doc-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-36007

PHYSICIANS REALTY TRUST

(Exact Name of Registrant as Specified in its Charter)


Maryland		46-2519850
(State of Organization)		(IRS Employer Identification No.)

309 N. Water Street, Suite 500		53202
Milwaukee,	Wisconsin
(Address of Principal Executive Offices)		(Zip Code)

(414) 367-5600

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock, $0.01 par value per share

DOC

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The number of Physicians Realty Trust’s common shares outstanding as of April 27, 2022 was 225,296,089.

PHYSICIANS REALTY TRUST

Quarterly Report on Form 10-Q

for the Quarter Ended March 31, 2022

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		Page Number
Part I	Financial Information

Item 1	Financial Statements (Unaudited)


	Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	3
	Consolidated Statements of Income for the Three Months Ended March 31, 2022 and 2021	4
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2022 and 2021	5
	Consolidated Statements of Equity for the Three Months Ended March 31, 2022 and 2021	6
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021	8









	Notes to Consolidated Financial Statements	9

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4	Controls and Procedures	34

Part II	Other Information

Item 1	Legal Proceedings	35
Item 1A	Risk Factors	35
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 6	Exhibits	36

SIGNATURES		37

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts may be forward-looking statements within the meaning of the federal securities laws. In particular, statements pertaining to our capital resources, property performance, and results of operations contain forward-looking statements. Likewise, all of our statements regarding anticipated growth in our funds from operations and anticipated market conditions, demographics, and results of operations are forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology such as “believe,” “expect,” “outlook,” “continue,” “project,” “may,” “will,” “should,” “seek,” “approximately,” “intend,” “plan,” “pro forma,” “estimate,” or “anticipate” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans, expectations, or intentions.

These forward-looking statements reflect the views of our management regarding current expectations and projections about future events and are based on currently available information. These forward-looking statements are not guarantees of future performance and involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data, or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

•the unknown duration and economic, operational, and financial impacts of the global outbreak of a novel strain of the coronavirus and its variants, including the Delta or Omicron variants and any future variants that may emerge, (the “COVID-19 pandemic”) and the actions taken by governmental authorities or others in connection with the COVID-19 pandemic will have on the Company’s business;

•general economic conditions, including inflation;

•adverse economic or real estate developments, either nationally or in the markets where our properties are located;

•our failure to generate sufficient cash flows to service our indebtedness or to pay down or refinance our indebtedness;

•fluctuations in interest rates and increased operating costs;

•the availability, terms and deployment of debt and equity capital, including our unsecured revolving credit facility;

•our ability to make distributions on our common shares;

•general volatility of the market price of our common shares;

•our increased vulnerability economically due to the concentration of our investments in health care properties;

•our geographic concentration in Texas causes us to be particularly exposed to downturns in the Texas economy or other changes in Texas market conditions;

•changes in our business or strategy;

•our dependence upon key personnel whose continued service is not guaranteed;

•our ability to identify, hire, and retain highly qualified personnel in the future;

•the degree and nature of our competition;

•changes in governmental regulations or interpretations thereof, such as real estate and zoning laws and increases in real property tax rates, taxation of real estate investment trusts (“REITs”), and similar matters;

•defaults on or non-renewal of leases by tenants;

•decreased rental rates or increased vacancy rates;

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•difficulties in identifying health care properties to acquire and completing acquisitions;

•competition for investment opportunities;

•any adverse effects to the business, financial position or results of operations of CommonSpirit Health, or one or more of the CommonSpirit Health-affiliated tenants, that impact the ability of CommonSpirit Health-affiliated tenants to pay us rent;

•the impact of our investments in joint ventures we have and may make in the future;

•the financial condition and liquidity of, or disputes with, any joint venture and development partners with whom we may make co-investments in the future;

•cybersecurity incidents could disrupt our business and result in the compromise of confidential information;

•our ability to operate as a public company;

•changes in health care laws or government reimbursement rates;

•changes in accounting principles generally accepted in the United States (“GAAP”);

•lack of or insufficient amounts of insurance;

•other factors affecting the real estate industry generally;

•our failure to maintain our qualification as a REIT for U.S. federal income tax purposes;

•limitations imposed on our business and our ability to satisfy complex rules in order for us to qualify as a REIT for U.S. federal income tax purposes; and

•other factors that may materially adversely affect us, or the per share trading price of our common shares, including:

•the number of our common shares available for future issuance or sale;

•our issuance of equity securities or the perception that such issuance might occur;

•future debt;

•failure of securities analysts to publish research or reports about us or our industry; and

•securities analysts’ downgrade of our common shares or the health care-related real estate sector.

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events, or other changes after the date of this report, except as required by applicable law. You should not place undue reliance on any forward-looking statements that are based on information currently available to us or the third parties making the forward-looking statements. For a further discussion of these and other factors that could impact our future results, performance or transactions, see Part I, Item 1A (Risk Factors) of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the Securities and Exchange Commission (the “Commission”) on February 24, 2022 (the “2021 Annual Report”).

As used in this report, unless the context otherwise requires, references to “we,” “us,” “our,” and the “Company” refer to Physicians Realty Trust (the “Trust”), a Maryland real estate investment trust, and Physicians Realty L.P. (the “Operating Partnership”), a Delaware limited partnership and the consolidated subsidiary of the Trust through which we conduct our business.

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PART I. Financial Information

Item 1. Financial Statements

Physicians Realty Trust

Consolidated Balance Sheets

(In thousands, except share and per share data)


	March 31, 2022		December 31, 2021
	(unaudited)
ASSETS
Investment properties:
Land and improvements	$	235,216	$	235,453
Building and improvements	4,612,574		4,612,561
Tenant improvements	89,768		86,018
Acquired lease intangibles	498,221		498,221
	5,435,779		5,432,253
Accumulated depreciation	(867,799)		(821,036)
Net real estate property	4,567,980		4,611,217
Real estate held for sale	2,113		1,964
Right-of-use lease assets, net	234,345		235,483
Real estate loans receivable, net	93,176		117,844
Investments in unconsolidated entities	75,669		69,793
Net real estate investments	4,973,283		5,036,301
Cash and cash equivalents	2,729		9,876
Tenant receivables, net	5,783		4,948
Other assets	134,248		131,584
Total assets	$	5,116,043	$	5,182,709
LIABILITIES AND EQUITY
Liabilities:
Credit facility	$	249,075	$	267,641
Notes payable	1,464,358		1,464,008
Mortgage debt	179,886		180,269
Accounts payable	1,399		6,651
Dividends and distributions payable	56,689		57,246
Accrued expenses and other liabilities	79,013		86,254
Lease liabilities	104,739		104,957
Acquired lease intangibles, net	21,111		21,569
Total liabilities	2,156,270		2,188,595

Redeemable noncontrolling interests - partially owned properties	6,335		7,081

Equity:
Common shares, $0.01 par value, 500,000,000 common shares authorized, 225,293,058 and 224,678,116 common shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	2,253		2,247
Additional paid-in capital	3,615,884		3,610,954
Accumulated deficit	(814,492)		(776,001)
Accumulated other comprehensive income (loss)	487		(892)
Total shareholders’ equity	2,804,132		2,836,308
Noncontrolling interests:
Operating Partnership	148,226		150,241
Partially owned properties	1,080		484
Total noncontrolling interests	149,306		150,725
Total equity	2,953,438		2,987,033
Total liabilities and equity	$	5,116,043	$	5,182,709

The accompanying notes are an integral part of these consolidated financial statements.

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Physicians Realty Trust

Consolidated Statements of Income

(In thousands, except share and per share data) (Unaudited)


	Three Months Ended March 31,
		2022		2021
Revenues:
Rental and related revenues		$	126,676	$	107,955
Interest income on real estate loans and other		3,714		5,384
Total revenues		130,390		113,339
Expenses:
Interest expense		16,823		13,715
General and administrative		10,293		9,465
Operating expenses		41,752		33,934
Depreciation and amortization		47,260		37,976

Total expenses		116,128		95,090
Income before equity in loss of unconsolidated entities and loss on sale of investment properties, net:		14,262		18,249
Equity in loss of unconsolidated entities		(166)		(420)
Loss on sale of investment properties, net		(153)		(24)
Net income		13,943		17,805
Net income attributable to noncontrolling interests:
Operating Partnership		(692)		(459)
Partially owned properties (1)		(159)		(152)
Net income attributable to controlling interest		13,092		17,194
Preferred distributions		—		(13)
Net income attributable to common shareholders		$	13,092	$	17,181
Net income per share:
Basic		$	0.06	$	0.08
Diluted		$	0.06	$	0.08
Weighted average common shares:
Basic		225,069,208		210,529,698
Diluted		238,340,243		217,322,425

Dividends and distributions declared per common share		$	0.23	$	0.23

(1)Includes amounts attributable to redeemable noncontrolling interests.

The accompanying notes are an integral part of these consolidated financial statements.

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Physicians Realty Trust

Consolidated Statements of Comprehensive Income

(In thousands) (Unaudited)


	Three Months Ended March 31,
		2022		2021
Net income		$	13,943	$	17,805
Other comprehensive income:
Change in fair value of interest rate swap agreements, net		1,379		797
Total other comprehensive income		1,379		797
Comprehensive income		15,322		18,602
Comprehensive income attributable to noncontrolling interests - Operating Partnership		(761)		(480)
Comprehensive income attributable to noncontrolling interests - partially owned properties		(159)		(152)
Comprehensive income attributable to common shareholders		$	14,402	$	17,970

The accompanying notes are an integral part of these consolidated financial statements.

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Physicians Realty Trust

Consolidated Statements of Equity

(In thousands) (Unaudited)


	Par Value		Additional Paid in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity		Operating Partnership Noncontrolling Interest		Partially Owned Properties Noncontrolling Interest		Total Noncontrolling Interests		Total Equity
Balance at December 31, 2021	$	2,247	$	3,610,954	$	(776,001)	$	(892)	$	2,836,308	$	150,241	$	484	$	150,725	$	2,987,033

Net proceeds from sale of common shares	3		5,029		—		—		5,032		—		—		—		5,032
Restricted share award grants, net	3		118		(421)		—		(300)		—		—		—		(300)
Purchase of OP Units	—		—		—		—		—		(184)		—		(184)		(184)

Dividends/distributions declared	—		—		(51,879)		—		(51,879)		(2,740)		—		(2,740)		(54,619)


Contributions	—		—		—		—		—		—		569		569		569
Distributions	—		—		—		—		—		—		(55)		(55)		(55)
Change in market value of Redeemable Noncontrolling Interest in Operating Partnership	—		—		717		—		717		—		—		—		717



Change in fair value of interest rate swap agreement	—		—		—		1,379		1,379		—		—		—		1,379
Adjustment for Noncontrolling Interests ownership in Operating Partnership	—		(217)		—		—		(217)		217		—		217		—


Net income	—		—		13,092		—		13,092		692		82		774		13,866
Balance as of March 31, 2022	$	2,253	$	3,615,884	$	(814,492)	$	487	$	2,804,132	$	148,226	$	1,080	$	149,306	$	2,953,438

The accompanying notes are an integral part of these consolidated financial statements.

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Physicians Realty Trust

Consolidated Statements of Equity

(In thousands) (Unaudited)


	Par Value		Additional Paid in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity		Operating Partnership Noncontrolling Interest		Partially Owned Properties Noncontrolling Interest		Total Noncontrolling Interests		Total Equity
Balance at December 31, 2020	$	2,096	$	3,303,231	$	(658,171)	$	(5,859)	$	2,641,297	$	73,302	$	403	$	73,705	$	2,715,002

Net proceeds from sale of common shares	28		52,404		—		—		52,432		—		—		—		52,432
Restricted share award grants, net	4		(333)		(664)		—		(993)		—		—		—		(993)
Purchase of OP Units	—		—		—		—		—		(269)		—		(269)		(269)

Dividends/distributions declared	—		—		(49,011)		—		(49,011)		(1,243)		—		(1,243)		(50,254)
Preferred distributions	—		—		(13)		—		(13)		—		—		—		(13)


Distributions	—		—		—		—		—		—		(73)		(73)		(73)
Change in market value of Redeemable Noncontrolling Interest in Operating Partnership	—		(23)		896		—		873		—		—		—		873

Change in fair value of interest rate swap agreements	—		—		—		797		797		—		—		—		797
Adjustment for Noncontrolling Interests ownership in Operating Partnership	—		1,136		—		—		1,136		(1,136)		—		(1,136)		—


Net income	—		—		17,194		—		17,194		459		76		535		17,729
Balance as of March 31, 2021	$	2,128	$	3,356,415	$	(689,769)	$	(5,062)	$	2,663,712	$	71,113	$	406	$	71,519	$	2,735,231

The accompanying notes are an integral part of these consolidated financial statements.

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Physicians Realty Trust

Consolidated Statements of Cash Flows

(In thousands) (Unaudited)


	Three Months Ended March 31,
	2022		2021
Cash Flows from Operating Activities:
Net income	$	13,943	$	17,805
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	47,260		37,976
Amortization of deferred financing costs	579		581
Amortization of lease inducements and above/below-market lease intangibles	1,575		1,143
Straight-line rental revenue/expense	(2,154)		(2,725)
Amortization of discount on unsecured senior notes	262		161
Amortization of above market assumed debt	(10)		(15)
Loss on sale of investment properties, net	153		24
Equity in loss of unconsolidated entities	166		420
Distributions from unconsolidated entities	2,002		1,761

Provision for bad debts	87		(49)
Non-cash share compensation	4,253		3,707


Change in operating assets and liabilities:
Tenant receivables	(791)		(1,937)
Other assets	(266)		2,766
Accounts payable	(5,252)		(4,349)
Accrued expenses and other liabilities	(7,272)		(15,968)
Net cash provided by operating activities	54,535		41,301
Cash Flows from Investing Activities:
Proceeds from sale of investment properties	1,804		436
Acquisition of investment properties, net	(10)		(1,135)
Investment in unconsolidated entities	(5,045)		37
Escrowed cash - acquisition deposits/earnest deposits	90		(311)
Capital expenditures on investment properties	(5,491)		(6,139)
Investment in real estate loans receivable	(904)		(7,398)
Repayment of real estate loans receivable	22,441		307


Leasing commissions	(704)		(1,044)

Net cash provided by (used in) investing activities	12,181		(15,247)
Cash Flows from Financing Activities:
Net proceeds from sale of common shares	5,032		52,432
Proceeds from credit facility borrowings	64,000		78,000
Repayment of credit facility borrowings	(83,000)		(88,000)


Principal payments on mortgage debt	(420)		(6,925)
Debt issuance costs	(10)		(7)

Dividends paid - shareholders	(52,858)		(49,406)
Distributions to noncontrolling interests - Operating Partnership	(2,739)		(1,307)
Preferred distributions paid - OP Unit holder	—		(303)
Contributions from noncontrolling interest	569		—
Distributions to noncontrolling interests - partially owned properties	(161)		(178)
Payments of employee taxes for withheld stock-based compensation shares	(4,092)		(3,996)
Purchase of Series A Preferred Units	—		(4,661)
Purchase of OP Units	(184)		(269)
Net cash used in financing activities	(73,863)		(24,620)
Net (decrease) increase in cash and cash equivalents	(7,147)		1,434
Cash and cash equivalents, beginning of period	9,876		2,515
Cash and cash equivalents, end of period	$	2,729	$	3,949
Supplemental disclosure of cash flow information—interest paid during the period	$	23,123	$	23,335
Supplemental disclosure of noncash activity—settlement of note receivable in exchange for Series A Preferred Units	$	—	$	20,646
Supplemental disclosure of noncash activity—change in fair value of interest rate swap agreements	$	1,379	$	797
Supplemental disclosure of noncash activity—conversion of loan receivable in connection to the acquisition of investment property	$	3,000	$	—

The accompanying notes are an integral part of these consolidated financial statements.

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Physicians Realty Trust

Notes to Consolidated Financial Statements

Unless otherwise indicated or unless the context requires otherwise, the use of the words “we,” “us,” “our,” and the “Company,” refer to Physicians Realty Trust, together with its consolidated subsidiaries, including Physicians Realty L.P.

Note 1. Organization and Business

Physicians Realty Trust (the “Trust” or the “Company”) was organized in the state of Maryland on April 9, 2013. As of March 31, 2022, the Trust was authorized to issue up to 500,000,000 common shares of beneficial interest, par value $0.01 per share. The Trust filed a Registration Statement on Form S-11 with the Commission with respect to a proposed underwritten initial public offering (the “IPO”) and completed the IPO of its common shares and commenced operations on July 24, 2013.

The Trust contributed the net proceeds from the IPO to Physicians Realty L.P, a Delaware limited partnership (the “Operating Partnership”), and is the sole general partner of the Operating Partnership. The Trust’s operations are conducted through the Operating Partnership and wholly-owned and majority-owned subsidiaries of the Operating Partnership. The Trust, as the general partner of the Operating Partnership, controls the Operating Partnership and consolidates the assets, liabilities, and results of operations of the Operating Partnership.

The Trust is a self-managed REIT formed primarily to acquire, selectively develop, own, and manage health care properties that are leased to physicians, hospitals, and health care delivery systems.

