UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 7, 2024
PHYSICIANS REALTY TRUST
(Exact name of registrant as specified in its charter)
| Maryland | |
001-36007 |
| 46-2519850 |
| (State of Organization) | |
(Commission File Number) |
| (IRS Employer Identification No.) |
| 309 N. Water Street, Suite 500 | |
|
| 53202 |
| Milwaukee, Wisconsin | |
|
| (Zip Code) |
| (Address of Principal Executive Offices) | |
|
| |
Registrant’s telephone number, including
area code: (414) 367-5600
Not Applicable
(Former Name or Former Address, if Changed Since
Last Report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| x | Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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 is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ¨
Item 2.02. Results of Operations and Financial Condition.
On February 7, 2024, Physicians Realty Trust (“we,”
“us,” “our,” the “Company” or “Physicians Realty Trust”), disclosed preliminary estimates
of certain consolidated financial data of Company for the three months and year ended December 31, 2023.
Preliminary Estimates for the Fourth Quarter and Full Year Ended
December 31, 2023
Set forth below are preliminary estimates of certain consolidated financial
data of the Company for the three months and year ended December 31, 2023. We have provided ranges, rather than specific amounts,
for these preliminary estimates, as our actual consolidated financial results remain subject to completion of our annual audit procedures
for the year ended December 31, 2023, which have commenced but are not yet completed. Our actual consolidated financial results for
the three months and year ended December 31, 2023 are expected to be reported in connection with the filing of our Annual Report
on Form 10-K for the year ended December 31, 2023 on February 22, 2024. Our actual consolidated financial results for the
three months and year ended December 31, 2023 may differ materially from these preliminary estimates, including as a result of audit
adjustments and other developments that may arise between now and the time our actual consolidated financial results for the three months
and year ended December 31, 2023 are finalized and reported. Moreover, these preliminary estimates should not be viewed as a substitute
for audited consolidated financial statements and related notes as of and for the year ended December 31, 2023 prepared in accordance
with Generally Accepted Accounting Principles (“GAAP”). Accordingly, you should not place undue reliance on these preliminary
estimates.
| | |
Three Months Ended December 31, 2023 | | |
Year Ended December 31, 2023 | |
| (Unaudited, subject to change) | |
Low | | |
High | | |
Low | | |
High | |
| Net income ($1,000s) | |
$ | 4,000 | | |
$ | 11,000 | | |
$ | 40,645 | | |
$ | 47,645 | |
| Earnings per share, diluted | |
$ | 0.02 | | |
$ | 0.04 | | |
$ | 0.16 | | |
$ | 0.19 | |
| FFO per common share, diluted | |
$ | 0.22 | | |
$ | 0.24 | | |
$ | 0.96 | | |
$ | 0.98 | |
| Normalized FFO per common share, diluted | |
$ | 0.25 | | |
$ | 0.27 | | |
$ | 0.98 | | |
$ | 1.00 | |
These preliminary estimates have been prepared by, and are the responsibility
of, our management. Our independent registered public accounting firm, Ernst & Young LLP, has not audited, reviewed, compiled
or applied agreed-upon procedures with respect to these preliminary estimates. Accordingly, our independent registered public accounting
firm does not express an opinion or any other form of assurance with respect thereto.
Non-GAAP Financial Measures
This Current Report on Form 8-K includes Funds From Operations
(“FFO”) and Normalized FFO which are non-GAAP financial measures. For purposes of the Securities and Exchange Commission's
(“SEC”) Regulation G, 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 Current Report on Form 8-K, GAAP refers to generally accepted accounting principles in the United
States of America. Pursuant to the requirements of Regulation G, we have provided reconciliations of the non-GAAP financial measures to
the most directly comparable GAAP financial measures.
Funds From Operations (“FFO”). Funds from
operations, or “FFO”, is a widely recognized measure of REIT performance. 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 operating partnership
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.
Normalized Funds From Operations (“Normalized FFO”).
