Business Context and Reporting Period
This Form 8-K filing by Healthcare Trust of America, Inc. (HTA) and its operating partnership, Healthcare Trust of America Holdings, LP, reports events occurring on June 1, 2017, with the report filed on June 7, 2017. The Company is a real estate investment trust focused on medical office buildings.
Key Financial Metrics and Capital Activities
- Debt Issuance: Entered into an underwriting agreement for a public offering of $900.0 million in aggregate principal amount of Senior Notes:
- $400.0 million of 2.950% Senior Notes due 2022.
- $500.0 million of 3.750% Senior Notes due 2027.
- Net Proceeds: Approximately $890.1 million after deducting underwriting discounts and estimated offering expenses.
- Equity Issuance: Sold approximately 2.0 million shares of Class A common stock under an at-the-market program for net proceeds of approximately $62 million.
- Acquisition Activity:
- Closed on 19 properties comprising the "Duke Assets" for an aggregate purchase price of approximately $512 million.
- Completed additional investments of $326.1 million for 16 other medical office buildings (92% leased, approx. 1.0 million square feet).
Material Changes and Use of Proceeds
The Company intends to use the net proceeds from the $900 million debt offering for the following purposes:
- To repay a portion of outstanding indebtedness under its revolving credit and term loan facility.
- To fund a portion of the $2.75 billion purchase price for the acquisition of the Duke Assets (announced May 1, 2017).
- For general corporate purposes, including working capital and real estate investment.
Regarding the Duke Acquisition, 31 properties were initially subject to rights of first offer (ROFOs) or rights of first refusal (ROFRs) with an approximate value of $1.3 billion. As of June 1, 2017, two holders indicated an intention to exercise these rights, while seven were waived.
Guidance, Risks, and Contingencies
Contingencies: The completion of the Duke Acquisition is subject to the resolution of ROFOs and ROFRs. The exercise of these rights by two holders could remove specific properties from the portfolio to be acquired.
Covenants: The new Senior Notes are subject to restrictive covenants, including limitations on incurring additional indebtedness, requirements to maintain a pool of unencumbered assets, and insurance requirements.
Management Commentary: The filing does not provide specific forward-looking financial guidance or earnings outlook beyond the stated use of proceeds and acquisition status.
Investor Verification Checklist
- Verify the final closing date and actual net proceeds of the $900 million Senior Notes offering.
- Confirm the final status of the ROFOs/ROFRs on the Duke Assets and the resulting final purchase price and asset count.
- Review the specific terms of the restrictive covenants in the new Indentures regarding future indebtedness.
- Monitor the impact of the debt repayment on the Company's overall leverage ratios and liquidity position.