Physicians Realty Trust Reports Fourth Quarter and Year Ended 2023 Financial Results
- Announcement of an all-stock merger of equals with Healthpeak Properties, Inc. (NYSE: PEAK).
- Reported total revenue of $135.5 million for Q4 2023, showing a 2.2% increase over the prior year period.
- Net income of $7.1 million for the quarter ended December 31, 2023, with a 40.1% decrease compared to the prior year period.
- Generated Normalized Funds From Operations (FFO) of $0.26 per share on a fully diluted basis for Q4 2023.
- Completed $47.4 million in investments, including funding of previous loan commitments.
- Achieved ENERGY STAR certifications at 16 new properties and earned seven new IREM Certified Sustainable Property designations.
- Weighted average leasing spread for the year ended 2023 was 4.2% on approximately 1.3 million square feet with a 74% retention rate on the consolidated portfolio.
- Decrease of 40.1% in net income for Q4 2023 compared to the prior year period.
- Potential risks associated with the merger with Healthpeak Properties, Inc.
- Subsequent event of the merger closure subject to satisfaction or waiver of customary closing conditions.
Insights
The announcement of a $0.03 net income per share and $0.26 Normalized FFO per share for the fourth quarter reflects both the company's profitability and its ability to generate cash flow from its operations. The reported increase in total revenue suggests a modest growth trajectory. However, the 40.1% decrease in net income compared to the prior year indicates potential challenges in cost management or possibly one-time expenses impacting profitability. Investors should assess the company's expense structure and the reasons behind the decline in profitability to understand its financial health better.
The all-stock merger with Healthpeak Properties is a significant strategic move that could lead to operational synergies and an enhanced market presence. The market typically reacts to such mergers with a focus on the long-term value creation potential, though short-term volatility is common as investors digest the terms and implications of the deal. The merger's approval by shareholders indicates confidence in the strategic rationale, yet the closing conditions and integration process will be critical to realizing the anticipated benefits.
The Outpatient Medical Same-Store Cash Net Operating Income growth of 1.0% year-over-year is a modest indicator of the company's operational efficiency in a specific segment of its portfolio. This metric is important for understanding the underlying performance of the real estate assets, excluding the effects of acquisitions and dispositions. The growth rate is relatively low, possibly reflecting market saturation or competitive pressures in the healthcare real estate sector.
Furthermore, the weighted average leasing spread of 4.2% and a 74% retention rate provide insights into the company's leasing activities. A positive leasing spread indicates that new leases are being signed at higher rates than expiring ones, which is a healthy sign for revenue growth. However, investors should consider industry benchmarks for retention rates to evaluate whether the reported 74% is in line with, or deviating from, sector norms. The portfolio's 94.3% lease rate is a strong indicator of asset utilization and demand for the company's properties.
The achievements in sustainability, such as ENERGY STAR certifications and IREM Certified Sustainable Property designations, reflect a growing trend in the real estate industry towards environmental responsibility. These certifications can enhance the company's reputation and potentially lead to operational cost savings. However, the direct impact on financial performance is often long-term and may not be immediately reflected in the stock price. Investors with an interest in sustainable investing might view these certifications positively, as they align with broader ESG (Environmental, Social and Governance) investment criteria.
Announces
Fourth Quarter Highlights:
- Announced an all-stock merger of equals with Healthpeak Properties, Inc. (NYSE: PEAK) (“Healthpeak”).
-
Reported fourth quarter 2023 total revenue of
$135.5 million 2.2% over the prior year period. -
Reported net income of
$7.1 million 40.1% over the prior year period, and fourth quarter net income per share of$0.03 -
Generated fourth quarter Normalized Funds From Operations (“Normalized FFO”) of
$0.26 -
Completed
$47.4 million -
Fourth quarter Outpatient Medical Same-Store Cash Net Operating Income growth was
1.0% year-over-year. -
Declared a quarterly dividend of
$0.23 - Achieved ENERGY STAR certifications at 16 new properties, totaling 42 property certifications since 2021.
- Earned seven new Institute of Real Estate Management (IREM®) Certified Sustainable Property designations, totaling 45 certifications since 2019.
