Physicians Realty Trust

Greetings. Welcome to Physicians' Reality Trust Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Bradley Page, SVP, General Counsel. Thank you. You may begin.

Thank you. Good morning and welcome to the Physicians Realty Trust second quarter 2021 earnings conference call and webcast. Joining me today are John Thomas, Chief Executive Officer, Jeff Tyler, Chief Financial Officer, Deanie Taylor, Chief Investment Officer, Mark Thine, Executive Vice President, Asset Management, John Lucey, Chief Accounting and Administrative Officer, and Lori Becker, Senior Vice President, Controller. During this call, John Thomas will provide a summary of the company's activities and performance for the second quarter of 2021 and year to date, as well as our strategic focus for the remainder of 2021. Jeff Tyler will review our financial results for the second quarter of 2021. And Mark Thine will provide a summary of our operations for the second quarter of 2021. Following that, we will open the call for questions. Today's call will contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. They are based on the current beliefs of management and information currently available to us. Our actual results will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control or ability to predict. Although we believe our assumptions are reasonable, our forward-looking statements are not guarantees of future performance. Our actual results could differ materially from our current expectations, and those anticipated are implied in such forward-looking statements. For more detailed description of potential risks and other important factors that could cause actual results to differ from those contained in any forward-looking statements, please refer to our filings with the Securities and Exchange Commission. With that, I would now like to turn the call over to the company's CEO, John Thomas. John?

Thank you, Brad, and thank you for joining us this morning. Our portfolio of best-in-class medical office facilities continue to perform exceptionally during the second quarter, delivering the predictable growth and operating outcomes that medical office investors have come to expect. This includes the collection of over 99% of all cash rents due during the quarter, supported by patient volumes that remain resilient despite the recent spikes in the Delta variant. Along with this operational performance, we continue to have confidence in our external growth pipeline. Since our last call, we have made additional progress on our acquisitions and have high-quality medical office billing targets in various stages of negotiations. Substantially, all of this pipeline is off-market in direct negotiations with existing health systems and developer and owner clients. So while our investments will be back in weighted this year, we remain very confident in our guidance of $400 to $600 million of investment activity for 2021. Our loan pipeline continues to grow as well, including the newly announced mezzanine loan in Brooklyn Park, Minnesota. Doc's real estate loan book totaled $176 million in outstanding principal at quarter end, and it's secured by real estate valued at over $1 billion. In addition to the attractive 8% average coupon, our loan portfolio represents a source of future growth through embedded ROFA rights and purchase options. Within this loan book are five projects under development with an expected market value of over $200 million upon completion, including one loan-to-own transaction. Our pipeline for development financing opportunities continues to grow. We expect to secure many of these new opportunities by year-end, supporting our growth in 2022 and 2023. We are also evaluating the opportunity to use the robust medical office market to dispose of some non-core facilities at a profit. This pruning can both enhance the quality of the portfolio and also provide an additional source of funding for the growth this year. Our Chief Financial Officer, Jeff Tyler, will review our financial results and balance sheet in a few minutes, but I wanted to recognize Jeff and Mike Farina for leading us in the achievement of our long overdue upgraded credit ratings with both S&P and Moody's. We've already seen the benefits of these well-deserved upgrades to our cost of capital, amplifying our opportunity for outsized accretive growth going forward. The trends in favor of medical office have proven to be very predictable and reliable, driving a consistent and growing rental income stream for the benefit of our shareholders. Public investors in healthcare real estate can count on medical office to remain open, occupied, and busy. Medical office does not need to recover. As an asset class, it has only impacted temporarily in spring 2020, and Doc has maintained close to 96% occupancy throughout the pandemic. We remain focused on growing our funds available for distribution each year, and we'll continue to manage our organization to achieve that result annually. Jeff will now review our financial results, and then Mark Thine will share our operating results. Jeff?