term Loans: SOFR Loans	Applicable Margin for Term Loans: Base Rate Loans
At Least A- or A3	SOFR + 0.725%	—	%	SOFR + 0.85%	—	%
At Least BBB+ or Baa1	SOFR + 0.775%	—	%	SOFR + 0.90%	—	%
At Least BBB or Baa2	SOFR + 0.85%	—	%	SOFR + 1.00%	—	%
At Least BBB- or Baa3	SOFR + 1.05%	0.05	%	SOFR + 1.25%	0.25	%
Below BBB- or Baa3	SOFR + 1.40%	0.40	%	SOFR + 1.65%	0.65	%

The Credit Agreement contains financial covenants that, among other things, require compliance with leverage and coverage ratios and maintenance of minimum tangible net worth, as well as covenants that may limit the Trust’s and the Operating Partnership’s ability to incur additional debt, grant liens, or make distributions. The Company may, at any time, voluntarily prepay any revolving or term loan under the Credit Agreement in whole or in part without premium or penalty. As of March 31, 2023, the Company was in compliance with all financial covenants related to the Credit Agreement.

The Credit Agreement includes customary representations and warranties by the Trust and the Operating Partnership and imposes customary covenants on the Operating Partnership and the Trust. The Credit Agreement also contains customary events of default, and if an event of default occurs and continues, the Operating Partnership is subject to certain actions by the administrative agent, including without limitation, the acceleration of repayment of all amounts outstanding under the Credit Agreement.

As of March 31, 2023, the Company had $152.0 million of borrowings outstanding under its unsecured revolving credit facility. As defined by the Credit Agreement, the current unencumbered borrowing base allows the Company to borrow an additional $848.0 million before reaching the maximum allowed under the credit facility.

Notes Payable

As of March 31, 2023, the Company had $1.5 billion aggregate principal amount of senior notes issued and outstanding by the Operating Partnership, comprised of $25.0 million maturing in 2025, $70.0 million maturing in 2026, $425.0 million maturing in 2027, $395.0 million maturing in 2028, and $545.0 million maturing in 2031.

Certain properties have mortgage debt that contains financial covenants. As of March 31, 2023, the Trust was in compliance with all mortgage debt financial covenants.

Scheduled principal payments due on consolidated debt as of March 31, 2023 are as follows (in thousands):

2023	$	754
2024	59,719
2025	177,476
2026	170,476
2027	425,476
Thereafter	942,775
Total Payments	$	1,776,676

As of March 31, 2023, the Company had total consolidated indebtedness of approximately $1.8 billion. The weighted average interest rate on consolidated indebtedness was 4.03% (based on the 30-day LIBOR rate of 4.77% and a SOFR rate of 4.87% as of March 31, 2023).

For the three months ended March 31, 2023 and 2022, the Company incurred interest expense on its debt, exclusive of deferred financing cost amortization, of $18.6 million and $16.2 million, respectively.

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Derivatives

3 Months Ended

Mar. 31, 2023

Derivative Instrument Detail [Abstract]

Derivatives

Derivatives

In the normal course of business, a variety of financial instruments are used to manage or hedge interest rate risk. The Company has implemented ASC 815, Derivatives and Hedging (“ASC 815”), which establishes accounting and reporting standards requiring that all derivatives, including certain derivative instruments embedded in other contracts, be recorded as either an asset or a liability measured at their fair value unless they qualify for a normal purchase or normal sales exception.

When specific hedge accounting criteria are not met, ASC 815 requires that changes in a derivative’s fair value be recognized currently in earnings. Changes in the fair market values of the Company’s derivative instruments are recorded in the consolidated statements of income if such derivatives do not qualify for, or the Company does not elect to apply for, hedge accounting. As a result of the Company’s adoption of ASU 2017-12 as of January 1, 2019, the entire change in the fair value of its derivatives designated and qualified as cash flow hedges are recorded in accumulated other comprehensive income on the consolidated balance sheets and are subsequently reclassified into earnings in the period in which the hedged forecasted transaction affects earnings.

To manage interest rate risk for certain of its variable-rate debt, the Company uses interest rate swaps as part of its risk management strategy. These derivatives are designed to mitigate the risk of future interest rate increases by providing a fixed interest rate for a limited, pre-determined period of time. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of March 31, 2023, the Company had one outstanding interest rate swap contract designated as a cash flow hedge of interest rate risk. See Note 2 (Summary of Significant Accounting Policies) of the 2022 Annual Report for a further discussion of our derivatives. In addition, the Company recognizes its share of other comprehensive income related to derivative instruments held by unconsolidated entities.

The following table summarizes the location and aggregate fair value of the interest rate swaps on the Company’s consolidated balance sheets (in thousands):

Total notional amount		$	36,050
Effective fixed interest rate	(1)	3.25		%
Effective date		10/31/2019
Maturity date		10/31/2024
Asset balance at March 31, 2023 (included in Other assets)		$	1,645
Asset balance at December 31, 2022 (included in Other assets)		$	2,045

(1)1.35% effective swap rate plus 1.90% spread per hedging agreement.

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Accrued Expenses and Other Liabilities

3 Months Ended

Mar. 31, 2023

Other Liabilities Disclosure [Abstract]

Accrued Expenses and Other Liabilities

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):

	March 31, 2023		December 31, 2022
Prepaid rent	$	29,041	$	21,062
Real estate taxes payable	18,982		23,303
Accrued interest	11,540		18,196
Accrued expenses	8,524		7,920
Security deposits	4,382		4,338
Accrued incentive compensation	1,579		2,700
Tenant improvement allowances	1,401		1,831
Other	9,558		8,370
Total	$	85,007	$	87,720

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Stock-based Compensation

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Stock-based Compensation

Stock-based Compensation

The Company follows ASC 718, Compensation - Stock Compensation (“ASC 718”), in accounting for its share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee’s requisite service period. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized when incurred. Share-based payments classified as liability awards are marked to fair value at each reporting period. Any common shares issued pursuant to the Company's incentive equity compensation and employee stock purchase plans will result in the Operating Partnership issuing OP Units to the Trust on a one-for-one basis, with the Operating Partnership receiving the net cash proceeds of such issuances.

Certain of the Company’s employee stock awards vest only upon the achievement of performance targets. ASC 718 requires recognition of compensation cost only when achievement of performance conditions is considered probable. Consequently, the Company’s determination of the amount of stock compensation expense requires judgment in estimating the probability of achievement of these performance targets. Subsequent changes in actual experience are monitored and estimates are updated as information is available.

In connection with the IPO, the Trust adopted the Physicians Realty Trust 2013 Equity Incentive Plan, which made shares available for awards for participants. On April 30, 2019, at the Annual Meeting of Shareholders of Physicians Realty Trust, the Trust’s shareholders approved the Amended and Restated Physicians Realty Trust 2013 Equity Incentive Plan (“2013 Plan”). The amendment increased the number of common shares authorized for issuance under the 2013 Plan to a total of 7,000,000 common shares authorized for issuance. The 2013 Plan term was also extended to 2029.

Restricted Common Shares

Restricted common shares granted under the 2013 Plan are eligible for dividends as well as the right to vote. In the three months ended March 31, 2023, the Trust granted a total of 291,324 restricted common shares with a total value of $4.3 million to its officers and certain of its employees. In January 2023, under the 2013 Plan, the Company granted restricted common shares to certain of its officers under a salary deferral program, part of which vests after one year, with the remainder vesting after two years. The remaining awards have a vesting period of one year.

A summary of the status of the Trust’s non-vested restricted common shares as of March 31, 2023 and changes during the three month period then ended follow:

	Common Shares	Weighted Average Grant Date Fair Value
Non-vested at December 31, 2022	272,898	$	16.69
Granted	291,324	14.67
Vested	(210,380)	16.37
Forfeited	(364)	17.45
Non-vested at March 31, 2023	353,478	$	15.21

For all service awards, the Company records compensation expense for the entire award on a straight-line basis over the requisite service period. For the three months ended March 31, 2023 and 2022, the Company recognized non-cash share compensation of $1.1 million and $0.9 million, respectively. Unrecognized compensation expense at March 31, 2023 was $4.5 million.

Restricted Share Units

In January 2023, under the 2013 Plan, the Company granted 11,274 restricted share units to certain of its trustees in lieu of all or a portion of such trustee’s 2023 cash retainer. These units are subject to certain timing conditions and a one-year service period. Each restricted share unit contains one dividend equivalent. Each recipient will accrue dividend equivalents on awarded share units equal to the cash dividend that would have been paid on the awarded share unit had the awarded share unit been an issued and outstanding common share on the record date for the dividend. With respect to the performance and timing conditions of the January 2023 grants, the grant date fair value of $14.47 per unit was based on the share price at the date of grant.

In March 2023, under the 2013 Plan, the Company granted restricted share units at a target level of 355,388 to its officers and certain of its employees and 62,586 to its trustees. Units granted to officers and certain employees under the Company’s 2013 Plan are subject to certain performance and market conditions and a three-year service period. Units granted to trustees are subject to certain timing conditions and a two-year service period for full vesting. Each restricted share unit contains one dividend equivalent. Each recipient will accrue dividend equivalents on awarded share units equal to the cash dividend that would have been paid on the awarded share unit had the awarded share unit been an issued and outstanding common share on the record date for the dividend.