-
Weighted average leasing spread for the year ended 2023 was
4.2% on approximately 1.3 million square feet with a74% retention rate on our consolidated portfolio, which is94.3% leased.
Subsequent Event Highlights:
- On February 21, 2024, our shareholders voted on and approved the merger with Healthpeak. Consummation of the merger is subject to the satisfaction or waiver of customary closing conditions. The merger is expected to close on or about March 1, 2024.
Fourth Quarter Financial Results
Total revenue for the fourth quarter ended December 31, 2023, was
Total expenses for the fourth quarter 2023 were
Net income for the fourth quarter 2023 was
Net income attributable to common shareholders for the fourth quarter 2023 was
Funds From Operations (“FFO”) totaled
Normalized Funds Available for Distribution (“FAD”) for the fourth quarter 2023, which consists of Normalized FFO adjusted for non-cash share compensation, straight-line rent adjustments, amortization of acquired above-market and below-market leases and assumed debt, amortization of lease inducements, amortization of deferred financing costs, recurring capital expenditures and lease commissions, loan reserve adjustments, and our share of adjustments from unconsolidated investments, was
Our Outpatient Medical Same-Store portfolio of 271 properties, which represents
Other Recent Events
Fourth Quarter Investment Highlights
Investment activity in the fourth quarter ended December 31, 2023, was highlighted by the closing of three construction loans for an aggregate commitment of
Abrazo Buckeye OMF - On November 1, 2023, the Company closed on a
Pima Center OMF - On December 7, 2023, the Company closed on a
Voyages Behavioral Health Hospital - On December 19, 2023, the Company closed on a
Dividend Paid
On December 21, 2023, announced that our Board of Trustees authorized and declared a cash distribution of
ESG Property Certifications Earned
The Company is proud to announce it has earned seven new IREM® CSP designations in 2023 at DOC-owned properties, reinforcing the Company’s ongoing commitment to expanding its environmental, social, and governance (ESG) practices. The IREM® CSP is a sustainability certification program that focuses on the role of exceptional real estate management through green building performance. IREM’s sustainability certification provides properties with recognition for resource efficiency and environmental initiatives. In total, the Company has earned 45 IREM® CSP designations since 2019.
The Company is also proud to have achieved ENERGY STAR® Certification receiving 16 new property certifications, totaling 42 certifications since 2021. As an ENERGY STAR® partner since 2014, the Company continually incorporates better environmental impact principles into our business thoughtfully and responsibly.
Conference Call Information
The Company will not hold a conference call for the fourth quarter ended December 31, 2023.
About Physicians Realty Trust
Physicians Realty Trust is a self-managed health care real estate company organized to acquire, selectively develop, own, and manage health care properties that are leased to physicians, hospitals, and health care delivery systems. The Company invests in real estate that is integral to providing high quality health care. The Company conducts its business through an UPREIT structure in which its properties are owned by Physicians Realty L.P., a
Investors are encouraged to visit the Investor Relations portion of the Company’s website (www.docreit.com) for additional information, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, press releases, supplemental information packages and investor presentations. The information contained on our website is not a part of, and is not incorporated by reference into, this press release.
