During the year ended December 31, 2017, the Company completed 23 acquisitions. A rollforward of the gross investment in land, building and improvements as of December 31, 2017, resulting from these acquisitions is as follows:

 

		Land			Building			Site &; Tenant Improvements			Acquired Lease Intangibles			Gross Investment in Real Estate
Balances as of January 1, 2017		$	17,786		$	179,253		$	2,651		$	7,187		$	206,877
Facility Acquired – Date Acquired:
Cape Coral – 1/10/17			352			7,017			-			-			7,369
Lewisburg – 1/12/17			471			5,819			505			505			7,300
Las Cruces – 2/1/17			396			4,618			-			-			5,014
Prescott – 2/9/17			791			3,821			-			-			4,612
Clermont – 3/1/17			-			4,361			206			868			5,435
Sandusky – 3/10/17			409			3,998			-			-			4,407
Great Bend – 3/31/17			837			23,801			-			-			24,638
Oklahoma City – 3/31/17			2,087			37,714			1,876			7,823			49,500
Sandusky – 4/21/17			98			978			-			-			1,076
Brockport – 6/27/17			413			6,885			492			1,295			9,085
Flower Mound – 6/27/17			581			2,922			382			407			4,292
Sherman facility – 6/30/17			1,601			25,011			-			-			26,612
Sandusky facility – 8/15/17			56			1,215			-			-			1,271
Lubbock facility – 8/18/17			1,303			5,042			947			908			8,200
Germantown – 8/30/17			2,700			8,078			657			4,505			15,940
Austin – 9/25/17			6,958			28,508			1,373			3,811			40,650
Fort Worth – 11/10/17			1,487			3,334			643			786			6,250
Albertville – 11/10/17			866			3,486			1,246			1,202			6,800
Moline – 11/10/17			722			8,175			1,194			1,916			12,007
Lee’s Summit – 12/18/17			428			2,426			646			437			3,937
Amarillo – 12/20/17			1,437			7,254			-			-			8,691
Wyomissing – 12/21/17			487			5,250			-			-			5,737
Saint George – 12/22/17			435			5,372			-			-			5,807
Total Additions1:			24,915			205,085			10,167			24,463			264,630
Balances as of December 31, 2017		$	42,701		$	384,338		$	12,818		$	31,650		$	471,507

 

 

 

 

Lewisburg Facility - On January 12, 2017, the Company purchased a medical office building located in Lewisburg, Pennsylvania, for a purchase price of $7.3 million. Upon the closing of the transaction, the Company assumed two leases. Both leases expire in 2023 and have two five-year tenant renewal options. The following table presents the preliminary purchase price allocation:

 

Land and site improvements		$	681
Building and tenant improvements			6,114
In place leases			373
Leasing costs			132
Total purchase price		$	7,300

 

Clermont Facility - On March 1, 2017, the Company purchased the seller’s interest, as ground lessee, in certain real property and a medical building located in Clermont, Florida., for a purchase price of $5.23 million. The ground lease has a remaining term of approximately 71 years. Upon closing of this acquisition, the Company assumed four subleases: two subleases with South Lake Hospital, Inc. each expiring in 2024, each with two, five-year tenant renewal options, one sublease with Orlando Health, Inc. expiring in 2021 with two, five-year renewal options, and one sublease with Vascular Specialists of Central Florida expiring in 2024 with two, five-year renewal options. The following table presents the preliminary purchase price allocation:

 

Site improvements		$	145
Building and tenant improvements			4,422
In place leases			255
Above market lease intangibles			488
Leasing costs			125
Below market lease intangibles			(210)
Total purchase price		$	5,225

 

Oklahoma City Facilities - On March 31, 2017, the Company purchased a surgical hospital, a physical therapy center (together with the hospital, “OCOM South”), and an outpatient ambulatory surgery center (“OCOM North”) located in Oklahoma City, Oklahoma for an aggregate purchase price of $49.5 million. The purchase price consisted of $44.4 million for OCOM South and $5.1 million for OCOM North.

 

Upon closing of the acquisition of OCOM South, the Company entered into a new lease (the “Master Lease”) with the seller that expires in 2022 and assumed, as a sublease to the Master Lease, the existing absolute triple-net lease (the “OCOM South Lease”) with Oklahoma Center for Orthopedic &; Multi-Specialty Surgery, LLC (“OCOM”) with a remaining term expiring in 2034, subject to three consecutive five-year tenant renewal options. Upon the expiration of the Master Lease, the OCOM South Lease will become a direct lease with the Company. A portion of the rent under the OCOM South sublease is guaranteed by United Surgical Partners International, Inc. and INTEGRIS Health, Inc.

