Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - Physicians Realty Trust | exhibit9913-14forbaylor090.htm |
| EX-23.2 - EXHIBIT 23.2 - Physicians Realty Trust | exhibit2323-14forbaylor090.htm |
| EX-23.1 - EXHIBIT 23.1 - Physicians Realty Trust | exhibit2313-14forbaylor090.htm |
| 8-K/A - 8-K/A - Physicians Realty Trust | a8-ka3x14forbaylor09082017.htm |
Exhibit 99.2
Physicians Realty Trust
Unaudited Pro Forma Condensed Consolidated Balance Sheet
March 31, 2017
(in thousands)
Historical | July 2017 Offering | Baylor Cancer Center | Pro Forma Reflecting Acquisition | |||||||||||||
ASSETS | ||||||||||||||||
Investment properties: | ||||||||||||||||
Land and improvements | $ | 201,372 | $ | — | $ | — | $ | 201,372 | ||||||||
Building and improvements | 2,577,895 | — | 256,652 | 2,834,547 | ||||||||||||
Tenant improvements | 15,646 | — | 234 | 15,880 | ||||||||||||
Acquired lease intangibles | 341,417 | — | 33,795 | 375,212 | ||||||||||||
3,136,330 | — | 290,681 | 3,427,011 | |||||||||||||
Accumulated depreciation | (204,516 | ) | — | — | (204,516 | ) | ||||||||||
Net real estate property | 2,931,814 | — | 290,681 | 3,222,495 | ||||||||||||
Real estate held for sale | 11,926 | — | 11,926 | |||||||||||||
Real estate loans receivable | 40,258 | — | — | 40,258 | ||||||||||||
Investment in unconsolidated entities | 2,231 | — | — | 2,231 | ||||||||||||
Net real estate investments | 2,986,229 | — | 290,681 | 3,276,910 | ||||||||||||
Cash and cash equivalents | 117,484 | 421,051 | (290,000 | ) | 248,535 | |||||||||||
Tenant receivables, net | 6,882 | — | — | 6,882 | ||||||||||||
Other assets | 85,798 | — | — | 85,798 | ||||||||||||
Total assets | $ | 3,196,393 | $ | 421,051 | $ | 681 | $ | 3,618,125 | ||||||||
LIABILITIES AND EQUITY | ||||||||||||||||
Liabilities: | ||||||||||||||||
Credit facility | $ | 243,163 | $ | — | $ | — | $ | 243,163 | ||||||||
Notes payable | 619,972 | — | — | 619,972 | ||||||||||||
Mortgage debt | 143,543 | — | — | 143,543 | ||||||||||||
Accounts payable | 3,126 | — | — | 3,126 | ||||||||||||
Dividends and distributions payable | 36,485 | — | — | 36,485 | ||||||||||||
Accrued expenses and other liabilities | 36,206 | — | — | 36,206 | ||||||||||||
Acquired lease intangibles, net | 9,433 | — | 681 | 10,114 | ||||||||||||
Total liabilities | 1,091,928 | — | 681 | 1,092,609 | ||||||||||||
Redeemable noncontrolling interest - partially owned properties | 11,931 | — | — | 11,931 | ||||||||||||
Equity: | ||||||||||||||||
Total shareholders' equity | 2,020,843 | 421,051 | — | 2,441,894 | ||||||||||||
Total noncontrolling interests | 71,691 | — | — | 71,691 | ||||||||||||
Total equity | 2,092,534 | 421,051 | — | 2,513,585 | ||||||||||||
Total liabilities and equity | $ | 3,196,393 | $ | 421,051 | $ | 681 | $ | 3,618,125 | ||||||||
See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheets.