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 Exchange Act of 1934, as amended, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “anticipate”, “believe”, “expect”, “estimate”, “plan”, “outlook”, “continue”, “intend”, and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements may include statements regarding the Company’s strategic and operational plans, the Company’s ability to generate internal and external growth, the future outlook, anticipated cash returns, cap rates or yields on properties, anticipated closing of property acquisitions, anticipated completion of development projects, ability to execute its business plan, and ability to consummate the proposed merger with Healthpeak and the timing of the closing of the proposed merger. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. 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 (the “Commission”), including, without limitation, the Company’s annual and periodic reports and other documents filed with the Commission. Unless legally required, the Company disclaims any obligation to update any forward-looking statements after the date of this release, whether as a result of new information, future events or otherwise. For a discussion of factors that could impact the Company’s results, performance, or transactions, see Part I, Item 1A (Risk Factors) of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Physicians Realty Trust |
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Condensed Consolidated Statements of Income |
|||||||||||||||
(in thousands, except share and per share data) |
|||||||||||||||
|
|
|
|
||||||||||||
|
Three Months Ended
|
|
Year Ended
|
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Revenues: |
|
|
|
|
|
|
|
||||||||
Rental revenues |
$ |
94,860 |
|
|
$ |
93,496 |
|
|
$ |
376,762 |
|
|
$ |
371,727 |
|
Expense recoveries |
|
36,137 |
|
|
|
36,122 |
|
|
|
151,331 |
|
|
|
143,646 |
|
Rental and related revenues |
|
130,997 |
|
|
|
129,618 |
|
|
|
528,093 |
|
|
|
515,373 |
|
Interest income on real estate loans and other |
|
4,475 |
|
|
|
2,947 |
|
|
|
15,370 |
|
|
|
11,262 |
|
Total revenues |
|
135,472 |
|
|
|
132,565 |
|
|
|
543,463 |
|
|
|
526,635 |
|
Expenses: |
|
|
|
|
|
|
|
||||||||
Interest expense |
|
21,514 |
|
|
|
19,878 |
|
|
|
81,351 |
|
|
|
72,234 |
|
General and administrative |
|
7,623 |
|
|
|
9,809 |
|
|
|
38,756 |
|
|
|
40,209 |
|
Operating expenses |
|
44,567 |
|
|
|
43,020 |
|
|
|
182,661 |
|
|
|
171,100 |
|
Depreciation and amortization |
|
47,536 |
|
|
|
47,639 |
|
|
|
191,091 |
|
|
|
189,641 |
|
Merger and transaction-related expense (1) |
|
6,934 |
|
|
|
— |
|
|
|
6,934 |
|
|
|
— |
|
Total expenses |
|
128,174 |
|
|
|
120,346 |
|
|
|
500,793 |
|
|
|
473,184 |
|
Income before equity in (loss) income of unconsolidated entities and gain on sale of investment properties, net: |
|
7,298 |
|
|
|
12,219 |
|
|
|
42,670 |
|
|
|
53,451 |
|
Equity in (loss) income of unconsolidated entities |
|
(176 |
) |
|
|
(338 |
) |
|
|
1,084 |
|
|
|
(790 |
) |
Gain on sale of investment properties, net |
|
— |
|
|
|
— |
|
|
|
13 |
|
|
|
57,375 |
|
Net income |
|
7,122 |
|
|
|
11,881 |
|
|
|
43,767 |
|
|
|
110,036 |
|
Net income attributable to noncontrolling interests: |
|
|
|
|
|
|
|
||||||||
Operating Partnership |
|
(279 |
) |
|
|
(410 |
) |
|
|
(1,722 |
) |
|
|
(5,240 |
) |
Partially owned properties (2) |
|
(48 |
) |
|
|
(46 |
) |
|
|
(169 |
) |
|
|
(430 |
) |
Net income attributable to common shareholders |
$ |
6,795 |
|
|
$ |