 

Upon closing of the acquisition of OCOM North, the Company assumed the existing lease. The lease has a remaining term expiring in 2022, with two consecutive five-year tenant renewal options. The following table presents the preliminary purchase price allocation:

 

Land and site improvements		$	2,953
Building and tenant improvements			38,724
Above market lease intangibles			759
In place leases			4,392
Leasing costs			2,672
Total purchase price		$	49,500

 

Brockport Facility - On June 27, 2017, the Company purchased a medical office building located in Brockport, New York for a purchase price of $8.67 million. Upon the closing of this acquisition, the Company assumed the existing lease with The Unity Hospital of Rochester. The lease has a remaining term expiring 2030, with three consecutive five-year tenant renewal options. The following table presents the preliminary purchase price allocation:

 

Land and site improvements		$	693
Building and tenant improvements			7,097
In place leases			841
Leasing costs			454
Below market lease intangible			(415)
Total purchase price		$	8,670

Flower Mound Facility - On June 27, 2017, the Company purchased a medical office building located in Flower Mound, Texas for a purchase price of $4.1 million. Upon the closing of this acquisition, the Company assumed the existing lease with Lone Star Endoscopy Center, LLC. The lease has a remaining term expiring in 2026, with two consecutive five-year tenant renewal options. The following table presents the preliminary purchase price allocation:

 

Land and site improvements		$	730
Building and tenant improvements			3,155
In place leases			222
Leasing costs			185
Below market lease intangible			(242)
Total purchase price		$	4,050

Lubbock Facility - On August 18, 2017, the Company purchased a medical office building located in Lubbock, Texas for a purchase price of $8.2 million. Upon the closing of this acquisition, the Company entered into a new lease with Lubbock Heart Hospital, LLC. The lease has a remaining term expiring 2029,with two consecutive five-year tenant renewal options. The following table presents the preliminary purchase price allocation:

 

Land and site improvements		$	1,567
Building and tenant improvements			5,725
In-place leases			414
Leasing costs			494
Total purchase price		$	8,200

Germantown Facility - On August 30, 2017, the Company purchased a medical office building located in Germantown, Tennessee for a purchase price of $15.94 million. Upon the closing of this acquisition, the Company assumed three existing leases with the Urology Center of the South. The leases have remaining terms of approximately seven years and each lease has two consecutive five-year tenant renewal options. The following table presents the preliminary purchase price allocation:

 

Land and site improvements		$	3,050
Building and tenant improvements			8,385
Above market lease intangible			3,284
In-place leases			587
Leasing costs			634
Total purchase price		$	15,940

 

Austin Facility - On September 25, 2017, the Company purchased a rehabilitation hospital located in Austin, Texas and approximately 1.27 acres of land adjacent to the hospital that has been planned to accommodate the development of a long-term, acute care hospital for an aggregate purchase price of $40.65 million. Upon the closing of the acquisition of the facility, the Company assumed the existing lease with CTRH, LLC. The lease has a remaining term of approximately 9.6 years, with four consecutive five-year tenant renewal options, and 80% of the lease payments are guaranteed by Kindred Healthcare. The following table presents the preliminary purchase price allocation:

 

Land and site improvements		$	7,223
Building and tenant improvements			29,616
Above market lease intangible			246
In-place leases			1,680
Leasing costs			1,885
Total purchase price		$	40,650

Fort Worth Facility - On November 10, 2017, the Company purchased a medical office building located in Fort Worth, Texas for a purchase price of $6.25 million. Upon the closing of the acquisition, the Company assumed the existing lease with Texas Digestive Disease Consultants, PLLC. The lease has a remaining term of approximately 10 years with two consecutive five year tenant renewal options. The following table presents the preliminary purchase price allocation:

 

Land and site improvements		$	1,738
Building and tenant improvements			3,726
Above market lease intangible			126
In-place leases			314
Leasing costs			346
Total purchase price		$	6,250

Albertville Facility - On November 10, 2017, the Company purchased a medical office building located in Albertville, Minnesota for a purchase price of $6.8 million. Upon the closing of the acquisition, the Company assumed the existing lease with Stellis Health, P.A. The lease has a remaining term of approximately 11 years with two consecutive five-year extension options. The following table presents the preliminary purchase price allocation:

Moline Facility - On November 10, 2017, the Company purchased a medical office building located in Moline, Illinois for a purchase price of $11.9 million. Upon the closing of the acquisition, the Company assumed the existing leases with Heartland Clinic, LLC, RSC Illinois, LLC, and Valley Laboratories, L.L.C. Each lease has a remaining term of approximately 16 years with no tenant renewal options. The following table presents the preliminary purchase price allocation:

 

Cape Coral Facility - On January 10, 2017, the Company purchased a medical office building located in Cape Coral, Florida, for a purchase price of $7.25 million. Upon the closing of the acquisition, the Company entered into a new 10-year lease with The Sypert Institute, P.A. with three consecutive five-year tenant renewal options.

