Physicians Realty Trust(DOC) - 2021 Q1 - Quarterly Report

Part I Financial Information Item 1 Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for Physicians Realty Trust for the quarterly period ended March 31, 2021, including balance sheets, income statements, and cash flows, with detailed notes Consolidated Balance Sheets As of March 31, 2021, total assets were $4.37 billion, a slight decrease from $4.41 billion at year-end 2020, while total liabilities decreased to $1.63 billion and total equity increased to $2.74 billion Consolidated Balance Sheets (in thousands) | | March 31, 2021 (unaudited) | December 31, 2020 | | :--- | :--- | :--- | | Total assets | $ 4,370,895 | $ 4,413,950 | | Net real estate investments | $ 4,236,638 | $ 4,262,678 | | Cash and cash equivalents | $ 3,949 | $ 2,515 | | Total liabilities | $ 1,628,931 | $ 1,670,659 | | Credit facility | $ 402,827 | $ 412,322 | | Notes payable | $ 968,868 | $ 968,653 | | Total equity | $ 2,735,231 | $ 2,715,002 | Consolidated Statements of Income For the three months ended March 31, 2021, total revenues increased to $113.3 million, and net income attributable to common shareholders rose to $17.2 million, or $0.08 per diluted share Consolidated Statements of Income (in thousands, except per share data) | | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Total revenues | $ 113,339 | $ 107,428 | | Rental revenues | $ 80,395 | $ 77,870 | | Total expenses | $ 95,090 | $ 92,313 | | Net income | $ 17,805 | $ 14,960 | | Net income attributable to common shareholders | $ 17,181 | $ 14,097 | | Diluted EPS | $ 0.08 | $ 0.07 | | Dividends declared per common share | $ 0.23 | $ 0.23 | Consolidated Statements of Cash Flows Net cash from operating activities increased to $41.3 million in Q1 2021, while net cash used in investing activities decreased and net cash used in financing activities increased Consolidated Statements of Cash Flows (in thousands) | | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $ 41,301 | $ 34,858 | | Net cash used in investing activities | $ (15,247) | $ (22,076) | | Net cash used in financing activities | $ (24,620) | $ (12,525) | | Net increase in cash and cash equivalents | $ 1,434 | $ 257 | Notes to Consolidated Financial Statements The notes provide detailed information on the company's organization, accounting policies, investment activities, debt structure, and other financial disclosures - The company is a self-managed REIT focused on acquiring, developing, owning, and managing healthcare properties leased to physicians, hospitals, and healthcare delivery systems[36] - In Q1 2021, the company acquired two medical condominium units for $0.7 million, funded a $4.8 million mezzanine loan, closed a $10.5 million construction loan, and sold one medical office facility for $0.5 million[57][60] - As of March 31, 2021, total consolidated debt was approximately $1.4 billion with a weighted average interest rate of 3.49%, and the company was in compliance with all debt covenants[80][78] - The top five tenant relationships account for 20.4% of total Annualized Base Rent (ABR), with CommonSpirit Health affiliates being the largest at 16.6% of total ABR[118][119] - Subsequent to quarter-end, the company acquired a medical condominium for $0.9 million and a medical office facility in Florida for $35.3 million[122] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and results of operations, covering portfolio, strategy, Q1 2021 performance, COVID-19 impact, cash flows, liquidity, and non-GAAP measures Overview and COVID-19 Update As of March 31, 2021, the company's portfolio comprised 262 healthcare properties valued at approximately $4.9 billion with a 96% lease rate, and 99.7% of Q1 billings were collected despite COVID-19 - The portfolio consists of 262 healthcare properties in 31 states, with 14.0 million net leasable square feet, which were 96% leased as of March 31, 2021[126] - As of April 30, 2021, no facilities were closed due to the COVID-19 pandemic, and the company had collected 99.7% of first-quarter billings[134] Results of Operations Total revenues increased 5.5% to $113.3 million in Q1 2021, driven by higher rental revenues and expense recoveries, while net income rose 19.0% to $17.8 million due to lower interest expense Results of Operations Comparison (in thousands) | | 2021 | 2020 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $ 113,339 | $ 107,428 | $ 5,911 | 5.5 % | | Rental revenues | $ 80,395 | $ 77,870 | $ 2,525 | 3.2 % | | Expense recoveries | $ 