11,425 |
|
|
$ |
41,876 |
|
|
$ |
104,366 |
|
Net income per share: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
0.03 |
|
|
$ |
0.05 |
|
|
$ |
0.18 |
|
|
$ |
0.46 |
|
Diluted |
$ |
0.03 |
|
|
$ |
0.05 |
|
|
$ |
0.17 |
|
|
$ |
0.46 |
|
Weighted average common shares: |
|
|
|
|
|
|
|
||||||||
Basic |
|
238,489,449 |
|
|
|
229,134,463 |
|
|
|
238,216,847 |
|
|
|
226,598,474 |
|
Diluted |
|
249,642,987 |
|
|
|
240,952,269 |
|
|
|
249,344,713 |
|
|
|
239,610,285 |
|
|
|
|
|
|
|
|
|
||||||||
Dividends and distributions declared per common share |
$ |
0.23 |
|
|
$ |
0.23 |
|
|
$ |
0.92 |
|
|
$ |
0.92 |
|
(1) During the year ended December 31, 2023, the Company recorded merger and transaction-related expense of |
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(2) Includes amounts attributable to redeemable noncontrolling interests. |
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Physicians Realty Trust |
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Condensed Consolidated Balance Sheets |
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(in thousands, except share and per share data) |
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|
December 31, |
|
December 31, |
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|
2023 |
|
2022 |
||||
ASSETS |
|
|
|
||||
Investment properties: |
|
|
|
||||
Land and improvements |
$ |
249,470 |
|
|
$ |
241,559 |
|
Building and improvements |
|
4,705,870 |
|
|
|
4,659,780 |
|
Construction in progress |
|
53,319 |
|
|
|
18,497 |
|
Tenant improvements |
|
100,834 |
|
|
|
88,640 |
|
Acquired lease intangibles |
|
509,468 |
|
|
|
505,335 |
|
|
|
5,618,961 |
|
|
|
5,513,811 |
|
Accumulated depreciation |
|
(1,187,952 |
) |
|
|
(996,888 |
) |
Net real estate property |
|
4,431,009 |
|
|
|
4,516,923 |
|
Right-of-use lease assets, net |
|
226,824 |
|
|
|
231,225 |
|
Real estate loans receivable, net |
|
98,277 |
|
|
|
104,973 |
|
Investments in unconsolidated entities |
|
78,218 |
|
|
|
77,716 |
|
Net real estate investments |
|
4,834,328 |
|
|
|
4,930,837 |
|
Cash and cash equivalents |
|
156,779 |
|
|
|
7,730 |
|
Tenant receivables, net |
|
11,955 |
|
|
|
11,503 |
|
Other assets |
|
152,559 |
|
|
|
146,807 |
|
Total assets |
$ |
5,155,621 |
|
|
$ |
5,096,877 |
|
LIABILITIES AND EQUITY |
|
|
|
||||
Liabilities: |
|
|
|
||||
Credit facility |
$ |
393,718 |
|
|
$ |
188,328 |
|
Notes payable |
|
1,451,905 |
|
|
|
1,465,437 |
|
Mortgage debt |
|
127,413 |
|
|
|
164,352 |
|
Accounts payable |
|
8,364 |
|
|
|
4,391 |
|
Dividends and distributions payable |
|
61,186 |
|
|
|
60,148 |
|
Accrued expenses and other liabilities |
|
96,087 |
|
|
|
87,720 |
|
Lease liabilities |
|
104,844 |
|
|
|
105,011 |
|
Acquired lease intangibles, net |
|
22,578 |
|
|
|
24,381 |
|
Total liabilities |
|
2,266,095 |
|
|
|
2,099,768 |
|
|
|
|
|
||||
Redeemable noncontrolling interests - partially owned properties |
|
3,008 |
|
|
|
3,258 |
|
|
|
|
|
||||
Equity: |
|
|
|
||||
Common shares, |
|
2,385 |
|
|
|
2,333 |
|
Additional paid-in capital |
|
3,821,718 |
|
|
|
3,743,876 |
|
Accumulated deficit |
|
(1,061,293 |
) |
|
|
(881,672 |
) |
Accumulated other comprehensive income |
|
717 |
|
|
|
5,183 |
|
Total shareholders’ equity |
|
2,763,527 |
|
|
|
2,869,720 |
|
Noncontrolling interests: |
|
|
|
||||
Operating Partnership |
|
113,662 |
|
|
|
123,015 |
|
Partially owned properties |
|
9,329 |
|
|
|
1,116 |
|
Total noncontrolling interests |
|
122,991 |
|
|
|
124,131 |
|
Total equity |
|
2,886,518 |
|
|
|
2,993,851 |
|
