Physicians Realty Trust Provides $6.9 Million in Secured Mezzanine Loan Secured by Interests in Two Leading Specialty Hospitals and Acquires Options to Acquire the Hospitals in the Future
Physicians Realty TrustJohn T. Thomas, President and CEO, 214-543-6611John W. Sweet, 414-978-6467orInvestors:The Ruth GroupStephanie Carrington / David Burke, 646-536-7017/7009 /
Physicians Realty Trust (NYSE:DOC) (the “Company”), a self-managed healthcare properties REIT, announced today that it has entered into an agreement to provide a secured 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 will be secured by MedProperties’ ownership interest in two special purpose entities (the “Owners”) 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) (collectively, the “Hospitals”). The Company will have an option (without obligation) to acquire the property leased to the Hospitals during the fourth year of the Loan.
The Loan will be made in connection with a recapitalization of the Owners, following an approximate 9,000 square foot expansion of the San Antonio hospital, and post-development of the Scottsdale hospital. The Hospitals are leased long term, and if the Company exercises its option to purchase either or both of the properties, there will be more than 10 years left on the current lease(s).
The Loan will have a five-year term, is interest only during the term, and bears interest at a rate of 9.0% per annum. The Loan represents approximately 15% of the appraised total $45.9 million current valuation of the properties.
John T. Thomas, President and CEO of Physicians Realty Trust, stated, “The origination of this secured mezzanine loan demonstrates our ability to identify and source investment opportunities that provide stable returns, as well as offer our partners an attractive financing option. Importantly, with the purchase option, we have the right but not the obligation to acquire 100% of these high quality hospitals within five years. We believe this is a great long-term opportunity for Physicians Realty Trust, as we partner with a private investor in high quality healthcare real estate, who owns high quality facilities leased to high quality and strong credit health care providers we know well. This investment allows us to receive a very attractive return on the Loan, secured by interests in high quality healthcare real estate, and the option to acquire 100% of the underlying properties in the future, as we continue to focus on growing our portfolio and increasing our predictable revenue stream.”
Darryl E. Freling and Roman Kupchynsky, Managing Principals of MedProperties, stated, “Physicians Realty Trust provided to us, our investors, and our physician and provider clients, a creative financing option allowing us to recapitalize these properties today, while establishing a potential long term ownership relationship between the operators of these Hospitals today, with an organization they know and trust, Physicians Realty Trust and its CEO, John Thomas. We have known and worked with John Thomas and his team for a number of years; Physicians Realty Trust provides to us a public REIT relationship that we and our physician and provider clients are comfortable working with over the long term.”
Physicians Realty Trust is a self-managed healthcare real estate company recently 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 plans to make an election to be taxed as a real estate investment trust (REIT) for U.S. federal income tax purposes.
Certain matters within this press release are discussed using forward-looking language as specified in the Private Securities Litigation Reform Act of 1995, and, as such, may involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance to differ from those projected in the forward looking statement. These forward-looking statements may include statements related to the Company’s ability to generate internal and external growth and to execute its business plan. For a description of factors that may cause the Company’s actual results or performance to differ from its forward-looking statements, please review the information under the heading “Risk Factors” included in the Company’s final prospectus in connection with its initial public offering filed by the Company with the Securities and Exchange Commission on July 19, 2013.