27,560 | $ 24,876 | $ 2,684 | 10.8 % | | Total expenses | $ 95,090 | $ 92,313 | $ 2,777 | 3.0 % | | Interest expense | $ 13,715 | $ 15,626 | $ (1,911) | (12.2)% | | Operating expenses | $ 33,934 | $ 30,963 | $ 2,971 | 9.6 % | | Net income | $ 17,805 | $ 14,960 | $ 2,845 | 19.0 % | - The decrease in interest expense was primarily due to a lower weighted average effective interest rate on the credit facility, which was 1.1% in Q1 2021 compared to 2.8% in Q1 2020[148][151] Non-GAAP Financial Measures Normalized FFO for Q1 2021 was $57.7 million, or $0.27 per share, and MOB Same-Store Cash NOI grew to $66.9 million, demonstrating operational performance beyond GAAP metrics FFO and Normalized FFO Reconciliation (in thousands, except per share data) | | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net income | $ 17,805 | $ 14,960 | | Adjustments (Depreciation, etc.) | $ 39,863 | $ 38,338 | | FFO applicable to common shares | $ 57,668 | $ 52,781 | | Normalized FFO applicable to common shares | $ 57,668 | $ 52,690 | | FFO per common share | $ 0.27 | $ 0.26 | | Normalized FFO per common share | $ 0.27 | $ 0.26 | MOB Same-Store Cash NOI (in thousands) | | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Cash NOI | $ 80,697 | $ 75,972 | | Adjustments | $ (13,762) | $ (10,628) | | MOB Same-Store Cash NOI | $ 66,935 | $ 65,344 | Liquidity and Capital Resources As of March 31, 2021, the company had $3.9 million in cash and $694.0 million available on its credit facility, with $52.4 million raised from ATM program share sales - As of March 31, 2021, liquidity included $3.9 million in cash and $694.0 million available on the unsecured revolving credit facility[182] - The company has an $850 million unsecured revolving credit facility and a $250 million term loan, with total borrowing capacity of $1.1 billion, expandable to $1.6 billion[191] - In Q1 2021, the Trust sold 2,887,296 common shares under its ATM Program at a weighted average price of $18.32 per share, generating net proceeds of approximately $52.4 million[196] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to interest rate risk, with 88.7% of its $1.4 billion debt fixed-rate, and a 100 basis point LIBOR change would impact annual interest expense by approximately $1.6 million - Total consolidated debt was approximately $1.4 billion with a weighted average interest rate of 3.49%[211] - Including the effect of interest rate swaps, 88.7% of total consolidated debt is fixed-rate, mitigating interest rate risk[206] - A 100 basis point change in LIBOR would change annual interest expense on the $162.0 million of exposed variable-rate debt by approximately $1.6 million[208][211] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2021, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that as of March 31, 2021, the Trust's disclosure controls and procedures are effective at a reasonable assurance level[212] - No changes in the Trust's internal control over financial reporting occurred during the quarter ended March 31, 2021, that have materially affected, or are reasonably likely to materially affect, the controls[213] Part II Other Information Item 1. Legal Proceedings The company is not currently a party to any legal proceedings expected to have a material effect on its business, financial condition, or results of operations - The company is not currently involved in any legal proceedings that are expected to have a material impact[215] Item 1A. Risk Factors No material changes have occurred from the risk factors previously disclosed in the company's 2020 Annual Report on Form 10-K/A - No material changes have occurred from the risk factors disclosed in the 2020 Annual Report[216] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the purchases of equity securities by the company during Q1 2021, primarily for employee withholding tax obligations and unit redemptions Issuer Purchases of Equity Securities (Q1 2021) | Period | Total Number of Shares (or Units) Purchased | Average Price Paid per Share (or Unit) | | :--- | :--- | :--- | | Jan 2021 | 131,110 | $ 17.96 | | Feb 2021 | 162,173 | $ 17.80 | | Mar 2021 | 64,809 | $ 17.14 | | Total | 358,092 | $ 17.74 | - Purchases included the redemption of 116,110 Series A Preferred Units and repurchases of common shares to satisfy employee tax obligations for stock-based compensation[220] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Exhibits filed include CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, and various Inline XBRL documents[222]