Acquisitions, Dispositions and Mortgage Repayments

2015 Real Estate Acquisitions

The Company acquired a 110,679 square foot medical office building in San Jose, California for a purchase price of $39.3 million, including cash consideration of $39.1 million and purchase price credits of $0.2 million. The property is located adjacent to two hospital campuses, Kaiser Permanente, a 106-bed hospital, and Washington Hospital Healthcare System, a 353-bed hospital. Upon acquisition, this property was 97% leased, with leases to the two hospitals comprising 59% of the rentable square feet.

The Company acquired a 35,558 square foot medical office property in Seattle, Washington for a purchase price of $14.0 million, including cash consideration of $4.4 million, a purchase price credit of $0.1 million, and the assumption of debt of $9.5 million (excluding a $0.2 million fair value premium recorded upon acquisition). The mortgage note payable assumed by the Company bears a contractual annual interest rate of 5.75% and matures on March 3, 2020. The property is located on the Catholic Health Initiatives campus of Highline Medical Center, a 177-bed general acute care hospital. Upon acquisition, the property was 93% leased, with leases to the hospital comprising 69% of the rentable square feet.

The Company acquired a 52,813 square foot medical office property in Seattle, Washington for a purchase price of $28.0 million, including cash consideration of $18.4 million, purchase price credits of $0.2 million, and the assumption of debt of $9.4 million (excluding a $0.3 million fair value premium recorded upon acquisition). The mortgage note payable assumed by the Company bears a contractual annual interest rate of 5.00% and matures on July 10, 2019. The property is located on the campus of Providence Health's Swedish Medical Center, a 624-bed acute care hospital. Upon acquisition, the property was 100% leased by one tenant whose lease expires in 2023.

The Company acquired 0.4 acres of land and a 7,672 square foot medical office building in Nashville, Tennessee for a purchase price and cash consideration of $2.0 million. The Company intends to demolish the existing medical office building and hold the property for future development.

The Company acquired a 47,508 square foot medical office building in Denver, Colorado for a purchase price of $6.5 million, including cash consideration of $6.2 million and purchase price credits of $0.3 million. The property is located in close proximity to Catholic Health Initiatives' St. Anthony Hospital, a 224-bed acute care hospital. Upon acquisition, the building was 73% leased.

The Company acquired a 33,169 square foot medical office building in Tacoma, Washington for a purchase price of $8.8 million, including cash consideration of $7.5 million and purchase price credits of $1.3 million. The Company recorded an environmental liability at acquisition that is discussed further in Note 16 to the Consolidated Financial Statements. Upon acquisition, this property was 100% leased. As part of this transaction, the Company acquired a neighboring 0.3 acre lot and 12,077 square foot vacant office building that the Company intends to demolish and hold for future development. The buildings are located adjacent to Tacoma General Hospital, a 340-bed hospital owned by MultiCare Health.

The Company acquired a 99,942 square foot medical office building in Oakland, California for a purchase price of $47.0 million, including cash consideration of $43.6 million and purchase price credits of $3.4 million. Upon acquisition, the property was 97% leased. The building is located on the Sutter Health's Alta Bates Summit Medical Center campus, a 326-bed acute care hospital.

The Company acquired a 60,437 square foot medical office building in Seattle, Washington for a purchase price of $27.6 million, including cash consideration of $27.7 million and purchase price adjustments of $0.1 million. Upon acquisition, the property was 100% leased. The building is located on the UW Medicine's Northwest Hospital and Medical Center campus, a 281-bed general medical and surgical hospital.

The Company exercised its purchase right to acquire 1.15 acres of land associated with its medical office building in Virginia Beach, Virginia for a purchase price and cash consideration of $0.9 million.

The Company acquired a 64,143 square foot medical office building in Minneapolis, Minnesota for a purchase price of $16.0 million, including cash consideration of $6.6 million, purchase price adjustments of $0.1 million, and the assumption of debt of $9.5 million (excluding a $0.1 million fair value discount recorded upon acquisition). The mortgage note payable assumed by the Company bears a contractual annual interest rate of 4.15% and matures September 1, 2024. Upon acquisition, the property was 92% leased. The building is connected to Allina Health's Unity Hospital, a 220-bed general acute care hospital.

