Physicians Realty Trust (NYSE:DOC) (the “Company”), a self-managed healthcare properties REIT, today announced the closing of four unrelated transactions totaling $44.9 million at an average first year unlevered cash yield of 7.8%. These transactions include a total of six buildings in North Carolina, Wisconsin and Indiana, and increase the total value of the Company’s portfolio of real estate assets to more than $500 million.
The Company completed its first investment in North Carolina with the purchase of the Presbyterian Medical Plaza, a Class-A medical office building located in Monroe, North Carolina, which is part of the Charlotte MSA. Presbyterian Medical is a 29,422 square foot, multi-tenant facility that is 100% occupied, with Novant Medical Group, Inc. as the anchor tenant. Novant Medical Group is a member of Novant Health, a network of 13 hospitals across four states which reported $3.6 billion in net patient service revenue in 2013. The total purchase price was approximately $7.8 million with a first year unlevered yield of 7.95%.
The Company also closed on the purchase of the Renaissance Center, a 24,622 square foot, dual-tenant facility located in Oshkosh, Wisconsin. Approximately 50% of the building is leased to ThedaCare Surgery Center, an ambulatory surgery center owned and operated by ThedaCare, Inc., the third largest healthcare employer in Wisconsin. The center provides a number of surgical services, including orthopaedics, general surgery, endoscopy, plastic surgery, urology, as well as other surgical specialties. Fox Valley Plastic Surgery, SC leases the remainder of the building. Fox Valley specializes in reconstructive surgery, as well as cosmetic procedures and post-operative care, and performs outpatient surgical procedures in the facility’s ambulatory surgery center. Both tenants have decades of experience in the healthcare industry. The total purchase price was $8.5 million with a first year unlevered yield of 8.26%.
In addition, the Company closed on the purchase of four buildings in Bloomington, Indiana. Three buildings were purchased from physician members of the Premier Healthcare, with new long-term leases entered into by their practice as part of the acquisition. These three buildings, containing approximately 90,000 square feet of total rentable space, were purchased for approximately $23.8 million with a first year unlevered yield of 7.5%. The physician owners contributed their ownership interests in the buildings to the Company’s operating partnership, Physician Realty L.P., in exchange for 502,586 operating partnership units (“OPUs”) in the Company's operating partnership valued at $7.2 million, in addition to net cash proceeds of $16.6 million. The medical office buildings are occupied by IMA and Premier-related physician groups and are subject to a 10-year absolute-net lease with Premier Healthcare, LLC. Premier Healthcare is a Bloomington, Indiana-based, physician-led multispecialty provider healthcare group with affiliated practices across the state of Indiana.
The fourth building in Bloomington is a 15,946 square foot, dual-tenant medical office building that is 100% occupied by Surgicare, LLC and the private practice of Dr. Brian Logue of Summit Urology. Surgicare is owned and operated by the physician members of Summit Urology. The total purchase price was approximately $4.8 million with a first year unlevered yield of 8.08%. The building is subject to a 10-year absolute-net lease with Surgicare.
John T. Thomas, President and CEO of the Company, stated, “Since our initial public offering in July of 2013, we have had the opportunity to work with numerous physician groups and other providers across the country, in addition to providing introductions to other provider colleagues. With the acquisitions closed this week, we have grown our portfolio from $124 million at the time of our IPO to more than $500 million in total real estate assets, significantly increasing our future revenue potential for the benefit of our shareholders. We are excited to expand in our home state of Wisconsin, as well as making investments in Indiana and North Carolina, our 17th state.”
Dr. Wesley Ratliff, President of Premier Healthcare, LLC, stated, “Our physicians have been looking for a capital partner to help Premier fund its aggressive growth plans. After evaluating many options, it became clear that Physicians Realty Trust was more than just a landlord, but a true partner that can support the expansion efforts of our clinical operations and physician network. We believe that working with Physicians Realty Trust will result in a mutually beneficial, long-term relationship. Many of our physician owners have demonstrated their confidence by electing to invest in the company with the contribution of their interest in the Premier buildings in exchange for operating partnership units, in addition to the cash proceeds which we will use to fund Premier’s growth. We look forward to a long and prosperous relationship as we strive to meet the healthcare needs of our communities.”
About Physicians Realty Trust
Physicians Realty Trust is a self-managed healthcare real estate company organized to acquire, selectively develop, own and manage healthcare properties that are leased to physicians, hospitals and healthcare delivery systems. The Company invests in real estate that is integral to providing high quality healthcare. The Company intends to elect to be taxed as a real estate investment trust (REIT) for U.S. federal income tax purposes.
This press release contains statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will” or other similar words or expressions. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies, financial and operating projections or other forward-looking information. These forward-looking statements are subject to various risks and uncertainties, not all of which are known to the Company and many of which are beyond the Company’s control, which could cause actual results to differ materially from such statements. These risks and uncertainties are described in greater detail in the Company’s filings with the Securities and Exchange Commission, including, without limitation, the Company’s Prospectus filed pursuant to Rule 424(b)(4) on May 21, 2014. Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
John T. Thomas, 214-549-6611
President and CEO
John W. Sweet, 414-978-6467
The Ruth Group
David Burke, 646-536-7009