Approximately 30% of the restricted share units issued to officers and certain employees under the Company’s 2013 Plan in 2023 vest based on a certain market condition. The awards containing the market condition were valued with the assistance of independent valuation specialists. The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $18.71 per unit for the March 2023 grant using the following assumptions:

Volatility	23.4		%
Dividend assumption	reinvested
Expected term in years	2.83 years
Risk-free rate	4.70		%
Share price (per share)	$	14.70

The remaining 70% of the restricted share units issued to officers and certain employees under the Company’s 2013 Plan, and 100% of other restricted share units issued to trustees vest based upon certain performance or timing conditions. With respect to the performance and timing conditions of the March 2023 grants, the grant date fair value of $14.70 per unit was based on the share price at the date of grant. The combined weighted average grant date fair value of the March 2023 restricted share units issued to officers and certain employees was $15.90 per unit.

The following is a summary of the activity in the Trust’s restricted share units during the three months ended March 31, 2023: 

	Executive Awards				Trustee Awards
	Restricted Share Units		Weighted Average Grant Date Fair Value		Restricted Share Units	Weighted Average Grant Date Fair Value
Non-vested at December 31, 2022	1,046,940		$	21.41	77,992	$	16.60
Granted	355,388		15.90		73,860	14.66
Vested	(223,579)	(1)	24.36		(49,890)	16.74
Non-vested at March 31, 2023	1,178,749		$	19.19	101,962	$	15.13

(1)Restricted units vested by Company executives in 2023 resulted in the issuance of 652,851 common shares, less 290,380 common shares withheld to cover minimum withholding tax obligations.

For the three months ended March 31, 2023 and 2022, the Company recognized non-cash share compensation of $3.5 million and $3.3 million, respectively. Unrecognized compensation expense at March 31, 2023 was $16.3 million.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

ASC Topic 820, Fair Value Measurement (“ASC 820”), requires certain assets and liabilities be reported and/or disclosed at fair value in the financial statements and provides a framework for establishing that fair value. The framework for determining fair value is based on a hierarchy that prioritizes the valuation techniques and inputs used to measure fair value.

In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset. These Level 3 fair value measurements are based primarily on management’s own estimates using pricing models, discounted cash flow methodologies, or similar techniques taking into account the characteristics of the asset or liability. In instances where inputs used to measure fair value fall into different levels of the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability. As part of the Company’s acquisition process, Level 3 inputs are used to measure the fair value of the assets acquired and liabilities assumed.

The Company’s derivative instruments as of March 31, 2023 consist of one interest rate swap, as detailed in the Derivative Instruments section of Note 7 (Derivatives) of this report and Note 2 (Summary of Significant Accounting Policies) of Part II, Item 8 (Financial Statements and Supplementary Data) of our 2022 Annual Report.

The interest rate swap is not traded on an exchange. The Company’s derivative assets and liabilities are recorded at fair value based on a variety of observable inputs including contractual terms, interest rate curves, yield curves, measure of volatility, and correlations of such inputs. The Company measures its derivatives at fair value on a recurring basis. The fair values are based on Level 2 inputs described above. The Company considers its own credit risk, as well as the credit risk of its counterparties, when evaluating the fair value of its derivatives.

The Company also has assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. This generally includes assets subject to impairment. There were no such assets measured at fair value as of March 31, 2023.

The carrying amounts of cash and cash equivalents, tenant receivables, payables, and accrued interest are reasonable estimates of fair value because of the short-term maturities of these instruments. Fair values for real estate loans receivable and mortgage debt are estimated based on rates currently prevailing for similar instruments of similar maturities and are based primarily on Level 2 inputs.

The following table presents the fair value of the Company’s financial instruments (in thousands):

	March 31, 2023				December 31, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Real estate loans receivable, net	$	115,764	$	113,453	$	104,973	$	102,162
Notes receivable, net	$	367	$	367	$	370	$	370
Derivative assets	$	1,645	$	1,645	$	2,045	$	2,045
Liabilities:
Credit facility	$	(152,000)	$	(152,000)	$	(193,000)	$	(193,000)
Notes payable	$	(1,460,000)	$	(1,307,272)	$	(1,475,000)	$	(1,302,767)
Mortgage debt	$	(164,676)	$	(163,429)	$	(164,929)	$	(163,129)

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Tenant Operating Leases

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Tenant Operating Leases

Tenant Operating Leases

The Company is a lessor of medical office buildings and other health care facilities. Leases have expirations from 2023 through 2042. As of March 31, 2023, the future minimum rental payments on non-cancelable leases, exclusive of expense recoveries and minimum rental payments for assets classified as held for sale, if applicable, were as follows (in thousands):

2023	$	270,431
2024	352,374
2025	334,894
2026	278,001
2027	226,004
Thereafter	764,694
Total	$	2,226,398

For the three months ended March 31, 2023 and 2022, the Company recognized $131.4 million and $127.8 million, respectively, of rental and other lease-related income related to our operating leases, of which $37.9 million and $35.1 million, respectively, were variable lease payments.

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Rent Expense

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Rent Expense

Rent Expense

The Company leases the rights to parking structures at two of its properties, the air that one property occupies, and the land upon which 97 of its properties are located from third party landowners pursuant to separate leases. In addition, the Company has nine corporate leases, primarily for office space.

The Company’s leases include both fixed and variable rental payments and may also include escalation clauses and renewal options. These leases have terms of up to 93 years remaining, excluding extension options, with a weighted average remaining term of 44 years.

At the inception of a new lease, the Company establishes an operating or finance lease asset and operating or finance lease liability calculated as the present value of future minimum lease payments. As our leases do not provide an implicit rate, we calculate a discount rate that approximates our incremental borrowing rate available at lease commencement to determine the present value of future minimum lease payments. The approximated weighted average discount rate was 4.4% as of March 31, 2023. There are no operating or finance leases that have not yet commenced that would have a significant impact on the Company’s consolidated balance sheets.

As of March 31, 2023, the future minimum lease obligations under non-cancelable parking, air, ground, and corporate leases were as follows (in thousands):

2023	$	3,539
2024	4,819
2025	4,798
2026	4,787
2027	4,789
Thereafter	239,130
Total undiscounted lease payments	$	261,862
Less: Interest	(157,006)
Present value of lease liabilities	$	104,856

Lease costs consisted of the following for the three months ended March 31, 2023 (in thousands):

Fixed lease cost	$	817
Variable lease cost	338
Total lease cost	$	1,155

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Credit Concentration

3 Months Ended

Mar. 31, 2023

Concentration Risks, Types, No Concentration Percentage [Abstract]

Credit Concentration

Credit Concentration

The Company uses annualized base rent (“ABR”) as its credit concentration metric. ABR is calculated by multiplying contractual base rent for the month ended March 31, 2023 by 12, excluding the impact of concessions and straight-line rent. The following table summarizes certain information about the Company’s top five tenant credit concentrations as of March 31, 2023 (in thousands):

Tenant	Total ABR		Percent of ABR
CommonSpirit - CHI - Nebraska	$	18,142	5.0	%
Northside Hospital	16,238		4.5	%
UofL Health - Louisville, Inc.	14,373		4.0	%
US Oncology	11,443		3.2	%
HonorHealth	11,220		3.1	%
Remaining portfolio	289,558		80.2	%
Total	$	360,974	100.0	%

ABR collected from the Company’s top five tenant relationships comprises 19.8% of its total ABR as of March 31, 2023. Total ABR from CommonSpirit-affiliated tenants totals 14.8%, including the affiliates disclosed above.

The following table summarizes certain information about the Company’s top five geographic concentrations as of March 31, 2023:

State	Total ABR		Percent of ABR
Texas	$	49,397	13.7	%
Georgia	26,570		7.4	%
Florida	25,512		7.1	%
Indiana	23,379		6.5	%
Arizona	21,542		6.0	%
Other	214,574		59.3	%
Total	$	360,974	100.0	%

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Earnings Per Share

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

The following table shows the amounts used in computing the Trust’s basic and diluted earnings per share (in thousands, except share and per share data):

	Three Months Ended March 31,
	2023		2022
Numerator for earnings per share - basic:
Net income	$	10,669	$	13,943
Net income attributable to noncontrolling interests:
Operating Partnership	(423)		(692)
Partially owned properties	(44)		(159)
Numerator for earnings per share - basic	$	10,202	$	13,092
Numerator for earnings per share - diluted:
Numerator for earnings per share - basic	$	10,202	$	13,092
Noncontrolling interest - Operating Partnership income	423		692
Numerator for earnings per share - diluted	$	10,625	$	13,784
Denominator for earnings per share - basic and diluted:
Weighted average number of shares outstanding - basic	237,484,043		225,069,208
Effect of dilutive securities:
Noncontrolling interest - Operating Partnership units	9,842,219		11,912,099
Restricted common shares	130,172		104,910
Restricted share units	1,300,238		1,254,026
Denominator for earnings per share - diluted:	248,756,672		238,340,243
Earnings per share - basic	$	0.04	$	0.06
Earnings per share - diluted	$	0.04	$	0.06

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Subsequent Events

3 Months Ended

Mar. 31, 2023

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Since March 31, 2023, the Company completed the acquisition of two medical condominium units located in an Atlanta “Pill Hill” medical office building (“MOB”) for an aggregate purchase price of approximately $1.4 million and funded additional costs of $0.8 million related to our development project.

