Physicians Realty Closes Mezzanine Loan Secured by Interests in Two Leading Specialty Hospitals and Completes Acquisition of Ambulatory Surgery Center

MILWAUKEE--()--Physicians Realty Trust (NYSE:DOC) (the “Company”), a self-managed healthcare properties REIT, announced today that it has closed its previously announced mezzanine loan of approximately $6.9 million to affiliates controlled by MedProperties Holdings, LLC (“MedProperties”), a leading Dallas-based private investor in healthcare real estate (the “Loan”).

The Loan is secured by MedProperties’ ownership interest in two special purpose entities that own real estate leased to two specialty hospitals: a stabilized surgical hospital, operated by National Surgical Hospitals in partnership with leading surgeons in San Antonio, Texas; and a new inpatient rehab hospital operated by a joint venture between Scottsdale Healthcare and Select Medical, Inc. (NYSE:SEM). The Loan has a five-year, interest only term and bears interest at a rate of 9.0% per annum. The Company also has an option, without obligation, to acquire these properties during the fourth year of the Loan.

In addition, the Company announced the completion of the acquisition of an ambulatory surgery center (“ASC”) in Great Falls, Montana for a total cash consideration of $4 million. The ASC is 100% leased to Great Falls Clinic Surgery Center, LLC under a recently signed 15-year absolute, net master lease. Physicians Realty Trust entered into a definitive agreement to acquire the property and subsequently completed the acquisition on December 11, 2013. The purchase price is equal to an 8.5% first year capitalization rate.

John T. Thomas, President and CEO of Physicians Realty Trust, stated, “As we grow our portfolio, we continue to look for creative means of financing our provider partners that will benefit both Physicians Realty Trust and our partners. The closing of this $6.9 million secured mezzanine loan with affiliates of MedProperties demonstrates our ability to create value for the Company and its shareholders through sizeable returns, while enabling our tenant to recapitalize its business. In conjunction with the loan, we have a purchase option to acquire the properties at a later date. This provides a built-in growth opportunity with two very attractive, high quality properties, one of which, The Scottsdale Healthcare Rehabilitation Hospital, was recently recognized by HREI Insights as the Best New Post-Acute New Ground-Up Development for 2013.”

Mr. Thomas added, “We have continued to successfully execute our growth strategy with the acquisition of an ambulatory surgery center in Great Falls, Montana. This property fits well within our portfolio and the transaction demonstrates our ability to achieve solid yields with strong counterparties. Furthermore, it provides us with an additional asset to drive further revenue generation and with 100% of the property on lease, it will help to improve the overall occupancy level of our portfolio.”

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.

Forward-Looking Statements

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. These forward-looking statements relate to the payment of the dividends. 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 (“SEC”), including, without limitation, the Company’s Prospectus filed pursuant to Rule 424(b)(4) on December 6, 2013. 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.

Contacts

Physicians Realty Trust
John T. Thomas, 214-543-6611
President and CEO
or
John W. Sweet, 414-978-6467
or
Investors:
The Ruth Group
Stephanie Carrington / David Burke, 646-536-7017/7009
scarrington@theruthgroup.com / dburke@theruthgroup.com

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Contacts

Physicians Realty Trust
John T. Thomas, 214-543-6611
President and CEO
or
John W. Sweet, 414-978-6467
or
Investors:
The Ruth Group
Stephanie Carrington / David Burke, 646-536-7017/7009
scarrington@theruthgroup.com / dburke@theruthgroup.com