Total liabilities and equity |
$ |
5,155,621 |
|
|
$ |
5,096,877 |
|
Physicians Realty Trust |
|||||||||||||||
Reconciliation of Non-GAAP Measures |
|||||||||||||||
(in thousands, except share and per share data) |
|||||||||||||||
|
|
|
|
||||||||||||
|
Three Months Ended
|
|
Year Ended
|
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Net income |
$ |
7,122 |
|
|
$ |
11,881 |
|
|
$ |
43,767 |
|
|
$ |
110,036 |
|
Earnings per share - diluted |
$ |
0.03 |
|
|
$ |
0.05 |
|
|
$ |
0.17 |
|
|
$ |
0.46 |
|
|
|
|
|
|
|
|
|
||||||||
Net income |
$ |
7,122 |
|
|
$ |
11,881 |
|
|
$ |
43,767 |
|
|
$ |
110,036 |
|
Net income attributable to noncontrolling interests - partially owned properties |
|
(48 |
) |
|
|
(46 |
) |
|
|
(169 |
) |
|
|
(430 |
) |
Depreciation and amortization expense |
|
47,469 |
|
|
|
47,544 |
|
|
|
190,706 |
|
|
|
189,221 |
|
Depreciation and amortization expense - partially owned properties |
|
(126 |
) |
|
|
(138 |
) |
|
|
(536 |
) |
|
|
(379 |
) |
Gain on sale of investment properties, net |
|
— |
|
|
|
— |
|
|
|
(13 |
) |
|
|
(57,375 |
) |
Proportionate share of unconsolidated joint venture adjustments |
|
2,281 |
|
|
|
2,258 |
|
|
|
7,280 |
|
|
|
9,289 |
|
FFO applicable to common shares |
$ |
56,698 |
|
|
$ |
61,499 |
|
|
$ |
241,035 |
|
|
$ |
250,362 |
|
Net change in fair value of derivative |
|
475 |
|
|
|
— |
|
|
|
660 |
|
|
|
— |
|
Merger and transaction-related expense (1) |
|
6,934 |
|
|
|
— |
|
|
|
6,934 |
|
|
|
— |
|
Gain on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
(1,763 |
) |
|
|
— |
|
Proportionate share of unconsolidated joint venture adjustments |
|
— |
|
|
|
20 |
|
|
|
— |
|
|
|
(340 |
) |
Normalized FFO applicable to common shares |
$ |
64,107 |
|
|
$ |
61,519 |
|
|
$ |
246,866 |
|
|
$ |
250,022 |
|
|
|
|
|
|
|
|
|
||||||||
FFO per common share - diluted |
$ |
0.23 |
|
|
$ |
0.26 |
|
|
$ |
0.97 |
|
|
$ |
1.04 |
|
Normalized FFO per common share - diluted |
$ |
0.26 |
|
|
$ |
0.26 |
|
|
$ |
0.99 |
|
|
$ |
1.04 |
|
|
|
|
|
|
|
|
|
||||||||
Normalized FFO applicable to common shares |
$ |
64,107 |
|
|
$ |
61,519 |
|
|
$ |
246,866 |
|
|
$ |
250,022 |
|
Non-cash share compensation expense |
|
3,386 |
|
|
|
3,272 |
|
|
|
15,676 |
|
|
|
15,672 |
|
Straight-line rent adjustments |
|
(476 |
) |
|
|
(1,488 |
) |
|
|
(3,232 |
) |
|
|
(6,847 |
) |
Amortization of acquired above/below-market leases/assumed debt |
|
1,054 |
|
|
|
1,151 |
|
|
|
4,392 |
|
|
|
4,924 |
|
Amortization of lease inducements |
|
245 |
|
|
|
225 |
|
|
|
962 |
|
|
|
900 |
|
Amortization of deferred financing costs |
|
763 |
|
|
|
575 |
|
|
|
2,791 |
|
|
|
2,314 |
|
Recurring capital expenditures and lease commissions |
|
(6,094 |
) |
|
|
(7,193 |
) |
|
|
(23,415 |
) |
|
|
(23,853 |
) |
Loan reserve adjustments |
|
511 |
|
|
|
(84 |
) |
|
|
786 |
|
|
|
75 |
|
Proportionate share of unconsolidated joint venture adjustments |
|
(930 |
) |
|
|
(118 |
) |
|
|
(2,314 |
) |
|
|
(1,018 |
) |
Normalized FAD applicable to common shares |
$ |
62,566 |
|
|
$ |
57,859 |
|
|
$ |
242,512 |
|
|
$ |
242,189 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding - diluted |
|
249,642,987 |
|
|
|
240,952,269 |
|
|
|
249,344,713 |
|
|
|
239,610,285 |
|
(1) During the year ended December 31, 2023, the Company recorded merger and transaction-related expense of |
|||||||||||||||
|
Three Months Ended
|
|
Year Ended
|
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Net income |
$ |
7,122 |
|
|
$ |
11,881 |
|
|
$ |
43,767 |
|
|
$ |
110,036 |
|