ATM Program

In May 2021, the Trust and the Operating Partnership entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with KeyBanc Capital Markets Inc., Credit Agricole Securities (USA) Inc., BMO Capital Markets Corp., and Raymond James & Associates, Inc. in their capacity as agents for the Company and/or forward sellers and Stifel, Nicolaus & Company, Incorporated in its capacity as sales agent for the Company (collectively, the “Agents”) and Bank of Montreal, Credit Agricole Corporate and Investments Bank, KeyBanc Capital Markets Inc., and Raymond James & Associates, Inc. as forward purchasers for the Company (the “Forward Purchasers”), pursuant to which the Trust may issue and sell, from time to time, its common shares having an aggregate offering price of up to $500 million through the Agents (the “ATM Program”). The Sales Agreement contemplates that, in addition to the issuance and sale of the Trust’s common shares through the Agents, the Trust may also enter into one or more forward sales agreements from time to time in the future with each of the Forward Purchasers.

During the quarter ended March 31, 2022, the Trust sold 259,977 common shares pursuant to the ATM Program, at a weighted average price of $18.93 per share, resulting in total net proceeds of approximately $4.9 million. As of March 31, 2022, the Trust has $326.3 million remaining available under the ATM Program.

Note 2. Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the periods ended March 31, 2022 and 2021 pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited financial statements included in the Trust’s 2021 Annual Report. The Company has consistently applied its accounting policies to all periods presented in these consolidated financial statements.

Noncontrolling Interests

As of March 31, 2022, the Trust held a 95.0% interest in the Operating Partnership. As the sole general partner and the majority interest holder, the Trust consolidates the financial position and results of operations of the Operating Partnership.

Redeemable Noncontrolling Interests - Partially Owned Properties

In connection with the Company’s acquisitions of the medical office building, ambulatory surgery center, and hospital located on the Great Falls Hospital campus in Great Falls, Montana, physicians affiliated with the sellers retained non-controlling interests which may, at the holders’ option, be redeemed at any time after May 1, 2023. Due to the redemption

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provision, which is outside of the control of the Trust, the Trust classifies the investment in the mezzanine section of its consolidated balance sheets. The Trust records the carrying amount of the redeemable noncontrolling interests at the greater of the carrying value or redemption value.

Dividends and Distributions

On March 18, 2022, the Trust announced that its Board of Trustees authorized and the Trust declared a cash dividend of $0.23 per common share for the quarter ended March 31, 2022. The dividend was paid on April 14, 2022 to common shareholders and holders of record of partnership interests of the Operating Partnership (“OP Units”) as of the close of business on March 31, 2022.

Tax Status of Dividends and Distributions

The Company’s distributions of current and accumulated earnings and profits for U.S. federal income tax purposes generally are taxable to shareholders as ordinary income. Distributions in excess of these earnings and profits generally are treated as a non-taxable reduction of the shareholders’ basis in the shares to the extent thereof (non-dividend distributions) and thereafter as taxable gain.

Any cash distributions received by an OP Unit holder in respect of its OP Units generally will not be taxable to such OP Unit holder for U.S. federal income tax purposes, to the extent that such distribution does not exceed the OP Unit holder’s basis in its OP Units. Any such distribution will instead reduce the OP Unit holder’s basis in its OP Units (and OP Unit holders will be subject to tax on the taxable income allocated to them by the Operating Partnership in respect of their OP Units when such income is earned by the Operating Partnership, with such income allocation increasing the OP Unit holders’ basis in their OP Units).

The Company has elected taxable REIT subsidiary (“TRS”) status for certain of its corporate subsidiaries and, as a result, these entities will incur both federal and state income taxes on any taxable income of such entities after consideration of any net operating losses. To date, these income taxes have been de minimis.

Impairment of Intangible and Long-Lived Assets

The Company periodically evaluates its long-lived assets, primarily consisting of investments in real estate, for impairment indicators or whenever events or changes in circumstances indicate that the recorded amount of an asset may not be fully recoverable. The Company did not record an impairment charge for the three months ended March 31, 2022 or 2021.

Assets Held for Sale

The Company may sell properties from time to time for various reasons, including favorable market conditions. The Company classifies certain long-lived assets as held for sale once the criteria, as defined by GAAP, have been met. The Company classifies a real estate property as held for sale when: (i) management has approved the disposition of the property, (ii) the property is available for sale in its present condition, (iii) an active program to locate a buyer has been initiated, (iv) it is probable that the property will be disposed of within one year, (v) the property is being marketed at a reasonable price relative to its fair value, and (vi) it is unlikely that the disposition plan will significantly change or be withdrawn. Following the classification of a property as “held for sale,” no further depreciation or amortization is recorded for the asset and the book value of the asset is written down to the lower of carrying value or fair market value, less cost to sell. As of March 31, 2022, the Company classified one property as held for sale.

Real Estate Loans Receivable, Net

Real estate loans receivable consists of nine mezzanine loans, two term loans, and one construction loan as of March 31, 2022. Generally, each mezzanine loan is collateralized by a pledge of the borrower’s ownership interest in the respective real estate owner, each term loan is secured by a mortgage of a related medical office building, and construction loans are secured by mortgages on the land and the improvements as constructed. The reserve for loan losses was $0.1 million as of March 31, 2022.

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Rental and Related Revenues

Rental revenue is recognized on a straight-line basis over the terms of the related leases when collectability is probable. Recognizing rental revenue on a straight-line basis for leases may result in recognizing revenue for amounts more or less than amounts currently due from tenants. Amounts recognized in excess of amounts currently due from tenants, excluding assets classified as held for sale, are included in other assets and were approximately $97.9 million and $95.4 million as of March 31, 2022 and December 31, 2021, respectively. If the Company determines that collectability of straight-line rents is not probable, income recognition is limited to the lesser of cash collected, or lease income reflected on a straight-line basis, plus variable rent when it becomes accruable.

In accordance with ASC 842, Leases, Topic 842, if the collectability of a lease changes after the commencement date, any difference between lease income that would have been recognized and the lease payments shall be recognized as an adjustment to lease income. Bad debt recognized as an adjustment to rental and related revenues was $0.1 million for the three months ended March 31, 2022 and 2021.

Rental revenue is adjusted by the amortization of lease inducements and above-market or below-market rents on certain leases. Lease inducements and above-market or below-market rents are amortized on a straight-line basis over the remaining lease term. Rental and related revenues also include expense recoveries, which relate to tenant reimbursement of real estate taxes, insurance, and other operating expenses that are recognized in the period the applicable expenses are incurred. The reimbursements are recorded gross, as these costs are incurred by the Company and reimbursed by the tenants. We have certain tenants with absolute net leases. Under these lease agreements, the tenant is responsible for operating and building expenses and we do not recognize expense recoveries.

New Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting, that provides optional relief to applying reference rate reform to changing reference rates, contracts, hedging relationships, and other transactions that reference LIBOR, which has been discontinued at the end of 2021. The amendments in this update are effective immediately and may be applied through December 31, 2022. The Company will continue to use published LIBOR rates through June of 2023 at which time the Company does not expect the replacement benchmark to have a material impact on the Company’s consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted. The Company adopted ASU 2020-06 on January 1, 2022, with no material effect on its consolidated financial statements.

Note 3. Investment and Disposition Activity

During the three months ended March 31, 2022, the Company acquired a 49% membership interest in three properties through the Davis Joint Venture for an aggregate purchase price of $8.0 million. The Company also funded $0.9 million of previous construction loan commitments, resulting in total investment activity of approximately $8.9 million as of March 31, 2022.

Dispositions

During the three months ended March 31, 2022, the Company sold one medical office building representing 9,997 square feet for approximately $2.0 million, realizing a net loss of approximately $0.2 million.

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Note 4. Intangibles

The following is a summary of the carrying amount of intangible assets and liabilities, excluding assets classified as held for sale if applicable, as of March 31, 2022 and December 31, 2021 (in thousands):


	March 31, 2022						December 31, 2021
	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
Assets
In-place leases	$	441,072	$	(212,925)	$	228,147	$	441,072	$	(201,885)	$	239,187
Above-market leases	$	57,149	$	(25,939)	$	31,210	$	57,149	$	(24,437)	$	32,712
Liabilities
Below-market leases	$	32,155	$	(11,044)	$	21,111	$	32,155	$	(10,585)	$	21,570

The following is a summary of acquired lease intangible amortization for the three month periods ended March 31, 2022 and 2021 (in thousands):


	Three Months Ended March 31,
		2022		2021
Amortization expense related to in-place leases		$	11,040	$	8,314
Decrease in rental income related to above-market leases		1,502		927
Increase in rental income related to below-market leases		459		322

Future aggregate net amortization of acquired lease intangibles, excluding one asset classified as held for sale, as of March 31, 2022, is as follows (in thousands):


	Net Decrease in Revenue		Net Increase in Expenses
2022	$	2,585	$	31,535
2023	3,157		38,805
2024	2,961		33,382
2025	2,431		27,935
2026	1,281		21,818
Thereafter	(2,316)		74,672
Total	$	10,099	$	228,147

As of March 31, 2022, the weighted average remaining amortization period is 8 years for in-place, above market tenant lease, and leasehold interest intangibles assets and 16 years for below market tenant lease intangibles.

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Note 5. Other Assets

Other assets consisted of the following, excluding assets classified as held for sale if applicable, as of March 31, 2022 and December 31, 2021 (in thousands):


	March 31, 2022		December 31, 2021
Straight line rent receivable, net	$	97,925	$	95,443
Leasing commissions, net	11,877		11,627
Prepaid expenses	8,446		8,910
Lease inducements, net	8,068		8,293
Escrows	1,517		1,780
Notes receivable, net	1,211		1,097
Interest rate swap	908		—
Other	4,296		4,434
Total	$	134,248	$	131,584

Note 6. Debt

The following is a summary of debt as of March 31, 2022 and December 31, 2021 (in thousands):


	March 31, 2022		December 31, 2021
Fixed interest mortgage notes (1)	$	75,094	$	75,395
Variable interest mortgage note (2)	105,510		105,629
Total mortgage debt	180,604		181,024
$1.0 billion unsecured revolving credit facility bearing variable interest of LIBOR plus 0.85%, due September 2025	255,000		274,000
$400 million senior unsecured notes bearing fixed interest of 4.30%, due March 2027	400,000		400,000
$350 million senior unsecured notes bearing fixed interest of 3.95%, due January 2028	350,000		350,000
$500 million senior unsecured notes bearing fixed interest of 2.625%, due November 2031	500,000		500,000
$150 million senior unsecured notes bearing fixed interest of 4.03% to 4.74%, due January 2023 to 2031	150,000		150,000
$75 million senior unsecured notes bearing fixed interest of 4.09% to 4.24%, due August 2025 to 2027	75,000		75,000
Total principal	1,910,604		1,930,024
Unamortized deferred financing costs	(9,124)		(9,694)
Unamortized discounts	(8,161)		(8,423)
Unamortized fair value adjustments	—		11
Total debt	$	1,893,319	$	1,911,918

(1)As of March 31, 2022, fixed interest mortgage notes bear interest from 3.33% to 4.83%, due in 2022 and 2024, with a weighted average interest rate of 4.05%. As of December 31, 2021, fixed interest mortgage notes bear interest from 3.33% to 4.83%, due in 2022 and 2024, with a weighted average interest rate of 4.05%. One mortgage bears interest at LIBOR + 1.90% and the Trust entered into a pay-fixed receive-variable interest rate swap, fixing the LIBOR component of this rate at 1.43%. The notes are collateralized by three properties with a net book value of $145.4 million as of March 31, 2022 and $151.9 million as of December 31, 2021.

(2)Variable interest mortgage notes bear variable interest of LIBOR + 2.75% and SOFR + 1.85% for a weighted average interest rate of 2.19% and 1.95% as of March 31, 2022 and December 31, 2021, respectively. The notes are due in 2026 and 2028 and collateralized by four properties with a net book value of $303.1 million as of March 31, 2022 and $307.2 million as of December 31, 2021.

On September 24, 2021, the Operating Partnership, as borrower, and the Trust, as guarantor, executed a Third Amended and Restated Credit Agreement (the “Credit Agreement”) which extended the maturity date of the revolving credit facility under the Credit Agreement to September 24, 2025 and reduced the interest rate margin applicable to borrowings. The

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Credit Agreement includes an unsecured revolving credit facility of $1.0 billion and contains a term loan feature of $250.0 million, bringing total borrowing capacity to $1.3 billion. The Credit Agreement also includes a swingline loan commitment for up to 10% of the maximum principal amount and provides an accordion feature allowing the Operating Partnership to increase borrowing capacity by up to an additional $500.0 million, subject to customary terms and conditions, resulting in a maximum borrowing capacity of $1.75 billion. The revolving credit facility under the Credit Agreement also includes two, six-month extension options.

Borrowings under the Credit Agreement bear interest on the outstanding principal amount at an adjusted LIBOR rate, which is based on the Trust’s investment grade rating under the Credit Agreement. As of March 31, 2022, the Trust had investment grade ratings of BBB from S&P, Baa2 from Moody’s, and BBB from Fitch. As such, borrowings under the revolving credit facility of the Credit Agreement accrue interest on the outstanding principal at a rate of LIBOR + 0.85%. The Credit Agreement includes a facility fee equal to 0.20% per annum, which is also determined by the Trust’s investment grade rating.

On October 13, 2021, the Operating Partnership issued $500.0 million in aggregate principle amount of 2.625% Senior Notes due November 1, 2031 (the “2031 Senior Notes”) in a public offering and the Company used the proceeds from the 2031 Senior Notes to pay off a $250.0 million term loan feature of the Credit Agreement. The Operating Partnership simultaneously terminated the existing pay-fixed receive-variable rate swaps associated with the full term loan borrowing of $250.0 million. As part of the termination, the Company made total cash payments of $3.3 million to the counterparties of the swap agreements. As defined by the Credit Agreement, the term loan feature is no longer available to the Company.

Base Rate Loans, Adjusted LIBOR Rate Loans, and Letters of Credit (each, as defined in the Credit Agreement) will be subject to interest rates, based upon the Trust’s investment grade rating as follows:


Credit Rating	Applicable Margin for Revolving Loans: LIBOR Rate Loans and Letter of Credit Fee	Applicable Margin for Revolving Loans: Base Rate Loans		Applicable Margin for Term Loans: LIBOR Rate Loans and Letter of Credit Fee	Applicable Margin for Term Loans: Base Rate Loans
At Least A- or A3	LIBOR + 0.725%	—	%	LIBOR + 0.85%	—	%
At Least BBB+ or Baa1	LIBOR + 0.775%	—	%	LIBOR + 0.90%	—	%
At Least BBB or Baa2	LIBOR + 0.85%	—	%	LIBOR + 1.00%	—	%
At Least BBB- or Baa3	LIBOR + 1.05%	0.05	%	LIBOR + 1.25%	0.25	%
Below BBB- or Baa3	LIBOR + 1.40%	0.40	%	LIBOR + 1.65%	0.65	%

The Credit Agreement contains financial covenants that, among other things, require compliance with leverage and coverage ratios and maintenance of minimum tangible net worth, as well as covenants that may limit the Trust’s and the Operating Partnership’s ability to incur additional debt, grant liens, or make distributions. The Company may, at any time, voluntarily prepay any revolving or term loan under the Credit Agreement in whole or in part without premium or penalty. As of March 31, 2022, the Company was in compliance with all financial covenants related to the Credit Agreement.

The Credit Agreement includes customary representations and warranties by the Trust and the Operating Partnership and imposes customary covenants on the Operating Partnership and the Trust. The Credit Agreement also contains customary events of default, and if an event of default occurs and continues, the Operating Partnership is subject to certain actions by the administrative agent, including without limitation, the acceleration of repayment of all amounts outstanding under the Credit Agreement.

As of March 31, 2022, the Company had $255.0 million of borrowings outstanding under its unsecured revolving credit facility. As defined by the Credit Agreement, the current unencumbered borrowing base allows the Company to borrow an additional $745.0 million before reaching the maximum allowed under the credit facility.

Notes Payable

As of March 31, 2022, the Company had $1.5 billion aggregate principal amount of senior notes issued and outstanding by the Operating Partnership, comprised of $15.0 million maturing in 2023, $25.0 million maturing in 2025, $70.0 million maturing in 2026, $425.0 million maturing in 2027, $395.0 million maturing in 2028, and $545.0 million maturing in 2031.

Certain properties have mortgage debt that contains financial covenants. As of March 31, 2022, the Trust was in compliance with all mortgage debt financial covenants.

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Scheduled principal payments due on consolidated debt as of March 31, 2022, are as follows (in thousands):


2022	$	15,674
2023	16,008
2024	59,719
2025	280,476
2026	170,476
Thereafter	1,368,251
Total Payments	$	1,910,604

As of March 31, 2022, the Company had total consolidated indebtedness of approximately $1.9 billion. The weighted average interest rate on consolidated indebtedness was 3.28% (based on the 30-day LIBOR rate of 0.40% and a SOFR rate of 0.29% as of March 31, 2022).