The Company also contributed $2.0 million to our existing Davis Joint Venture for our pro-rata share of two earn-out agreements. Additionally, we funded a $3.4 million term loan with the Davis Joint Venture related to these earn-out agreements.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Noncontrolling Interests

Noncontrolling Interests

The Company presents the portion of any equity it does not own in entities that it controls (and thus consolidates) as noncontrolling interests and classifies such interests as a component of consolidated equity, separate from the Company’s total shareholders’ equity, on the consolidated balance sheets.

Operating Partnership: Noncontrolling interests in the Company include OP Units held by other investors. Net income or loss is allocated to noncontrolling interests (limited partners) based on their respective ownership percentage of the Operating Partnership. The ownership percentage is calculated by dividing the number of OP Units held by the noncontrolling interests by the total OP Units held by the noncontrolling interests and the Trust. Issuance of additional common shares and OP Units

changes the ownership interests of both the noncontrolling interests and the Trust. Such transactions and the related proceeds are treated as capital transactions. 

As of March 31, 2023, the Trust held a 96.0% interest in the Operating Partnership. As the sole general partner and the majority interest holder, the Trust consolidates the financial position and results of operations of the Operating Partnership.

Partially Owned Properties: The Trust reflects noncontrolling interests in partially owned properties on the consolidated balance sheets for the portion of consolidated properties that are not wholly owned by the Company. The earnings or losses from those properties attributable to the noncontrolling interests are reflected as noncontrolling interests in partially owned properties in the consolidated statements of income.

Tax Status of Dividends and Distributions

Tax Status of Dividends and Distributions

The Company’s distributions of current and accumulated earnings and profits for U.S. federal income tax purposes generally are taxable to shareholders as ordinary income. Distributions in excess of these earnings and profits generally are treated as a non-taxable reduction of the shareholders’ basis in the shares to the extent thereof (non-dividend distributions) and thereafter as taxable gain.

Any cash distributions received by an OP Unit holder in respect of its OP Units generally will not be taxable to such OP Unit holder for U.S. federal income tax purposes, to the extent that such distribution does not exceed the OP Unit holder’s basis in its OP Units. Any such distribution will instead reduce the OP Unit holder’s basis in its OP Units (and OP Unit holders will be subject to tax on the taxable income allocated to them by the Operating Partnership in respect of their OP Units when such income is earned by the Operating Partnership, with such income allocation increasing the OP Unit holders’ basis in their OP Units).

The Company has elected taxable REIT subsidiary (“TRS”) status for certain of its corporate subsidiaries and, as a result, these entities will incur both federal and state income taxes on any taxable income of such entities after consideration of any net operating losses. To date, these income taxes have been de minimis.

Real Estate Loans Receivable, Net

Real Estate Loans Receivable, Net

Real estate loans receivable consists of eight mezzanine loans, six term loans, and two construction loans as of March 31, 2023. Generally, each mezzanine loan is collateralized by a pledge of the borrower’s ownership interest in the respective real estate owner, each term loan is secured by a mortgage on a related medical office building, and construction loans are secured by mortgages on the land and the improvements as constructed.

Rental and Related Revenues

Rental and Related Revenues

Rental revenue is recognized on a straight-line basis over the terms of the related leases when collectability is probable. Recognizing rental revenue on a straight-line basis for leases may result in recognizing revenue for amounts more or less than amounts currently due from tenants. Amounts recognized in excess of amounts currently due from tenants are included in other assets and were approximately $102.9 million and $101.3 million as of March 31, 2023 and December 31, 2022, respectively. If the Company determines that collectability of straight-line rents is not probable, income recognition is limited to the lesser of cash collected, or lease income reflected on a straight-line basis, plus variable rent when it becomes accruable.

In accordance with ASC 842, Leases, Topic 842, if the collectability of a lease changes after the commencement date, any difference between lease income that would have been recognized and the lease payments shall be recognized as an adjustment to lease income. Bad debt recognized as an adjustment to rental and related revenues was $0.4 million for the three months ended March 31, 2023 and $0.1 million for the three months ended March 31, 2022.

Rental revenue is adjusted by the amortization of lease inducements and above-market or below-market rents on certain leases. Lease inducements and above-market or below-market rents are amortized on a straight-line basis over the remaining lease term. Rental and related revenues also include expense recoveries, which relate to tenant reimbursement of real estate taxes, insurance, and other operating expenses that are recognized in the period the applicable expenses are incurred. The reimbursements are recorded gross, as these costs are incurred by the Company and reimbursed by the tenants. We have certain tenants with absolute net leases. Under these lease agreements, the tenant is responsible for operating and building expenses and we do not recognize expense recoveries.

New Accounting Pronouncements

New Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional relief to applying reference rate reform to changing reference rates, contracts, hedging relationships, and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”), which has been discontinued at the end of 2021. The amendments in this update may be applied through December 31, 2024. The Company will continue to use published LIBOR rates through June of 2023, or until all transactions referencing LIBOR have been amended.

On March 31, 2023, the Operating Partnership, as borrower, and the Trust, as guarantor, executed a First Amendment to the Third Amended and Restated Credit Agreement to update the benchmark provisions to replace LIBOR with the Secured Overnight Financing Rate (“SOFR”), as the reference rate for the purpose of calculating interest under the agreement. In connection with amending the unsecured credit agreement, we also amended our fixed interest rate swap agreement to update reference rate from LIBOR to SOFR. As a result, we elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients maintains the presentation of derivatives consistent with past presentation. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

Derivatives

In the normal course of business, a variety of financial instruments are used to manage or hedge interest rate risk. The Company has implemented ASC 815, Derivatives and Hedging (“ASC 815”), which establishes accounting and reporting standards requiring that all derivatives, including certain derivative instruments embedded in other contracts, be recorded as either an asset or a liability measured at their fair value unless they qualify for a normal purchase or normal sales exception.

When specific hedge accounting criteria are not met, ASC 815 requires that changes in a derivative’s fair value be recognized currently in earnings. Changes in the fair market values of the Company’s derivative instruments are recorded in the consolidated statements of income if such derivatives do not qualify for, or the Company does not elect to apply for, hedge accounting. As a result of the Company’s adoption of ASU 2017-12 as of January 1, 2019, the entire change in the fair value of its derivatives designated and qualified as cash flow hedges are recorded in accumulated other comprehensive income on the consolidated balance sheets and are subsequently reclassified into earnings in the period in which the hedged forecasted transaction affects earnings.

To manage interest rate risk for certain of its variable-rate debt, the Company uses interest rate swaps as part of its risk management strategy. These derivatives are designed to mitigate the risk of future interest rate increases by providing a fixed interest rate for a limited, pre-determined period of time. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of March 31, 2023, the Company had one outstanding interest rate swap contract designated as a cash flow hedge of interest rate risk. See Note 2 (Summary of Significant Accounting Policies) of the 2022 Annual Report for a further discussion of our derivatives. In addition, the Company recognizes its share of other comprehensive income related to derivative instruments held by unconsolidated entities.

Fair Value Measurements

The Company’s derivative instruments as of March 31, 2023 consist of one interest rate swap, as detailed in the Derivative Instruments section of Note 7 (Derivatives) of this report and Note 2 (Summary of Significant Accounting Policies) of Part II, Item 8 (Financial Statements and Supplementary Data) of our 2022 Annual Report.

The interest rate swap is not traded on an exchange. The Company’s derivative assets and liabilities are recorded at fair value based on a variety of observable inputs including contractual terms, interest rate curves, yield curves, measure of volatility, and correlations of such inputs. The Company measures its derivatives at fair value on a recurring basis. The fair values are based on Level 2 inputs described above. The Company considers its own credit risk, as well as the credit risk of its counterparties, when evaluating the fair value of its derivatives.

The Company also has assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. This generally includes assets subject to impairment. There were no such assets measured at fair value as of March 31, 2023.

The carrying amounts of cash and cash equivalents, tenant receivables, payables, and accrued interest are reasonable estimates of fair value because of the short-term maturities of these instruments. Fair values for real estate loans receivable and mortgage debt are estimated based on rates currently prevailing for similar instruments of similar maturities and are based primarily on Level 2 inputs.

Stock-based Compensation

The Company follows ASC 718, Compensation - Stock Compensation (“ASC 718”), in accounting for its share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee’s requisite service period. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized when incurred. Share-based payments classified as liability awards are marked to fair value at each reporting period. Any common shares issued pursuant to the Company's incentive equity compensation and employee stock purchase plans will result in the Operating Partnership issuing OP Units to the Trust on a one-for-one basis, with the Operating Partnership receiving the net cash proceeds of such issuances.