Changes in the accounting and reporting rules under GAAP have prompted a significant increase in the amount of non-operating
items included in FFO, as defined. Therefore, 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, gain on extinguishment of
debt, merger and transaction related expenses, 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 its ability to make distributions. Normalized FFO should be reviewed in connection with other GAAP measurements.
Physicians Realty Trust
Reconciliation of Non-GAAP Measures
(in thousands, except share and per share
data)
(unaudited)
| | |
Three Months Ended December 31, 2023 (Preliminary) | | |
Year Ended December 31, 2023 (Preliminary) | |
| | |
Low | | |
High | | |
Low | | |
High | |
| Net income | |
$ | 4,000 | | |
$ | 11,000 | | |
$ | 40,645 | | |
$ | 47,645 | |
| Earnings per share - diluted | |
$ | 0.02 | | |
$ | 0.04 | | |
$ | 0.16 | | |
$ | 0.19 | |
| | |
| | | |
| | | |
| | | |
| | |
| Net income | |
$ | 4,000 | | |
$ | 11,000 | | |
$ | 40,645 | | |
$ | 47,645 | |
| Net income attributable to noncontrolling interests - partially owned properties | |
| (44 | ) | |
| (54 | ) | |
| (165 | ) | |
| (175 | ) |
| Depreciation and amortization expense | |
| 47,750 | | |
| 47,250 | | |
| 190,987 | | |
| 190,487 | |
| Depreciation and amortization expense - partially owned properties | |
| (112 | ) | |
| (137 | ) | |
| (522 | ) | |
| (547 | ) |
| Gain on the sale of investment properties, net | |
| — | | |
| — | | |
| (13 | ) | |
| (13 | ) |
| Proportionate share of unconsolidated joint venture adjustments | |
| 2,300 | | |
| 2,200 | | |
| 7,299 | | |
| 7,199 | |
| FFO applicable to common shares | |
$ | 53,894 | | |
$ | 60,259 | | |
$ | 238,231 | | |
$ | 244,596 | |
| Net change in fair value of derivative | |
| 516 | | |
| 426 | | |
| 701 | | |
| 611 | |
| Merger and transaction-related expense (1) | |
| 8,400 | | |
| 6,500 | | |
| 8,400 | | |
| 6,500 | |
| Gain on extinguishment of debt | |
| — | | |
| — | | |
| (1,763 | ) | |
| (1,763 | ) |
| Normalized FFO applicable to common shares | |
$ | 62,810 | | |
$ | 67,185 | | |
$ | 245,569 | | |
$ | 249,944 | |
| | |
| | | |
| | | |
| | | |
| | |
| FFO per common share - diluted | |
$ | 0.22 | | |
$ | 0.24 | | |
$ | 0.96 | | |
$ | 0.98 | |
| Normalized FFO per common share - diluted | |
$ | 0.25 | | |
$ | 0.27 | | |
$ | 0.98 | | |
$ | 1.00 | |
| | |
| | | |
| | | |
| | | |
| | |
| Weighted average common shares outstanding - diluted | |
| 249,642,987 | | |
| 249,642,987 | | |
| 249,344,713 | | |
| 249,344,713 | |
| (1) | During the year ended December 31, 2023, the Company recorded merger and transaction-related expense
related to the proposed merger with Healthpeak Properties, Inc. (“Healthpeak”),
which are primarily comprised of legal, accounting, tax, and other costs incurred prior to year-end. |
Item 7.01 Regulation FD Disclosure.
Healthpeak will host a conference call and webcast on Friday, February 9,
2024, at 8:00 a.m. Mountain Time (10:00 a.m. Eastern Time) in order to review its financial performance and operating results.
John Thomas, the Company’s President and Chief Executive Officer, will join the Healthpeak call.