For the three month periods ending March 31, 2022 and 2021, the Company incurred interest expense on its debt, exclusive of deferred financing cost amortization, of $16.2 million and $13.1 million, respectively.

Note 7. Derivatives

In the normal course of business, a variety of financial instruments are used to manage or hedge interest rate risk. The Company has implemented ASC 815, Derivatives and Hedging (“ASC 815”), which establishes accounting and reporting standards requiring that all derivatives, including certain derivative instruments embedded in other contracts, be recorded as either an asset or a liability measured at their fair value unless they qualify for a normal purchase or normal sales exception.

When specific hedge accounting criteria are not met, ASC 815 requires that changes in a derivative’s fair value be recognized currently in earnings. Changes in the fair market values of the Company’s derivative instruments are recorded in the consolidated statements of income if such derivatives do not qualify for, or the Company does not elect to apply for, hedge accounting. As a result of the Company’s adoption of ASU 2017-12 as of January 1, 2019, the entire change in the fair value of its derivatives designated and qualified as cash flow hedges are recorded in accumulated other comprehensive income on the consolidated balance sheets and are subsequently reclassified into earnings in the period in which the hedged forecasted transaction affects earnings.

To manage interest rate risk for certain of its variable-rate debt, the Company uses interest rate swaps as part of its risk management strategy. These derivatives are designed to mitigate the risk of future interest rate increases by providing a fixed interest rate for a limited, pre-determined period of time. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of March 31, 2022, the Company had one outstanding interest rate swap contract designated as a cash flow hedge of interest rate risk. See Note 2 (Summary of Significant Accounting Policies) of the 2021 Annual Report for a further discussion of our derivatives.

The following table summarizes the location and aggregate fair value of the interest rate swaps on the Company’s consolidated balance sheets (in thousands):


Total notional amount		$	36,050
Effective fixed interest rate	(1)	3.33		%
Effective date		10/31/2019
Maturity date		10/31/2024
Asset balance at March 31, 2022 (included in Other assets)		$	908
Liability balance at December 31, 2021 (included in Accrued expenses and other liabilities)		$	452

(1)1.43% effective swap rate plus 1.90% spread per Credit Agreement.

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Note 8. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following as of March 31, 2022 and December 31, 2021 (in thousands):


	March 31, 2022		December 31, 2021
Prepaid rent	$	24,919	$	22,714
Real estate taxes payable	17,968		23,487
Accrued interest	11,814		18,799
Accrued expenses	9,137		5,960
Security deposits	4,278		4,234
Tenant improvement allowances	1,857		1,857
Accrued incentive compensation	1,458		1,784
Interest rate swap	—		452


Other	7,582		6,967
Total	$	79,013	$	86,254

Note 9. Stock-based Compensation

The Company follows ASC 718, Compensation - Stock Compensation (“ASC 718”), in accounting for its share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee’s requisite service period. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized when incurred. Share-based payments classified as liability awards are marked to fair value at each reporting period. Any common shares issued pursuant to the Company's incentive equity compensation and employee stock purchase plans will result in the Operating Partnership issuing OP Units to the Trust on a one-for-one basis, with the Operating Partnership receiving the net cash proceeds of such issuances.

Certain of the Company’s employee stock awards vest only upon the achievement of performance targets. ASC 718 requires recognition of compensation cost only when achievement of performance conditions is considered probable. Consequently, the Company’s determination of the amount of stock compensation expense requires judgment in estimating the probability of achievement of these performance targets. Subsequent changes in actual experience are monitored and estimates are updated as information is available.

In connection with the IPO, the Trust adopted the 2013 Equity Incentive Plan, which made shares available for awards for participants. On April 30, 2019, at the Annual Meeting of Shareholders of Physicians Realty Trust, the Trust’s shareholders approved the Amended and Restated Physicians Realty Trust 2013 Equity Incentive Plan (“2013 Plan”). The amendment increased the number of common shares authorized for issuance under the 2013 Plan to a total of 7,000,000 common shares authorized for issuance. The 2013 Plan term was also extended to 2029.

Restricted Common Shares

Restricted common shares granted under the 2013 Plan are eligible for dividends as well as the right to vote. In the three month period ended March 31, 2022, the Trust granted a total of 210,380 restricted common shares with a total value of $3.4 million to its officers and certain of its employees, which have a vesting period of one year.

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A summary of the status of the Trust’s non-vested restricted common shares as of March 31, 2022 and changes during the three month period then ended follow:


	Common Shares	Weighted Average Grant Date Fair Value
Non-vested at December 31, 2021	247,447	$	17.41
Granted	210,380	16.37
Vested	(187,262)	17.21
Forfeited	(3,868)	17.98
Non-vested at March 31, 2022	266,697	$	16.72

For all service awards, the Company records compensation expense for the entire award on a straight-line basis over the requisite service period. For the three month periods ending March 31, 2022 and 2021, the Company recognized non-cash share compensation of $0.9 million. Unrecognized compensation expense at March 31, 2022 was $3.8 million.

Restricted Share Units

In January 2022, under the 2013 Plan, the Company granted 7,800 restricted share units to certain of its trustees in lieu of all or a portion of such trustee’s 2022 cash retainer. These units are subject to certain timing conditions and a one-year service period. Each restricted share unit contains one dividend equivalent. Each recipient will accrue dividend equivalents on awarded share units equal to the cash dividend that would have been paid on the awarded share unit had the awarded share unit been an issued and outstanding common share on the record date for the dividend. With respect to the performance and timing conditions of the January 2022 grants, the grant date fair value of $18.83 per unit was based on the share price at the date of grant.

In March 2022, under the 2013 Plan, the Company granted restricted share units at a target level of 299,019 to its officers and certain of its employees and 56,204 to its trustees. Units granted to officers and certain employees under the Company’s 2013 Plan are subject to certain performance and market conditions and a three-year service period. Units granted to trustees are subject to certain timing conditions and a two-year service period for full vesting. Each restricted share unit contains one dividend equivalent. Each recipient will accrue dividend equivalents on awarded share units equal to the cash dividend that would have been paid on the awarded share unit had the awarded share unit been an issued and outstanding common share on the record date for the dividend.

Approximately 30% of the restricted share units issued to officers and certain employees under the Company’s 2013 Plan in 2022 vest based on one certain market condition. The awards containing a market condition were valued with the assistance of independent valuation specialists. The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $30.17 per unit for the March 2022 grant using the following assumptions:


Volatility	33.9		%
Dividend assumption	reinvested
Expected term in years	2.84 years
Risk-free rate	1.44		%
Share price (per share)	$	16.37

The remaining 70% of the restricted share units issued to officers and certain employees under the Company’s 2013 Plan, and 100% of other restricted share units issued to trustees vest based upon certain performance or timing conditions. With respect to the performance and timing conditions of the March 2022 grants, the grant date fair value of $16.37 per unit was based on the share price at the date of grant. The combined weighted average grant date fair value of the March 2022 restricted share units issued to officers and certain employees is $20.51 per unit.

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The following is a summary of the activity in the Trust’s restricted share units during the three months ended March 31, 2022:


	Executive Awards				Trustee Awards
	Restricted Share Units		Weighted Average Grant Date Fair Value		Restricted Share Units	Weighted Average Grant Date Fair Value
Non-vested at December 31, 2021	976,570		$	22.59	63,008	$	17.85
Granted	299,019		20.51		64,004	16.67
Vested	(228,649)	(1)	25.27		(41,220)	18.20

Non-vested at March 31, 2022	1,046,940		$	21.41	85,792	$	16.81

(1)Restricted units vested by Company executives in 2022 resulted in the issuance of 361,679 common shares, less 160,573 common shares withheld to cover minimum withholding tax obligations, for multiple employees.

For the three month periods ending March 31, 2022 and 2021, the Company recognized non-cash share compensation of $3.3 million and $2.8 million, respectively. Unrecognized compensation expense at March 31, 2022 was $18.0 million.

Note 10. Fair Value Measurements

ASC Topic 820, Fair Value Measurement (“ASC 820”), requires certain assets and liabilities be reported and/or disclosed at fair value in the financial statements and provides a framework for establishing that fair value. The framework for determining fair value is based on a hierarchy that prioritizes the valuation techniques and inputs used to measure fair value.

In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset. These Level 3 fair value measurements are based primarily on management’s own estimates using pricing models, discounted cash flow methodologies, or similar techniques taking into account the characteristics of the asset or liability. In instances where inputs used to measure fair value fall into different levels of the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability. As part of the Company’s acquisition process, Level 3 inputs are used to measure the fair value of the assets acquired and liabilities assumed.

The Company’s derivative instruments as of March 31, 2022 consist of one interest rate swap, as detailed in the Derivative Instruments section of Note 7 (Derivatives) of this report and Note 2 (Summary of Significant Accounting Policies) of Part II, Item 8 (Financial Statements and Supplementary Data) of our 2021 Annual Report.

The interest rate swap is not traded on an exchange. The Company’s derivative assets and liabilities are recorded at fair value based on a variety of observable inputs including contractual terms, interest rate curves, yield curves, measure of volatility, and correlations of such inputs. The Company measures its derivatives at fair value on a recurring basis. The fair values are based on Level 2 inputs described above. The Company considers its own credit risk, as well as the credit risk of its counterparties, when evaluating the fair value of its derivatives.

The Company also has assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. This generally includes assets subject to impairment. There was no asset measured at fair value as of March 31, 2022.

The carrying amounts of cash and cash equivalents, tenant receivables, payables, and accrued interest are reasonable estimates of fair value because of the short-term maturities of these instruments. Fair values for real estate loans receivable and mortgage debt are estimated based on rates currently prevailing for similar instruments of similar maturities and are based primarily on Level 2 inputs.

As of March 31, 2022, the Company classified one property as held for sale. Upon classification as held for sale, the Company records the value of the assets at the lower of their carrying value or fair value, less costs to sell. Fair value is generally based on discounted cash flow analyses, which involves management’s best estimate of market participants’ holding

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period, market comparables, future occupancy levels, rental rates, capitalization rates, lease-up periods, and capital requirements. As of March 31, 2022, the fair value exceeds the carrying value of the one asset classified as held for sale and therefore, is recorded at respective carrying value.

The following table presents the fair value of the Company’s financial instruments (in thousands):


	March 31, 2022				December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Real estate loans receivable, net	$	93,176	$	90,592	$	117,844	$	115,385
Notes receivable, net	$	1,211	$	1,211	$	1,097	$	1,097
Derivative assets	$	908	$	908	$	—	$	—
Liabilities:
Credit facility	$	(255,000)	$	(255,000)	$	(274,000)	$	(274,000)
Notes payable	$	(1,475,000)	$	(1,436,801)	$	(1,475,000)	$	(1,554,802)
Mortgage debt	$	(180,604)	$	(179,267)	$	(181,035)	$	(182,189)
Derivative liabilities	$	—	$	—	$	(452)	$	(452)

Note 11. Tenant Operating Leases

The Company is a lessor of medical office buildings and other health care facilities. Leases have expirations from 2022 through 2043. As of March 31, 2022, the future minimum rental payments on non-cancelable leases, exclusive of expense recoveries and minimum rental payments for the one asset classified as held for sale, were as follows (in thousands):


2022	$	266,659
2023	350,838
2024	336,326
2025	315,578
2026	257,972
Thereafter	913,892
Total	$	2,441,265

For the three month periods ending March 31, 2022 and 2021, we recognized $126.7 million and $108.0 million, respectively, of rental and other lease-related income related to our operating leases, of which $35.1 million and $27.6 million, respectively, were variable lease payments.

Note 12. Rent Expense

The Company leases the rights to parking structures at two of its properties, the air space above one property, and the land upon which 97 of its properties are located from third party land owners pursuant to separate leases. In addition, the Company has ten corporate leases, primarily for office space.

The Company’s leases include both fixed and variable rental payments and may also include escalation clauses and renewal options. These leases have terms of up to 93 years remaining, excluding extension options, with a weighted average remaining term of 44 years.

At the inception of a new lease, the Company establishes an operating or finance lease asset and operating or finance lease liability calculated as the present value of future minimum lease payments. As our leases do not provide an implicit rate, we calculate a discount rate that approximates our incremental borrowing rate available at lease commencement to determine the present value of future minimum lease payments. The approximated weighted average discount rate was 4.4% as of March 31, 2022. There are no operating or finance leases that have not yet commenced that would have a significant impact on the Company’s consolidated balance sheets.

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As of March 31, 2022, the future minimum lease obligations under non-cancelable parking, air, ground, and corporate leases, exclusive of the one asset classified as held for sale, were as follows (in thousands):


2022	$	3,466
2023	4,717
2024	4,707
2025	4,704
2026	4,752
Thereafter	243,277
Total undiscounted lease payments	$	265,623
Less: Interest	(160,884)
Present value of lease liabilities	$	104,739

Lease costs consisted of the following for the three months ended March 31, 2022 (in thousands):



Fixed lease cost	$	834
Variable lease cost	319
Total lease cost	$	1,153

Note 13. Credit Concentration

The Company uses annualized base rent (“ABR”) as its credit concentration metric. ABR is calculated by multiplying contractual base rent for the month ended March 31, 2022 by 12, excluding the impact of concessions and straight-line rent. The following table summarizes certain information about the Company’s top five tenant credit concentrations as of March 31, 2022, excluding the one asset classified as held for sale (in thousands):


Tenant	Total ABR		Percent of ABR
CommonSpirit - CHI - Nebraska	$	17,739	5.0	%
Northside Hospital	15,703		4.4	%
UofL Health - Louisville, Inc.	12,750		3.6	%
HonorHealth	11,143		3.1	%
US Oncology	11,059		3.1	%
Remaining portfolio	287,543		80.8	%
Total	$	355,937	100.0	%

ABR collected from the Company’s top five tenant relationships comprises 19.2% of its total ABR for the period ending March 31, 2022. Total ABR from CommonSpirit Health affiliated tenants totals 14.6%, including the affiliates disclosed above.

The following table summarizes certain information about the Company’s top five geographic concentrations as of March 31, 2022, excluding the one asset classified as held for sale (in thousands):


State	Total ABR		Percent of ABR
Texas	$	48,186	13.5	%
Georgia	25,763		7.2	%
Florida	25,009		7.0	%
Indiana	22,776		6.4	%
Arizona	20,887		5.9	%
Other	213,316		60.0	%
Total	$	355,937	100.0	%

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Note 14. Earnings Per Share

The following table shows the amounts used in computing the Trust’s basic and diluted earnings per share (in thousands, except share and per share data):


	Three Months Ended March 31,
		2022		2021
Numerator for earnings per share - basic:
Net income		$	13,943	$	17,805
Net income attributable to noncontrolling interests:
Operating Partnership		(692)		(459)
Partially owned properties		(159)		(152)
Preferred distributions		—		(13)
Numerator for earnings per share - basic		$	13,092	$	17,181
Numerator for earnings per share - diluted:
Numerator for earnings per share - basic		$	13,092	$	17,181
Noncontrolling interest - Operating Partnership income		692		459
Numerator for earnings per share - diluted		$	13,784	$	17,640
Denominator for earnings per share - basic and diluted:
Weighted average number of shares outstanding - basic		225,069,208		210,529,698
Effect of dilutive securities:
Noncontrolling interest - Operating Partnership units		11,912,099		5,687,247
Restricted common shares		104,910		87,124
Restricted share units		1,254,026		1,018,356
Denominator for earnings per share - diluted:		238,340,243		217,322,425
Earnings per share - basic		$	0.06	$	0.08
Earnings per share - diluted		$	0.06	$	0.08

Note 15. Subsequent Events

On April 22, 2022 the Company disposed of a 17,213 square foot medical office building for $6.4 million and recognized a net gain on the sale of approximately $3.7 million. This asset was classified as held for sale as of March 31, 2022.

On April 26, 2022, the Company purchased a medical office facility comprising of 59,233 square feet in New Albany, Ohio for $27.7 million.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our unaudited consolidated financial statements, including the notes to those statements, included in Part I, Item 1 of this report, and the Section entitled “Cautionary Statement Regarding Forward-Looking Statements” in this report. As discussed in more detail in the Section entitled “Cautionary Statement Regarding Forward-Looking Statements,” this discussion contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause those differences include those discussed in Part I, Item 1 (Business) and Part I, Item 1A (Risk Factors) of our 2021 Annual Report.

Company Highlights

•Reported first quarter 2022 total revenue of $130.4 million, an increase of 15.0% over the prior year period.

•Generated first quarter net income per share of $0.06 on a fully diluted basis.

•Generated first quarter Normalized Funds From Operations (Normalized FFO) of $0.27 per share on a fully diluted basis.

•Completed investments of $8.9 million during the first quarter.

•First quarter MOB Same-Store Cash Net Operating Income growth was 2.0% year-over-year.

•Declared a quarterly dividend of $0.23 per share and OP Unit for the first quarter 2022, paid on April 14, 2022.

•Disposed of one property for $2.0 million and recognized a net loss on the sale of approximately $0.2 million.

•Sold 259,977 common shares pursuant to the ATM program at a weighted average price of $18.93 during the first quarter, resulting in net proceeds of $4.9 million.

