Business Context and Reporting Period
This Form 8-K is a current report filed by NNN Healthcare/Office REIT, Inc. (also referred to as Healthcare Realty Trust Inc in metadata) on May 1, 2007. The filing discloses the completion of an asset acquisition and the creation of a direct financial obligation to finance said acquisition.
Key Financial Metrics and Transaction Details
- Acquisition Price: $21,500,000 for the Fayette property (Yorktown Medical Center and Shakerag Medical Center in Georgia).
- Financing: $13,530,000 secured loan obtained from Wachovia Bank, National Association.
- Equity Funding: The balance of the purchase price was funded via proceeds from the company's initial public offering.
- Transaction Fees: An acquisition fee of $645,000 (3.0% of the purchase price) was paid to the Advisor and its affiliate.
- Loan Terms:
- Interest Rate: 5.52% per annum.
- Maturity Date: May 11, 2017.
- Payment Structure: Interest-only payments from June 11, 2007, through May 11, 2010; principal and interest payments of $77,587.59 monthly thereafter until maturity.
- Default Interest: 9.52% per annum.
Material Changes
The primary material change is the expansion of the company's real estate portfolio through the acquisition of two medical centers in Georgia. Concurrently, the company's debt load increased by $13,530,000. The filing does not provide comparative financial metrics (revenue, profit, or cash flow) for the prior period as this is a transaction-specific report rather than a periodic financial statement.
Outlook, Risks, and Contingencies
- Financial Statements: The registrant stated it is not practical to provide required financial statements or pro forma information at this time. These will be filed as an amendment within 71 days of the filing deadline.
- Guarantees: Performance on the new loan is guaranteed by NNN Healthcare/Office REIT, Inc. under an Indemnity and Guaranty Agreement.
- Covenants: The loan documents include customary representations, warranties, covenants, and provisions for reserves and impounds.
- Environmental Risk: An Environmental Indemnity Agreement was executed with the lender, indicating potential environmental contingencies associated with the property.
Investor Verification Checklist
- Verify the pro forma financial impact of the acquisition once the amendment to this Form 8-K is filed.
- Review the specific covenants and reserve requirements in the loan agreement (Exhibits 10.3 through 10.8).
- Confirm the occupancy status and lease terms of the newly acquired Yorktown and Shakerag Medical Centers.
- Monitor the company's liquidity position given the new interest-only payment obligations starting June 2007.