General and administrative |
|
7,623 |
|
|
|
9,809 |
|
|
|
38,756 |
|
|
|
40,209 |
|
Merger and transaction-related expense (1) |
|
6,934 |
|
|
|
— |
|
|
|
6,934 |
|
|
|
— |
|
Depreciation and amortization expense |
|
47,536 |
|
|
|
47,639 |
|
|
|
191,091 |
|
|
|
189,641 |
|
Interest expense |
|
21,514 |
|
|
|
19,878 |
|
|
|
81,351 |
|
|
|
72,234 |
|
Corporate high yield interest income |
|
(2,370 |
) |
|
|
— |
|
|
|
(5,654 |
) |
|
|
— |
|
Swap income |
|
(360 |
) |
|
|
— |
|
|
|
(604 |
) |
|
|
— |
|
Net change in the fair value of derivative |
|
475 |
|
|
|
— |
|
|
|
660 |
|
|
|
— |
|
Gain on sale of investment properties, net |
|
— |
|
|
|
— |
|
|
|
(13 |
) |
|
|
(57,375 |
) |
Proportionate share of unconsolidated joint venture adjustments |
|
3,733 |
|
|
|
3,636 |
|
|
|
12,677 |
|
|
|
13,925 |
|
NOI |
$ |
92,207 |
|
|
$ |
92,843 |
|
|
$ |
368,965 |
|
|
$ |
368,670 |
|
|
|
|
|
|
|
|
|
||||||||
NOI |
$ |
92,207 |
|
|
$ |
92,843 |
|
|
$ |
368,965 |
|
|
$ |
368,670 |
|
Straight-line rent adjustments |
|
(476 |
) |
|
|
(1,488 |
) |
|
|
(3,232 |
) |
|
|
(6,847 |
) |
Amortization of acquired above/below-market leases |
|
1,054 |
|
|
|
1,152 |
|
|
|
4,392 |
|
|
|
4,935 |
|
Amortization of lease inducements |
|
245 |
|
|
|
225 |
|
|
|
962 |
|
|
|
900 |
|
Loan reserve adjustments |
|
511 |
|
|
|
(84 |
) |
|
|
786 |
|
|
|
75 |
|
Proportionate share of unconsolidated joint venture adjustments |
|
(74 |
) |
|
|
(139 |
) |
|
|
(367 |
) |
|
|
(485 |
) |
Cash NOI |
$ |
93,467 |
|
|
$ |
92,509 |
|
|
$ |
371,506 |
|
|
$ |
367,248 |
|
|
|
|
|
|
|
|
|
||||||||
Cash NOI |
$ |
93,467 |
|
|
$ |
92,509 |
|
|
|
|
|
||||
Assets not held for all periods |
|
(577 |
) |
|
|
(14 |
) |
|
|
|
|
||||
Non-outpatient medical facilities |
|
(2,871 |
) |
|
|
(2,778 |
) |
|
|
|
|
||||
Lease termination fees |
|
(57 |
) |
|
|
— |
|
|
|
|
|
||||
Interest income on real estate loans |
|
(1,593 |
) |
|
|
(2,326 |
) |
|
|
|
|
||||
Joint venture and other income |
|
(3,814 |
) |
|
|
(3,657 |
) |
|
|
|
|
||||
Outpatient Medical Same-Store Cash NOI |
$ |
84,555 |
|
|
$ |
83,734 |
|
|
|
|
|
||||
(1) During the year ended December 31, 2023, the Company recorded merger and transaction-related expense of |
|||||||||||||||
|
Three Months Ended
|
||||||
|
2023 |
|
2022 |
||||
Net income |
$ |
7,122 |
|
|
$ |
11,881 |
|
Depreciation and amortization expense |
|
47,536 |
|
|
|
47,639 |
|
Interest expense |
|
21,514 |
|
|
|
19,878 |
|
Corporate high yield interest income |
|
(2,370 |
) |
|
|
— |
|
Swap income |
|
(360 |
) |
|
|
— |
|
Proportionate share of unconsolidated joint venture adjustments |
|
3,722 |
|
|
|
3,560 |
|
EBITDAre |
$ |
77,164 |
|
|
$ |
82,958 |
|
Merger and transaction-related expense (1) |
|
6,934 |
|
|
|
— |
|
Non-cash share compensation expense |
|
3,386 |
|
|
|
3,272 |
|
Non-cash changes in fair value |
|
475 |
|
|
|
— |
|
Pursuit costs |
|
96 |
|
|
|
328 |
|
Non-cash intangible amortization |
|
1,299 |
|
|
|
1,376 |
|
Proportionate share of unconsolidated joint venture adjustments |
|
— |
|
|
|
20 |
|
Pro forma adjustments for investment activity |
|
630 |
|
|
|
(40 |
) |
Adjusted EBITDAre |
$ |
89,984 |
|
|
$ |
87,914 |
|
(1) During the year ended December 31, 2023, the Company recorded merger and transaction-related expense of |
|||||||