The following table details the Company's acquisitions for the twelve months ended December 31, 2015:



(Dollars in millions)	Date Acquired	Purchase Price		Purchase Price Adjustments/ (Credits)			Mortgage Notes Payable Assumed ⁽¹⁾			Cash Consideration ⁽²⁾		Real Estate		Other ⁽³⁾			Square Footage
Real estate acquisitions
California	1/15/15	$	39.3	$	(0.2	)	$	—		$	39.1	$	39.2	$	(0.1	)	110,679
Washington	6/26/15	14.0		(0.1		)	(9.5		)	4.4		13.8		0.1			35,558
Washington	9/1/15	28.0		(0.2		)	(9.4		)	18.4		27.8		—			52,813
Colorado	9/14/15	6.5		(0.3		)	—			6.2		6.3		(0.1		)	47,508
Washington	10/23/15	8.8		(1.3		)	—			7.5		8.6		(1.1		)	33,169
California	11/3/15	47.0		(3.4		)	—			43.6		44.2		(0.6		)	99,942
Washington	11/18/15	27.6		0.1			—			27.7		27.6		0.1			60,437
Minnesota	12/18/15	16.0		0.1			(9.5		)	6.6		16.0		0.1			64,143
Total real estate acquisitions		$	187.2	$	(5.3	)	$	(28.4	)	$	153.5	$	183.5	$	(1.6	)	504,249
Land acquisitions		2.9		—			—			2.9		2.9		—			—
		$	190.1	$	(5.3	)	$	(28.4	)	$	156.4	$	186.4	$	(1.6	)	504,249

______


(1)	The mortgage notes payable assumed in the acquisitions do not reflect the fair value adjustments totaling $0.4 million recorded by the Company upon acquisition (included in Other).


(2)	Cash consideration excludes prorations of revenue and expense due to/from seller at the time of the acquisition.


(3)	Includes assets acquired, liabilities assumed, intangibles recognized at acquisition and fair value adjustments on debt assumed.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed in the real estate acquisitions for 2015 as of the acquisition date:



	Estimated Fair Value			Estimated Useful Life
	(In millions)			(In years)
Building	$	153.1		25.0-35.0
Land	20.3			—
Intangibles:
At-market lease intangibles	10.1			1.9-7.9
Above-market lease intangibles	0.1			0.9-4.9
Below-market lease intangibles	(0.5		)	1.3-8.3
Below-market ground lease intangibles	0.9			46.3-78.5
Total intangibles	10.6
Mortgage notes payable assumed, including fair value adjustments	(28.8		)
Other assets acquired	0.5
Accounts payable, accrued liabilities and other liabilities assumed	(2.2		)
Total cash paid	$	153.5

2014 Real Estate Acquisitions

The Company acquired a 152,655 square foot multi-tenanted office building in Iowa in which the Company acquired ownership in satisfaction of a $40.0 million mortgage note receivable that matured on January 10, 2014. The cash flows from the operations of the property were sufficient to pay the Company interest from the maturity date through the date of the transfer of ownership to the Company at the 7.7% fixed interest rate plus an additional 3% of interest for the default interest rate. The Company has accounted for this transaction as a business combination and recorded the acquisition of the property at its estimated fair value based primarily on level three inputs. Upon acquisition, the property was 93% leased with expirations through 2023.

The Company acquired a 200,000 square foot medical office building in Oklahoma for a purchase price of approximately $85.4 million that was 100% leased to Mercy Health, based in Missouri, through 2028 under a single-tenant net lease. The Company funded the development of the facility through a construction mortgage loan of approximately $81.2 million prior to acquisition. Upon purchase the construction mortgage loan was eliminated in the Company's Consolidated Financial Statements. At the closing of the purchase, the outstanding loan balance was credited to the purchase price and the Company paid an additional $4.2 million, including cash consideration of $4.1 million and purchase price credits of $0.1 million. Subsequent to the purchase, the Company funded an additional $5.8 million to complete the $91.2 million development.

The Company acquired 56.9% of a medical office building equating to 48,048 square feet and related land in Texas through an equity interest in a limited liability company for a purchase price of $8.7 million, including purchase price adjustments of $0.1 million and cash consideration of $8.8 million. Based on the nature of the transaction, the Company has accounted for the acquisition as an asset acquisition and has recorded the amounts in real estate assets on the Company's Consolidated Balance Sheet. Upon acquisition, the property was 95% leased with expirations through 2024. The building is adjacent to Ascension Health's Seton Medical Center, a 534-bed hospital.

The Company acquired a 35,292 square foot medical office building located in North Carolina for a purchase price and cash consideration of $6.5 million. Upon acquisition, the property was 100% leased with expirations through 2024. The building is adjacent to Carolinas HealthCare System's Wesley Long Hospital, a 175-bed hospital.