Certain of the Company’s employee stock awards vest only upon the achievement of performance targets. ASC 718 requires recognition of compensation cost only when achievement of performance conditions is considered probable. Consequently, the Company’s determination of the amount of stock compensation expense requires judgment in estimating the probability of achievement of these performance targets. Subsequent changes in actual experience are monitored and estimates are updated as information is available.

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Investment and Disposition Activity (Tables)

3 Months Ended

Mar. 31, 2023

Business Combination and Asset Acquisition [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the acquisition date fair values of the assets acquired and the liabilities assumed in connection with the acquisition of the medical condominium unit, a parcel of land adjacent to one of our medical office facilities, and two earn-out agreements, as well as follow-on capitalized costs during the three months ended March 31, 2023, which the Company determined using Level 2 and Level 3 inputs (in thousands):

Land	$	1,356
Building and improvements	1,294
Cash used in acquisition of investment property	$	2,650

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Intangibles (Tables)

3 Months Ended

Mar. 31, 2023

Finite-Lived Intangible Assets, Net [Abstract]

Summary of the carrying amount of intangible assets and liabilities

The following is a summary of the carrying amount of intangible assets and liabilities as of March 31, 2023 and December 31, 2022 (in thousands):

	March 31, 2023						December 31, 2022
	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
Assets
In-place leases	$	445,322	$	(251,995)	$	193,327	$	445,583	$	(241,643)	$	203,940
Above-market leases	$	59,752	$	(31,511)	$	28,241	$	59,752	$	(30,096)	$	29,656
Liabilities
Below-market leases	$	36,409	$	(12,613)	$	23,796	$	37,002	$	(12,621)	$	24,381

Summary of the carrying amount of acquired lease intangibles

The following is a summary of acquired lease intangible amortization for the three months ended March 31, 2023 and 2022 (in thousands):

	Three Months Ended March 31,
	2023		2022
Amortization expense related to in-place leases	$	10,612	$	11,040
Decrease in rental income related to above-market leases	1,415		1,502
Increase in rental income related to below-market leases	586		459

Schedule of future amortization of the acquired lease intangibles

Future aggregate net amortization of acquired lease intangibles as of March 31, 2023, is as follows (in thousands):

	Net Decrease (Increase)  in Revenue		Net Increase in  Expenses
2023	$	2,361	$	30,004
2024	2,929		34,718
2025	2,357		29,208
2026	1,203		23,095
2027	1,036		20,173
Thereafter	(5,441)		56,129
Total	$	4,445	$	193,327

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Other Assets (Tables)

3 Months Ended

Mar. 31, 2023

Other Assets, Unclassified [Abstract]

Schedule of other assets

Other assets consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):

	March 31, 2023		December 31, 2022
Straight line rent receivable, net	$	102,856	$	101,306
Leasing commissions, net	13,449		13,231
Prepaid expenses	10,657		11,009
Lease inducements, net	8,065		7,894
Interest rate swap	1,645		2,045
Escrows	1,352		1,565
Notes receivable, net	367		370
Other	8,659		9,387
Total	$	147,050	$	146,807

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Debt (Tables)

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Schedule of debt

The following is a summary of debt as of March 31, 2023 and December 31, 2022 (in thousands):

	March 31, 2023		December 31, 2022
Fixed interest mortgage notes (1)	$	59,641	$	59,776
Variable interest mortgage notes (2)	105,035		105,153
Total mortgage debt	164,676		164,929
$1.0 billion unsecured revolving credit facility due September 2025 (3)	152,000		193,000
$400 million senior unsecured notes bearing fixed interest of 4.30%, due March 2027	400,000		400,000
$350 million senior unsecured notes bearing fixed interest of 3.95%, due January 2028	350,000		350,000
$500 million senior unsecured notes bearing fixed interest of 2.625%, due November 2031	500,000		500,000
$135 million senior unsecured notes bearing fixed interest of 4.43% to 4.74%, due January 2026 to 2031	135,000		150,000
$75 million senior unsecured notes bearing fixed interest of 4.09% to 4.24%, due August 2025 to 2027	75,000		75,000
Total principal	1,776,676		1,832,929
Unamortized deferred financing costs	(6,899)		(7,453)
Unamortized discounts	(7,087)		(7,359)
Total debt	$	1,762,690	$	1,818,117

(1)As of March 31, 2023, fixed interest mortgage notes bear interest from 3.25% to 4.63%, due in 2024, with a weighted average interest rate of 3.80%. As of December 31, 2022, fixed interest mortgage notes bear interest from 3.33% to 4.63%, due in 2024, with a weighted average interest rate of 3.85%. The notes are collateralized by two properties with a net book value of $93.1 million as of March 31, 2023 and two properties with a net book value of $94.9 million as of December 31, 2022. One mortgage bears interest at LIBOR + 1.90% and the Trust entered into a pay-fixed receive-variable interest rate swap, fixing the variable component at 1.35% as of March 31, 2023 and 1.43% as of December 31, 2022.

(2)Variable interest mortgage notes bear variable interest of SOFR + 1.85% and LIBOR + 2.75% for a weighted average interest rate of 6.76% and 6.20% as of March 31, 2023 and December 31, 2022, respectively. The notes are due in 2026 and 2028 and collateralized by four properties with a net book value of $291.1 million as of March 31, 2023 and $295.5 million as of December 31, 2022.

(3)The unsecured revolving credit facility bears variable interest of SOFR plus 0.95%, inclusive of a 0.10% SOFR index adjustment, as of March 31, 2023 and LIBOR plus 0.85% as of December 31, 2022.

Schedule of adjusted LIBOR rate loans and interest rates based on credit rating

Base Rate Loans, Adjusted SOFR Loans, and Letters of Credit (each, as defined in the Credit Agreement) will be subject to interest rates, based upon the Trust’s investment grade rating as follows:

Credit Rating	Applicable Margin for Revolving Loans: SOFR Loans and Letter of Credit Fee	Applicable Margin for Revolving Loans: Base Rate Loans		Applicable Margin for Term Loans: SOFR Loans	Applicable Margin for Term Loans: Base Rate Loans
At Least A- or A3	SOFR + 0.725%	—	%	SOFR + 0.85%	—	%
At Least BBB+ or Baa1	SOFR + 0.775%	—	%	SOFR + 0.90%	—	%
At Least BBB or Baa2	SOFR + 0.85%	—	%	SOFR + 1.00%	—	%
At Least BBB- or Baa3	SOFR + 1.05%	0.05	%	SOFR + 1.25%	0.25	%
Below BBB- or Baa3	SOFR + 1.40%	0.40	%	SOFR + 1.65%	0.65	%

Schedule of principal payments due on debt

Scheduled principal payments due on consolidated debt as of March 31, 2023 are as follows (in thousands):

2023	$	754
2024	59,719
2025	177,476
2026	170,476
2027	425,476
Thereafter	942,775
Total Payments	$	1,776,676

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Derivatives (Tables)

3 Months Ended

Mar. 31, 2023

Derivative Instrument Detail [Abstract]

Schedule of interest rate derivatives

The following table summarizes the location and aggregate fair value of the interest rate swaps on the Company’s consolidated balance sheets (in thousands):

Total notional amount		$	36,050
Effective fixed interest rate	(1)	3.25		%
Effective date		10/31/2019
Maturity date		10/31/2024
Asset balance at March 31, 2023 (included in Other assets)		$	1,645
Asset balance at December 31, 2022 (included in Other assets)		$	2,045

(1)1.35% effective swap rate plus 1.90% spread per hedging agreement.

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Accrued Expenses and Other Liabilities (Tables)

3 Months Ended

Mar. 31, 2023

Other Liabilities Disclosure [Abstract]

Schedule of accrued expenses and other liabilities

Accrued expenses and other liabilities consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):

	March 31, 2023		December 31, 2022
Prepaid rent	$	29,041	$	21,062
Real estate taxes payable	18,982		23,303
Accrued interest	11,540		18,196
Accrued expenses	8,524		7,920
Security deposits	4,382		4,338
Accrued incentive compensation	1,579		2,700
Tenant improvement allowances	1,401		1,831
Other	9,558		8,370
Total	$	85,007	$	87,720

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Stock-based Compensation (Tables)

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of non-vested restricted common shares

A summary of the status of the Trust’s non-vested restricted common shares as of March 31, 2023 and changes during the three month period then ended follow:

	Common Shares	Weighted Average Grant Date Fair Value
Non-vested at December 31, 2022	272,898	$	16.69
Granted	291,324	14.67
Vested	(210,380)	16.37
Forfeited	(364)	17.45
Non-vested at March 31, 2023	353,478	$	15.21

Schedule of weighted average grant date fair value assumptions

The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $18.71 per unit for the March 2023 grant using the following assumptions:

Volatility	23.4		%
Dividend assumption	reinvested
Expected term in years	2.83 years
Risk-free rate	4.70		%
Share price (per share)	$	14.70

Summary of the activity in the restricted share units

The following is a summary of the activity in the Trust’s restricted share units during the three months ended March 31, 2023: 

	Executive Awards				Trustee Awards
	Restricted Share Units		Weighted Average Grant Date Fair Value		Restricted Share Units	Weighted Average Grant Date Fair Value
Non-vested at December 31, 2022	1,046,940		$	21.41	77,992	$	16.60
Granted	355,388		15.90		73,860	14.66
Vested	(223,579)	(1)	24.36		(49,890)	16.74
Non-vested at March 31, 2023	1,178,749		$	19.19	101,962	$	15.13

(1)Restricted units vested by Company executives in 2023 resulted in the issuance of 652,851 common shares, less 290,380 common shares withheld to cover minimum withholding tax obligations.

