Commitments and Contingencies

Legal Proceedings

The Company is, from time to time, involved in litigation arising in the ordinary course of business. The Company is not aware of any pending or threatened litigation that, if resolved against the Company, would have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

Redevelopment Activity

The Company is in the process of redeveloping two medical office buildings in Tennessee and began constructing an expansion of one of the buildings in the second quarter of 2015. The Company spent approximately $15.0 million on the redevelopment of these properties through September 30, 2015, including the acquisition of a land parcel for $5.0 million on which the Company is building a parking garage. The total estimated budget of the redevelopment of these properties is expected to be $51.8 million and the project is expected to be completed in the first quarter of 2017.

The Company is in the process of redeveloping a medical office building in Alabama, which includes the construction of a parking garage. Construction began in the second quarter of 2015. The total redevelopment budget is expected to be $15.4 million, of which $6.1 million has been spent as of September 30, 2015. Construction is expected to be completed in the fourth quarter of 2015.

Development Activity

In the third quarter of 2015, the Company began development of a 12,900 square foot retail center, which is adjacent to two of the Company's existing medical office buildings associated with Baylor Scott & White Health. The total development budget is expected to be $5.6 million, of which $1.8 million has been spent as of September 30, 2015. These amounts include $1.5 million used by the Company to purchase land in 2006 and previously recorded as land held for development. Construction is expected to be completed in the second quarter of 2016.

The table below details the Company’s construction activity as of September 30, 2015. The information included in the table below represents management’s estimates and expectations at September 30, 2015, which are subject to change. The Company’s disclosures regarding certain projections or estimates of completion dates may not reflect actual results.



			Balance at September 30, 2015
(Dollars in thousands)	Number of Properties	Estimated Completion Date	Construction in Progress Fundings During the Nine Months Ended		Total Funded During the Nine Months Ended		Total Amount Funded		Estimated Remaining Fundings		Estimated Total Investment		Approximate Square Feet
Construction Activity
Birmingham, AL	1	Q4 2015	$	4,721	$	6,119	$	6,119	$	9,281	$	15,400	138,000
Austin, TX	1	Q2 2016	1,764		1,764		1,764		3,811		5,575		12,900
Nashville, TN	2	Q1 2017	8,970		10,575		14,959		36,841		51,800		294,000
Total			$	15,455	$	18,458	$	22,842	$	49,933	$	72,775	444,900

Land Held for Development

In August 2015, the Company acquired 0.38 acres of land and a 7,672 square foot medical office building in Tennessee for $2.0 million. The Company plans to demolish the building and create surface parking. The surface parking will serve as additional parking for the Company's adjacent medical office buildings pending future development.

Casualty Loss

The Company owns a medical office building in Oklahoma that sustained damage from a tornado on May 6, 2015. As of September 30, 2015, the Company estimated its expenditures related to returning the property to its previous operating condition to be approximately $2.4 million. The Company estimates recoveries for restoration costs of approximately $2.3 million. In addition, as of September 30, 2015, the Company estimated that it will receive insurance proceeds related to lost rental revenue of approximately $0.4 million for the period of May 6, 2015 to September 30, 2015. This amount was recognized in rental income on the Company's Condensed Consolidated Statements of Operations. The Company believes that it is probable that it will recover any losses due to business interruption and expects all repairs to be completed and tenants to return to occupancy throughout the remainder of the year.