The Company acquired a 60,476 square foot medical office building located in Minnesota for a purchase price of $19.8 million including cash consideration of $9.2 million, purchase price adjustments of $0.8 million, and the assumption of debt of $11.4 million (excluding a $1.0 million fair value premium recorded upon acquisition). The mortgage notes payable assumed by the Company bear a weighted average contractual interest rate of 6.67% with maturities from 2017 to 2040. The property was constructed in 2010 and, upon acquisition, was 100% leased with expirations through 2025. The building is connected to Unity Hospital, a 220-bed hospital operated by Allina Health.

The Company acquired a 47,962 square foot medical office building located in Florida for a purchase price of $7.9 million, including cash consideration of $7.8 million and purchase price credits of $0.1 million. Upon acquisition, the property was 89% leased with expirations through 2019. The building is adjacent to Tampa General Hospital, a 1,018-bed hospital.

The Company acquired a 68,860 square foot medical office building in Oklahoma for a purchase price of $17.5 million, including cash consideration of $10.8 million, purchase price adjustments of $0.1 million, and the assumption of debt of $6.8 million (excluding a $0.4 million fair value premium recorded upon acquisition). The mortgage note payable assumed by the Company bears a contractual interest rate of 6.1% and matures on August 1, 2020. Upon acquisition, the property was 97% leased with expirations through 2027. The building is located on the Norman Regional Healthplex campus, a 152-bed hospital.

The Company acquired a 60,161 square foot medical office building in Washington for a purchase price and cash consideration of $22.7 million. Upon acquisition, the property was 98% leased with expirations through 2021 and is located on the Catholic Health Initiatives' Highline Medical Center campus, a 177-bed hospital.

The following table details the Company's acquisitions for the twelve months ended December 31, 2014:



(Dollars in millions)	Date Acquired	Purchase Price		Purchase Price Adjustments/(Credits)			Elimination of Mortgage Notes Receivable			Mortgage Notes Payable Assumed ⁽¹⁾			Cash Consideration ⁽²⁾		Real Estate		Other ⁽³⁾			Square Footage
Real estate acquisitions
Iowa	3/28/14	$	—	$	0.2		$	(40.0	)	$	—		$	—	$	40.2	$	(0.4	)	152,655
Oklahoma	5/22/14	85.4		(0.1		)	(81.2		)	—			4.1		85.4		(0.1		)	200,000
Texas	6/4/14	8.7		0.1			—			—			8.8		8.8		—			48,048
North Carolina	6/6/14	6.5		—			—			—			6.5		6.5		—			35,292
Minnesota	7/28/14	19.8		0.8			—			(11.4		)	9.2		20.9		(0.3		)	60,476
Florida	9/16/14	7.9		(0.1		)	—			—			7.8		7.9		(0.1		)	47,962
Oklahoma	10/29/14	17.5		0.1			—			(6.8		)	10.8		17.9		(0.3		)	68,860
Washington	12/1/14	22.7		—			—			—			22.7		18.9		3.8			60,161
Total real estate acquisitions		$	168.5	$	1.0		$	(121.2	)	$	(18.2	)	$	69.9	$	206.5	$	2.6		673,454

______

(1) The mortgage notes payable assumed in the acquisitions do not reflect the fair value adjustments totaling $1.4 million recorded by the Company upon acquisition (included in Other).

(2) Cash consideration excludes non-real estate assets acquired and liabilities assumed in the acquisitions.

(3) Includes intangibles recognized at acquisition and fair value adjustments on debt assumed.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed in the real estate acquisitions for 2014 as of the acquisition date:



	Estimated Fair Value			Estimated Useful Life
	(In millions)			(In years)
Building	$	181.7		11.5-39.0
Land	12.7			—
Intangibles:
At-market lease intangibles	12.1			4.8-13.9
Below-market lease intangibles	(0.4		)	3.8-6.5
Above-market ground lease intangibles	(0.1		)	91.3
Below-market ground lease intangibles	3.8			63.7
Total intangibles	15.4
Mortgage notes payable assumed, including fair value adjustments	(19.6		)
Foreclosed mortgage note receivable	(40.0		)
Elimination of mortgage note receivable upon acquisition	(81.2		)
Other assets acquired	3.0
Accounts payable, accrued liabilities and other liabilities assumed	(2.3		)
Cash acquired	0.2
Total cash paid	$	69.9

2014 Noncontrolling Interest Purchase

In April 2014, the Company purchased the outstanding 40% noncontrolling equity interest in a consolidated partnership that owns a medical office building and parking garage in Texas, which were developed by the partnership, for an aggregate purchase price and cash consideration of $8.2 million. The book value of the noncontrolling interest prior to the equity purchase was $1.6 million. The remaining $6.6 million was recorded as a decrease to additional paid-in capital on the Company's Consolidated Balance Sheets. The Company held a term loan that was secured by the property and was payable from the partnership. Upon acquisition of the noncontrolling interest, the term loan, which was previously eliminated in the Company's Consolidated Financial Statements, was extinguished.

