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Acquisitions and Dispositions
 6 Months Ended
Jun. 30, 2012
Acquisitions and Dispositions [Abstract]  
Acquisitions and Dispositions
Acquisitions and Dispositions
Real Estate Acquisitions
In January 2012, the Company purchased a 58,285 square foot medical office building in South Dakota for cash consideration of approximately $15.0 million. The property is 100% leased under a single-tenant net lease, which expires in 2022, with an affiliate of “AA-” rated Sanford Health, with a parent guarantee. The property is connected to a new Sanford Health acute care hospital that opened in June 2012.

In February 2012, the Company purchased a 23,312 square foot medical office building in North Carolina for cash consideration of approximately $6.4 million. The building is 100% occupied by two tenants with an affiliate of “AA-” rated Carolinas Healthcare System (“CHS”) occupying 93% of the building. The property is adjacent to a CHS hospital campus where the Company currently owns six medical office buildings totaling approximately 187,000 square feet.

In March 2012, the Company acquired the fee simple interest in 9.14 acres of land in Pennsylvania for cash consideration of approximately $1.2 million. The Company previously held a ground lease interest in this property.

In May 2012, the Company purchased a 76,484 square foot medical office building in Texas for a purchase price of approximately $10.7 million. Concurrent with the acquisition, the Company's construction mortgage note receivable totaling $9.9 million, which was secured by the building, was repaid, resulting in a total of an additional $1.2 million in cash consideration from the Company. The building was 100% leased at the time of the acquisition with lease expirations through 2021.

Mortgage Note Financings
In January 2012, the Company originated a $3.0 million seller-financed mortgage note receivable with the purchaser of two medical office buildings located in Texas that were sold by the Company as discussed in “Asset Dispositions” below. The note has a stated fixed interest rate of 7.25% and matures in January 2014.

In March 2012, the Company originated a $4.5 million seller-financed mortgage note receivable with the purchaser of a medical office building located in Texas that was sold by the Company as discussed in “Asset Dispositions” below. This note was repaid in April 2012.

In April 2012, the Company originated a $3.8 million seller-financed mortgage note receivable with the purchaser of two medical office buildings located in Florida that were sold by the Company as part of a larger disposition as discussed in "Asset Dispositions" below. The note has a stated fixed interest rate of 7.5% and matures in April 2015.

The following table details the Company’s acquisitions and mortgage note financings for the six months ended June 30, 2012:
(Dollars in millions)
Date
Acquired
 
Cash
Consideration
 
Real
Estate
 
Mortgage
Note
Financing
 
Other
 
Square
Footage
Real estate acquisitions
 
 
 
 
 
 
 
 
 
 
South Dakota
1/20/12
 
$
15.0

 
$
14.9

 
$
—

 
$
0.1

 
58,285

North Carolina
2/10/12
 
6.4

 
6.4

 
—

 
—

 
23,312

Pennsylvania
3/16/12
 
1.2

 
1.1

 
—

 
0.1

 
—

Texas
5/23/12
 
1.2

 
10.7

 
(9.9
)
 
0.4

 
76,484



 
23.8

 
33.1

 
(9.9
)
 
0.6

 
158,081

Mortgage note financings

 
 
 
 
 
 
 
 
 
 
Texas
1/10/12
 
3.0

 
—

 
3.0

 
—

 
—

Texas
3/16/12
 
4.5

 
—

 
4.5

 
—

 
—

Florida
4/18/12
 
3.8

 
—

 
3.8

 
—

 
—

 
 
 
11.3

 
—

 
11.3

 
—

 
—

 
 
