REIT Report: Physicians Realty Trust holds IPO

Healthcare REIT goes public with nearly $120 million and a 19-asset portfolio

By Murray W. Wolf

Add another name to the growing list of healthcare real estate investment trusts (REITs): Physicians Realty Trust.

The Milwaukee-based REIT begn trading on the New York Stock Exchange July 19 under the stock symbol DOC. Five days later, Physicians Realty Trust announced that it had completed its initial public offering (IPO) of 10,434,782 common shares of stock at a price of $11.50 per share, which translates to just a hair less than $120 million.

Although several private and public healthcare REITs have emerged in recent years, Physicians Realty Trust has a little more star power than most. At the helm is CEO John T. Thomas, a familiar face in healthcare real estate (HRE) circles and a man with a particularly impressive pedigree in the space. Mr. Thomas has a blue chip resumé with previous stints as an executive VP with Health Care REIT Inc. (NYSE: HCN), the former president of Cirrus Health and the former general counsel of Baylor Health Care System. Among other luminaries, Physicians Realty Trust’s board also includes Tommy Thompson, former Republican governor of Wisconsin and past U.S. Department of Health & Human Services secretary under former President George W. Bush.

According to a prospectus filed July 19 with the U.S. Securities and Exchange Commission (SEC), the new REIT was slated to open for business with a 10-state, 19-building medical office building (MOB) portfolio of totaling about 528,000 square feet. The properties were to be acquired from real estate funds managed by B.C. Ziegler & Co., a Chicago-based investment firm with roots in Wisconsin. In exchange for their interest in the 19 buildings, the Ziegler funds were to receive ownership units in the partnership that will operate the properties.

In addition, Physicians Realty Trust planned to use $36.9 million of the IPO proceeds to repay mortgage debt secured by some of the MOBs – although we’re not sure that has happened yet because Physicians Realty Trust is now subject to the usual SEC-required “quiet period” that lasts for 40 calendar days after an IPO’s first day of trading.
The rest of the proceeds are earmarked for “general corporate purposes” and, of course, more acquisitions. Physicians Realty Trust acknowledged prior to the IPO that it was already in active discussions with the owners of several other HRE assets, and had signed letters of intent with two of them.

Wunderlich Securities Inc., Oppenheimer & Co. Inc., Janney Montgomery Scott LLC, JMP Securities LLC and BB&T Capital Markets, a division of BB&T Securities LLC, served as joint book-running managers for the Physicians Realty Trust IPO. Compass Point Research & Trading LLC, J.J.B. Hilliard, W.L. Lyons LLC and B.C. Ziegler & Co. served as co-managers for the offering.

Healthcare Real Estate Insights™ will be taking a closer look this new healthcare REIT as soon as the SEC-mandated quiet period comes to a close and company executives are free to comment. 

Disclaimer: The author has no financial position in any of the companies mentioned and this article does not constitute an investment recommendation.