2015 Real Estate Asset Dispositions

The Company disposed of an off-campus, 5,323 square foot building located in Virginia in which the Company had a $0.3 million net investment. The sales price and cash proceeds were approximately $1.0 million. The Company recognized a $0.7 million gain on the disposal of this property.

The Company disposed of an on-campus, 58,474 square foot medical office building and a 117,525 square foot surgical facility, located in Indiana, in which the Company had an aggregate net investment of $50.5 million. The sales price for the buildings was approximately $97.0 million comprised of net cash proceeds of $93.3 million, closing costs of approximately $0.6 million, and a tenant improvement allowance credit of $3.1 million. The Company recognized a $40.9 million gain on the disposal, net of straight-line rent receivables and other assets.

The Company disposed of an on-campus, 63,914 square foot medical office building located in Pennsylvania pursuant to an exercised purchase option. The property was previously classified as held for sale, and the Company had a $7.4 million net investment. The sales price and net cash proceeds were approximately $18.4 million. The Company recognized a $10.6 million gain upon the disposal of this property, net of straight-line rent receivables and other assets.

The Company disposed of an on-campus, 119,903 square foot medical office building located in Florida, in which the Company had a net investment of $10.5 million. The sales price for the building was approximately $16.3 million comprised of net cash proceeds of $15.8 million and closing costs of approximately $0.5 million. The Company recognized a $5.1 million gain upon the disposal of this property, net of straight-line rent receivables and other assets.

The Company disposed of an on-campus, 40,782 square foot medical office building located in Arizona, in which the Company had a net investment of $2.0 million. The sales price and cash proceeds were approximately $3.0 million. The Company recognized a $0.8 million gain on the disposal, net of straight-line receivables and other assets.

The Company disposed of an off-campus, 13,478 square foot medical office building located in Missouri, in which the Company had a net investment of $2.9 million. The sales price for the building was approximately $3.0 million comprised of net cash proceeds of $2.8 million and tenant improvement credits of $0.2 million. The Company recorded a $0.3 million impairment on the disposal, net of straight-line rent receivables and other assets.

The Company disposed of an off-campus, 56,645 square foot medical office building located in Arizona, in which the Company had a net investment of $4.9 million, including the impact of impairment charges recorded prior to the sale of approximately $3.3 million. The sales price for the building was approximately $5.3 million comprised of net cash proceeds of $5.0 million and closing costs of approximately $0.3 million. The Company recognized a $0.1 million gain upon the disposal of this property.

The Company disposed of an on-campus, 58,030 square foot medical office building located in Georgia, in which the Company had a net investment of $4.4 million. The sales price for the building was approximately $14.0 million comprised of net cash proceeds of $13.8 million and closing costs of approximately $0.2 million. The Company recorded a $9.0 million gain upon the disposal of this property.

2015 Company-Financed Mortgage Notes

During 2015, one Company-financed mortgage notes receivable totaling $1.9 million was repaid.

A summary of the Company's 2015 dispositions are as follows:



(Dollars in millions)	Date Disposed	Sales Price		Closing Adjustments			Company-financed Mortgage Notes		Net Proceeds		Net Real Estate Investment		Other (including receivables)		Gain/ (Impairment)			Square Footage
Real estate dispositions
Virginia	05/21/15	$	1.0	$	—		$	—	$	1.0	$	0.3	$	—	$	0.7		5,323
Indiana ⁽¹⁾	06/30/15	97.0		(3.7		)	—		93.3		50.5		1.9		40.9			175,999
Pennsylvania ⁽²⁾	07/17/15	18.4		—			—		18.4		7.4		0.4		10.6			63,914
Florida	09/16/15	16.3		(0.5		)	—		15.8		10.5		0.2		5.1			119,903
Arizona	09/25/15	3.0		—			—		3.0		2.0		0.2		0.8			40,782
Missouri	09/30/15	3.0		(0.2		)	—		2.8		2.9		0.2		(0.3		)	13,478
Arizona	11/05/15	5.3		(0.3		)	—		5.0		4.9		—		0.1			56,645
Georgia	12/14/15	14.0		(0.2		)	—		13.8		4.4		0.4		9.0			58,030
Total dispositions		158.0		(4.9		)	—		153.1		82.9		3.3		66.9			534,074
Mortgage note repayments		—		—			1.9		1.9		—		—		—			—
		$	158.0	$	(4.9	)	$	1.9	$	155.0	$	82.9	$	3.3	$	66.9		534,074

______

(1) Includes two properties.