Overview

We are a self-managed health care real estate company organized in April 2013 to acquire, selectively develop, own, and manage health care properties that are leased to physicians, hospitals, and health care delivery systems. We invest in real estate that is integral to providing high quality health care services. Our properties are typically located on a campus with a hospital or other health care facilities or strategically affiliated with a hospital or other health care facilities. We believe the impact of government programs and continuing trends in the health care industry create attractive opportunities for us to invest in health care related real estate. In particular, we believe the demand for health care will continue to increase as a result of the aging population as older persons generally utilize health care services at a rate well in excess of younger people. Our management team has significant public health care REIT experience and has long-established relationships with physicians, hospitals, and health care delivery system decision makers that we believe will provide quality investment and growth opportunities. Our principal investments include medical office buildings, outpatient treatment facilities, as well as other real estate integral to health care providers. In recent years, we have seen increased competition for health care properties and we expect this trend to continue. We seek to generate attractive risk-adjusted returns for our shareholders through a combination of stable and increasing dividends and potential long-term appreciation in the value of our properties and our common shares.

We grew our portfolio of gross real estate investments from approximately $124 million at the time of our IPO in July 2013 to approximately $5.7 billion as of March 31, 2022. As of March 31, 2022, our consolidated portfolio consisted of 278 health care properties (which excludes one asset, representing approximately 17,213 leasable square feet, classified as held for sale) located in 33 states with approximately 15,576,392 net leasable square feet, which were approximately 95% leased with a weighted average remaining lease term of approximately 6.2 years. As of March 31, 2022, approximately 90% of the net leasable square footage of our portfolio was either on the campus of a hospital or strategically affiliated with a health system.

We receive a cash rental stream from the health care providers under our leases. Approximately 95% of the annualized base rent payments from our properties as of March 31, 2022, excluding our one asset held for sale, are from absolute and triple-net leases pursuant to which the tenants are responsible for operating expenses relating to the property, including but not limited to real estate taxes, utilities, property insurance, routine maintenance and repairs, and property management. This structure helps insulate us from increases in certain operating expenses and provides more predictable cash flow. Approximately 4% of the annualized base rent payments from our properties as of March 31, 2022, excluding our one asset held for sale, are from modified gross base stop leases which allow us to pass through certain increases in future operating expenses (e.g., property tax and insurance) to tenants for reimbursement, thus protecting us from increases in such operating expenses.

We seek to structure our triple-net leases to generate attractive returns on a long-term basis. Our leases typically have initial terms of 5 to 15 years and include annual rent escalators of approximately 1.5% to 4.0%, with an annual weighted average rent escalator of approximately 2.4%. Our operating results depend significantly upon the ability of our tenants to make

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required rental payments. We believe that our portfolio of medical office buildings and other health care facilities will enable us to generate stable cash flows over time because of the diversity of our tenants, staggered lease expiration schedule, long-term leases, and low historical occurrence of tenants defaulting under their leases. As of March 31, 2022, leases representing 2.7%, 5.1%, and 6.6% of leased square feet will expire in 2022, 2023, and 2024, respectively.

We intend to grow our portfolio of high-quality health care properties leased to physicians, hospitals, health care delivery systems, and other health care providers primarily through acquisitions of existing health care facilities that provide stable revenue growth and predictable long-term cash flows. We may also selectively finance the development of new health care facilities through joint venture or fee arrangements with health care real estate developers or health system development professionals. Generally, we expect to make investments in new development properties when approximately 80% or more of the development property has been pre-leased before construction commences. We seek to invest in properties where we can develop strategic alliances with financially sound health care providers and health care delivery systems that offer need-based health care services in sustainable health care markets. We focus our investment activity on medical office buildings and ambulatory surgery centers.

We believe that trends such as shifting consumer preferences, limited space in hospitals, the desire of patients and health care providers to limit non-essential services provided in a hospital setting, and cost considerations, continue to drive the industry towards performing more procedures in outpatient facilities versus the hospital setting. As these trends continue, we believe that demand for medical office buildings and similar health care properties away from hospital settings and in convenient locations to patients will continue to rise. We intend to exploit this trend and seek outpatient properties consistent with our investment philosophy and strategies.

While not our focus, we may choose to invest opportunistically in life science facilities, senior housing properties, skilled nursing facilities, specialty hospitals, and treatment centers. Consistent with our qualification as a REIT, we may also opportunistically invest in companies that provide health care services, and in joint venture entities with operating partners, structured to comply with the REIT Investment Diversification Act of 2007.

The Trust is a Maryland real estate investment trust and elected to be taxed as a REIT for U.S. federal income tax purposes. We conduct our business through an UPREIT structure in which our properties are owned by our Operating Partnership directly or through limited partnerships, limited liability companies, or other subsidiaries. The Trust is the sole general partner of our Operating Partnership and, as of March 31, 2022, owned approximately 95.0% of the OP Units. As of April 27, 2022, there were 225,296,089 common shares outstanding.

Key Transactions in First Quarter 2022

Investment Activity

During the three months ended March 31, 2022, the Company contributed $8.0 million to acquire a 49% membership interest in three properties through the Davis Joint Venture and funded $0.9 million of previous a construction loan commitment, resulting in total investment activity of approximately $8.9 million.

Recent Developments

Quarterly Distribution

On March 18, 2022, we announced that our Board of Trustees authorized and declared a cash distribution of $0.23 per common share for the quarterly period ended March 31, 2022. The dividend was paid on April 14, 2022 to common shareholders and OP Unit holders of record as of the close of business on March 31, 2022.

Recent Events

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On April 26, 2022, the Company purchased a medical office facility comprising of 59,233 square feet in New Albany, Ohio for $27.7 million.

Results of Operations

Three months ended March 31, 2022 compared to the three months ended March 31, 2021.

The following table summarizes our results of operations for the three months ended March 31, 2022 and 2021 (in thousands):


	2022		2021		Change		%
Revenues:
Rental and related revenues	$	126,676	$	107,955	$	18,721	17.3	%
Interest income on real estate loans and other	3,714		5,384		(1,670)		(31.0)	%
Total revenues	130,390		113,339		17,051		15.0	%
Expenses:
Interest expense	16,823		13,715		3,108		22.7	%
General and administrative	10,293		9,465		828		8.7	%
Operating expenses	41,752		33,934		7,818		23.0	%
Depreciation and amortization	47,260		37,976		9,284		24.4	%

Total expenses	116,128		95,090		21,038		22.1	%
Income before equity in loss of unconsolidated entities and loss on sale of investment properties, net:	14,262		18,249		(3,987)		(21.8)	%
Equity in loss of unconsolidated entities	(166)		(420)		254		60.5	%
Loss on sale of investment properties, net	(153)		(24)		(129)		NM
Net income	$	13,943	$	17,805	$	(3,862)	(21.7)	%

NM = Not Meaningful

Revenues

Total revenues increased $17.1 million, or 15.0%, for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021. An analysis of selected revenues follows.

Rental and related revenues. Rental and related revenues increased $18.7 million, or 17.3%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. Rental and related revenues were comprised of the following based upon contractual billing terms (in thousands):


	2022		2021		Change		%
Rental revenues	$	91,550	$	80,395	$	11,155	13.9	%
Expense recoveries	35,126		27,560		7,566		27.5	%
Rental and related revenues	$	126,676	$	107,955	$	18,721	17.3	%

Rental revenues increased $11.2 million, or 13.9%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. Rental revenues increased $13.1 million from properties acquired in 2021, including $9.4 million related to the Landmark Portfolio, and were partially offset by a decrease of $1.9 million due to properties sold in 2022 and 2021.

Expense recoveries increased $7.6 million, or 27.5%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. Expense recoveries increased $6.2 million from properties acquired in 2021, including $4.3 million related to the Landmark Portfolio, and $1.2 million due to an increase in reimbursable operating expenses from our existing portfolio, explained below.

Interest income on real estate loans and other. Interest income on real estate loans and other decreased $1.7 million, or 31.0%, for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021. Interest income on real estate loans and other decreased $1.9 million due to lower average real estate loan balances.

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Expenses

Total expenses increased $21.0 million, or 22.1%, for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021. An analysis of selected expenses follows.

Interest expense. Interest expense increased $3.1 million, or 22.7%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The issuance of the 2031 Senior Notes resulted in an increase of $3.4 million and the issuance of new mortgage debt resulted an increase of $0.9 million. This was partially offset the October 2021 pay off and extinguishment of our $250.0 million term loan feature of the Credit Agreement and the associated pay-fixed receive-variable rate swaps which resulted in a decrease of $1.2 million.

General and administrative. General and administrative expenses increased $0.8 million, or 8.7%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase was due to higher non-cash compensation of $0.5 million and increased travel and marketing costs of $0.5 million and was partially offset by a decrease in other expenses of $0.1 million.

Operating expenses. Operating expenses increased $7.8 million, or 23.0%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. Net operating expenses on properties purchased and sold in 2022 and 2021 increased by $6.6 million. Operating expenses on the existing portfolio increased by $1.2 million, or 3.6% quarter over quarter, due to additional utilities costs of $1.0 million and building maintenance costs of $0.4 million, partially offset by a decrease in insurance costs of $0.2 million.

Depreciation and amortization. Depreciation and amortization increased $9.3 million, or 24.4%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. Depreciation and amortization increased $10.6 million for properties purchased in 2021 and was partially offset by $0.8 million for properties sold during 2022 and 2021 and a decrease of $0.5 million on the existing portfolio.

Equity in loss of unconsolidated entities. The change in equity in loss of unconsolidated entities for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 is primarily due to improved performance from joint ventures during the three months ended.

Loss on sale of investment properties, net. During the three months ended March 31, 2022, we sold one property representing 9,997 net leasable square feet located in Michigan for approximately $2.0 million, realizing a net loss of approximately $0.2 million. During the three months ended March 31, 2021, we sold one property representing 44,089 net leasable square feet located in Michigan for approximately $0.5 million, realizing an insignificant net loss.

Cash Flows

Three months ended March 31, 2022 compared to the three months ended March 31, 2021 (in thousands).


	2022		2021
Cash provided by operating activities	$	54,535	$	41,301
Cash provided by (used in) investing activities	12,181		(15,247)
Cash used in financing activities	(73,863)		(24,620)
(Decrease) increase in cash and cash equivalents	$	(7,147)	$	1,434

Cash flows from operating activities. Cash flows provided by operating activities was $54.5 million during the three months ended March 31, 2022 compared to $41.3 million during the three months ended March 31, 2021, representing an increase of $13.2 million. Net cash provided by operating activities increased primarily due to the impact of our 2022 and 2021 acquisitions, including the Landmark Portfolio acquired on December 20, 2021, and contractual rent increases offset by our 2022 and 2021 dispositions.

Cash flows from investing activities. Cash flows provided by investing activities was $12.2 million during the three months ended March 31, 2022 compared to cash flows used in investing activities of $15.2 million during the three months ended March 31, 2021, representing a change of $27.4 million. The increase in cash flows provided by investing activities was primarily due to higher real estate loan repayments and lower new real estate loans for a net increase in cash of $28.6 million. Proceeds on sales of investment properties also increased cash by $1.4 million, and cash spent on capital expenditures and

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leasing commissions decreased by $1.0 million. Cash flows provided by investing activities were partially offset by an increase in net cash spent on acquisitions of investment properties and unconsolidated entities of $3.6 million.

Cash flows from financing activities. Cash flows used in financing activities was $73.9 million during the three months ended March 31, 2022 compared to $24.6 million during the three months ended March 31, 2021, representing an increase of $49.2 million. The change in cash used in financing activities was primarily due to a decrease in net proceeds from the sale of common shares pursuant to the applicable ATM Program of $47.4 million, and an increase in net paydowns under the credit facility of $9.0 million in 2022 compared to 2021. Further, $3.5 million of additional dividends were paid to shareholders in 2022 compared to 2021, and $1.4 million of additional distributions were paid to noncontrolling interests of the operating partnership. Cash flows used in financing activities were partially offset by $6.5 million of additional principal payments on mortgage debt in 2021 compared to 2022. Additionally, Series A Preferred Units redeemed in 2021 used $4.7 million while no such redemptions were made in 2022.

Non-GAAP Financial Measures

This report includes Funds From Operations (FFO), Normalized FFO, Normalized Funds Available For Distribution (FAD), Net Operating Income (NOI), Cash NOI, MOB 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 Item 10(e) of Regulation S-K promulgated under the Securities Act, 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 report, GAAP refers to generally accepted accounting principles in the United States of America. Pursuant to the requirements of Item 10(e) of Regulation S-K promulgated under the Securities Act, we have provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

FFO and Normalized FFO

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, 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.

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The following is a reconciliation from net income, the most direct financial measure calculated and presented in accordance with GAAP, to FFO and Normalized FFO (in thousands, except per share data):


	Three Months Ended March 31,
	2022		2021
Net income	$	13,943	$	17,805
Earnings per share - diluted	$	0.06	$	0.08

Net income	$	13,943	$	17,805
Net income attributable to noncontrolling interests - partially owned properties	(159)		(152)
Preferred distributions	—		(13)
Depreciation and amortization expense	47,149		37,877
Depreciation and amortization expense - partially owned properties	(70)		(70)
Loss on sale of investment properties, net	153		24

Proportionate share of unconsolidated joint venture adjustments	2,383		2,197
FFO applicable to common shares	$	63,399	$	57,668



Proportionate share of unconsolidated joint venture adjustments	(8)		—
Normalized FFO applicable to common shares	$	63,391	$	57,668

FFO per common share	$	0.27	$	0.27
Normalized FFO per common share	$	0.27	$	0.27

Weighted average number of common shares outstanding	238,340,243		217,322,425

Normalized Funds Available for Distribution (FAD)

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 tenant improvements and leasing commissions, and 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.

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The following is a reconciliation from net income, the most direct financial measure calculated and presented in accordance with GAAP, to Normalized FAD (in thousands):


	Three Months Ended March 31,
	2022		2021
Net income	$	13,943	$	17,805
Normalized FFO applicable to common shares	$	63,391	$	57,668

Normalized FFO applicable to common shares	$	63,391	$	57,668
Non-cash share compensation expense	4,253		3,707
Straight-line rent adjustments	(2,154)		(2,725)
Amortization of acquired above/below-market leases/assumed debt	1,339		864
Amortization of lease inducements	225		264
Amortization of deferred financing costs	579		581
TI/LC and recurring capital expenditures	(5,663)		(5,638)
Loan reserve adjustments	3		(47)

Proportionate share of unconsolidated joint venture adjustments	(431)		(211)
Normalized FAD applicable to common shares	$	61,542	$	54,463

Net Operating Income (NOI), Cash NOI, and MOB Same-Store Cash NOI

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, interest expense, 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.

MOB 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-MOB assets, and other normalizing items not specifically related to the same-store property portfolio. Management considers MOB 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 MOB 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.

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The following is a reconciliation from the Trust’s net income, the most direct financial measure calculated and presented in accordance with GAAP, to NOI, Cash NOI, and MOB Same-Store Cash NOI (in thousands):


	Three Months Ended March 31,
	2022		2021
Net income	$	13,943	$	17,805
General and administrative	10,293		9,465

Depreciation and amortization expense	47,260		37,976
Interest expense	16,823		13,715

Loss on sale of investment properties, net	153		24

Proportionate share of unconsolidated joint venture adjustments	3,422		3,511
NOI	$	91,894	$	82,496

NOI	$	91,894	$	82,496
Straight-line rent adjustments	(2,154)		(2,725)
Amortization of acquired above/below-market leases	1,349		880
Amortization of lease inducements	225		264
Loan reserve adjustments	3		(47)


Proportionate share of unconsolidated joint venture adjustments	(71)		(171)
Cash NOI	$	91,246	$	80,697

Cash NOI	$	91,246	$	80,697
Assets not held for all periods or held for sale	(12,353)		(1,822)
Hospital Cash NOI	(3,478)		(3,139)
Lease termination fees	(5)		—
Interest income on real estate loans	(2,199)		(4,107)
Joint venture and other income	(3,509)		(3,271)
MOB Same-Store Cash NOI	$	69,702	$	68,358

Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre) and Adjusted EBITDAre

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, 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 non-cash share compensation expense, non-cash changes in fair value, pursuit costs, non-cash intangible amortization, 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.