Physicians Realty L.P.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
March 31, 2017
(in thousands)
Historical | July 2017 Offering | Baylor Cancer Center | Pro Forma Reflecting Acquisition | |||||||||||||
ASSETS | ||||||||||||||||
Investment properties: | ||||||||||||||||
Land and improvements | $ | 201,372 | $ | — | $ | — | $ | 201,372 | ||||||||
Building and improvements | 2,577,895 | — | 256,652 | 2,834,547 | ||||||||||||
Tenant improvements | 15,646 | — | 234 | 15,880 | ||||||||||||
Acquired lease intangibles | 341,417 | — | 33,795 | 375,212 | ||||||||||||
3,136,330 | — | 290,681 | 3,427,011 | |||||||||||||
Accumulated depreciation | (204,516 | ) | — | — | (204,516 | ) | ||||||||||
Net real estate property | 2,931,814 | — | 290,681 | 3,222,495 | ||||||||||||
Real estate held for sale | 11,926 | — | — | 11,926 | ||||||||||||
Real estate loans receivable | 40,258 | — | — | 40,258 | ||||||||||||
Investment in unconsolidated entities | 2,231 | — | — | 2,231 | ||||||||||||
Net real estate investments | 2,986,229 | — | 290,681 | 3,276,910 | ||||||||||||
Cash and cash equivalents | 117,484 | 421,051 | (290,000 | ) | 248,535 | |||||||||||
Tenant receivables, net | 6,882 | — | — | 6,882 | ||||||||||||
Other assets | 85,798 | — | — | 85,798 | ||||||||||||
Total assets | $ | 3,196,393 | $ | 421,051 | $ | 681 | $ | 3,618,125 | ||||||||
LIABILITIES AND CAPITAL | ||||||||||||||||
Liabilities: | ||||||||||||||||
Credit facility | $ | 243,163 | $ | — | $ | — | $ | 243,163 | ||||||||
Notes payable | 619,972 | — | — | 619,972 | ||||||||||||
Mortgage debt | 143,543 | — | — | 143,543 | ||||||||||||
Accounts payable | 3,126 | — | — | 3,126 | ||||||||||||
Dividends and distributions payable | 36,485 | — | — | 36,485 | ||||||||||||
Accrued expenses and other liabilities | 36,206 | — | — | 36,206 | ||||||||||||
Acquired lease intangibles, net | 9,433 | — | 681 | 10,114 | ||||||||||||
Total liabilities | 1,091,928 | — | 681 | 1,092,609 | ||||||||||||
Redeemable noncontrolling interest - partially owned properties | 11,931 | — | — | 11,931 | ||||||||||||
Capital: | ||||||||||||||||
Total partners' capital | 2,091,886 | 421,051 | — | 2,512,937 | ||||||||||||
Total noncontrolling interests - partially owned properties | 648 | — | — | 648 | ||||||||||||
Total capital | 2,092,534 | 421,051 | — | 2,513,585 | ||||||||||||
Total liabilities and capital | $ | 3,196,393 | $ | 421,051 | $ | 681 | $ | 3,618,125 | ||||||||
See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
Physicians Realty Trust and Physicians Realty L.P.
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheets
Basis of Presentation
The Unaudited Pro Forma Condensed Consolidated Balance Sheets of Physicians Realty Trust (together with its consolidated subsidiaries, including Physicians Realty L.P., the "Company") and Physicians Realty L.P. (together with its consolidated subsidiaries, the “Operating Partnership”) as of March 31, 2017 reflect the Company’s acquisition of the Baylor Charles A. Sammons Cancer Center, a multi-tenant, on-campus medical office building located in Dallas, Texas (the "Baylor Cancer Center") through a subsidiary of the Operating Partnership. The Baylor Cancer Center was subject to existing leases, and as such, was accounted for as a business combination and recorded at preliminary estimated fair value, which approximated the purchase price, exclusive of acquisition costs, which were expensed. The purchase price of approximately $290.0 million was fully funded from proceeds from the Company's unsecured revolving credit facility and the purchase price fair value estimates were completed in accordance with the Company's accounting policy. For the purpose of these pro forma condensed consolidated balance sheets, the purchase of the Baylor Cancer Center is shown as being funded from proceeds of the Company's follow-on public offering of common shares in July 2017, as proceeds from the offering were used to repay borrowings on the Company's unsecured revolving credit facility.
Notes and Management Assumptions
The historical consolidated balance sheets of the Company prior to the acquisition of the Baylor Cancer Center have been derived from the unaudited consolidated balance sheets included in the Company’s and the Operating Partnership's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the Securities and Exchange Commission (“SEC”) on May 5, 2017.