(2) Previously included in assets held for sale.

2014 Real Estate Asset Dispositions

The Company disposed of a 52,608 square foot off-campus, medical office building located in Florida in which the Company had a $1.7 million net investment, including the impact of impairment charges recorded prior to the sale of approximately $3.3 million. The sales price was $1.8 million, comprised of $1.7 million in net cash proceeds and closing costs of $0.1 million. This property was previously classified as held for sale.

The Company disposed of a 58,365 square foot off-campus, medical office building located in Texas in which the Company had a $4.1 million net investment, including the impact of impairment charges recorded prior to the sale of approximately $2.6 million. The sales price was $4.4 million, comprised of $4.2 million in net cash proceeds and closing costs of $0.2 million. This property was previously classified as held for sale.

The Company disposed of a 31,026 square foot on-campus, medical office building located in Nevada in which the Company had a $4.9 million net investment. The sales price was approximately $2.3 million, comprised of net cash proceeds of approximately $0.2 million, a seller-financed mortgage note of $1.9 million, and closing costs of $0.2 million. The Company recognized a $2.8 million impairment on the disposal of this property that was not previously classified as held for sale.

The Company disposed of two off-campus medical office buildings in Tennessee, totaling 32,204 square feet, in which the Company had an aggregate net investment of $3.2 million. The sales price for the buildings was approximately $3.1 million comprised of net cash proceeds of $2.9 million and closing costs of approximately $0.2 million. The Company recognized a $0.4 million impairment on the disposal, net of straight-line rent receivables which were written off. These properties were not previously classified as held for sale.

The Company disposed of two off-campus medical office buildings in Texas, totaling 166,167 square feet, in which the Company had an aggregate net investment $12.1 million. The sales price and net cash proceeds for the buildings was approximately $21.5 million. The Company recognized a $9.2 million gain on the disposal, net of straight-line rent receivables which were written off. These properties were not previously classified as held for sale.

The Company disposed of a 26,166 square foot off-campus, medical office building located in Missouri in which the Company had a $1.4 million net investment, including a $3.1 million impairment charge recorded in the second quarter of 2014 as a result of the pending sale. The sales price and net cash proceeds for the building was approximately $1.3 million. The Company recognized a $0.2 million impairment on the disposal, net of straight-line rent receivables which were written off. This property was previously classified as held for sale.

The Company disposed of a 110,000 square foot off-campus, medical office building located in Illinois in which the Company had a $0.8 million net investment, including the impact of impairment charges prior to the sale of $5.6 million. The sales price and net cash proceeds for the building was approximately $0.5 million and the Company recognized a $0.3 million impairment on the disposal. This property was previously classified as held for sale.

2014 Company-Financed Mortgage Notes

During 2014, the Company originated an $1.9 million seller-financed mortgage note receivable with the purchaser of a medical office building located in Nevada. See "2014 Real Estate Asset Dispositions" above for more information. This mortgage note receivable was repaid in September 2015.

Also during 2014, two Company-financed mortgage notes receivable totaling $4.9 million were repaid.

A summary of the Company's 2014 dispositions are as follows:



(Dollars in millions)	Date Disposed	Sales Price		Closing Adjustments			Company-financed Mortgage Notes			Net Proceeds		Net Real Estate Investment		Other (including receivables)		Gain/ (Impairment)			Square Footage
Real estate dispositions
Florida ⁽¹⁾	4/11/14	$	1.8	$	(0.1	)	$	—		$	1.7	$	1.7	$	—	$	—		52,608
Texas ⁽¹⁾	4/23/14	4.4		(0.2		)	—			4.2		4.1		0.1		—			58,365
Nevada	9/12/14	2.3		(0.2		)	(1.9		)	0.2		4.9		—		(2.8		)	31,026
Tennessee ⁽²⁾	11/14/14	3.1		(0.2		)	—			2.9		3.2		0.1		(0.4		)	32,204
Texas ⁽²⁾	11/25/14	21.5		—			—			21.5		12.1		0.2		9.2			166,167
Missouri ⁽¹⁾	12/18/14	1.3		—			—			1.3		1.4		0.1		(0.2		)	26,166
Illinois ⁽¹⁾	12/29/14	0.5		—			—			0.5		0.8		—		(0.3		)	110,000
Total dispositions		34.9		(0.7		)	(1.9		)	32.3		28.2		0.5		5.5			476,536
Mortgage note repayments		—		—			4.9			4.9		—		—		—			—
		$	34.9	$	(0.7	)	$	3.0		$	37.2	$	28.2	$	0.5	$	5.5		476,536

______

(1) Previously included in assets held for sale.

(2) Includes two properties.