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The following is a reconciliation from the Trust’s net income, the most direct financial measure calculated and presented in accordance with GAAP, to EBITDAre and Adjusted EBITDAre (in thousands):


	Three Months Ended March 31,
	2022		2021
Net income	$	13,943	$	17,805
Depreciation and amortization expense	47,260		37,976
Interest expense	16,823		13,715
Loss on sale of investment properties, net	153		24

Proportionate share of unconsolidated joint venture adjustments	3,420		3,482
EBITDAre	$	81,599	$	73,002

Non-cash share compensation expense	4,253		3,707

Pursuit costs	74		20
Non-cash intangible amortization	1,575		1,128
Proportionate share of unconsolidated joint venture adjustments	(8)		—
Pro forma adjustments for investment activity	68		6
Adjusted EBITDAre	$	87,561	$	77,863

Liquidity and Capital Resources

In March 2020, the Securities and Exchange Commission (SEC) adopted amendments to Rule 3-10 of Regulation S-X and created Rule 13-01 to simplify disclosure requirements related to certain registered securities. The rule is effective January 4, 2021 but earlier compliance is permitted. As a result of the amendments to Rule 3-10 of Regulation S-X, subsidiary issuers of obligations guaranteed by the parent are not required to provide separate financial statements, provided that the subsidiary obligor is consolidated into the parent company’s consolidated financial statements, the parent guarantee is “full and unconditional” and the alternative disclosure required by Rule 13-01 is provided, which includes narrative disclosure and summarized financial information. Accordingly, separate consolidated financial statements of the Operating Partnership have not been presented. Furthermore, as permitted under Rule 13-01(a)(4)(vi), the Company has excluded the summarized financial information for the Operating Partnership as the assets, liabilities, and results of operations of the Company and the Operating Partnership are not materially different than the corresponding amounts presented in the consolidated financial statements of the Company, and management believes such summarized financial information would be repetitive and not provide incremental value to investors.

Our short-term liquidity requirements consist primarily of operating and interest expenses and other expenditures directly associated with our properties, including:

•property expenses;

•interest expense and scheduled principal payments on outstanding indebtedness;

•general and administrative expenses; and

•capital expenditures for tenant improvements and leasing commissions.

In addition, we will require funds for future distributions expected to be paid to our common shareholders and OP Unit holders in our Operating Partnership.

As of March 31, 2022, we had a total of $2.7 million of cash and cash equivalents and $745.0 million of near-term availability on our unsecured revolving credit facility. Our primary sources of cash include rent we collect from our tenants, borrowings under our unsecured credit facility, and financings of debt and equity securities. We believe that our existing cash and cash equivalents, cash flow from operating activities, and borrowings available under our unsecured revolving credit facility will be adequate to fund any existing contractual obligations to purchase properties and other obligations through the next year. However, because of the 90% distribution requirement under the REIT tax rules under the Code, we may not be able to fund all of our future capital needs from cash retained from operations, including capital needed to make investments and to satisfy or refinance maturing obligations. As a result, we expect to rely upon external sources of capital, including debt and equity financing, to fund future capital needs. If we are unable to obtain needed capital on satisfactory terms or at all, we may not be able to make the investments needed to expand our business or to meet our obligations and commitments as they mature.

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We will rely upon external sources of capital to fund future capital needs, and, if we encounter difficulty in obtaining such capital, we may not be able to make future acquisitions necessary to grow our business or meet maturing obligations.

Our long-term liquidity needs consist primarily of funds necessary to pay for acquisitions, recurring and non-recurring capital expenditures, and scheduled debt maturities. We expect to satisfy our long-term liquidity needs through cash flow from operations, unsecured borrowings, issuances of equity and debt securities, proceeds from select property dispositions and joint venture transactions, and, in connection with acquisitions of additional properties, the issuance of OP Units of our Operating Partnership.

Our ability to access capital in a timely and cost-effective manner is essential to the success of our business strategy as it affects our ability to satisfy existing obligations, including repayment of maturing indebtedness, and to make future investments and acquisitions. Factors such as general market conditions, interest rates, credit ratings on our debt and equity securities, expectations of our potential future earnings and cash distributions, and the market price of our common shares, each of which are beyond our control and vary or fluctuate over time, all impact our access to and cost of capital. In particular, to the extent interest rates continue to rise, we may experience a decline in the trading price of our common shares, which may impact our decision to conduct equity offerings for capital raising purposes. We will likely also experience higher borrowing costs as interest rates rise, which may also impact our decisions to incur additional indebtedness, or to engage in transactions for which we may need to fund through borrowing. We expect to continue to utilize equity and debt financings to support our future growth and investment activity.

We also continuously evaluate opportunities to finance future investments. New investments are generally funded from temporary borrowings under our primary unsecured credit facility and the proceeds from financing transactions such as those discussed above. Our investments generate cash from net operating income and principal payments on loans receivable. Permanent financing for future investments, which generally replaces funds drawn under our primary unsecured credit facility, has historically been provided through a combination of the issuance of debt and equity securities and the incurrence or assumption of secured debt.

We intend to invest in additional properties as suitable opportunities arise and adequate sources of financing are available. We are currently evaluating additional potential investments consistent with the normal course of our business. There can be no assurance as to whether or when any portion of these investments will be completed. Our ability to complete investments is subject to a number of risks and variables, including our ability to negotiate mutually agreeable terms with sellers and our ability to finance the investment. We may not be successful in identifying and consummating suitable acquisitions or investment opportunities, which may impede our growth and negatively affect our results of operations and may result in the use of a significant amount of management’s resources. We expect that future investments in properties will depend on and will be financed by, in whole or in part, our existing cash, borrowings, including under our unsecured revolving credit facility, or the proceeds from additional issuances of equity or debt securities.

We currently do not expect to sell any of our properties to meet our liquidity needs, although we may do so in the future.

We currently are in compliance with all debt covenants on our outstanding indebtedness.

Credit Facility

On September 24, 2021, the Operating Partnership, as borrower, and the Trust, as guarantor, executed the Credit Agreement which extended the maturity date of the revolving credit facility under the Credit Agreement to September 24, 2025 and reduced the interest rate margin applicable to borrowings. The Credit Agreement includes an unsecured revolving credit facility of $1.0 billion and contains a term loan feature of $250 million, bringing total borrowing capacity to $1.3 billion. The Credit Agreement also includes a swingline loan commitment for up to 10% of the maximum principal amount and provides an accordion feature allowing the Trust to increase borrowing capacity by up to an additional $500 million, subject to customary terms and conditions, resulting in a maximum borrowing capacity of $1.75 billion. The revolving credit facility under the Credit Agreement also includes two, six-month extension options.

On October 13, 2021, the Company used the proceeds from the 2031 Senior Notes to pay off a $250.0 million term loan feature of the Credit Agreement. The Operating Partnership simultaneously terminated the existing pay-fixed receive-variable rate swaps associated with the full term loan borrowing of $250.0 million. As part of the termination, the Company made total cash payments of $3.3 million to the counterparties of the swap agreements. As defined by the Credit Agreement, the term loan feature is no longer available to the Company.

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As of March 31, 2022, the Company had $255.0 million of borrowings outstanding under its unsecured revolving credit facility. As defined by the Credit Agreement, $745.0 million is available to borrow without adding additional properties to the unencumbered borrowing base of assets. See Note 6 (Debt) to our accompanying consolidated financial statements for a further discussion of our credit facility.

Senior Notes

As of March 31, 2022, we had $1.5 billion aggregate principal amount of senior notes issued and outstanding by the Operating Partnership, comprised of $15.0 million maturing in 2023, $25.0 million maturing in 2025, $70.0 million maturing in 2026, $425.0 million maturing in 2027, $395.0 million maturing in 2028, and $545.0 million maturing in 2031. See Note 6 (Debt) to our accompanying consolidated financial statements for a further discussion of our senior notes.

ATM Program

In May 2021, the Company entered into the Sales Agreement, pursuant to which the Trust may issue and sell, from time to time, its common shares having an aggregate offering price of up to $500 million. In accordance with the Sales Agreement, the Trust may offer and sell its common shares through the Agents, from time to time, by any method deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended, which includes sales made directly on the New York Stock Exchange or other existing trading market, or sales made to or through a market maker.

During the quarterly period ended March 31, 2022, the Trust sold 259,977 common shares pursuant to the ATM Program, at a weighted average price of $18.93 per share resulting in total net proceeds of approximately $4.9 million. As of March 31, 2022, the Trust has $326.3 million remaining available under the ATM Program.

Dividend Reinvestment and Share Purchase Plan

In December 2014, the Company adopted a Dividend Reinvestment and Share Purchase Plan. Under the DRIP:

•existing shareholders may purchase additional common shares by reinvesting all or a portion of the dividends paid on their common shares and by making optional cash payments of not less than $50 and up to a maximum of $10,000 per month;

•new investors may join the DRIP by making an initial investment of not less than $1,000 and up to a maximum of $10,000; and

•once enrolled in the DRIP, participants may authorize electronic deductions from their bank account for optional cash payments to purchase additional shares.

The DRIP is administered by our transfer agent, Computershare Trust Company, N.A. Our common shares sold under the DRIP are newly issued or purchased in the open market, as further described in the DRIP. As of March 31, 2022, the Company had issued 187,510 common shares under the DRIP since its inception.

Critical Accounting Policies

Our consolidated financial statements included in Part I, Item 1 of this report are prepared in conformity with GAAP for interim financial information set forth in the ASC, as published by the Financial Accounting Standards Board, which require us to make estimates and assumptions regarding future events that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. We base these estimates on our experience and assumptions we believe to be reasonable under the circumstances. However, if our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, we may have applied a different accounting treatment, resulting in a different presentation of our financial statements. We periodically reevaluate our estimates and assumptions, and in the event they prove to be different from actual results, we make adjustments in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. Please refer to our 2021 Annual Report for further information regarding the critical accounting policies that affect our more significant estimates and judgments used in the preparation of our consolidated financial statements included in Part I, Item 1 of this report.

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REIT Qualification Requirements

We are subject to a number of operational and organizational requirements necessary to qualify and maintain our qualification as a REIT. If we fail to qualify as a REIT or fail to remain qualified as a REIT in any taxable year, our income would be subject to federal income tax at regular corporate rates and potentially increased state and local taxes and we could incur substantial tax liabilities which could have an adverse impact upon our results of operations, liquidity, and distributions to our shareholders.

Off-Balance Sheet Arrangements

As of March 31, 2022, we have investments in two unconsolidated joint ventures with ownership interests of 49.0% and 12.3%, respectively. The aggregate carrying amount of debt, including both our and our partners’ share, incurred by these ventures was approximately $792.3 million (of which our proportionate share is approximately $143.8 million). See Note 2 (Summary of Significant Accounting Policies) of Part II, Item 8 (Financial Statements and Supplementary Data) of our 2021 Annual Report for the fiscal year ended December 31, 2021 for additional information. We have no other off-balance sheet arrangements that we expect would materially affect our liquidity and capital resources.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our future income, cash flows, and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. We use certain derivative financial instruments to manage, or hedge, interest rate risks related to our borrowings. We do not use derivatives for trading or speculative purposes and only enter into contracts with major financial institutions based upon their credit rating and other factors. Our derivative instruments consist of one interest rate swap. See Note 7 (Derivatives) in Part I, Item I of this report and Note 2 (Summary of Significant Accounting Policies) of Part II, Item 8 (Financial Statements and Supplementary Data) of our 2021 Annual Report for further detail on our interest rate swap.

Interest rate risk amounts are our management’s estimates and were determined by considering the effect of hypothetical interest rates on our consolidated financial instruments. These analyses do not consider the effect of any change in overall economic activity that could occur in that environment. Further, in the event of a change of that magnitude, we may take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure.

Fixed Interest Rate Debt

As of March 31, 2022, our consolidated fixed interest rate debt totaled $1.5 billion, which represented 79.2% of our total consolidated debt, excluding the impact of the interest rate swap. We entered into a pay-fixed receive-variable rate swap for $36.1 million of our mortgage debt, fixing the LIBOR component of the borrowing rate to 1.43%, for an all-in fixed rate as of March 31, 2022 of 3.33%. Both the borrowing and pay-fixed receive-variable swap have a maturity date of October 31, 2024.

Assuming the effects of our interest rate swap agreement, our fixed interest rate debt would represent 81.1% of our total consolidated debt. Interest rate fluctuations on our fixed interest rate debt will generally not affect our future earnings or cash flows unless such instruments mature or are otherwise terminated. However, interest rate changes could affect the fair value of our fixed interest rate debt.

As of March 31, 2022, the fair value and the carrying value of our consolidated fixed interest rate debt were approximately $1.5 billion and $1.6 billion, respectively. The fair value estimate of our fixed interest rate debt was estimated using a discounted cash flow analysis utilizing rates we would expect to pay for debt of a similar type and remaining maturity if the loans were originated on March 31, 2022. As we expect to hold our fixed interest rate debt instruments to maturity, based on the underlying structure of the debt instrument, and the amounts due under such instruments are limited to the outstanding principal balance and any accrued and unpaid interest, we do not expect that market fluctuations in interest rates, and the resulting change in fair value of our fixed interest rate debt instruments, would have a significant impact on our operating cash flows.

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Variable Interest Rate Debt

As of March 31, 2022, our consolidated variable interest rate debt totaled $396.6 million, which represented 20.8% of our total consolidated debt. Assuming the effects of our interest rate swap agreement, our variable interest rate debt would represent 18.9% of our total consolidated debt. Interest rate changes on our variable rate debt could impact our future earnings and cash flows but would not significantly affect the fair value of such debt. As of March 31, 2022, we were exposed to market risks related to fluctuations in interest rates on $360.5 million of consolidated borrowings. Assuming no increase in the amount of our variable rate debt, if LIBOR and SOFR were to change by 100 basis points, interest expense on our variable rate debt as of March 31, 2022 would change by approximately $2.6 million and $1.0 million annually, respectively.

Derivative Instruments

As of March 31, 2022, we had one outstanding interest rate swap that was designated as cash flow hedges of interest rate risk, with a total notional amount of $36.1 million. See Note 7 (Derivatives) within our consolidated financial statements for further detail on our interest rate swap. We are exposed to credit risk of the counterparty to our interest rate swap agreement in the event of non-performance under the terms of the agreements. If we were not able to replace the swap in the event of non-performance by the counterparty, we would be subject to variability of the interest rate on the amount outstanding under our debt that is fixed through the use of the swap.

Indebtedness

As of March 31, 2022, we had total consolidated indebtedness of approximately $1.9 billion. The weighted average interest rate on our consolidated indebtedness was 3.28% (based on the 30-day LIBOR rate of 0.40% and a SOFR rate of 0.29% as of March 31, 2022). As of March 31, 2022, we had approximately $360.5 million, or approximately 18.9%, of our outstanding long-term debt exposed to fluctuations in short-term interest rates. See Note 6 (Debt) to our consolidated financial statements included in Part I, Item 1 to this report for a summary of our indebtedness as of March 31, 2022.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Trust’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Trust’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this report. Based on such evaluation, the Trust’s Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2022, the Trust’s disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information it is required to disclose in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to the Trust’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in the Trust’s system of internal control over financial reporting during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Trust’s internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures and the Trust’s internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and the Trust’s internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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PART II. Other Information

Item 1. Legal Proceedings

From time to time, we are party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. We are not currently a party, as plaintiff or defendant, to any legal proceedings which, individually or in the aggregate, would be expected to have a material effect on our business, financial condition, or results of operations if determined adversely to us.

Item 1A. Risk Factors

Information on risk factors can be found in Part I, Item 1A (Risk Factors) of our 2021 Annual Report. There have been no material changes from the risk factors previously disclosed in our 2021 Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

From time to time the Operating Partnership issues OP Units to the Trust, as required by the Partnership Agreement, to reflect additional issuances of common shares by the Trust and to preserve equitable ownership ratios.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table sets forth information relating to repurchases of our common shares of beneficial interest and OP Units during the three months ended March 31, 2022:

ISSUER PURCHASES OF EQUITY SECURITIES


Period	(a) Total Number of Shares (or Units) Purchased		(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
January 1, 2022 - January 31, 2022	10,000	(1)	$	18.44	N/A	N/A
February 1, 2022 - February 28, 2022	160,573	(2)	17.07		N/A	N/A
March 1, 2022 - March 31, 2022	82,475	(2)	16.37		N/A	N/A
Total	253,048		$	16.90	—	—

(1)Represents OP Units redeemed by holders in exchange for cash.

(2)Represents repurchased common shares to satisfy employee withholding tax obligations related to stock-based compensation.

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Item 6. Exhibits


Exhibit No.						Description
10.1						Employment Agreement dated as of March 1, 2022 between the Trust and William Mark Dukes**
22.1						List of Subsidiary Issuers and Guaranteed Securities**
31.1						Certification of John T. Thomas, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Physicians Realty Trust**
31.2						Certification of Jeffrey N. Theiler, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Physicians Realty Trust**


32.1						Certification of John T. Thomas and Jeffrey N. Theiler, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) for Physicians Realty Trust**


101.INS						This instance document does not appear in the interactive data file because of XBRL tags are embedded within the inline XBRL document.
101.SCH						Inline XBRL Extension Schema Document (+)
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document (+)
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document (+)
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document (+)
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document (+)
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

** Filed herewith

(+) Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement for purposes of Section 11 or 12 of the Securities Act, is deemed not filed for purposes of Section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			PHYSICIANS REALTY TRUST


Date: May 5, 2022			/s/ John T. Thomas
			John T. Thomas
			President and Chief Executive Officer
			(Principal Executive Officer)


Date: May 5, 2022			/s/ Jeffrey N. Theiler
			Jeffrey N. Theiler
			Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)

Document

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”), by and between PHYSICIANS REALTY TRUST, a Maryland trust (the “Company”), and William M. Dukes (the “Executive”) is entered into and effective on this 1st day of March, 2022 (the “Effective Date”).

NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties, intending to be legally bound, hereby agree as follows:

1.EMPLOYMENT

The Company hereby agrees to employ the Executive as its Senior Vice President – Asset Management (the “SVP-Asset Management”) upon the terms and conditions herein contained, and the Executive hereby agrees to accept such employment and to serve in such position. As SVP-Asset Management, the Executive will have those duties which can reasonably be expected to be performed by a person in such position and shall undertake such other responsibilities as may be assigned to the Executive by the Company’s Chief Executive Officer (“CEO”) from time to time. For purposes of the Agreement, all references to the “Board” shall mean the Board of Trustees. In such capacity, the Executive shall report to the Company’s Board and shall have such powers and responsibilities consistent with his position as may be assigned. Throughout the Employment Term, the Executive shall devote his best efforts and all of his business time and services to the business and affairs of the Company.

2.TERM OF AGREEMENT

Subject to earlier termination as herein provided, the Executive’s employment under the Agreement shall continue in effect until December 31, 2024 (the “Initial Term”). The Agreement will automatically renew, subject to earlier termination as herein provided, for successive one (1) year periods (the “Additional Terms”), unless either the Executive provides notice of non-renewal at least sixty (60) days prior to the expiration of the Initial Term or the then Additional Term, whichever is applicable, or the Company provides notice of non-renewal at least six (6) months prior to the expiration of the Initial Term or the then Additional Term, whichever is applicable; provided, the number of Additional Terms shall not exceed two (2) and, unless earlier terminated in accordance with the terms of this Agreement, the Agreement shall automatically terminate on December 31, 2026. The Initial Term and any Additional Term(s) shall be referred to collectively as the “Employment Term.”

Notwithstanding the foregoing, the Company shall be entitled to terminate the Agreement immediately, subject to a continuing obligation to make any payments required under Section 5 below, if the Executive (i) incurs a Disability as described in Section 5(b), (ii) is terminated for Cause, as defined in Section 5(c), or (iii) voluntarily terminates his employment without Good Reason (as defined below), as described in Section 5(d).

3.SALARY AND BONUS

The Executive shall receive a base salary during the Employment Term at a rate of $260,000 per annum for 2021 (the “Base Salary”), payable in substantially equal semi-monthly installments. The Compensation Committee of the Board shall consult with the SVP-Asset Management and review the Executive’s Base Salary at annual intervals, and may increase the Executive’s annual Base Salary from time to time as the Committee deems to be appropriate.

Subject to Section 12 the Executive will have an annual cash bonus opportunity for each calendar year during the Employment Term (the “Annual Bonus”) based upon performance goals that are established by the Board or the Compensation Committee of the Board, as the case may be, in its sole discretion. In the event an Annual Bonus is payable pursuant to this Section 3, such bonus shall be paid to the Executive no later than March 15th of the year after the year to which the bonus relates.

4.ADDITIONAL COMPENSATION AND BENEFITS

The Executive shall receive the following additional compensation and welfare and fringe benefits during the term of the Agreement:

(a)Options and Other Long-Term Incentives. During the Employment Term, any options, restricted shares or other awards granted under the Physicians Realty Trust 2013 Equity Incentive Plan (the “2013 Equity Plan”) shall be at the discretion of the Compensation Committee of the Company’s Board.

(b)Vacation. The Executive shall be entitled to vacation and personal days in accordance with the policies the Company maintains from time to time.

(c)Business Expenses. The Company shall reimburse the Executive for all reasonable expenses he incurs in promoting the Company’s business, including expenses for travel and similar items, upon presentation by the Executive (generally within 60 days of the date incurred) of an itemized account of such expenditures. Any reimbursement of expenses made under the Agreement shall only be made for eligible expenses (including transportation and cellular service expenses as set forth above) incurred during the Employment Term, and no reimbursement of any expense shall be made by the Company after December 31st of the year following the calendar year in which the expense was incurred. The amount eligible for reimbursement under the Agreement during a taxable year may not affect expenses eligible for reimbursement in any other taxable year, and the right to reimbursement under the Agreement is not subject to liquidation or exchange for another benefit. The Executive will comply with the Company’s policies regarding these benefits, including all Internal Revenue Service rules and requirements.

(d)Professional Expenses. Each calendar year during the Employment Term, the Company agrees to reimburse the Executive for up to $10,000 of reasonable professional expenses (i.e., accounting, financial planning, estate planning expenses) incurred by the Executive during such year for personal advice rendered to the Executive.

(e)Other Benefits and Perquisites. The Executive shall be entitled to participate in the benefit plans provided by the Company for all employees, generally, and for the Company’s executive employees. The Company shall be entitled to change or terminate these plans in its sole discretion at any time.

5.PAYMENTS UPON TERMINATION

(a)Accrued Obligations. Upon termination of employment for any reason, the Executive shall be entitled to receive his Base Salary accrued through the date of termination, any accrued but unpaid vacation pay, plus any bonuses earned but unpaid with respect to fiscal years or other periods ending in or with the year of termination (collectively, the “Accrued Obligations”). For purposes of the preceding sentence, except upon termination of employment by the Company for Cause (as defined below), the Executive shall be entitled to receive an Annual Bonus for the year of termination based on the actual achievement of any performance goal or goals thereunder and pro-rated based on the Executive’s period of service during the performance period. Payments under this Section 5(a) shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the date of termination). The Executive shall also receive any nonforfeitable benefits payable to him under the terms of any deferred compensation, incentive or other benefit plans maintained by the Company, payable in accordance with the terms of the applicable plan.

(b)Disability. The Company shall be entitled to terminate the Executive’s employment if the Board determines that the Executive has been unable to attend to his duties for at least ninety (90) days because of a Disability (as defined below), and has received a written opinion from a physician acceptable to the Board that such condition prevents the Executive from resuming full performance of his duties and is likely to continue for an indefinite period. Subject to compliance with the covenants in Section 9 and Section 10 and the execution and

timely return by the Executive of a release of claims in a form and substance reasonably requested by the Company (the “Release”), the Company shall pay severance to the Executive in accordance with its normal payroll practices, equal to twelve (12) months of the Executive’s Base Salary as in effect at the time his employment terminates, with the first payment on the first payroll date after the revocation period for the Release has expired; provided (i) if the time period for returning and revoking the Release begins in one taxable year and ends in a second taxable year, the payments shall not commence until the first payroll date in the second taxable year; and (ii) all such payments shall immediately terminate at an earlier date if the Executive returns to active employment, either with the Company or otherwise. Any amounts payable under this Section 5(b) shall be reduced on a dollar-for-dollar basis by the amount of bona fide disability pay (within the meaning of Treas. Reg. section 1.409A-1(a)(5)) received or receivable by the Executive during such twelve-month period, provided such disability payments are made pursuant to a plan sponsored by the Company that covers a substantial number of employees of the Company and was established prior to the date the Executive incurred a permanent disability, and further provided that such reduction does not otherwise affect the time of payment of amounts pursuant to this Section 5(b). For purposes of the Agreement, “Disability” means the Executive is incapacitated due to physical or mental illness and such incapacity, with or without reasonable accommodation, prevents the Executive from satisfactorily performing the essential functions of his job for the Company on a full-time basis for at least ninety (90) days in a calendar year.

(c)Termination for Cause. If the Executive’s employment is terminated by the Company for Cause, the amount the Executive shall be entitled to receive from the Company shall be limited to the Accrued Obligations. For purposes of the Agreement, the term “Cause” shall be limited to the following

(i)the Executive engaging in any act of fraud, dishonesty, theft, misappropriation or embezzlement of funds or misrepresentation with respect to the Company;

(ii)the Executive’s conviction or plea of no contest with respect to any felony or other crime involving moral turpitude;

(iii)the Executive’s material breach of his obligations under the Agreement, including, without limitation, breach of the covenants set forth in Section 9 and Section 10 below or the refusal of the Executive to perform his job duties as directed by the Board, which the Executive failed to cure within thirty (30) days after receiving written notice from the Board specifying the alleged breach;

(iv)violation of any material duty or obligation to the Company or of any direction or any rule or regulation reasonably established by the Board, which the Executive failed to cure within thirty (30) days after receiving written notice from the Board specifying the alleged violation; or

(v)insubordination or misconduct in the performance of, or neglect of, the Executive’s duties which the Executive failed to cure within thirty (30) days after receiving written notice from the Board specifying the alleged insubordination, misconduct, or neglect.

(d)Voluntary Termination by the Executive Without Good Reason. If the Executive resigns or otherwise voluntarily terminates his employment without Good Reason (as defined in Section 5(e) below), or if the Executive’s employment terminates due to non-renewal of the Agreement by the Executive, the amount the Executive shall be entitled to receive from the Company shall be limited to the Accrued Obligations.

(e)Termination by the Executive for Good Reason. The Executive may terminate his employment for Good Reason if (i) a Good Reason circumstance shall have occurred, and the Executive provides the Company with written notice thereof within ninety (90) days after the occurrence of the Good Reason circumstance, which notice shall specifically identify the circumstance that the Executive believes constitutes Good Reason; (ii) the

Company fails to correct the circumstance so identified within thirty (30) days after the receipt of such notice; and (iii) the Executive resigns within ninety (90) days after the date of delivery of the notice referred to in clause (i) above. For purposes of the Agreement, “Good Reason” shall mean the occurrence or failure to cause the occurrence, as the case may be, without the Executive’s prior express written consent, of any of the following circumstances:

(1)the assignment to the Executive of a position other than the position of SVP-Asset Management (other than for Cause or by reason of his Disability) or the assignment of duties materially inconsistent with such position if either such change in assignment constitutes a material diminution in the Executive’s authority, duties or responsibilities;

(2)receipt by the Executive of a direction to report to anyone other than the CEO if such change in reporting duties constitutes a material diminution in the authority, duties or responsibilities of the supervisor to whom the Executive is required to report;

(3)a relocation of more than thirty-five (35) miles from the geographic location where the Executive is providing services under this Agreement;

(4)a material diminution in the Executive’s (i) Base Salary or (ii) total compensation opportunity;

(5)a failure by the Company (A) to continue any bonus, incentive or material compensatory plan, program or arrangement in which the Executive is entitled to participate (the “Bonus Plans”), provided that any such Bonus Plans may be modified at the Company’s discretion from time to time but shall be deemed terminated if (x) any such plan does not remain substantially in the form in effect prior to such modification and (y) if plans providing the Executive with substantially similar benefits are not substituted therefor (“Substitute Plans”), or (B) to continue the Executive as a participant in the Bonus Plans and Substitute Plans on at least the same basis as to potential amount of the bonus as the Executive participated in prior to any change in such plans or awards, in accordance with the Bonus Plans and the Substitute Plans;

(6)any material breach by the Company of any provision of the Agreement; or

(7)a failure of any successor to the Company (whether direct or indirect and whether by merger, acquisition, consolidation or otherwise) to assume in a writing delivered to the Executive upon the successor becoming such, the obligations of the Company hereunder.

The failure by the Executive to set forth in the written notice to the Company of his termination for Good Reason of any facts or circumstances which contribute to the showing of Good Reason shall not waive any right of the Executive hereunder or preclude the Executive from asserting such fact or circumstance in enforcing his rights hereunder.

Upon termination of employment for Good Reason, subject to compliance with the covenants in Section 9 and Section 10 and the execution of the Release, and except as otherwise provided by Sections 12 and 18, the Executive shall be entitled to receive the amounts and benefits described in Section 5(f) below.

(f)Involuntary Termination by the Company without Cause. If the Executive’s employment is involuntarily terminated by the Company without Cause and for a reason other than death or Disability, subject to compliance with the covenants in Section 9 and Section 10 and the execution and timely return by the Executive of the Release, and except as otherwise provided by Sections 12 and 18, the Executive shall be entitled to receive the amounts and benefits described in this Section 5(f). The Company shall pay severance to the Executive

in accordance with its normal payroll practices, equal to the Executive’s Base Salary as in effect at the time his employment terminates for twenty four (24) months, with the first payment on the first payroll date after the revocation period for the Release has expired; provided, that if the time period for returning and revoking the Release begins in one taxable year and ends in a second taxable year, the payments shall not commence until the first payroll date in the second taxable year. In addition, the Executive shall be entitled to the following:

(i)Any options, restricted shares or other awards granted to the Executive under the 2013 Equity Plan shall become fully vested and, in the case of options, exercisable in full;

(ii)Provided that the Executive elects continuation of coverage under the Company’s group health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended (“COBRA”), the Executive shall be provided continued coverage at the Company’s expense under any health insurance programs maintained by the Company in which the Executive participated at the time of his termination for twelve (12) months or until, if earlier, the date the Executive obtains comparable coverage under a group health plan maintained by a new employer. To the extent the benefits provided under the immediately preceding sentence are otherwise taxable to the Executive, such benefits, for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) (and the regulations and other guidance issued thereunder) shall be provided as separate monthly in-kind payments of those benefits, and to the extent those benefits are subject to and not otherwise excepted from Section 409A of the Code, the provision of the in-kind benefits during one calendar year shall not affect the in kind benefits to be provided in any other calendar year; and

(iii)A lump sum payment equal to two times the average of the Annual Bonuses paid to the Executive for the two fiscal years of the Company ending prior to the Executive’s employment termination date, if any, payable on the first payroll date after the revocation period for the Release has expired, and subject to forfeiture if the Executive violates any of the covenants in Section 9 and Section 10.

For purposes of clause (i) above, the reference to “fully vested” in connection with any award subject to performance-based vesting conditions refers to vesting at the maximum level of achievement of the performance goal or goals under the award.

(g)Non-Renewal of the Agreement by the Company. If the Executive’s employment terminates due to non-renewal of the Agreement by the Company or automatic termination of the Agreement on December 31, 2026. subject to compliance with the covenants in Section 9 and Section 10 and the execution and timely return by the Executive of the Release, and except as otherwise provided by Sections 12 and 18, the Executive shall be entitled to receive the amounts and benefits described in this Section 5(g). The Company shall pay severance to the Executive in accordance with its normal payroll practices, equal to the Executive’s Base Salary as in effect at the time his employment terminates for six (6) months, with the first payment on the first payroll date after the revocation period for the Release has expired; provided, that if the time period for returning and revoking the Release begins in one taxable year and ends in a second taxable year, the payments shall not commence until the first payroll date in the second taxable year. In addition, the Executive shall be entitled to the following:

(i)Any options, restricted shares or other awards granted to the Executive under the 2013 Equity Plan that are subject to performance-based vesting conditions shall vest, based on the actual level of achievement of the performance goal or goals under the award and shall be pro-rated based on the Executive’s period of service during the performance period. Any options, restricted shares or other awards granted to the Executive under the 2013 Equity Plan that are not subject to

performance-based vesting conditions shall be accelerated and such awards shall become immediately fully vested and, in the case of options, exercisable in full; and

(ii)Provided that the Executive elects continuation of coverage under the Company’s group health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended (“COBRA”), the Executive shall be provided continued coverage at the Company’s expense under any health insurance programs maintained by the Company in which the Executive participated at the time of his termination for six (6) months or until, if earlier, the date the Executive obtains comparable coverage under a group health plan maintained by a new employer. To the extent the benefits provided under the immediately preceding sentence are otherwise taxable to the Executive, such benefits, for purposes of Section 409A of the Code (and the regulations and other guidance issued thereunder) shall be provided as separate monthly in-kind payments of those benefits, and to the extent those benefits are subject to and not otherwise excepted from Section 409A of the Code, the provision of the in-kind benefits during one calendar year shall not affect the in-kind benefits to be provided in any other calendar year.

Notwithstanding the foregoing, if the Executive and the Company enter into a new agreement for the performance of services by the Executive for the Company or its affiliate with respect to the period commencing on or immediately after December 31, 2026, the Executive shall not be entitled to receive the amounts and benefits described in this Section 5(g) and this Section 5(g) shall be null and void and of no further effect.

6.EFFECT OF CHANGE IN CONTROL

(a) Vesting of Awards. In the event of a Change in Control, the surviving or successor entity (or its parent corporation) may continue, assume or replace awards granted to the Executive under the terms of the 2013 Equity Plan that are outstanding as of the Change in Control, and such awards or replacements therefore shall remain outstanding and be governed by their respective terms. If and to the extent that outstanding awards granted to the Executive under the terms of the 2013 Equity Plan are not continued, assumed or replaced in connection with a Change in Control, then the vesting of such awards shall be accelerated and such awards shall become immediately fully vested and, in the case of options, exercisable in full as of the Change in Control. With respect to outstanding awards granted to the Executive under the terms of the 2013 Equity Plan that are subject to performance-based vesting conditions, the level of achievement of the performance-based vesting conditions shall be measured consistent with the original terms of the award to preserve the intent of the metrics, and to the extent performance can no longer be reasonably measured consistent with the original terms, the vesting of such awards shall be accelerated and such awards shall become immediately fully vested and, in the case of options, exercisable in full as of the Change in Control. The reference to “fully vested” in connection with any award subject to performance-based vesting conditions refers to vesting at the maximum level of achievement of the performance goal or goals under the award.

