Acquisitions, Dispositions and Mortgage Fundings

Real Estate Acquisition

In January 2013, the Company purchased a 52,225 square foot medical office building in Tennessee for a purchase price and cash consideration of $16.2 million. The Company recorded approximately $0.5 million of market rate lease intangibles upon acquisition. The property is 100% leased to four tenants and is adjacent to a 39,345 square foot medical office building the Company purchased in October 2012.

Subsequent Acquisition

In April 2013, the Company purchased a 42,627 square foot inpatient rehabilitation facility in Texas for a purchase price and cash consideration of $16.3 million. The property is 100% leased to one tenant.

Asset Disposition

In March 2013, the Company disposed of 15.1 acres of land in Texas in which the Company had an aggregate net investment of approximately $8.1 million. The sales price was approximately $5.0 million, which included $1.1 million in net cash proceeds, the origination of a $3.7 million Company-financed mortgage note receivable and closing costs of $0.2 million. The Company-financed mortgage note receivable bears interest of 5.0% in the first year and 6.0% in the second year and matures in March 2015. The Company recognized a $3.3 million impairment on the disposal based on the contractual sales price, a level 1 input. The land parcel was not previously classified as held for sale.

Potential Dispositions

The Company received notice in January 2013 that a tenant is exercising purchase options on two inpatient rehabilitation facilities, one in Florida and one in Alabama, upon the expiration of the current leases in July 2013. The aggregate purchase price will be $29.4 million. The Company's aggregate net investment in the two facilities was approximately $18.6 million, and base rent was approximately $1.0 million per quarter as of March 31, 2013. These properties are included in assets held for sale as of March 31, 2013.

In April 2013, the same inpatient rehabilitation facility operator provided notice of exercise of purchase options for two facilities located in Pennsylvania upon the expiration of the current leases on September 30, 2013. The purchase prices will be the greater of fair market value or $17.6 million for each facility. The Company's aggregate net investment in the two facilities was approximately $25.1 million, and base rent was approximately $1.3 million per quarter as of March 31, 2013. Subsequent to providing notice of its exercise of the purchase options, the operator contacted the Company to continue long-term lease renewal discussions for these two properties which discussions are on-going as of the date of this report. These properties were not included in assets held for sale as of March 31, 2013.

Mortgage Note Fundings

In the first quarter of 2013, the Company funded $24.3 million on two outstanding construction mortgage notes. The total amount outstanding on the two build-to-suit facilities in Oklahoma and Missouri that are fully leased to Mercy Health is approximately $142.7 million at March 31, 2013. The Company anticipates funding the majority of the remaining $59.9 million during the second and third quarters of 2013.

Noncontrolling Interest

In January 2013, the Company received a $1.4 million capital contribution from a 40% noncontrolling interest holder in a partnership that owns a medical office building and parking garage in Texas included as a property in stabilization. The partnership owner (HRP MAC III, LLC), in which the Company holds a 60% majority controlling interest, is the borrower under a permanent loan from the Company of approximately $10.3 million. These buildings were constructed by the Company and were previously subject to a construction mortgage note totaling $13.7 million. The Company's equity in and loan to the partnership are eliminated in consolidation.

Discontinued Operations and Assets Held for Sale

At March 31, 2013 and December 31, 2012, the Company had four and one properties, respectively, classified as held for sale. The Company recorded a $0.3 million impairment charge on a building currently classified as held for sale based on the execution of a sales agreement, a level 2 input.



(Dollars in thousands)	March 31, 2013			December 31, 2012
Balance Sheet data:
Land	$	4,310		$	3,835
Buildings, improvements and lease intangibles	35,342			5,566
Personal property	215			212
	39,867			9,613
Accumulated depreciation	(17,805		)	(6,303		)
Assets held for sale, net	22,062			3,310
Other assets, net (including receivables)	235			27
Assets of discontinued operations, net	235			27
Assets held for sale and discontinued operations, net	$	22,297		$	3,337

Accounts payable and accrued liabilities	$	71		$	99
Other liabilities	15			32
Liabilities of discontinued operations	$	86		$	131



	Three Months Ended March 31,
(Dollars in thousands)	2013			2012
Statements of Operations data:
Revenues
Rental income	$	851		$	4,292
Other operating	—			5
	851			4,297
Expenses
Property operating	316			1,104
General and administrative	—			5
Depreciation	48			909
Amortization	—			15
Bad debt, net of recoveries	—			(1		)
	364			2,032
Other Income (Expense)
Interest and other income, net	—			115
	—			115
Discontinued Operations
Income from discontinued operations	487			2,380
Impairments	(3,630		)	(4,170		)
Gain on sales of real estate properties	—			3,428
Income (Loss) from Discontinued Operations	$	(3,143	)	$	1,638