 
$
35.1

 
$
33.1

 
$
1.4

 
$
0.6

 
158,081



Asset Dispositions
During the first quarter of 2012, the Company disposed of the following properties and mortgage notes:
•
a 14,748 square foot medical office building and an 18,978 square foot medical office building, both in Texas, in which the Company had an aggregate net investment of approximately $2.5 million, for total consideration of approximately $3.4 million. The Company received approximately $0.4 million in net cash proceeds, including prepaid interest, originated a $3.0 million seller-financed mortgage note receivable as discussed above in “Mortgage Note Financings,” and recognized a $0.9 million net gain on the disposal;
•
a 35,752 square foot medical office building in Florida, in which the Company had a net investment of approximately $3.0 million, for total consideration of approximately $5.7 million. The Company received approximately $5.7 million in net cash proceeds and a lease termination fee of $1.5 million which is recorded in income from discontinued operations. The Company also recognized a $2.5 million net gain on the disposal;
•
a 33,895 square foot medical office building in Florida in which the Company had a net investment of approximately $0.5 million for total consideration of approximately $0.5 million;
•
an 82,664 square foot medical office building in Texas, in which the Company had a net investment of approximately $4.8 million, for a purchase price of approximately $4.7 million. The Company originated a $4.5 million seller-financed mortgage note receivable as discussed above in “Mortgage Note Financings” and recognized a $0.4 million impairment on the disposal, including the write-off of straight-line rent receivables and closing costs;
•
two mortgage notes receivable of $1.5 million and $3.2 million for total consideration of approximately $4.7 million; and
•
a construction mortgage note receivable totaling approximately $35.1 million which was repaid in full relating to the ongoing development of an inpatient facility in South Dakota. See Note 1 for more details on this repayment.

During the second quarter of 2012, the Company disposed of the following properties and mortgage notes:

•
a medical office building in Tennessee in which the Company had a net investment of approximately $0.8 million. The Company received approximately $0.8 million in net cash proceeds;
•
five medical office buildings located in Florida were sold to a single buyer for a purchase price of $33.3 million in which the Company had a net aggregate investment of approximately $31.8 million, including $0.6 million of straight-line rent receivables. The Company received approximately $32.4 million in consideration from the sale, including the origination of a $3.8 million seller-financed mortgage note and a $0.6 million contingent liability. The Company recognized a $0.2 million impairment on the disposal, including the write-off of straight-line rent receivables and closing costs. These properties were not previously classified as held for sale;
•
a mortgage note receivable of $4.5 million was repaid; and
•
a mortgage note receivable of $9.9 million was repaid in conjunction with the acquisition of a medical office building in Texas as discussed in “Real Estate Acquisitions” above.

The following table details the Company’s dispositions and mortgage note repayments for the six months ended June 30, 2012:
(Dollars in millions)
Date
Disposed
 
Net
Proceeds
 
Net Real
Estate
Investment
 
Other
(including
receivables)
 
Mortgage
Note
Receivable
 
Gain/
(Impairment)
 
Square
Footage
Real estate dispositions
 
 
 
 
 
 
 
 
 
 
 
 
 
Texas (two properties) (1)
1/10/2012
 
$
0.4

 
$
2.5

 
$
—

 
$
(3.0
)
 
$
0.9

 
33,726

Florida (1)
1/19/2012
 
5.7

 
3.0

 
0.2

 
—

 
2.5

 
35,752

Florida (1)
3/2/2012
 
0.5

 
0.5

 
—

 
—

 
—

 
33,895

Texas (1)
3/16/2012
 
—

 
4.8

 
0.1

 
(4.5
)
 
(0.4
)
 
82,664

Tennessee (1)
4/13/2012
 
0.8

 
0.8

 
—

 
—

 
—

 
18,476

Florida (five properties)
4/18/2012
 
28.6

 
31.2

 
1.4

 
(3.8
)
 
(0.2
)
 
272,571

 
 
 
36.0

 
42.8

 
1.7

 
(11.3
)
 
2.8

 
477,084

Mortgage note repayments
 
 
19.1

 
—

 
—

 
19.1

 
—

 
—

Deconsolidation of VIE (2)
 
 
35.1

 
38.2

 
(3.4
)
 
—

 
0.3

 
113,602

Total dispositions and repayments
 
 
$
90.2

 
$
81.0

 
$
(1.7
)
 
$
7.8

 
$
3.1

 
590,686

________________
(1) Previously included in assets held for sale.
(2) “Other” includes construction liabilities transferred upon deconsolidation. “Gain” includes $0.4 million of net mortgage interest income recognized, partially offset by $0.1 million of general and administrative overhead expense that had been capitalized into the project that was reversed upon deconsolidation.