Physicians Realty Trust
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Three Months Ended March 31, 2017
(in thousands, except share and per share data)
Historical | July 2017 Offering | Baylor Cancer Center | Pro Forma Reflecting Acquisition | |||||||||||||
Revenues: | ||||||||||||||||
Rental revenues | $ | 59,092 | $ | — | $ | 3,235 | $ | 62,327 | ||||||||
Expense recoveries | 16,354 | — | 1,844 | 18,198 | ||||||||||||
Interest income on real estate loans and other | 1,220 | — | 166 | 1,386 | ||||||||||||
Total revenues | 76,666 | — | 5,245 | 81,911 | ||||||||||||
Expenses: | ||||||||||||||||
Interest expense | 9,815 | — | — | 9,815 | ||||||||||||
General and administrative | 4,736 | — | — | 4,736 | ||||||||||||
Operating expenses | 22,089 | — | 1,878 | 23,967 | ||||||||||||
Depreciation and amortization | 27,933 | — | 2,379 | 30,312 | ||||||||||||
Acquisition expenses | 5,405 | — | 641 | 6,046 | ||||||||||||
Total expenses | 69,978 | — | 4,898 | 74,876 | ||||||||||||
Income before equity in income of unconsolidated entities: | 6,688 | — | 347 | 7,035 | ||||||||||||
Equity in income of unconsolidated entities | 28 | — | — | 28 | ||||||||||||
Net income | 6,716 | — | 347 | 7,063 | ||||||||||||
Net income attributable to noncontrolling interests | ||||||||||||||||
Operating Partnership | (147 | ) | — | (8 | ) | (155 | ) | |||||||||
Partially owned properties | (167 | ) | — | — | (167 | ) | ||||||||||
Net income attributable to controlling interests | 6,402 | — | 339 | 6,741 | ||||||||||||
Preferred distributions | (211 | ) | — | — | (211 | ) | ||||||||||
Net income attributable to common shareholders | $ | 6,191 | $ | — | $ | 339 | $ | 6,530 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 0.04 | $ | 0.04 | ||||||||||||
Diluted | $ | 0.04 | $ | 0.04 | ||||||||||||
Weighted average common shares: | ||||||||||||||||
Basic | 138,986,629 | 21,500,000 | 160,486,629 | |||||||||||||
Diluted | 142,605,930 | 21,500,000 | 164,105,930 | |||||||||||||
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations.
Physicians Realty Trust
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2016
(in thousands, except share and per share data)
Historical | July 2017 Offering | Baylor Cancer Center | 2016 Acquisition Properties | Pro Forma Reflecting Acquisitions | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Rental revenues | $ | 186,301 | $ | — | $ | 12,941 | $ | 23,142 | $ | 222,384 | ||||||||||
Expense recoveries | 45,875 | — | 7,326 | 8,028 | 61,229 | |||||||||||||||
Interest income on real estate loans and other | 8,858 | — | 503 | 26 | 9,387 | |||||||||||||||
Total revenues | 241,034 | — | 20,770 | 31,196 | 293,000 | |||||||||||||||
Expenses: | ||||||||||||||||||||
Interest expense | 23,864 | — | — | 2,952 | 26,816 | |||||||||||||||
General and administrative | 18,397 | — | — | — | 18,397 | |||||||||||||||
Operating expenses | 65,999 | — | 7,461 | 10,869 | 84,329 | |||||||||||||||
Depreciation and amortization | 86,589 | — | 9,516 | 10,626 | 106,731 | |||||||||||||||
Acquisition expenses | 14,778 | — | 641 | — | 15,419 | |||||||||||||||
Total expenses | 209,627 | — | 17,618 | 24,447 | 251,692 | |||||||||||||||
Income before equity in income of unconsolidated entities: | 31,407 | — | 3,152 | 6,749 | 41,308 | |||||||||||||||
Equity in income of unconsolidated entities | 115 | — | — | — | 115 | |||||||||||||||
Net income | 31,522 | — | 3,152 | 6,749 | 41,423 | |||||||||||||||
Net income attributable to noncontrolling interests: | ||||||||||||||||||||
Operating Partnership | (825 | ) | — | (82 | ) | (177 | ) | (1,084 | ) | |||||||||||
Partially owned properties | (716 | ) | — | — | — | (716 | ) | |||||||||||||
Net income attributable to controlling interest | 29,981 | — | 3,070 | 6,572 | 39,623 | |||||||||||||||
Preferred distributions | (1,857 | ) | — | — | — | (1,857 | ) | |||||||||||||
Net income attributable to common shareholders | $ | 28,124 | $ | — | $ | 3,070 | $ | 6,572 | $ | 37,766 | ||||||||||
Net income per share: | ||||||||||||||||||||
Basic | $ | 0.22 | $ | 0.24 | ||||||||||||||||
Diluted | $ | 0.22 | $ | 0.24 | ||||||||||||||||
Weighted average common shares: | ||||||||||||||||||||
Basic | 126,143,114 | 21,500,000 | 7,140,369 | 154,783,483 | ||||||||||||||||
Diluted | 130,466,893 | 21,500,000 | 7,140,369 | 159,107,262 | ||||||||||||||||
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations.