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Schedule of fair value of other financial instruments

The following table presents the fair value of the Company’s financial instruments (in thousands):

	March 31, 2023				December 31, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Real estate loans receivable, net	$	115,764	$	113,453	$	104,973	$	102,162
Notes receivable, net	$	367	$	367	$	370	$	370
Derivative assets	$	1,645	$	1,645	$	2,045	$	2,045
Liabilities:
Credit facility	$	(152,000)	$	(152,000)	$	(193,000)	$	(193,000)
Notes payable	$	(1,460,000)	$	(1,307,272)	$	(1,475,000)	$	(1,302,767)
Mortgage debt	$	(164,676)	$	(163,429)	$	(164,929)	$	(163,129)

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Tenant Operating Leases (Tables)

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Lessor, operating lease, payments to be received, maturity

As of March 31, 2023, the future minimum rental payments on non-cancelable leases, exclusive of expense recoveries and minimum rental payments for assets classified as held for sale, if applicable, were as follows (in thousands):

2023	$	270,431
2024	352,374
2025	334,894
2026	278,001
2027	226,004
Thereafter	764,694
Total	$	2,226,398

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Rent Expense (Tables)

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Schedule of future minimum lease obligations under non-cancelable ground leases

As of March 31, 2023, the future minimum lease obligations under non-cancelable parking, air, ground, and corporate leases were as follows (in thousands):

2023	$	3,539
2024	4,819
2025	4,798
2026	4,787
2027	4,789
Thereafter	239,130
Total undiscounted lease payments	$	261,862
Less: Interest	(157,006)
Present value of lease liabilities	$	104,856

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Credit Concentration (Tables)

3 Months Ended

Mar. 31, 2023

Concentration Risks, Types, No Concentration Percentage [Abstract]

Schedules of concentration of risk, by risk factor

The following table summarizes certain information about the Company’s top five tenant credit concentrations as of March 31, 2023 (in thousands):

Tenant	Total ABR		Percent of ABR
CommonSpirit - CHI - Nebraska	$	18,142	5.0	%
Northside Hospital	16,238		4.5	%
UofL Health - Louisville, Inc.	14,373		4.0	%
US Oncology	11,443		3.2	%
HonorHealth	11,220		3.1	%
Remaining portfolio	289,558		80.2	%
Total	$	360,974	100.0	%

The following table summarizes certain information about the Company’s top five geographic concentrations as of March 31, 2023:

State	Total ABR		Percent of ABR
Texas	$	49,397	13.7	%
Georgia	26,570		7.4	%
Florida	25,512		7.1	%
Indiana	23,379		6.5	%
Arizona	21,542		6.0	%
Other	214,574		59.3	%
Total	$	360,974	100.0	%

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Schedule of amounts used in computing basic and diluted earnings per share

The following table shows the amounts used in computing the Trust’s basic and diluted earnings per share (in thousands, except share and per share data):

	Three Months Ended March 31,
	2023		2022
Numerator for earnings per share - basic:
Net income	$	10,669	$	13,943
Net income attributable to noncontrolling interests:
Operating Partnership	(423)		(692)
Partially owned properties	(44)		(159)
Numerator for earnings per share - basic	$	10,202	$	13,092
Numerator for earnings per share - diluted:
Numerator for earnings per share - basic	$	10,202	$	13,092
Noncontrolling interest - Operating Partnership income	423		692
Numerator for earnings per share - diluted	$	10,625	$	13,784
Denominator for earnings per share - basic and diluted:
Weighted average number of shares outstanding - basic	237,484,043		225,069,208
Effect of dilutive securities:
Noncontrolling interest - Operating Partnership units	9,842,219		11,912,099
Restricted common shares	130,172		104,910
Restricted share units	1,300,238		1,254,026
Denominator for earnings per share - diluted:	248,756,672		238,340,243
Earnings per share - basic	$	0.04	$	0.06
Earnings per share - diluted	$	0.04	$	0.06

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Organization and Business - Additional Information (Details) - $ / shares	Mar. 31, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01

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Organization and Business - ATM Program (Details) - Private Placement - ATM Program - USD ($)	1 Months Ended	3 Months Ended
	May 31, 2021	Mar. 31, 2023
Maximum
Class of Stock [Line Items]
Aggregate offering price of common stock	$ 500,000,000
Operating Partnership
Class of Stock [Line Items]
Common shares sold (in shares)		4,400,000
Weighted average price (in dollars per share)		$ 15.10
Proceeds from issuance of common stock		$ 65,800,000
Sale of stock, remaining authorized amount		$ 158,600,000

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Summary of Significant Accounting Policies - Noncontrolling Interests and Redeemable Noncontrolling Interests (Details)	3 Months Ended
	Mar. 31, 2023
Physicians Realty Trust
Business Acquisition [Line Items]
Percentage of interest held	96.00%

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Summary of Significant Accounting Policies - Dividends and Distributions (Details) - $ / shares		3 Months Ended
	Mar. 17, 2023	Mar. 31, 2023	Mar. 31, 2022
Accounting Policies [Abstract]
Dividends and distributions declared per common share and OP Unit (in dollars per share)	$ 0.23	$ 0.23	$ 0.23

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Summary of Significant Accounting Policies - Real Estate Loans Receivable, Net (Details) $ in Millions	3 Months Ended
	Mar. 31, 2023 USD ($) loan
Property, Plant and Equipment [Line Items]
Financing receivable, allowance for credit loss | $	$ 0.2
Mezzanine Loan Receivable
Property, Plant and Equipment [Line Items]
Number of mezzanine loans collateralized	8
Term Loan Receivable
Property, Plant and Equipment [Line Items]
Number of mezzanine loans collateralized	6
Construction Loans
Property, Plant and Equipment [Line Items]
Number of mezzanine loans collateralized	2

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Summary of Significant Accounting Policies - Rental and Related Revenues (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Accounting Policies [Abstract]
Straight line rent receivable, net	$ 102,856		$ 101,306
Operating lease, bad debt expense	$ 400	$ 100

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Investment and Disposition Activity - Narrative (Details) $ in Millions	3 Months Ended
	Mar. 31, 2023 USD ($) earn-outAgreement condominiumUnit medicalFacility land loan
Asset Acquisition [Line Items]
Contractual obligation	$ 40.5
Contractual obligation, quarterly payment amount	1.0
Payments to acquire real estate, payments for loans receivable and payments for real estate investments	14.4
Asset acquisition, capitalized costs	$ 0.2
Disposal Group, Held-for-sale, Not Discontinued Operations
Asset Acquisition [Line Items]
Number of real estate properties sold | medicalFacility	1
Proceeds from divestiture of businesses	$ 2.6
One Medical Condominium Unit Acquired in 2023
Asset Acquisition [Line Items]
Number of medical condominium units | condominiumUnit	1
Asset acquisition, consideration transferred	$ 1.3
One Parcel Of Land Acquired 2023
Asset Acquisition [Line Items]
Asset acquisition, consideration transferred	$ 0.8
Number of land parcels acquired | land	1
Earn-Out Investments
Asset Acquisition [Line Items]
Asset acquisition, consideration transferred	$ 0.3
Number of earn-out agreements | earn-outAgreement	2
Construction Loans
Asset Acquisition [Line Items]
Construction loan	$ 35.8
Payments for (proceeds from) loans receivable	4.1
Term Loan
Asset Acquisition [Line Items]
Payments for (proceeds from) loans receivable	$ 5.4
Number of mezzanine loans collateralized | loan	1
Previous Construction Loan
Asset Acquisition [Line Items]
Payments for (proceeds from) loans receivable	$ 1.0
Previous Term Loan
Asset Acquisition [Line Items]
Payments for (proceeds from) loans receivable	0.5
Private Equity Funds
Asset Acquisition [Line Items]
Payments to acquire investments	$ 0.2

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Investment and Disposition Activity - Summary of Acquisition Date Fair Values (Details) $ in Thousands	Mar. 31, 2023 USD ($)
Business Combination and Asset Acquisition [Abstract]
Land	$ 1,356
Building and improvements	1,294
Cash used in acquisition of investment property	$ 2,650

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Intangibles - Summary of Carrying Amount of Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Liabilities
Below-market leases, net	$ 23,796	$ 24,381
In-place leases
Assets:
Cost	445,322	445,583
Accumulated Amortization	(251,995)	(241,643)
Net	193,327	203,940
Above-market leases
Assets:
Cost	59,752	59,752
Accumulated Amortization	(31,511)	(30,096)
Net	28,241	29,656
Below-market leases
Liabilities
Below-market leases, cost	36,409	37,002
Below-market leases, accumulated amortization	(12,613)	(12,621)
Below-market leases, net	$ 23,796	$ 24,381