(b) Certain Calculations. In the event of a Change in Control, all calculations required to be made to determine whether any payments or distributions by the Company, or other benefits provided by the Company, to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of the Agreement or otherwise) would be subject to the excise tax imposed by Section 4999 of the Code, or whether any interest or penalties with respect to such excise tax would be due, including the assumptions to be utilized in arriving at any such determinations, shall be made by a nationally recognized accounting firm, consulting firm or law firm, designated by the Executive (the “Consulting Firm”). All fees and expenses of the Consulting Firm shall be borne solely by the Company.

(c) Severance Payment and Benefits. If, at any time during the period of twelve (12) consecutive months commencing on the occurrence of a Change in Control, (i) the Executive is involuntarily terminated (other than for Cause), or (ii) the Executive terminates his employment for Good Reason, or (iii) the Company gives notice of non-renewal of the Agreement, or (iv) such period of twelve (12) consecutive months includes December 31, 2026, then subject to compliance with the covenants in Section 9 and Section 10 and the execution and timely return by the Executive of the Release, in lieu of the amounts and benefits otherwise payable under Section 5(e), 5(f) or 5(g) above, whichever is applicable, (A) the Executive shall be entitled to receive a lump sum severance payment equal to two times the sum of (i) the Executive’s Base Salary, as in effect at the time of the Change in Control, and (ii) the average of the annual bonuses paid to the Executive for the prior two fiscal years of the Company ending prior to the Change in Control, if any, and (B) any options, restricted shares, or other awards granted to the Executive under the 2013 Equity Plan or any replacement awards shall become fully vested and, in the case of options, exercisable in full. For purposes of the above, the reference to “fully vested” in connection with any award subject to performance-based vesting conditions refers to vesting at the maximum level of achievement of the performance goal or goals under the award. Such lump sum payment shall be made to the Executive within sixty (60) days following the date of the Executive’s termination of employment. Notwithstanding the foregoing, such lump sum severance payment shall be reduced on a dollar-for-dollar basis by any portion of such payment received or receivable by the Executive from any successor to the Company; provided, such reduction does not otherwise affect the time of payment of such lump sum severance pursuant to this Section 6(c). In addition to the severance payment, the Executive shall be entitled to continued coverage at the Company’s expense under any health insurance programs maintained by the Company in which the Executive participated at the time of his termination, which coverage shall be continued for eighteen (18) months or until, if earlier, the date the Executive obtains comparable coverage under a group health plan maintained by a new employer. To the extent the benefits provided under the immediately preceding sentence are otherwise taxable to the Executive, such benefits, for purposes of Section 409A of the Code (and the regulations and other guidance issued thereunder) shall be provided as separate monthly in-kind payments of those benefits, and to the extent those benefits are subject to and not otherwise excepted from Section 409A of the Code, the provision of the in kind benefits during one calendar year shall not affect the in-kind benefits to be provided in any other calendar year.

(d) Definition of Change in Control. For purposes of the Agreement, a “Change in Control” shall mean the occurrence of any one of the following events:

(i)any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the Board (the “Company Voting Securities”); provided, however, the event described in this paragraph (i) shall not be deemed to be a Change in Control if such event results from the acquisition of Company Voting Securities pursuant to a Non-Qualifying Transaction (as defined in paragraph (iii) below);

(ii)individuals who, on the Effective Date, constitute the Board (the “Incumbent Trustees”) cease for any reason to constitute at least a majority of the Board; provided, however, that any person becoming a trustee subsequent to the Effective Date, whose election or nomination for election was approved (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for trustee, without written objection to such nomination) by a vote of at least two-thirds of the trustees who were, as of the date of such approval, Incumbent Trustees, shall be an Incumbent Trustee; provided, further, that no individual initially appointed, elected or nominated as a trustee of the Company as a result of an actual or threatened election contest with respect to the election or removal of trustees or as a result of any other actual

or threatened solicitation of proxies or consents or pursuant to any proxy access right by or on behalf of any person other than the Board shall be deemed to be an Incumbent Trustee;

(iii)the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving (A) the Company or (B) any of its wholly owned subsidiaries pursuant to which, in the case of this clause (B), Company Voting Securities are issued or issuable (any event described in the immediately preceding clause (A) or (B), a “Reorganization”) or the sale or other disposition of all or substantially all of the assets of the Company to an entity that is not an Affiliate of the Company (a “Sale”), unless immediately following such Reorganization or Sale: (1) more than fifty percent (50%) of the total voting power (in respect of the election of trustees, or similar officials in the case of an entity other than a trust) of (x) the Company (or, if the Company ceases to exist, the entity resulting from such Reorganization), or, in the case of a Sale, the entity which has acquired all or substantially all of the assets of the Company (in either case, the “Surviving Entity”), or (y) if applicable, the ultimate parent entity that directly or indirectly has Beneficial Ownership of more than fifty percent (50%) of the total voting power (in respect of the election of trustees, or similar officials in the case of an entity other than a trust) of the Surviving Entity (the “Parent Entity”), is represented by Company Voting Securities that were outstanding immediately prior to such Reorganization or Sale (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Reorganization or Sale), (2) no Person is or becomes the Beneficial Owner, directly or indirectly, of fifty percent (50%) or more of the total voting power (in respect of the election of trustees, or similar officials in the case of an entity other than a trust) of the outstanding voting securities of the Parent Entity (or, if there is no Parent Entity, the Surviving Entity) and (3) at least a majority of the members of the board of trustees (or similar officials in the case of an entity other than a trust) of the Parent Entity (or, if there is no Parent Entity, the Surviving Entity) following the consummation of the Reorganization or Sale were, at the time of the approval by the Board of the execution of the initial agreement providing for such Reorganization or Sale, Incumbent Trustees (any Reorganization or Sale which satisfies all of the criteria specified in (1), (2) and (3) above being deemed to be a “Non-Qualifying Transaction”); or

(iv)the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company. Notwithstanding the foregoing, if any Person becomes the Beneficial Owner, directly or indirectly, of fifty percent (50%) or more of the combined voting power of Company Voting Securities solely as a result of the, acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding, such increased amount shall be deemed not to result in a Change in Control; provided, however, that if such Person subsequently becomes the Beneficial Owner, directly or indirectly, of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities Beneficially Owned by such Person to a percentage equal to or greater than fifty percent (50%), a Change in Control of the Company shall then be deemed to occur.

For purposes of this Section 6(d), the following terms shall have the following meanings:

(v)“Affiliate” shall mean an affiliate of the Company, as defined in Rule 12b-2 promulgated under Section 12 of the Securities Exchange Act of 1934, as amended from time to time (the “Exchange Act”);

(vi)“Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act;

(vii)“Person” shall have the meaning set forth in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof; except that such term shall not include (1) the Company or any of its subsidiaries, (2) a trustee or other fiduciary holding securities under an employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries, (3) an underwriter temporarily holding securities pursuant to an offering of such securities, (4) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of shares of common stock of the Company or (5) the Executive or any group of persons including the Executive (or any entity controlled by the Executive or any group of persons including the Executive).

7.DEATH

If the Executive dies during the Employment Term, the Company shall pay to the Executive’s surviving spouse or if there is no surviving spouse, the Executive’s estate, a lump sum payment equal to the Accrued Obligations. In addition, the death benefits payable by reason of the Executive’s death under any retirement, deferred compensation, life insurance or other employee benefit plan maintained by the Company shall be paid to the beneficiary designated by the Executive, and the options, restricted shares or other awards held by the Executive under the Company’s equity incentive plans shall become fully vested, and, in the case of options, exercisable in full, in accordance with the terms of the applicable plan or plans.

8.WITHHOLDING

The Company shall, to the extent permitted by law, have the right to withhold and deduct from any payment hereunder any federal, state or local taxes of any kind required by law to be withheld with respect to any such payment.

9.PROTECTION OF CONFIDENTIAL INFORMATION

(a) Confidential Information. During the Executive’s employment with the Company, the Company shall grant the Executive otherwise prohibited access to its confidential information which are not known to the Company’s competitors or within the Company’s industry generally, which were developed by the Company over a long

period of time and/or at its substantial expense, and which are of great competitive value to the Company, and access to the Company’s customers and clients. For purposes of the Agreement, “Confidential Information” includes all confidential and proprietary information of the Company, including, but not limited to, the following: financial models, financial information and data, business methods, electronic files, computer drives/disks, passwords, address and telephone lists, internal memoranda, correspondence, business strategies, business plans and/or projections, lease forms, construction contract forms, development and construction management service agreements, tenant lists, lease terms, rates, rent rolls, strategies, improvements, discoveries, plans for research or future business, infrastructure, marketing and sales plans and strategies, budgets, customer and client information, employee, customer and client nonpublic personal information, supplier lists, business records, audit processes, management methods and information, reports, recommendations and conclusions, information regarding the names, contact information, skills and compensation of employees and contractors of the Company, other information not generally known to the public, and other business information disclosed to the Executive by the Company, either directly or indirectly, in writing, orally, or by drawings or observation.

(b) Non-Disclosure of Confidential Information. The Executive acknowledges and agrees that Confidential Information is proprietary to the Company and, as such, is a special and unique asset of the Company, and that any disclosure or unauthorized use of any Confidential Information by the Executive will

cause irreparable harm and loss to the Company. The Executive understands and acknowledges that each and every component of the Confidential Information (i) has been developed by the Company at significant effort and expense and is sufficiently secret to derive economic value from not being generally known to other parties, and (ii) constitutes a protectable business interest of the Company. The Executive acknowledges and agrees that the Company owns the Confidential Information. The Executive agrees not to dispute, contest, or deny any such ownership rights either during or after the Executive’s employment with the Company. The Executive agrees to preserve and protect the confidentiality of all Confidential Information. The Executive agrees that the Executive shall not at any time during the Executive’s employment with the Company and for a period of two (2) years immediately following the date of the Executive’s termination from employment for any reason, directly or indirectly, disclose to any unauthorized person or use for the Executive’s own account any Confidential Information without the Company’s consent. Throughout the Executive’s employment and for two (2) years thereafter: (i) the Executive shall hold all Confidential Information in the strictest confidence, take all reasonable precautions to prevent its inadvertent disclosure to any unauthorized person, and follow all policies of the Company protecting the Confidential Information; (ii) the Executive shall not, directly or indirectly, utilize, disclose or make available to any other person or entity, any of the Confidential Information, other than in the proper performance of the Executive’s duties; (iii) the Executive shall not use the Confidential Information to attempt to solicit, induce, recruit, or take away clients or customers of the Company; and (iv) if the Executive learns that any person or entity is taking or threatening to take any actions which would compromise any Confidential Information, the Executive shall promptly advise the Company of all facts concerning such action or threatened action. Provided that, any Confidential Information that is also a Trade Secret shall be subject to the provisions of Section 9(c) of this Agreement. The foregoing shall not apply to any information which is already in the public domain, or is generally disclosed by the Company or is otherwise in the public domain at the time of disclosure (other than through an unauthorized disclosure by the Executive or any other person).

(c) Non-disclosure of Trade Secrets. During the Executive’s employment with the Company, the Company shall grant the Executive otherwise prohibited access to its Trade Secrets which are not known to the Company’s competitors or within the Company’s industry generally, which were developed by the Company over a long

period of time and/or at its substantial expense, and which are of great competitive value to the Company, and access to the Company’s customers and clients. Throughout the Executive’s employment and after the termination of Executive’s employment: (i) the Executive shall hold all Trade Secrets in the strictest confidence, take all reasonable precautions to prevent its inadvertent disclosure to any unauthorized person, and follow all policies of the Company protecting Trade Secrets; (ii) the Executive shall not, directly or indirectly, utilize, disclose or make available to any other person or entity, any Trade Secrets, other than in the proper performance of the Executive’s duties; (iii) the Executive shall not use Trade Secrets to attempt to solicit, induce, recruit, or take away clients or customers of the Company; and (iv) if the Executive learns that any person or entity is taking or threatening to take any actions which would compromise any Trade Secret, the Executive shall promptly advise the Company of all facts concerning such action or threatened action. The foregoing shall not apply to any information which is already in the public domain, or is generally disclosed by the Company or is otherwise in the public domain at the time of disclosure (other than through an unauthorized disclosure by the Executive or any other person). During and after the termination of Executive’s employment with the Company, the Executive shall not use or disclose the Company’s Trade Secrets so long as they remain Trade Secrets. As used in this Agreement, “Trade Secret” means a Trade Secret as that term is defined under Wisconsin law and under the Economic Espionage Act of 1996 and its amendments.

(d) Return of Confidential Information and Trade Secrets. Upon the termination of the Executive’s employment for any reason, the Executive shall immediately return and deliver to the Company any and all Trade Secrets, Confidential Information, software, devices, cell phones, personal data assistants, credit cards, data, reports, proposals, lists, correspondence, materials, equipment, computers, hard drives, papers, books, records, documents, memoranda, manuals, e-mail, electronic or magnetic recordings or data, including all copies thereof, which belong to the Company or relate to the Company’s business and which are in the Executive’s possession,

custody or control, whether prepared by the Executive or others. If at any time after termination of the Executive’s employment he determines that he has any Trade Secrets or Confidential Information in his possession or control, the Executive shall immediately return to the Company all such Trade Secrets or Confidential Information in the Executive’s possession or control, including all copies and portions thereof.

(e) Reasonableness. The Executive recognizes that because his work for the Company may bring him into contact with confidential and proprietary information of the Company, the restrictions of this Section 9 are required for the reasonable protection of the Company and its investments and for the Company’s reliance on and confidence in the Executive. The Executive hereby agrees that the covenants contained in this Section 9, including their duration, are fair and reasonable in light of the amount of compensation, Trade Secrets and Confidential Information that the Executive is receiving in connection with his employment by the Company. It is the desire and intent of the parties that the provisions of Section 9 be enforced to the fullest extent permitted under applicable law, whether now or hereafter in effect and therefore, to the extent permitted by applicable law, the Executive and the Company hereby waive any provision of applicable law that would render any provision of Section 9 invalid or unenforceable.

(f) Defend Trade Secrets Act. The Executive acknowledges that the Company has provided him with the following notice of immunity rights in compliance with the requirements of the Defend Trade Secrets Act of 2016 (18 U.S.C. Section 1833(b)): (a) The Executive shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of Confidential Information or Trade Secrets that is made in confidence to a Federal, State, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law; (b) The Executive shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of Confidential Information or Trade Secrets that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (c) if the Executive files a lawsuit for retaliation by his employer for reporting a suspected violation of law, the Executive may disclose the Confidential Information or Trade Secrets to his attorney and use the Confidential Information or Trade Secrets in the court proceeding, provided that the Executive file any document containing the Confidential Information or Trade Secrets under seal and do not disclose the Confidential Information or Trade Secrets, except pursuant to court order.

(g) Protected Activity. The Executive understands that nothing in this Agreement, including the language in this Section 9 or in Section 10(c) below, is intended to or shall limit, prevent, impede or interfere in any way with his right, without prior notice to the Company, to provide information to the government, participate in investigations, testify in proceedings regarding the Company’s past or future conduct, or engage in any activities protected under whistleblower statutes. The Executive understands that nothing herein is intended to preclude or dissuade him from engaging in activities protected by applicable state and federal law.

10.RESTRICTIVE COVENANTS

In consideration for (i) the Company’s promise to provide Trade Secrets and Confidential Information to the Executive, (ii) the substantial economic investment made by the Company in the Trade Secrets and Confidential Information and goodwill of the Company, and/or the business opportunities disclosed or entrusted to the Executive, (iii) access to the Company’s customers and clients, and (iv) the Company’s employment of the Executive pursuant to the Agreement and the compensation and other benefits provided by the Company to the Executive, to protect the Company’s Trade Secrets and Confidential Information and business goodwill of the Company, the Executive agrees to the following restrictive covenants.

(a) Non-Competition. The Executive hereby agrees that during the Restricted Period (defined below), other than in connection with the Executive’s duties under the Agreement, the Executive shall not, and shall not use any Trade Secrets or Confidential Information to, without the prior consent of the Company, directly or indirectly, either individually or as an owner, principal, partner, stockholder, manager, contractor, distributor,

lender, investor, consultant, agent, employee, co-venturer or as a director or officer of any corporation or association, perform services of the type the Executive performed for the Company on behalf of, or to benefit, any Competing Business (defined below) within the Restricted Territory (defined below); provided however, that nothing in this Section 10(a) shall prevent the Executive from owning a passive investment in up to two percent (2%) of the stock of a publicly traded corporation engaged in a Competing Business and such ownership shall not be considered to be a violation of Section 10(a).

(i)“Restricted Period” means during the Executive’s employment with the Company and for a period equal to the later of (i) one (1) year immediately following the date of the Executive’s termination from employment for any reason or (ii) the number of months for which the Executive is receiving monthly severance payments under Section 5 of the Agreement.

(ii)“Competing Business” means any business, individual, partnership, firm, corporation or other entity that provides the same or substantially similar products or services as those provided by the Company during the Executive’s employment, which includes, without limitation, the business of buying, managing, holding and selling medical office buildings.

(iii)As SVP-Asset Management of the Company, the Executive has responsibility for the Company’s operations throughout the United States. Because the Company does business throughout the United States, the “Restricted Territory” means the United States and any other region or state in which the Executive performed services, was assigned responsibility for the Company, or about which the Executive received Confidential Information or Trade Secrets.