Discontinued Operations and Assets Held for Sale
During the first quarter of 2012, the Company recorded a $1.5 million lease termination fee related to the sale of a medical office building in Florida which is included in single-tenant net lease revenue in discontinued operations, recorded $3.4 million in gains on property sales, recorded a $0.4 million impairment charge on a property sold, and recorded a $3.8 million impairment charge on a building that was classified as held for sale.

During the second quarter of 2012, the Company sold five properties that were not previously classified as held for sale and recognized a $0.2 million impairment on the disposal.

The following tables detail the assets, liabilities, and results of operations included in discontinued operations on the Company’s Condensed Consolidated Statements of Operations and in assets and liabilities of discontinued operations on the Company’s Condensed Consolidated Balance Sheets. At June 30, 2012 and December 31, 2011, the Company had 9 and 15 properties, respectively, classified as held for sale. Of the 15 properties classified as held for sale at December 31, 2011, three properties in Texas and two properties in Florida were sold during the first quarter of 2012, and one property in Tennessee was sold during the second quarter of 2012.
(Dollars in thousands)
June 30,
2012
 
December 31,
2011
Balance Sheet data (as of the period ended):
 
 
 
Land
$
5,107

 
$
8,078

Buildings, improvements and lease intangibles
23,992

 
44,299

Personal property
440

 
458


29,539

 
52,835

Accumulated depreciation
(16,675
)
 
(24,557
)
Assets held for sale, net
12,864

 
28,278

Other assets, net (including receivables)
57

 
372

Assets of discontinued operations, net
57

 
372

Assets held for sale and discontinued operations, net
$
12,921

 
$
28,650

Accounts payable and accrued liabilities
$
100

 
$
404

Other liabilities
74

 
114

Liabilities of discontinued operations
$
174

 
$
518


 
Three Months Ended
 
Six Months Ended
(Dollars in thousands, except per share data)
June 30,
2012
 
June 30,
2011
 
June 30,
2012
 
June 30,
2011
Statements of Operations data (for the period ended):
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
Property operating
$
269

 
$
665

 
$
910

 
$
1,436

Single-tenant net lease
766

 
1,643

 
3,391

 
3,287

Straight-line rent
3

 
33

 
(4
)
 
31

Other operating
2

 
6

 
9

 
13

 
1,040

 
2,347

 
4,306

 
4,767

Expenses
 
 
 
 
 
 
 
Property operating
305

 
1,006

 
1,111

 
2,067

General and administrative
1

 
3

 
4

 
5

Depreciation
121

 
633

 
487

 
1,259

Amortization
—

 
(8
)
 
—

 
(16
)
Bad debt, net
1

 
—

 
(1
)
 
16

 
428

 
1,634

 
1,601

 
3,331

Other Income (Expense)
 
 
 
 
 
 
 
Interest and other income, net
47

 
6

 
72

 
12

 
47

 
6

 
72

 
12

Discontinued Operations
 
 
 
 
 
 
 
Income from discontinued operations
659

 
719

 
2,777

 
1,448

Impairments
(167
)
 
—

 
(4,336
)
 
(147
)
Gain on sales of real estate properties
3

 
—

 
3,431

 
36

Income from Discontinued Operations
$
495

 
$
719

 
$
1,872

 
$
1,337

Income from Discontinued Operations per Common Share—Basic
$
0.01

 
$
0.01

 
$
0.03

 
$
0.02

Income from Discontinued Operations per Common Share—Diluted
$
0.01

 
$
0.01

 
$
0.03

 
$
0.02