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Intangibles - Summary of Acquired Amortization (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Amortization expense related to in-place leases
Intangibles
Amortization expense related to in-place leases	$ 10,612	$ 11,040
Decrease in rental income related to above-market leases
Intangibles
Decrease of rental income	1,415	1,502
Below market in-place lease intangibles
Intangibles
Increase in rental income related to below-market leases	$ 586	$ 459

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Intangibles - Additional Information (Details)	3 Months Ended
	Mar. 31, 2023
In-place lease intangibles
Intangibles
Weighted average amortization period for lease intangibles	7 years
Above-market leases
Intangibles
Weighted average amortization period for lease intangibles	7 years
Leasehold Interest
Intangibles
Weighted average amortization period for lease intangibles	7 years
Below market in-place lease intangibles
Intangibles
Weighted average amortization period for lease intangibles	15 years

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Intangibles - Future Aggregate Net Amortization of Acquired Lease Intangibles (Details) $ in Thousands	Mar. 31, 2023 USD ($)
Net Decrease (Increase)  in Revenue
2023	$ 2,361
2024	2,929
2025	2,357
2026	1,203
2027	1,036
Thereafter	(5,441)
Total	4,445
Net Increase in  Expenses
2023	30,004
2024	34,718
2025	29,208
2026	23,095
2027	20,173
Thereafter	56,129
Total	$ 193,327

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Other Assets - Schedule of Other Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Other Assets, Unclassified [Abstract]
Straight line rent receivable, net	$ 102,856	$ 101,306
Prepaid expenses	10,657	11,009
Leasing commissions, net	13,449	13,231
Lease inducements, net	8,065	7,894
Interest rate swap	1,645	2,045
Escrows	1,352	1,565
Notes receivable, net	367	370
Other	8,659	9,387
Total	$ 147,050	$ 146,807

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Debt - Summary of Debt (Details)	3 Months Ended	12 Months Ended
	Mar. 31, 2023 USD ($) healthcareproperty	Dec. 31, 2022 USD ($) healthcareproperty	Sep. 24, 2021 USD ($)
Debt
Long-term debt, gross	$ 1,776,676,000	$ 1,832,929,000
Unamortized deferred financing costs	(6,899,000)	(7,453,000)
Unamortized discounts	(7,087,000)	(7,359,000)
Total debt	1,762,690,000	1,818,117,000
2021 Third Amended and Restated Credit Agreement
Debt
Current borrowing capacity			$ 1,250,000,000
Mortgages
Debt
Long-term debt, gross	164,676,000	164,929,000
Mortgages | Fixed rate mortgage
Debt
Long-term debt, gross	$ 59,641,000	$ 59,776,000
Weighted average interest rate	3.80%	3.85%
Pledged assets separately reported real estate pledged as collateral number | healthcareproperty	2	2
Mortgages | Fixed rate mortgage | Asset Pledged as Collateral
Debt
Financial instruments, owned, at fair value	$ 93,100,000	$ 94,900,000
Mortgages | Fixed rate mortgage | Minimum
Debt
Interest rate (as a percent)	3.25%	3.33%
Mortgages | Fixed rate mortgage | Maximum
Debt
Interest rate (as a percent)	4.63%	4.63%
Mortgages | Variable interest mortgage note
Debt
Long-term debt, gross	$ 105,035,000	$ 105,153,000
Weighted average interest rate	6.76%	6.20%
Pledged assets separately reported real estate pledged as collateral number | healthcareproperty	4
Mortgages | Variable interest mortgage note | Asset Pledged as Collateral
Debt
Financial instruments, owned, at fair value	$ 291,100,000	$ 295,500,000
Mortgages | Variable interest mortgage note | London Interbank Offered Rate (LIBOR)
Debt
Reference rate (as a percent)	2.75%
Mortgages | Variable interest mortgage note | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Maximum
Debt
Reference rate (as a percent)	1.85%
Revolving credit facility
Debt
Current borrowing capacity	$ 848,000,000
Revolving credit facility | $1.0 billion unsecured revolving credit facility due September 2025
Debt
Long-term debt, gross	152,000,000	$ 193,000,000
Revolving credit facility | 2021 Third Amended and Restated Credit Agreement
Debt
Current borrowing capacity	$ 1,000,000,000		$ 1,000,000,000
Revolving credit facility | 2021 Third Amended and Restated Credit Agreement | London Interbank Offered Rate (LIBOR)
Debt
Reference rate (as a percent)		0.85%
Revolving credit facility | 2021 Third Amended and Restated Credit Agreement | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt
Reference rate (as a percent)	0.95%
Debt instrument, variable rate, index adjustment	0.10%
Senior notes
Debt
Total debt	$ 1,500,000,000
Senior notes | $400 million senior unsecured notes bearing fixed interest of 4.30%, due March 2027
Debt
Long-term debt, gross	400,000,000	$ 400,000,000
Debt instrument, face amount	$ 400,000,000
Interest rate (as a percent)	4.30%
Senior notes | $350 million senior unsecured notes bearing fixed interest of 3.95%, due January 2028
Debt
Long-term debt, gross	$ 350,000,000	350,000,000
Debt instrument, face amount	$ 350,000,000
Interest rate (as a percent)	3.95%
Senior notes | $500 million senior unsecured notes bearing fixed interest of 2.625%, due November 2031
Debt
Long-term debt, gross	$ 500,000,000	500,000,000
Debt instrument, face amount	$ 500,000,000
Interest rate (as a percent)	2.625%
Senior notes | $135 million senior unsecured notes bearing fixed interest of 4.43% to 4.74%, due January 2026 to 2031
Debt
Long-term debt, gross	$ 135,000,000	150,000,000
Debt instrument, face amount	$ 135,000,000
Senior notes | $135 million senior unsecured notes bearing fixed interest of 4.43% to 4.74%, due January 2026 to 2031 | Minimum
Debt
Interest rate (as a percent)	4.43%
Senior notes | $135 million senior unsecured notes bearing fixed interest of 4.43% to 4.74%, due January 2026 to 2031 | Maximum
Debt
Interest rate (as a percent)	4.74%
Senior notes | $75 million senior unsecured notes bearing fixed interest of 4.09% to 4.24%, due August 2025 to 2027
Debt
Long-term debt, gross	$ 75,000,000	$ 75,000,000
Debt instrument, face amount	$ 75,000,000
Senior notes | $75 million senior unsecured notes bearing fixed interest of 4.09% to 4.24%, due August 2025 to 2027 | Minimum
Debt
Interest rate (as a percent)	4.09%
Senior notes | $75 million senior unsecured notes bearing fixed interest of 4.09% to 4.24%, due August 2025 to 2027 | Maximum
Debt
Interest rate (as a percent)	4.24%
Unsecured Debt | Derivative assets
Debt
Effective fixed interest rate (as a percent)	1.35%	1.43%
Unsecured Debt | 2018 Credit Agreement Amendment
Debt
Reference rate (as a percent)	1.90%

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Debt - Additional Information (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2023 USD ($) extensionOption	Mar. 31, 2022 USD ($)	Dec. 31, 2022 USD ($)	Oct. 13, 2021 USD ($)	Sep. 24, 2021 USD ($)
Debt
Long-term debt	$ 1,762,690,000		$ 1,818,117,000
Long-term debt, gross	1,776,676,000		$ 1,832,929,000
Interest expense, debt	18,600,000	$ 16,200,000
2021 Third Amended and Restated Credit Agreement
Debt
Current borrowing capacity					$ 1,250,000,000
Maximum borrowing capacity as a percentage of maximum principal amount					10.00%
Accordion feature, increase limit					$ 500,000,000
Maximum borrowing capacity under accordion feature					1,750,000,000
2023 First Amendment To The Third Amended And Restated Credit Agreement
Debt
Accordion feature, increase limit	500,000,000
Maximum borrowing capacity under accordion feature	$ 2,250,000,000
Unused fee (as a percent)	0.20%
2023 First Amendment To The Third Amended And Restated Credit Agreement | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt
Reference rate (as a percent)	0.95%
Revolving credit facility
Debt
Current borrowing capacity	$ 848,000,000
Number of extension options | extensionOption	2
Term of extension option	6 months
Amount outstanding	$ 152,000,000
Revolving credit facility | 2021 Third Amended and Restated Credit Agreement
Debt
Current borrowing capacity	$ 1,000,000,000				1,000,000,000
Revolving credit facility | 2021 Third Amended and Restated Credit Agreement | London Interbank Offered Rate (LIBOR)
Debt
Reference rate (as a percent)			0.85%
Revolving credit facility | 2021 Third Amended and Restated Credit Agreement | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt
Debt instrument, variable rate, index adjustment	0.10%
Reference rate (as a percent)	0.95%
Term Loan
Debt
Amount outstanding				$ 250,000,000
Term Loan | 2021 Third Amended and Restated Credit Agreement
Debt
Current borrowing capacity					$ 250,000,000
Senior notes
Debt
Long-term debt	$ 1,500,000,000
Senior notes | Senior Notes Due 2025
Debt
Long-term debt	25,000,000
Senior notes | Senior Notes Due 2026
Debt
Long-term debt	70,000,000
Senior notes | Senior Notes Due 2027
Debt
Long-term debt	425,000,000
Senior notes | Senior Notes Due 2028
Debt
Long-term debt	395,000,000
Senior notes | Senior Notes Due 2031
Debt
Long-term debt	$ 545,000,000
Operating Partnership | Revolving credit facility
Debt
Interest rate at end of period (as a percent)	4.03%
Operating Partnership | Revolving credit facility | London Interbank Offered Rate (LIBOR)
Debt
Reference rate (as a percent)	4.77%
Operating Partnership | Revolving credit facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt
Reference rate (as a percent)	4.87%