This press release includes Funds From Operations (“FFO”), Normalized FFO, Normalized Funds Available For Distribution (“FAD”), Net Operating Income (“NOI”), Cash NOI, Outpatient Medical Same-Store Cash NOI, Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (“EBITDAre”) and Adjusted EBITDAre, which are non-GAAP financial measures. For purposes of the SEC’s Regulation G, a non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable financial measure calculated and presented in accordance with GAAP in the statement of operations, balance sheet or statement of cash flows (or equivalent statements) of the Company, or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable financial measure so calculated and presented. As used in this press release, GAAP refers to generally accepted accounting principles in
We believe that information regarding FFO is helpful to shareholders and potential investors because it facilitates an understanding of the operating performance of our properties without giving effect to real estate depreciation and amortization, which assumes that the value of real estate assets diminishes ratably over time. We calculate FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (“Nareit”). Nareit defines FFO as net income or loss (computed in accordance with GAAP) before noncontrolling interests of holders of OP units, excluding preferred distributions, gains (or losses) on sales of depreciable operating property, impairment write-downs on depreciable assets, plus real estate related depreciation and amortization (excluding amortization of deferred financing costs). Our FFO computation includes our share of required adjustments from our unconsolidated joint ventures and may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the Nareit definition or that interpret the Nareit definition differently than we do. The GAAP measure that we believe to be most directly comparable to FFO, net income, includes depreciation and amortization expenses, gains or losses on property sales, impairments, and noncontrolling interests. In computing FFO, we eliminate these items because, in our view, they are not indicative of the results from the operations of our properties. To facilitate a clear understanding of our historical operating results, FFO should be examined in conjunction with net income (determined in accordance with GAAP) as presented in our financial statements. FFO does not represent cash generated from operating activities in accordance with GAAP, should not be considered to be an alternative to net income or loss (determined in accordance with GAAP) as a measure of our liquidity and is not indicative of funds available for our cash needs, including our ability to make cash distributions to shareholders.
We use Normalized FFO, which excludes from FFO net change in fair value of derivative financial instruments, acceleration of deferred financing costs, net change in fair value of contingent consideration, gain on extinguishment of debt, merger and transaction related expenses, and other normalizing items. Our Normalized FFO computation includes our share of required adjustments from our unconsolidated joint ventures and our use of the term Normalized FFO may not be comparable to that of other real estate companies as they may have different methodologies for computing this amount. Normalized FFO should not be considered as an alternative to net income or loss (computed in accordance with GAAP), as an indicator of our financial performance or of cash flow from operating activities (computed in accordance with GAAP), or as an indicator of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions. Normalized FFO should be reviewed in connection with other GAAP measurements.