Las Cruces Facility - On February 1, 2017, the Company purchased a medical office building located in Las Cruces, New Mexico for a purchase price of $4.88 million. Upon closing of this acquisition, the Company entered into a new 12-year lease with Las Cruces Orthopedic Associates with four consecutive five-year tenant renewal options.

Prescott Facility - On February 9, 2017, the Company purchased a medical office building located in Prescott, Arizona, for a purchase price of $4.5 million. Upon the closing of this acquisition, the Company entered into a new 10-year lease with Thumb Butte Medical Center, PLLC with two consecutive seven-year renewal options.

Sandusky Facility - On March 10, 2017, the Company purchased one, out of a total of seven, properties for a purchase price of approximately $4.3 million. Upon the closing of this acquisition, the Company entered into a new 11-year master lease with the Northern Ohio Medical Specialists (NOMS) with four consecutive five-year tenant renewal options.

Great Bend Facility - On March 31, 2017, the Company purchased an acute-care hospital located in Great Bend, Kansas for a purchase price of $24.5 million. Upon the closing of the acquisition, the Company entered into a new 15-year lease with Great Bend Regional Hospital with two consecutive ten-year renewal options.

Sandusky Facility - On April 21, 2017, the Company purchased a medical property (out of a total portfolio of seven medical properties) in Sandusky, Ohio for a purchase price of approximately $1.1 million. Upon the closing of this acquisition, the Company amended the existing master lease with NOMS to include the Sandusky facility

Sherman Facility - On June 30, 2017, the Company purchased a rehabilitation hospital and long-term acute care facility located in Sherman, Texas for a purchase price of $26 million. Upon closing of this acquisition, the Company entered into a new 20-year lease with SDB Partners, LLC. with two consecutive 10-year tenant renewal options.

Sandusky Facility (Ballville Facility) - On August 15, 2017, the Company purchased a medical office building located in Ballville, Ohio for a purchase price of $1.2 million. Upon the closing of this acquisition, the Company amended the existing master lease with NOMS to include the Ballville facility.

Amarillo Facility - On December 20, 2017, the Company purchased a medical office building located in Amarillo, Texas for a purchase price of $8.61 million. Upon the closing of this acquisition, the Company entered into a new 12-year lease with Amarillo Bone &; Joint Clinic PLLC. with two consecutive 10-year tenant renewal options.

Wyomissing Facility - On December 21, 2017, the Company purchased a medical office building located in Wyomissing, Pennsylvania for a purchase price of $5.6 million. Upon the closing of this acquisition, the Company entered into a new 10-year lease with Berks-Schuylkill Respiratory Specialists, Ltd. with two consecutive five year tenant renewal options.

Saint George Facility - On December 22, 2017, the Company purchased a medical office building located in St. George, Utah for a purchase price of $5.715 million. Upon the closing of this acquisition, the Company entered into a new 12-year lease with Jason A. Ahee, M.D. P.C. doing business as Zion Eye Institute with four consecutive five-year tenant renewal options.

 

		Land			Building			Site &; Tenant Improvements			Acquired Lease Intangibles			Gross Investment in Real Estate
Balances as of January 1, 2016		$	4,564		$	51,574		$	-		$	-		$	56,138
Facility Acquired – Date Acquired:
Plano – 1/28/16			1,050			16,696			-			-			17,746
Westland – 3/31/16			230			4,520			-			-			4,750
Melbourne – 3/31/16			1,200			14,250			-			-			15,450
Reading – 7/20/16			1,440			7,940			-			-			9,380
East Orange – 9/29/16			2,150			10,112			-			-			12,262
Watertown – 9/30/16			1,100			8,002			-			-			9,102
Sandusky – 10/7/16			229			4,519			-			-			4,748
Carson City – 10/31/16			761			3,268			-			-			4,029
Ellijay – 12/16/16			777			2,929			544			870			5,120
HealthSouth – 12/20/16			4,285			55,443			2,107			6,317			68,152
Total Additions 1:			13,222			127,679			2,651			7,187			150,739
Balances as of December 31, 2016		$	17,786		$	179,253		$	2,651		$	7,187		$	206,877

 

 

Additionally, during the year ended December 31, 2015 the Company funded acquisitions in the amount of $31,764.

 

Westland Facility - On March 31, 2016, the Company purchased a medical office building and ambulatory surgery center located in Westland, Michigan for an aggregate purchase price of $4.75 million. Upon the closing of this acquisition, the Company entered into a new lease with The Surgical Institute of Michigan, LLC. The lease has a remaining term expiring in 2026, with two consecutive 10-year tenant renewal options. No intangible assets or liabilities were identified in connection with this acquisition and accordingly the purchase price was allocated entirely to land and building.