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Debt - Trust Investment Grade Rating (Details)	3 Months Ended
	Mar. 31, 2023
At Least A- or A3 | Adjusted SOFR rate loans and letter of credit | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt
Reference rate (as a percent)	0.725%
At Least A- or A3 | Adjusted SOFR rate term loans and letter of credit | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt
Reference rate (as a percent)	0.85%
At Least BBB+ or Baa1 | Adjusted SOFR rate loans and letter of credit | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt
Reference rate (as a percent)	0.775%
At Least BBB+ or Baa1 | Adjusted SOFR rate term loans and letter of credit | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt
Reference rate (as a percent)	0.90%
At Least BBB or Baa2 | Adjusted SOFR rate loans and letter of credit | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt
Reference rate (as a percent)	0.85%
At Least BBB or Baa2 | Adjusted SOFR rate term loans and letter of credit | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt
Reference rate (as a percent)	1.00%
At Least BBB- or Baa3 | Adjusted SOFR rate loans and letter of credit | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt
Reference rate (as a percent)	1.05%
At Least BBB- or Baa3 | Adjusted SOFR rate term loans and letter of credit | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt
Reference rate (as a percent)	1.25%
Below BBB- or Baa3 | Adjusted SOFR rate loans and letter of credit | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt
Reference rate (as a percent)	1.40%
Below BBB- or Baa3 | Adjusted SOFR rate term loans and letter of credit | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt
Reference rate (as a percent)	1.65%
Applicable Margin for Revolving Loans: Base Rate Loans | At Least A- or A3 | Base rate loans | Base rate
Debt
Reference rate (as a percent)	0.00%
Applicable Margin for Revolving Loans: Base Rate Loans | At Least BBB+ or Baa1 | Base rate loans | Base rate
Debt
Reference rate (as a percent)	0.00%
Applicable Margin for Revolving Loans: Base Rate Loans | At Least BBB or Baa2 | Base rate loans | Base rate
Debt
Reference rate (as a percent)	0.00%
Applicable Margin for Revolving Loans: Base Rate Loans | At Least BBB- or Baa3 | Base rate loans | Base rate
Debt
Reference rate (as a percent)	0.05%
Applicable Margin for Revolving Loans: Base Rate Loans | Below BBB- or Baa3 | Base rate loans | Base rate
Debt
Reference rate (as a percent)	0.40%
Applicable Margin for Term Loans: Base Rate Loans | At Least A- or A3 | Base rate loans | Base rate
Debt
Reference rate (as a percent)	0.00%
Applicable Margin for Term Loans: Base Rate Loans | At Least BBB+ or Baa1 | Base rate loans | Base rate
Debt
Reference rate (as a percent)	0.00%
Applicable Margin for Term Loans: Base Rate Loans | At Least BBB or Baa2 | Base rate loans | Base rate
Debt
Reference rate (as a percent)	0.00%
Applicable Margin for Term Loans: Base Rate Loans | At Least BBB- or Baa3 | Base rate loans | Base rate
Debt
Reference rate (as a percent)	0.25%
Applicable Margin for Term Loans: Base Rate Loans | Below BBB- or Baa3 | Base rate loans | Base rate
Debt
Reference rate (as a percent)	0.65%

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Debt - Scheduled Principal Payments (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Debt Disclosure [Abstract]
2023	$ 754
2024	59,719
2025	177,476
2026	170,476
2027	425,476
Thereafter	942,775
Total Payments	$ 1,776,676	$ 1,832,929

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Derivatives - Additional Information (Details)	Mar. 31, 2023 instrument
Derivative assets
Derivative [Line Items]
Outstanding interest rate swap contracts designated as cash flow hedges	1

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Derivatives - Location and Aggregate Fair Value of Interest Rate Swaps (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Derivative [Line Items]
Total notional amount	$ 36,050,000
Effective date	Oct. 31, 2019
Maturity date	Oct. 31, 2024
Derivative assets | Carrying Amount
Derivative [Line Items]
Asset balance at March 31, 2023 (included in Other assets)	$ 1,645,000	$ 2,045,000
Asset balance at December 31, 2022 (included in Other assets)		$ 2,045,000
Unsecured Debt | 2018 Credit Agreement Amendment
Derivative [Line Items]
Reference rate (as a percent)	1.90%
Unsecured Debt | Derivative assets
Derivative [Line Items]
Effective fixed interest rate	3.25%
Effective fixed interest rate (as a percent)	1.35%	1.43%

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Accrued Expenses and Other Liabilities - Schedule of Accrued Expense and Other Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Other Liabilities Disclosure [Abstract]
Real estate taxes payable	$ 18,982	$ 23,303
Prepaid rent	29,041	21,062
Accrued interest	11,540	18,196
Accrued expenses	8,524	7,920
Accrued incentive compensation	1,579	2,700
Security deposits	4,382	4,338
Tenant improvement allowances	1,401	1,831
Other	9,558	8,370
Total	$ 85,007	$ 87,720

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Stock-based Compensation - Additional Information (Details)	Apr. 30, 2019 shares
Restricted common shares | 2013 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares authorized (in shares)	7,000,000

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Stock-based Compensation - Restricted Common Shares (Narrative) (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Jan. 31, 2023	Mar. 31, 2023	Mar. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-cash share compensation		$ 4,667	$ 4,253
2013 Plan | Restricted common shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)		291,324
Non-cash share compensation		$ 1,100	$ 900
Unrecognized compensation expense		$ 4,500
2013 Plan | Restricted common shares | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		1 year
Equity Incentive Plan 2023 | Restricted common shares | Maximum | Share-based Payment Arrangement, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	1 year
Equity Incentive Plan 2023 | Restricted common shares | Maximum | Share-based Payment Arrangement, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	2 years
Officers and Certain Employees | 2013 Plan | Restricted common shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)		291,324
Grant date value		$ 4,300

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Stock-based Compensation - Summary of the Status of the Trust's Non-Vested Restricted Common Shares (Details) - 2013 Plan - Restricted common shares	3 Months Ended
	Mar. 31, 2023 $ / shares shares
Common Shares
Non-vested at the beginning of the period (in shares) | shares	272,898
Granted (in shares) | shares	291,324
Vested (in shares) | shares	(210,380)
Forfeited (in shares) | shares	(364)
Non-vested at the end of the period (in shares) | shares	353,478
Weighted Average Grant Date Fair Value
Non-vested at beginning of period (in dollars per share) | $ / shares	$ 16.69
Granted (in dollars per share) | $ / shares	14.67
Vested (in dollars per share) | $ / shares	16.37
Forfeited (in dollars per share) | $ / shares	17.45
Non-vested at end of period (in dollars per share) | $ / shares	$ 15.21

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Stock-based Compensation - Restricted Share Units (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended		3 Months Ended
	Mar. 31, 2023	Jan. 31, 2023	Mar. 31, 2023	Mar. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-cash share compensation			$ 4,667	$ 4,253
2013 Plan | Restricted share units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of dividend equivalent included in each award (in shares)	1		1
Non-cash share compensation			$ 3,500	$ 3,300
Unrecognized compensation expense	$ 16,300		$ 16,300
2013 Plan | Performance based restricted stock units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance conditions grant date fair value (in dollars per share)			$ 14.70
Granted (in dollars per share)			15.90
2013 Plan | Market Based Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in dollars per share)			$ 18.71
Officers and Certain Employees | 2013 Plan | Restricted share units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	355,388
Vesting period	3 years	1 year
Officers and Certain Employees | 2013 Plan | Performance based restricted stock units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage			70.00%
Officers and Certain Employees | 2013 Plan | Market Based Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage			30.00%
Trustees | 2013 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)		11,274
Trustees | 2013 Plan | Restricted share units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	62,586
Vesting period	2 years
Number of dividend equivalent included in each award (in shares)		1
Trustees | 2013 Plan | Performance based restricted stock units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance conditions grant date fair value (in dollars per share)		$ 14.47
Percentage of restricted share units issued to trustees			100.00%

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Stock-based Compensation - Restricted Share Assumptions (Details) - 2013 Plan - Restricted share units (RSUs)	1 Months Ended
	Mar. 31, 2023 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Volatility	23.40%
Expected term in years	2 years 9 months 29 days
Risk-free rate	4.70%
Share price (per share)	$ 14.70

