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News Release: Executed Purchase and Sale Agreements Totaling $166.0 Million

Clearview Cancer Institute, Huntsville, Ala. (Photo courtesy of Robins & Morton)

MILWAUKEE–(BUSINESS WIRE) – Physicians Realty Trust (NYSE: DOC) (the “Company,” the “Trust,” “we,” “our,” “us,” and “DOC”), a self-managed healthcare real estate investment trust, is announcing that the Company has completed acquisitions of eight medical office facilities since June 30, 2017. The facilities represent approximately 417,753 square feet with a total purchase price of $129.7 million at an average first year cash yield of 6.1%, and bring year to date investment activity to $966.2 million. The Company is also announcing fully executed purchase and sale agreements to acquire an additional two medical office facilities totaling approximately 390,033 square feet for $166.0 million at an average first year cash yield of 4.8%.

John T. Thomas, President and Chief Executive Officer of the Trust, commented, “Our growth plans are not only intact, they are thriving. We have and continue to grow and improve the finest medical office portfolio in the United States. As we have throughout our 4 year history, our growth continues to come from our deep-seated relationships in the healthcare industry and off-market negotiated transactions. We believe this strategy produces the highest quality medical office real estate investments at the best returns for our company and shareholders. We are well on track to achieve our 2017 acquisition guidance of $1.2 to $1.4 billion of new investments at very attractive yields. These investments also reflect our continued effort to source and acquire assets anchored by strong credits, occupying younger, larger, strategically located real estate to meet the health needs of the communities they serve for years to come.”

“We also recognize the tireless and hard work of our providers located in the Houston, Texas area. While none of our medical facilities in the area suffered any material damage or flooding from Hurricane Harvey, the providers who work in our facilities and the patients that depend on them for care, have suffered greatly. Our hearts and prayers continue to be with them as they recover, and we are happy to report that our facilities are fully operational to provide them access to care as and when needed,” Mr. Thomas continued. “We have also been working with our tenants in the path of Hurricane Irma to prepare, and pray for the safety and well-being of their families and patients. We are assessing each of our facilities in the aftermath, and will provide an update of any material damage or interruption of operations as our providers begin to return to work.”

Recent Acquisitions

Clearview Cancer Institute (CCI) – On August 4, 2017, the Company closed on the acquisition of a 112,986 square foot medical office facility in Huntsville, Alabama for a purchase price of approximately $53.3 million. This facility is 100% leased by the 14-physician CCI practice and is northern Alabama’s leading cancer treatment facility. One of the top five fastest growing cities in the Southeast, Huntsville is known for its high tech industry, stemming from its deep history with NASA and the Marshall Space Flight Center. This acquisition was brought to DOC by Anchor Health Properties who currently manages the DOC-owned Maury Regional MOB in Spring Hill, Tennessee. CCI was purpose-built for the tenant’s hematology and oncology needs and features heavy clinical use services including three linear accelerators, chemotherapy treatment centers, and imaging. The practice has existing relationships with all hospitals in northern Alabama, and DOC’s new acquisition is the flagship practice location, which also has two other satellite locations. The first year unlevered yield on this investment is expected to be approximately 6.3%.

Northside Cherokee / Towne Lake – On August 15, 2017, the Company closed on the acquisition of a 102,977 square foot medical office facility in Atlanta, Georgia for a purchase price of approximately $38.0 million. This facility is 100% leased to Northside Hospital through a long-term, NNN lease extending through 2028. Onsite services include urgent care, cardiology, general surgery, primary care, family medicine, urology, and diagnostic imaging services. Northside Hospital is one of Georgia’s largest and most respected health systems and is committed to balancing clinical excellence with safe, high-quality, compassionate patient care, serving more than 2.5 million patients annually through three hospitals, over 150 outpatient locations, and nearly 15,000 employees. Towne Lake was in the original Duke Realty Healthcare portfolio and was brought to DOC by Northside after it exercised its Right of First Refusal. Northside matched the price allocated to the facility by the potential Buyer and offered DOC additional lease enhancements. The stabilized unlevered yield on this investment is expected to be approximately 5.1%.

HonorHealth Mesa MOB – On August 15, 2017, the Company closed on the acquisition of a 14,400 square foot medical office facility in Mesa, Arizona for a purchase price of approximately $4.8 million. This facility is 100% leased and is a full-service primary care facility, with HonorHealth’s build-out completed just last year. HonorHealth offers convenient access to healthcare with a large network of high-quality primary care and specialty physicians, as well as other healthcare providers. The health system was formed in March 2015 after the merger of Scottsdale Healthcare and the John C. Lincoln Health Network and now encompasses more than 3,400 expert physicians, 11,600 dedicated employees, and over 3,000 caring volunteers working in partnership. HonorHealth is rated “A2” by Moody’s. This closing marks DOC’s fifth transaction with HonorHealth. The first year unlevered yield on this investment is expected to be approximately 6.0%.

CHI Tranche 2 (five properties) – On August 24, 2017 and August 31, 2017, the Company closed on a total of five properties, located in four states, comprising of 187,390 square feet, for a purchase price of approximately $33.7 million. These facilities are 97% leased on a weighted average basis and are part of the Catholic Health Initiatives (“CHI”) MOB portfolio. CHI is a nonprofit, faith-based health system and is the nation’s third-largest nonprofit health system, and is rated “Baa1” by Moody’s. CHI operates in 17 states, comprising 104 hospitals, including four academic health centers and major teaching hospitals as well as 30 critical-access facilities. These properties represent the five remaining properties of the second CHI tranche. The first year unlevered blended yield on these five properties is expected to be approximately 6.8%.

Pending Acquisitions

Northside Center Pointe I & II – As previously announced, the Company has entered into a contract to purchase a medical office facility located in Atlanta, Georgia comprising of 363,174 square feet for a purchase price of $156.0 million. Upon closing on Northside Center Pointe I & II, the first year unlevered cash yield is expected to be 4.7%. The company expects the acquisition of Northside Center Pointe I & II will be completed on or before September 15, 2017.

Franklin ASC/MOB – The Company has entered into a contract to purchase a medical office facility located in Franklin, Tennessee comprising of 26,859 square feet for a purchase price of $10.0 million. The facility is anchored by an ambulatory surgery center owned by joint venture including USPI, St. Thomas Hospital (a member of Ascension Health (Moody’s: “Aa2”) and physicians who perform surgery at the facility. This is our 12th facility anchored by USPI, a subsidiary of Tenet Health (NYSE:THC). Upon closing, the first year unlevered cash yield on this investment is expected to be 6.7%.

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 conducts its business through an UPREIT structure in which its properties are owned by Physicians Realty L.P., a Delaware limited partnership (the “operating partnership”), directly or through limited partnerships, limited liability companies or other subsidiaries. The Company is the sole general partner of the operating partnership and, as of June 30, 2017, owned approximately 96.7% of the partnership interests in our operating partnership (“OP Units”).

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.

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