The Company’s shareholders can access the call in the following
ways:
| · | Healthpeak’s website: https://ir.healthpeak.com/news-events |
| · | Webcast: https://events.q4inc.com/attendee/292488797. Joining via webcast is recommended for those who will not be asking questions. |
| · | Telephone: The participant dial-in number is (800) 715-9871. |
Forward-Looking Statements
This Current Report on Form 8-K may include “forward-looking
statements,” including but not limited to those regarding the proposed transactions between Physicians Realty Trust and Healthpeak
within the meaning of the Private Securities Litigation Reform Act. All statements other than statements of historical fact are “forward-looking
statements” for purposes of federal and state securities laws. These forward-looking statements, which are based on current expectations,
estimates and projections about the industry and markets in which Healthpeak and Physicians Realty Trust operate and beliefs of and assumptions
made by Healthpeak management and Physicians Realty Trust management, involve uncertainties that could significantly affect the financial
or operating results of Healthpeak, Physicians Realty Trust or the combined company. Words such as “expects,” “anticipates,”
“intends,” “plans,” “believes,” “seeks,” “estimates,” “predicts,”
“projects,” “forecasts,” “will,” “may,” “potential,” “can,” “could,”
“should,” “pro forma,” and variations of such words and similar expressions are intended to identify such forward-looking
statements. Such forward-looking statements include, but are not limited to, statements about the benefits of the proposed transactions
involving Healthpeak and Physicians Realty Trust, including future financial and operating results, plans, objectives, expectations and
intentions. All statements that address operating performance, events or developments that Healthpeak and Physicians Realty Trust expects
or anticipates will occur in the future — including statements relating to creating value for shareholders, benefits of the proposed
transactions to clients, tenants, employees, shareholders and other constituents of the combined company, integrating the companies, cost
savings and the expected timetable for completing the proposed transactions — are forward-looking statements. These statements are
not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although
Healthpeak and Physicians Realty Trust believe the expectations reflected in any forward-looking statements are based on reasonable assumptions,
Healthpeak and Physicians Realty Trust can give no assurance that its expectations will be attained and, therefore, actual outcomes and
results may differ materially from what is expressed or forecasted in such forward-looking statements. For example, these forward-looking
statements could be affected by factors including, without limitation, risks associated with the ability to consummate the proposed merger
and the timing of the closing of the proposed merger; securing the necessary shareholder approvals and satisfaction of other closing conditions
to consummate the proposed merger; the occurrence of any event, change or other circumstance that could give rise to the termination of
the merger agreement relating to the proposed transactions; the ability to secure favorable interest rates on any borrowings incurred
in connection with the proposed transactions; the impact of indebtedness incurred in connection with the proposed transactions; the ability
to successfully integrate portfolios, business operations, including properties, tenants, property managers and employees; the ability
to realize anticipated benefits and synergies of the proposed transactions as rapidly or to the extent anticipated by financial analysts
or investors; potential liability for a failure to meet regulatory or tax-related requirements, including the maintenance of REIT status;
material changes in the dividend rates on securities or the ability to pay dividends on common shares or other securities; potential changes
to tax legislation; changes in demand for developed properties; adverse changes in the financial condition of joint venture partner(s) or
major tenants; risks associated with the acquisition, development, expansion, leasing and management of properties; risks associated with
the geographic concentration of Healthpeak or Physicians Realty Trust; risks associated with the industry concentration of tenants; the
potential impact of the announcement of the proposed transactions or consummation of the proposed transactions on business relationships,
including with clients, tenants, property managers, customers, employees and competitors; risks related to diverting the attention of
Healthpeak’s and Physicians Realty Trust’s management from ongoing business operations; unfavorable outcomes of any legal
proceedings that have been or may be instituted against Healthpeak or Physicians Realty Trust; costs related to uninsured losses, condemnation,
or environmental issues, including risks of natural disasters; the ability to retain key personnel; costs, fees, expenses and charges
related to the proposed transactions and the actual terms of the financings that may be obtained in connection with the proposed transactions;
