Business Context and Reporting Period
This Form 8-K is filed by NNN Healthcare/Office REIT, Inc. (referred to in the text as Healthcare Realty Trust Inc in metadata) for the reporting period of October 19, 2007. The filing discloses the entry into a material definitive agreement and the creation of a direct financial obligation involving an interest rate swap.
Key Financial Metrics and Obligations
- Loan Principal: $30,500,000 secured loan on the East Florida Senior Care Portfolio (EFSC loan).
- Counterparty: KeyBank National Association.
- Interest Rate Mechanism: An interest rate swap agreement (ISDA) was executed to convert the variable rate loan to a fixed rate.
- Effective Fixed Rate: 6.02% per annum.
- Term of Fixed Rate: November 1, 2007, through November 1, 2010.
- Payment Structure: Monthly interest-only payments commencing December 1, 2007.
Material Changes
The primary material change is the execution of an interest rate swap agreement on October 19, 2007 (amended October 25, 2007). This action locks the interest rate on the $30.5 million EFSC loan at 6.02%, replacing the previous variable rate options which were based on the greater of the prime rate or 1.0% in excess of the federal funds effective rate, or the Adjusted LIBOR Rate.
Outlook, Risks, and Management Commentary
The filing does not provide forward-looking guidance, general management commentary, or a discussion of risks beyond the specific terms of the swap agreement. The filing notes that the terms of the loan and the swap are qualified in their entirety by the related loan documents and the ISDA Agreement attached as exhibits.
Investor Verification Checklist
- Verify the full text of the ISDA Interest Rate Swap Agreement (Exhibit 10.1) for termination clauses and credit risk provisions.
- Review the loan documents (Exhibits 10.3 through 10.9 from the October 4, 2007 filing) to understand collateral requirements and default triggers for the EFSC loan.
- Confirm the impact of the 6.02% fixed rate on the company's overall weighted average cost of debt.
- Assess the creditworthiness of KeyBank National Association as the swap counterparty.