Physicians Realty L.P.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Three Months Ended March 31, 2017
(in thousands, except unit and per unit data)
Historical | July 2017 Offering | Baylor Cancer Center | Pro Forma Reflecting Acquisition | |||||||||||||
Revenues: | ||||||||||||||||
Rental revenues | $ | 59,092 | $ | — | $ | 3,235 | $ | 62,327 | ||||||||
Expense recoveries | 16,354 | — | 1,844 | 18,198 | ||||||||||||
Interest income on real estate loans and other | 1,220 | — | 166 | 1,386 | ||||||||||||
Total revenues | 76,666 | — | 5,245 | 81,911 | ||||||||||||
Expenses: | ||||||||||||||||
Interest expense | 9,815 | — | — | 9,815 | ||||||||||||
General and administrative | 4,736 | — | — | 4,736 | ||||||||||||
Operating expenses | 22,089 | — | 1,878 | 23,967 | ||||||||||||
Depreciation and amortization | 27,933 | — | 2,379 | 30,312 | ||||||||||||
Acquisition expenses | 5,405 | — | 641 | 6,046 | ||||||||||||
Total expenses | 69,978 | — | 4,898 | 74,876 | ||||||||||||
Income before equity in income of unconsolidated entities: | 6,688 | — | 347 | 7,035 | ||||||||||||
Equity in income of unconsolidated entities | 28 | — | — | 28 | ||||||||||||
Net income | 6,716 | — | 347 | 7,063 | ||||||||||||
Net income attributable to noncontrolling interests - partially owned properties | (167 | ) | — | — | (167 | ) | ||||||||||
Net income attributable to controlling interest | 6,549 | — | 347 | 6,896 | ||||||||||||
Preferred distributions | (211 | ) | — | — | (211 | ) | ||||||||||
Net income attributable to common unitholders | $ | 6,338 | $ | — | $ | 347 | $ | 6,685 | ||||||||
Net income per common unit: | ||||||||||||||||
Basic | $ | 0.04 | $ | 0.04 | ||||||||||||
Diluted | $ | 0.04 | $ | 0.04 | ||||||||||||
Weighted average common units: | ||||||||||||||||
Basic | 142,172,746 | 21,500,000 | 163,672,746 | |||||||||||||
Diluted | 142,605,930 | 21,500,000 | 164,105,930 | |||||||||||||
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations.
Physicians Realty L.P.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2016
(in thousands, except unit and per unit data)
Historical | July 2017 Offering | Baylor Cancer Center | 2016 Acquisition Properties | Pro Forma Reflecting Acquisitions | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Rental revenues | $ | 186,301 | $ | — | $ | 12,941 | $ | 23,142 | $ | 222,384 | ||||||||||
Expense recoveries | 45,875 | — | 7,326 | 8,028 | 61,229 | |||||||||||||||
Interest income on real estate loans and other | 8,858 | — | 503 | 26 | 9,387 | |||||||||||||||
Total revenues | 241,034 | — | 20,770 | 31,196 | 293,000 | |||||||||||||||
Expenses: | ||||||||||||||||||||
Interest expense | 23,864 | — | — | 2,952 | 26,816 | |||||||||||||||
General and administrative | 18,397 | — | — | — | 18,397 | |||||||||||||||
Operating expenses | 65,999 | — | 7,461 | 10,869 | 84,329 | |||||||||||||||
Depreciation and amortization | 86,589 | — | 9,516 | 10,626 | 106,731 | |||||||||||||||
Acquisition expenses | 14,778 | — | 641 | — | 15,419 | |||||||||||||||
Total expenses | 209,627 | — | 17,618 | 24,447 | 251,692 | |||||||||||||||
Income before equity in income of unconsolidated entities: | 31,407 | — | 3,152 | 6,749 | 41,308 | |||||||||||||||
Equity in income of unconsolidated entities | 115 | — | — | — | 115 | |||||||||||||||
Net income | 31,522 | — | 3,152 | 6,749 | 41,423 | |||||||||||||||
Net income attributable to noncontrolling interests - partially owned properties | (716 | ) | — | — | — | (716 | ) | |||||||||||||
Net income attributable to controlling interest | 30,806 | — | 3,152 | 6,749 | 40,707 | |||||||||||||||
Preferred distributions | (1,857 | ) | — | — | — | (1,857 | ) | |||||||||||||
Net income attributable to common unitholders | $ | 28,949 | $ | — | $ | 3,152 | $ | 6,749 | $ | 38,850 | ||||||||||
Net income per common unit: | ||||||||||||||||||||
Basic | $ | 0.22 | $ | 0.25 | ||||||||||||||||
Diluted | $ | 0.22 | $ | 0.24 | ||||||||||||||||
Weighted average common units: | ||||||||||||||||||||
Basic | 129,835,209 | 21,500,000 | 7,140,369 | 158,475,578 | ||||||||||||||||