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Stock-based Compensation - Summary of Activity in the Trust's Restricted Share Units (Details)	3 Months Ended
	Mar. 31, 2023 $ / shares shares	Dec. 31, 2022 shares
Weighted Average Grant Date Fair Value
Common stock, shares issued (in shares)	238,395,869	233,292,030
2013 Plan | Executive Awards
Restricted Share Units
Non-vested at the beginning of the period (in shares)	1,046,940
Granted (in shares)	355,388
Vested (in shares)	(223,579)
Non-vested at the end of the period (in shares)	1,178,749
Weighted Average Grant Date Fair Value
Non-vested at beginning of period (in dollars per share) | $ / shares	$ 21.41
Granted (in dollars per share) | $ / shares	15.90
Vested (in dollars per share) | $ / shares	24.36
Non-vested at end of period (in dollars per share) | $ / shares	$ 19.19
Common stock, shares issued (in shares)	652,851
Restricted stock, shares issued net of shares for tax withholdings (in shares)	290,380
2013 Plan | Trustee Awards
Restricted Share Units
Non-vested at the beginning of the period (in shares)	77,992
Granted (in shares)	73,860
Vested (in shares)	(49,890)
Non-vested at the end of the period (in shares)	101,962
Weighted Average Grant Date Fair Value
Non-vested at beginning of period (in dollars per share) | $ / shares	$ 16.60
Granted (in dollars per share) | $ / shares	14.66
Vested (in dollars per share) | $ / shares	16.74
Non-vested at end of period (in dollars per share) | $ / shares	$ 15.13

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Fair Value Measurements - Additional Information (Details)	Mar. 31, 2023 instrument asset
Fair value, measurements, nonrecurring
Fair value of other financial instruments
Number of assets measured at fair value | asset	0
Derivative assets
Fair value of other financial instruments
Outstanding interest rate swap contracts designated as cash flow hedges | instrument	1

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Fair Value Measurements - Fair Value of Company's Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Assets:
Notes receivable, net	$ 367	$ 370
Liabilities:
Credit facility	(147,762)	(188,328)
Notes payable	(1,450,798)	(1,465,437)
Mortgage debt	(164,130)	(164,352)
Carrying Amount
Assets:
Real estate loans receivable, net	115,764	104,973
Notes receivable, net	367	370
Liabilities:
Credit facility	(152,000)	(193,000)
Notes payable	(1,460,000)	(1,475,000)
Mortgage debt	(164,676)	(164,929)
Carrying Amount | Derivative assets
Assets:
Asset balance at March 31, 2023 (included in Other assets)	1,645	2,045
Liabilities:
Derivative liabilities		(2,045)
Fair Value
Assets:
Real estate loans receivable, net	113,453	102,162
Notes receivable, net	367	370
Liabilities:
Credit facility	(152,000)	(193,000)
Notes payable	(1,307,272)	(1,302,767)
Mortgage debt	(163,429)	(163,129)
Fair Value | Derivative assets
Assets:
Asset balance at March 31, 2023 (included in Other assets)	$ 1,645	$ 2,045

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Tenant Operating Leases - Schedule of Future Minimum Rental Payments (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Leases [Abstract]
2023	$ 270,431
2024	352,374
2025	334,894
2026	278,001
2027	226,004
Thereafter	764,694
Total	2,226,398
Operating lease, lease income	131,400	$ 127,800
Operating lease, variable lease income	$ 37,900	$ 35,100

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Rent Expense - Additional Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($) property lease
Leases [Abstract]
Number of properties subject to parking lease	2
Number of properties subject to air space lease	1
Number of properties subject to ground leases	97
Number of office space leases | lease	9
Maximum lease terms	93 years
Operating lease, weighted average remaining lease term	44 years
Operating lease, weighted average discount rate, percent	4.40%
Fixed lease cost | $	$ 817

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Rent Expense - Schedule of Future Minimum Lease Obligations (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Leases [Abstract]
2023	$ 3,539
2024	4,819
2025	4,798
2026	4,787
2027	4,789
Thereafter	239,130
Total undiscounted lease payments	261,862
Less: Interest	(157,006)
Present value of lease liabilities	$ 104,856	$ 105,011

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Rent Expense - Lease Cost (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
Leases [Abstract]
Fixed lease cost	$ 817
Variable lease cost	338
Total lease cost	$ 1,155

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Credit Concentration - Schedule of ABR (Annualized Base Rent) (Details) - Sales Revenue, Services, Net	3 Months Ended
	Mar. 31, 2023 USD ($) Rate
Customer Concentration Risk
Concentration Risk [Line Items]
Total ABR	$ 360,974,000
Percent of ABR | Rate	100.00%
Customer Concentration Risk | CommonSpirit - CHI - Nebraska
Concentration Risk [Line Items]
Total ABR	$ 18,142,000
Percent of ABR | Rate	5.00%
Customer Concentration Risk | Northside Hospital
Concentration Risk [Line Items]
Total ABR	$ 16,238,000
Percent of ABR | Rate	4.50%
Customer Concentration Risk | UofL Health - Louisville, Inc.
Concentration Risk [Line Items]
Total ABR	$ 14,373,000
Percent of ABR | Rate	4.00%
Customer Concentration Risk | US Oncology
Concentration Risk [Line Items]
Total ABR	$ 11,443,000
Percent of ABR | Rate	3.20%
Customer Concentration Risk | HonorHealth
Concentration Risk [Line Items]
Total ABR	$ 11,220,000
Percent of ABR | Rate	3.10%
Customer Concentration Risk | Remaining portfolio
Concentration Risk [Line Items]
Total ABR	$ 289,558,000
Percent of ABR | Rate	80.20%
Geographic Concentration Risk
Concentration Risk [Line Items]
Total ABR	$ 360,974,000
Percent of ABR | Rate	100.00%
Geographic Concentration Risk | Texas
Concentration Risk [Line Items]
Total ABR	$ 49,397,000
Percent of ABR	13.70%
Geographic Concentration Risk | Georgia
Concentration Risk [Line Items]
Total ABR	$ 26,570,000
Percent of ABR	7.40%
Geographic Concentration Risk | Florida
Concentration Risk [Line Items]
Total ABR	$ 25,512,000
Percent of ABR	7.10%
Geographic Concentration Risk | Indiana
Concentration Risk [Line Items]
Total ABR	$ 23,379,000
Percent of ABR	6.50%
Geographic Concentration Risk | Arizona
Concentration Risk [Line Items]
Total ABR	$ 21,542,000
Percent of ABR	6.00%
Geographic Concentration Risk | Other
Concentration Risk [Line Items]
Total ABR	$ 214,574,000
Percent of ABR	59.30%

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Credit Concentration - Additional Information (Details) - Sales Revenue, Services, Net - Customer Concentration Risk	3 Months Ended
	Mar. 31, 2023 Rate
Concentration Risk [Line Items]
Percent of ABR	100.00%
Top five tenant relationships
Concentration Risk [Line Items]
Percent of ABR	19.80%
CHI Portfolio
Concentration Risk [Line Items]
Percent of ABR	14.80%

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Earnings Per Share - Schedule of Earnings Per Share and Earnings Per Unit (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
		Mar. 31, 2023	Mar. 31, 2022
Numerator for earnings per share - basic:
Net income		$ 10,669	$ 13,943
Net income attributable to noncontrolling interests:
Operating Partnership		(423)	(692)
Partially owned properties	[1]	(44)	(159)
Net income attributable to common shareholders		10,202	13,092
Numerator for earnings per share - diluted:
Numerator for earnings per share - basic		10,202	13,092
Noncontrolling interest - Operating Partnership income		423	692
Numerator for earnings per share - diluted		$ 10,625	$ 13,784
Denominator for earnings per share - basic and diluted:
Weighted average number of shares outstanding - basic (in shares)		237,484,043	225,069,208
Effect of dilutive securities:
Noncontrolling interest - Operating Partnership units (in shares)		9,842,219	11,912,099
Denominator for earnings per share - diluted (in shares)		248,756,672	238,340,243
Earnings per share - basic (in dollars per share)		$ 0.04	$ 0.06
Earnings per share - diluted (in dollars per share)		$ 0.04	$ 0.06
Restricted common shares
Effect of dilutive securities:
Restricted common shares/units (in shares)		130,172	104,910
Restricted share units
Effect of dilutive securities:
Restricted common shares/units (in shares)		1,300,238	1,254,026

[1] Includes amounts attributable to redeemable noncontrolling interests.

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Subsequent Events - Narrative (Details) $ in Millions	1 Months Ended	3 Months Ended
	May 04, 2023 USD ($) healthcareproperty earn-outAgreement	Mar. 31, 2023 USD ($)
Term Loan
Subsequent Event [Line Items]
Payments for (proceeds from) loans receivable		$ 5.4
Subsequent Event
Subsequent Event [Line Items]
Payments for (proceeds from) loans receivable	$ 0.8
Subsequent Event | Two Medical Office Facilities in 2023
Subsequent Event [Line Items]
Number of operating healthcare properties | healthcareproperty	2
Asset acquisition, consideration transferred	$ 1.4
Subsequent Event | InterMed MOB - Davis Joint Venture
Subsequent Event [Line Items]
Asset acquisition, consideration transferred	$ 2.0
Number of earn-out agreements | earn-outAgreement	2
Subsequent Event | InterMed MOB - Davis Joint Venture | Term Loan
Subsequent Event [Line Items]
Payments for (proceeds from) loans receivable	$ 3.4