We define Normalized FAD, a non-GAAP measure, which excludes from Normalized FFO non-cash share compensation expense, straight-line rent adjustments, amortization of acquired above-market or below-market leases and assumed debt, amortization of lease inducements, amortization of deferred financing costs, and loan reserve adjustments, including our share of all required adjustments from unconsolidated joint ventures. We also adjust for recurring capital expenditures related to building, site, and tenant improvements, leasing commissions, cash payments from seller master leases, and rent abatement payments, including our share of all required adjustments for unconsolidated joint ventures. Other REITs or real estate companies may use different methodologies for calculating Normalized FAD, and accordingly, our computation may not be comparable to those reported by other REITs. Although our computation of Normalized FAD may not be comparable to that of other REITs, we believe Normalized FAD provides a meaningful supplemental measure of our performance due to its frequency of use by analysts, investors, and other interested parties in the evaluation of our performance as a REIT. Normalized FAD should not be considered as an alternative to net income or loss attributable to controlling interest (computed in accordance with GAAP) or as an indicator of our financial performance. Normalized FAD should be reviewed in connection with other GAAP measurements.
NOI is a non-GAAP financial measure that is defined as net income or loss, computed in accordance with GAAP, generated from our total portfolio of properties and other investments before general and administrative expenses, depreciation and amortization expense, merger and transaction related expenses, interest expense, corporate high yield interest income, swap income, net change in the fair value of derivative financial instruments, gain or loss on the sale of investment properties, and impairment losses, including our share of all required adjustments from our unconsolidated joint ventures. We believe that NOI provides an accurate measure of operating performance of our operating assets because NOI excludes certain items that are not associated with management of the properties. Our use of the term NOI may not be comparable to that of other real estate companies as they may have different methodologies for computing this amount.
Cash NOI is a non-GAAP financial measure which excludes from NOI straight-line rent adjustments, amortization of acquired above and below market leases, and other non-cash and normalizing items, including our share of all required adjustments from unconsolidated joint ventures. Other non-cash and normalizing items include items such as the amortization of lease inducements, loan reserve adjustments, payments received from seller master leases and rent abatements, and changes in fair value of contingent consideration. We believe that Cash NOI provides an accurate measure of the operating performance of our operating assets because it excludes certain items that are not associated with management of the properties. Additionally, we believe that Cash NOI is a widely accepted measure of comparative operating performance in the real estate community. Our use of the term Cash NOI may not be comparable to that of other real estate companies as such other companies may have different methodologies for computing this amount.
Outpatient Medical Same-Store Cash NOI is a non-GAAP financial measure which excludes from Cash NOI assets not held for the entire preceding five quarters, non-outpatient medical facility assets, and other normalizing items not specifically related to the same-store property portfolio. Management considers Outpatient Medical Same-Store Cash NOI a supplemental measure because it allows investors, analysts, and Company management to measure unlevered property-level operating results. Our use of the term Outpatient Medical Same-Store Cash NOI may not be comparable to that of other real estate companies, as such other companies may have different methodologies for computing this amount.
We calculate EBITDAre in accordance with standards established by Nareit and define EBITDAre as net income or loss computed in accordance with GAAP plus depreciation and amortization, interest expense, corporate high yield interest income, swap income, gain or loss on the sale of investment properties, and impairment loss, including our share of all required adjustments from unconsolidated joint ventures. We define Adjusted EBITDAre, which excludes from EBITDAre merger and transaction related expense, non-cash share compensation expense, non-cash changes in fair value, pursuit costs, non-cash intangible amortization, corporate high yield interest income, the pro forma impact of investment activity, and other normalizing items. We consider EBITDAre and Adjusted EBITDAre important measures because they provide additional information to allow management, investors, and our current and potential creditors to evaluate and compare our core operating results and our ability to service debt.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240221749668/en/
Physicians Realty Trust
John T. Thomas
President and CEO
(214) 549-6611
jtt@docreit.com
Source: Physicians Realty Trust
FAQ
What was DOC's net income per share for the fourth quarter of 2023?
What was DOC's Normalized FFO per share for the fourth quarter of 2023?
What was the total revenue reported by DOC for the fourth quarter of 2023?
What was the percentage increase in total revenue for DOC in the fourth quarter of 2023 compared to the prior year period?
What investments did DOC complete in the fourth quarter of 2023?
What certifications did DOC achieve for its properties in 2023?
What was the weighted average leasing spread for DOC in 2023?
When is the merger with Healthpeak Properties expected to close?