Diluted | 130,466,893 | 21,500,000 | 7,140,369 | 159,107,262 | ||||||||||||||||
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations.
Physicians Realty Trust and Physicians Realty L.P.
Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations
Basis of Presentation
The Unaudited Pro Forma Condensed Consolidated Statements of Operations for the three months ended March 31, 2017 and the year ended December 31, 2016 include the historical operations of the Company and the Operating Partnership and have been derived from the unaudited consolidated statement of income included in the Company’s and the Operating Partnership's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017 filed with the SEC on May 5, 2017 and the audited consolidated statement of operations included in the Company's and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on February 24, 2017 (the "2016 Annual Report"). Each of the Company’s and the Operating Partnership's historical operations have been adjusted to take into consideration the following acquisitions as if they occurred on January 1, 2016.
During the second quarter of 2017, the Company acquired the Baylor Cancer Center through a subsidiary of the Operating Partnership. Historical financial results for the periods presented for the Baylor Cancer Center are included elsewhere in this Form 8-K/A. Financial results for the period ended March 31, 2017 and for the year ended December 31, 2016 related to the Baylor Cancer Center prior to their acquisition represents the results of operations under the previous owners and are included in the column labeled Baylor Cancer Center and adjusted as noted under “Notes and Management Assumptions.”
During 2016, the Company, through subsidiaries of the Operating Partnership, completed the acquisition from regional health systems controlled by Catholic Health Initiatives (“CHI”) of 49 medical office facilities representing approximately 3,016,926 net leasable square feet (the "2016 CHI Portfolio"). Historical financial results and other information related to the 2016 CHI Portfolio was included in a previously filed Form 8-K/A, filed on July 26, 2016. Financial results prior to their acquisition represents the results of operations under the previous owners and are included in the column labeled "2016 Acquisition Properties" and adjusted as noted under "Notes and Management Assumptions" below. Operating results for the 2016 Acquisition Properties since their acquisition date are included in the Company’s historical results of operations, including acquisition costs associated with the properties.
Notes and Management Assumptions
Revenue and operating expenses for the Baylor Cancer Center are based upon the historical operations under the property's previous ownership. Depreciation and amortization expenses are pro forma adjustments based upon the Company's ownership, utilizing its own depreciation and amortization policies outlined in the 2016 Annual Report. Net income attributable to noncontrolling interests is calculated based on the Company's ownership percentage of the Operating Partnership as of the end of each period.
Revenues and expenses for the 2016 Acquisition Properties are pro forma adjustments for the period in 2016 during which these properties were not owned by the Company and are based on the historical operations of these properties since being acquired by the Company during 2016. Interest expense is a pro forma adjustment relating to the incremental expense associated with borrowings used to finance the 2016 CHI Portfolio as if those borrowings had been outstanding for the period prior to acquisition based upon the Company’s average borrowing rate on its unsecured credit facility. Depreciation and amortization expense are pro forma adjustments based upon the Company’s ownership, utilizing its own depreciation and amortization policies outlined in the 2016 Annual Report. Net income attributable to noncontrolling interests is calculated based on the Company’s ownership percentage of the Operating Partnership as of the end of each period.