Ellijay Facilities - On December 16, 2016, the Company purchased one medical office building and two ancillary healthcare-related buildings, located in Ellijay, Georgia, for a purchase price of $4.9 million. Upon the closing of this acquisition, the Company assumed the existing lease with Piedmont Mountainside Hospital, Inc. The lease has a remaining term expiring in 2026, with two consecutive five-year tenant renewal options. The following table presents the preliminary purchase price allocation:

Encompass (formerly HealthSouth) Facilities - Encompass East Valley Rehabilitation Hospital – Mesa, AZ - On December 20, 2016, the Company purchased a rehabilitation hospital located in Mesa, Arizona for a purchase price of $22.4 million. Upon the closing of this acquisition, the Company assumed the existing lease with Encompass Mesa Rehabilitation Hospital, LLC. The lease has a remaining term expiring in 2024 with four consecutive five-year tenant renewal options.

Encompass Rehabilitation Hospital of Altoona – Altoona, PA - On December 20, 2016, the Company purchased the a rehabilitation hospital located in Altoona, Pennsylvania for a purchase price of $21.5 million. Upon the closing of this acquisition, the Company assumed from existing lease with Encompass. The lease has a remaining term expiring in 2021 with two consecutive five-year tenant renewal options.

Encompass Rehabilitation Hospital of Mechanicsburg – Mechanicsburg, PA - On December 20, 2016, the Company (i) purchased a rehabilitation hospital in Mechanicsburg, Pennsylvania for a purchase price of $24.2 million; and (ii) accepted an assignment of the ground lessee’s interest in the ground lease dated May 1, 1996 from the assignor, whereby PENNSYLVANIA HRT, INC. ground leased the property to HR ACQUISITION OF PENNSYLVANIA, INC. Upon the closing of this acquisition, the Company assumed the existing lease with Encompass. The lease has a remaining term expiring in 2021 with two consecutive five-year tenant renewal options. Encompass has the option under the lease to purchase the property at the end of the initial lease term and at the end of each renewal term thereof, if any, upon the terms and conditions set forth in the lease. The following table presents the preliminary purchase price allocation:

  

Plano Facility - On January 28, 2016, the Company purchased a surgical hospital located in Plano, Texas for $17.5 million. Upon the closing of this acquisition, the Company entered into a new 20-year lease with Star Medical Center, LLC. with two consecutive ten-year tenant renewal options.

Melbourne Facility - On March 31, 2016, the Company purchased a medical office building located in Melbourne, Florida for a purchase price of $15.45 million. Upon the closing of this acquisition, the Company entered into a new 10-year lease with Marina Towers, LLC with two consecutive five-year tenant renewal options.

Reading Facilities - On July 20, 2016, the Company purchased a medical office building and eye surgery center located in Wyomissing, Pennsylvania for a combined purchase price of $9.20 million. Upon the closing of the transaction, the Company entered into two new 10-year leases for the medical office building with Berks Eye Physicians &; Surgeons, Ltd., and the surgery center with Ridgewood Surgery Associates, LLC both with two consecutive five-year tenant renewal options.

East Orange Facility - On September 29, 2016, the Company purchased a medical office building in East Orange, New Jersey for a purchase price of $11.86 million. Upon the closing of this acquisition, the Company entered into a new 10-year lease with Prospect Medical Holdings, Inc. with four consecutive five-year tenant renewal options

Watertown Facilities - On September 30, 2016, the Company purchased a clinic, an administration building, and a medical office building located in Watertown South Dakota for a purchase price of $9.0 million. Upon the closing of the acquisition, the Company entered into a new 15-year lease with the Brown Clinic with two consecutive five-year tenant renewal options.

Sandusky Facilities - On September 29, 2016, the Company purchased a portfolio of five of the seven medical office buildings located in or near Sandusky, Ohio for a purchase price of $4.6 million. Upon the closing of this acquisition, the Company entered into a new 11-year lease with the Northern Ohio Medical Specialists, LLC with four consecutive five-year tenant renewal options.

Carson City Facilities - On October 31, 2016, the Company purchased two medical office buildings located in Carson City, Nevada for a purchase price of $3.8 million. Upon the closing of the acquisition, the Company assumed the existing lease with the Carson Medical Group. The lease has a remaining term expiring in 2023, with one five-year tenant renewal option.

		Year Ended December 31,
		2017			2016
Amortization expense related to in-place leases		$	1,542		$	35
Amortization expense related to leasing costs		$	530		$	8
Decrease in rental revenue related to above market ground lease		$	6		$	-
Decrease in rental revenue related to above market leases		$	220		$	-
Increase in rental revenue related to below market leases		$	(97)		$	(1)