(b) Non-Solicitation. The Executive agrees that during the Restricted Period, other than in connection with the Executive’s duties under the Agreement, the Executive shall not, and shall not use any Confidential Information or Trade Secrets to, directly or indirectly, either individually or as an owner, principal, partner, stockholder, manager, contractor, distributor, lender, investor, consultant, agent, employee, co-venturer or as a director or officer of any corporation or association, or in any other manner or capacity whatsoever, and whether personally or through other persons:

(i)Solicit business from, interfere with, attempt to solicit business with, or do business with any customer or client of the Company with whom the Company did business or who the Company solicited within the preceding two (2) years, and who or which: (1) the Executive contacted, called on, serviced, or did business with during his employment with the Company; (2) the Executive learned of as a result of his employment with the Company; or (3) about whom the Executive received Confidential Information or Trade Secrets. This restriction applies only to business which is in the scope of services or products provided by the Company; or

(ii)Solicit, induce, or attempt to solicit or induce, engage or hire, on behalf of himself or any other person or entity, any person who is an employee or full-time consultant of the Company or who was employed or retained by the Company within the preceding two (2) years.

(c) Non-Disparagement. Subject to engaging in Protected Activity as set forth in Section 9(g) above, the Executive shall refrain, both during and after the employment term from publishing any oral or written statements about the Company or any of the Company’s board of trustees, equity holders, members, shareholders, managers, officers, employees, consultants, agents or representatives that (i) are slanderous, libelous or defamatory; or (ii) place the Company or any of its trustees, managers, officers, employees, consultants, agents or

representatives in a false light before the public. A violation or threatened violation of this prohibition may be enjoined by the courts. The rights afforded the Company under this provision are in addition to any and all rights and remedies otherwise afforded by law.

(d) Tolling. If the Executive violates any of the restrictions contained in Section 10, the Restricted Period shall be suspended and shall not run in favor of the Executive from the time of the commencement of any violation until the time when the Executive cures the violation to the satisfaction of the Company.

(e) Reasonableness. The Executive hereby represents to the Company that he has read and understands, and agrees to be bound by, the terms of this Section 10. The Executive acknowledges that the geographic scope and duration of the covenants contained in this Section 10 are fair and reasonable in light of (i) the nature and wide geographic scope of the operations of the Company’s business; (ii) the Executive’s level of control over and contact with the business in the Restricted Territory; and (iii) the amount of compensation, Trade Secrets and Confidential Information that the Executive is receiving in connection with his employment by the Company. It is the desire and intent of the parties that the provisions of Section 10 be enforced to the fullest extent permitted under applicable law, whether now or hereafter in effect and therefore, to the extent permitted by applicable law, the Executive and the Company hereby waive any provision of applicable law that would render any provision of Section 10 invalid or unenforceable.

11.INJUNCTIVE RELIEF

The Executive acknowledges that (a) compliance with the covenants set forth in Section 9 and Section 10 of the Agreement are necessary to protect the Company’s business, Trade Secrets and Confidential Information; (b) a breach or threatened breach of any of such covenants will irreparably harm the Company; and (c) an award of money damages will not be adequate to remedy such harm. Consequently, the Executive acknowledges and agrees that, in addition to other remedies, in the event the Executive breaches or threatens to breach any of the covenants contained in the Agreement, the Company shall be entitled to both a temporary and/or permanent injunction to prevent the continuation of such harm and enforce such provisions and money damages insofar as they can be determined, including, without limitation, all costs and reasonable attorneys’ fees incurred by or on behalf of the Company in the enforcement of the terms of the Agreement. The Company may apply to any court of competent jurisdiction for a temporary restraining order, preliminary injunction or other interim or conservatory relief, as necessary or applicable. This provision with respect to injunctive relief shall not, however, diminish the Company’s right to claim and recover damages.

It is expressly understood and agreed that although the parties consider the restrictions contained in the Agreement to be reasonable, if a court determines that the time or territory or any other restriction contained in the Agreement is an unenforceable restriction on the activities of the Executive, no such provision of the Agreement shall be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such extent as such court may judicially determine or indicate to be reasonable. By agreeing to this contractual modification prospectively at this time, the Company and the Executive intend to make this provision enforceable under the law or laws of all applicable jurisdictions so that the entire agreement not to compete and the Agreement as prospectively modified shall remain in full force and effect and shall not be rendered void or illegal.

12.CLAWBACK

Any compensation paid to the Executive shall be subject to recovery by the Company, and the Executive shall be required to repay such compensation, if (i) such recovery and repayment is required by applicable law or (ii) either in the year such compensation is paid, or within the three (3) year period thereafter the Company is required to prepare an accounting restatement due to material noncompliance of the Company with any financial reporting requirement under applicable securities laws and the Executive is either (A) a named executive officer or (B) an employee who is responsible for preparation of the Company’s financial statements. The parties agree that the repayment obligations set forth in this Section 12 shall only apply to the extent repayment is required by

applicable law, or to the extent the Executive’s compensation is determined to be in excess of the amount that would have been deliverable to the Executive taking into account any restatement or correction of any inaccurate financial statements or materially inaccurate performance metric criteria.

13.MANDATORY MEDIATION AND ARBITRATION

(a) Mediation. In the event there is an unresolved legal dispute between the Executive and the Company that involves legal rights or remedies arising from the Agreement or the employment relationship between the Executive and the Company (“Dispute”), except as otherwise provided herein, before commencing an arbitration action or other legal proceeding, the parties shall promptly submit the Dispute to mediation, using a mediator jointly selected by the parties, or if the parties are unable to agree upon a mediator then the Dispute shall be submitted to non-binding mediation with the American Arbitration Association.

(b) Arbitration. If the parties are unable to achieve a mutually agreeable resolution of the Dispute through mediation, the parties agree to submit their Dispute to binding arbitration under the authority of the Federal Arbitration Act and/or the Wisconsin Uniform Arbitration Act; provided, however, that the Company or the Executive may pursue a temporary restraining order, preliminary injunction and/or other interim or conservatory relief in accordance with Section 11 above, with related expedited discovery for the parties, in a court of law, and, thereafter, require arbitration of all issues of final relief. This agreement to arbitrate covers disputes including, but not limited to, those arising out of or related to Trade Secrets, unfair competition, compensation, and all federal or state legal claims arising out of or relating to Executive’s hiring, employment, or termination of employment, including, but not limited to, claims that may be asserted for any post-employment conduct or time periods, such as defamation or retaliation. Insured workers compensation claims (other than wrongful discharge claims), claims for unemployment insurance, disputes solely before government agencies, and disputes between the parties that may not be subject to predispute arbitration agreement as provided by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111-203) or an Act of Congress, are excluded from arbitration under this provision. The arbitrator(s) shall be duly licensed to practice law in the State of Wisconsin. The arbitrator must follow applicable law and may award any party any remedy to which that party is entitled under applicable law, but such remedies shall be limited to those that would be available to a party in his or her individual capacity in a court of law for the claims presented to and decided by the arbitrator, and no remedies that otherwise would be available to an individual in a court of law will be forfeited by virtue of this Section 13. The arbitrator’s decision shall be final and binding upon the parties, must be in writing, and must contain the arbitrator’s reasoning. Judgment may be entered on the arbitrator’s decision in any court having jurisdiction.

(c) Class Action Waiver. The Executive and the Company agree to resolve any dispute in arbitration on an individual basis only, and not on a class or collective action basis (“Class Action Waiver”). The arbitrator shall have no authority to consider or resolve any claim or issue any relief on any basis other than an individual basis, and shall not do so on a class or collective action basis. Notwithstanding any other provision of this Section 13 or the AAA Rules, disputes regarding the enforceability, revocability, or validity of this Class Action Waiver may be resolved only by a civil court of competent jurisdiction. Notwithstanding any other provision of this Agreement, in any case in which: (1) the dispute is filed as a class or collective action; and (2) there is a final judicial determination that all or part of the Class Action Waiver is unenforceable, the class and/or collective action to that extent must be litigated in a civil court of competent jurisdiction, but the portion of the Class Action Waiver that is enforceable shall be enforced in arbitration. Except as otherwise provided above, the parties hereby waive trial in a court of law or by jury. All other rights, remedies, statutes of limitation and defenses applicable to claims asserted in a court of law will apply in the arbitration.

(d) Location, Rules, and Costs. Any mediation or arbitration with the American Arbitration Association shall be in Waukesha County, Wisconsin or another mutually agreeable site, and subject to AAA Rules for the Resolution of Employment Disputes. The AAA Rules are available online, free of charge, at

www.adr.org/employment, or by searching for “AAA Employment Arbitration Rules” using a service such as www.google.com or www.yahoo.com. The Executive and the Company shall follow the AAA Rules applicable to initial filing fees, but in no event will the Executive be responsible for any portion of those fees in excess of the filing or initial appearance fees applicable to court actions in the jurisdiction where the mediation or arbitration will be conducted. The Company otherwise shall pay all costs and expenses unique to arbitration, including without limitation the mediator or arbitrator’s and/or mediation or arbitration fees. Each party will pay the fees for his or its own attorneys, subject to any remedies to which that party may later be entitled under applicable law (e.g., a party prevails on a claim that provides for the award of reasonable attorneys’ fees to the prevailing party).

14.NOTICE

All notices or communications hereunder shall be in writing and sent certified or registered mail, return receipt requested, postage prepaid, addressed as follows (or to such other address as such party may designate in writing from time to time):

If to the Company:

Physicians Realty Trust

309 North Water Street Suite 500

Milwaukee, Wisconsin 53202

(414) 367-5600

Attention: Corporate Secretary

If to the Executive:

William M. Dukes

c/o Physicians Realty Trust

309 North Water Street Suite 500

Milwaukee, Wisconsin 53202

(414) 367-5600

Attention: Corporate Secretary

The actual date of receipt, as shown by the receipt therefor, shall determine the time at which notice was given.

15.SEPARABILITY

If any provision of the Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect.

16.ASSIGNMENT

The Agreement shall be binding upon and inure to the benefit of the heirs and representatives of the Executive and the assigns and successors of the Company, but neither the Agreement nor any rights hereunder shall be assignable or otherwise subject to hypothecation by the Executive.

17.ENTIRE AGREEMENT

The Agreement represents the entire agreement of the parties and shall supersede any and all previous contracts, arrangements or understandings, including the Prior Agreement (which is hereby automatically terminated effective upon the execution of the Agreement), (whether oral or written) between the Company and the Executive with respect to the subject matter hereof. In the event of any conflict between the Agreement

and the 2013 Equity Plan, any bonus plan or any award agreement, the Agreement shall control. No oral statements or prior written material not specifically incorporated in the Agreement shall be of any force and effect. The Agreement may be amended at any time by mutual written agreement of the parties hereto. The Executive acknowledges and represents that in executing the Agreement, he did not rely on, has not relied on, and specifically disavows any reliance on any communications, promises, statements, inducements, or representation(s), oral or written, by the Company, except as expressly contained in the Agreement. The parties represent that they relied on their own judgment in entering into the Agreement.

18.SECTION 409A COMPLIANCE

The Agreement and the benefits or payments to be provided under the Agreement are intended to be exempt from with the requirements of Section 409A of the Code, and shall be interpreted and construed consistently with such intent, provided, that if the Agreement is not exempt, the Agreement is drafted in a manner to comply with the requirements of Section 409A of the Code. The payments to the Executive pursuant to the Agreement are also intended to be exempt from Section 409A of the Code to the maximum extent possible, under either the separation pay exemption pursuant to Treasury Regulation Section 1.409A-1(b)(9) (iii) or as short-term deferrals pursuant to Treasury Regulation Section 1.409A-1(b)(4). Each payment and benefit hereunder shall constitute a “separately identified” amount within the meaning of Treasury Regulation Section 1.409A-2(b)(2). In the event the terms of the Agreement would subject the Executive to taxes or penalties under Section 409A of the Code (“409A Penalties”), the Company and the Executive shall cooperate diligently to amend the terms of the Agreement to avoid such 409A Penalties, to the extent possible. To the extent any amounts under the Agreement are payable by reference to Executive’s “termination,” “termination of employment,” or similar phrases, such term shall be deemed to refer to the Executive’s “separation from service” (as defined in Treasury Regulation Section 1.409A-l(h) (without regard to any permissible alternative definition thereunder) with the Company and all entities treated as a single employer with the Company under Sections 414(b) and (c) of the Code but substituting a fifty percent (50%) ownership level for the eighty percent (80%) ownership level set forth therein). Notwithstanding any other provision in the Agreement, if the Executive is a “Specified Employee” (as defined in Treasury Regulation Section 1.409A-l(i) on December 31st of the prior calendar year), as of the date of the Executive’s separation from service, then to the extent any amount payable under the Agreement (i) constitutes the payment of nonqualified deferred compensation within the meaning of Section 409A of the Code, (ii) is payable upon the Executive’s separation from service and (iii) under the terms of the Agreement would be payable prior to the six-month anniversary of the Executive’s separation from service, such payment shall be delayed and paid to the Executive, together with interest at an annual rate equal to the interest rate specified by Regions Bank for a six-month certificate of deposit, on the first day of the first calendar month beginning seven (7) months following the date of termination, or, if earlier, within ninety (90) days following the Executive’s death to the Executive’s surviving spouse (or such other beneficiary as the Executive may designate in writing). Any reimbursement or advancement payable to the Executive pursuant to the Agreement shall be conditioned on the submission by the Executive of all expense reports reasonably required by the Company under any applicable expense reimbursement policy, and shall be paid to the Executive within thirty (30) days following receipt of such expense reports, but in no event later than the last day of the calendar year following the calendar year in which the Executive incurred the reimbursable expense. Any amount of expenses eligible for reimbursement, or in-kind benefit provided, during a calendar year shall not affect the amount of expenses eligible for reimbursement, or in- kind benefit to be provided, during any other calendar year. The right to any reimbursement or in-kind benefit pursuant to the Agreement shall not be subject to liquidation or exchange for any other benefit. Whenever a payment under the Agreement that constitutes a payment of nonqualified deferred compensation within the meaning of Code Section 409A specifies a payment period, the actual date of payment within such specified period shall be within the sole discretion of the Company, and the Executive shall have no right (directly or indirectly) to determine the year in which such payment is made. In the event a payment period straddles two consecutive calendar years, the payment shall be made in the later of such calendar years.

19.GOVERNING LAW

The Agreement shall be construed, interpreted, and governed in accordance with the laws of the State of Wisconsin, other than the conflict of laws provisions of such laws. Subject to Section 13, venue of any litigation arising from the Agreement or any disputes relating to the Executive’s employment shall be in the United States District Court for the Eastern District of Wisconsin, or a state district court of competent jurisdiction in Waukesha County, Wisconsin. The Executive consents to personal jurisdiction of the United States District Court for the Eastern District of Wisconsin, or a state district court of competent jurisdiction in Waukesha County, Wisconsin for any dispute relating to or arising out of the Agreement or the Executive’s employment, and Executive agrees that Executive shall not challenge personal or subject matter jurisdiction in such courts.

20.SURVIVAL

The respective rights and obligations of the parties hereunder, including without limitation the Executive’s post-termination obligations under Section 9 and Section 10, shall survive any termination of the Executive’s employment, or of the Employment Term, to the extent necessary to the agreed preservation of such rights and obligations.

IN WITNESS WHEREOF, the Company has caused the Agreement to be duly executed, and the Executive has hereunto set his hand, as of the day and year first above written.

PHYSICIANS REALTY TRUST

By: /s/ John T. Thomas

Title: President & Chief Executive Officer Physicians Realty Trust

EXECUTIVE

/s/ William M Dukes
William M. Dukes

Document

Exhibit 22.1

LIST OF SUBSIDIARY ISSUERS OF GUARANTEED SECURITIES

As of March 31, 2022, Physicians Realty Trust is the guarantor of the outstanding guaranteed debt securities of its subsidiaries, as listed below.


Debt Instrument			Issuer
4.300% Senior Notes due 2027			Physicians Realty L.P.
3.950% Senior Notes due 2028			Physicians Realty L.P.
2.625% Senior Notes due 2031			Physicians Realty L.P.

Document

Exhibit 31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John T. Thomas, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Physicians Realty Trust for the three month period ended March 31, 2022;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: May 5, 2022			/s/ John T. Thomas
			John T. Thomas
			President and Chief Executive Officer

Document

Exhibit 31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jeffrey N. Theiler, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Physicians Realty Trust for the three month period ended March 31, 2022;

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: May 5, 2022			/s/ Jeffrey N. Theiler
			Jeffrey N. Theiler
			Executive Vice President and Chief Financial Officer

Document

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned hereby certifies, for the purposes of 18 U.S.C. Section 1350, in his capacity as an officer of Physicians Realty Trust (the “Company”), that, to such person’s knowledge:

a. the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended March 31, 2022, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

b. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 5, 2022


/s/ John T. Thomas
John T. Thomas
President and Chief Executive Officer


/s/ Jeffrey N. Theiler
Jeffrey N. Theiler
Executive Vice President and Chief Financial Officer

This certification is not deemed to be “filed” for purposes of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liability under the Exchange Act. This certification is not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.