Milwaukee-based Physicians Realty Trust has acquired another building, this time by issuing $19.3 million in shares to the building’s owners in lieu of cash.
The health care real estate investment trust issued the shares to 46 people beginning on Oct. 28, according to a new filing with the SEC. The shares were used to buy the Northwest Michigan Surgery Center, a 55,215 square foot ambulatory surgery facility in Traverse City, Michigan, for a total of $29.4 million.
PRT also expects to close on a $4.5 million facility in a larger 50-plus building medical office portfolio it is buying from Catholic Health Initiatives in the fourth quarter. And it plans to acquire a $33.4 million medical office facility in Omaha, Nebraska, occupied by the Creighton University Medical Center, in early 2017.
PRT has grown rapidly since its 2013 formation and initial public offering. The trust acquires, selectively develops, owns and manages health care properties that are leased to physicians, hospitals and health care delivery systems. PRT raised $135 million gross in its IPO.
The REIT also today reported its third quarter earnings, which were up significantly year-over-year.
Third quarter net income was $10.3 million, or 7 cents per share, up from $4 million, or 5 cents per share, in the third quarter of 2015.
Revenue was $70 million in the third quarter, up 101 percent from $34.9 million in the same period a year ago.
The massive revenue increase was driven by nearly double the amount of rental revenues as last year’s third quarter, as well as higher expense recoveries.
Profits were offset by higher operating expenses and depreciation and amortization versus last year.
“We are very pleased with our third quarter results,” said John Thomas, president and chief executive officer of PRT. “While we intentionally slowed down new business development as we focused on the integration of the Catholic Health Initiatives portfolio, we still had a very strong quarter of new business activity, with $177 million of new investments and approximately $30 million of investments already completed in the fourth quarter. We now own more than 10 million square feet that is almost 96 percent leased for an average lease term of approximately 8.5 years. Our team’s attention to detail and focus on tenant satisfaction has produced a remarkable integration of the CHI medical office facilities, and early feedback from physician tenants and the CHI hospitals has been very positive. These efforts and our executive attention to operational excellence, as well as new and renewal leasing, is producing far better results than we could have anticipated this early in the relationship. We are determined to set a new high standard for medical office asset management, which starts with sourcing, underwriting, investing, and then managing our high-quality medical office portfolio.”