changes in local, national and international financial markets, insurance rates and interest rates; general adverse economic and local
real estate conditions; risks related to the market value of shares of Healthpeak common stock to be issued in the transaction; the inability
of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general downturn in their business; foreign
currency exchange rates; increases in operating costs and real estate taxes; changes in dividend policy or ability to pay dividends for
Healthpeak or Physicians Realty Trust common shares; impairment charges; unanticipated changes in Healthpeak’s or Physicians Realty
Trust’s intention or ability to prepay certain debt prior to maturity and/or hold certain securities until maturity; pandemics or
other health crises, such as coronavirus (COVID-19); and those additional risks and factors discussed in reports filed with the SEC by
Healthpeak and Physicians Realty Trust. Moreover, other risks and uncertainties of which Healthpeak or Physicians Realty Trust are not
currently aware may also affect each of the companies’ forward-looking statements and may cause actual results and the timing of
events to differ materially from those anticipated. The forward-looking statements made in this communication are made only as of the
date hereof or as of the dates indicated in the forward-looking statements, even if they are subsequently made available by Healthpeak
or Physicians Realty Trust on their respective websites or otherwise. Neither Healthpeak nor Physicians Realty Trust undertakes any obligation
to update or supplement any forward-looking statements to reflect actual results, new information, future events, changes in its expectations
or other circumstances that exist after the date as of which the forward-looking statements were made.
Additional Information About the Proposed Transaction and Where
to Find It
In connection with the proposed merger, on December 15, 2023,
Healthpeak filed with the SEC a registration statement on Form S-4, which includes a document that serves as a prospectus of Healthpeak
and a joint proxy statement of Healthpeak and Physicians Realty Trust (the “joint proxy statement/ prospectus”). Each party
also plans to file other relevant documents with the SEC regarding the proposed transaction. The Form S-4 became effective on January 11,
2024. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE
SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Healthpeak and Physicians
Realty Trust commenced mailing the definitive joint proxy statement/prospectus to stockholders on or about January 11, 2024. Investors
and securityholders may obtain a free copy of the joint proxy statement/prospectus and other relevant documents filed by Healthpeak and
Physicians Realty Trust with the SEC at the SEC’s website at www.sec.gov. Copies of the documents filed by Healthpeak with the SEC
are available free of charge on Healthpeak’s website at www.healthpeak.com or by contacting Healthpeak’s Corporate Secretary
at (720) 428-5050. Copies of the documents filed by Physicians Realty Trust with the SEC are available free of charge on Physicians Realty
Trust’s website at www.docreit.com or by contacting Physicians Realty Trust’s Investor Relations at (414) 367-5600.
Participants in the Solicitation
Physicians Realty Trust and Healthpeak and their respective trustees
or directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction. Information about trustees and executive officers of Physicians Realty Trust is available
in the Physicians Realty Trust proxy statement for its 2023 Annual Meeting, which was filed with the SEC on March 23, 2023. Information
about directors and executive officers of Healthpeak is available in the Healthpeak proxy statement for its 2023 Annual Meeting, which
was filed with the SEC on March 17, 2023. Other information regarding the participants in the proxy solicitation and a description
of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and
other relevant materials filed with the SEC regarding the proposed transaction. Investors should read the joint proxy statement/prospectus
carefully before making any voting or investment decisions. Investors may obtain free copies of these documents from Physicians Realty
Trust and Healthpeak as indicated above.
No Offer or Solicitation
This communication is for informational purposes only and is neither
an offer to purchase, nor a solicitation of an offer to sell, any securities or the solicitation of any vote in any jurisdiction pursuant
to the proposed transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention
of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of
the Securities Act of 1933, as amended.
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 hereunto duly authorized.
| Date: |
February 7, 2024 |
|
PHYSICIANS REALTY TRUST |
| |
|
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|
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| |
|
By: |
/s/ John T. Thomas |
| |
|
|
John T. Thomas |
| |
|
|
President and Chief Executive Officer |
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