Business Context and Reporting Period
This Form 8-K is a current report filed by Griffin-American Healthcare REIT IV, Inc. (American Healthcare REIT, Inc.) on March 13, 2017. The filing discloses the entry into a material definitive agreement for a senior housing portfolio and the completion of an acquisition for a medical office building.
Key Financial Metrics and Transaction Details
- SW Illinois Senior Housing Portfolio (Pending): Aggregate purchase price of $31,800,000 plus closing costs. The portfolio includes five facilities with 229 units and approximately 154,000 square feet of gross leasable area, currently 94% occupied. An earnest money deposit of $700,000 was required.
- Reno MOB (Completed): Purchase price of $66,250,000 plus closing costs. The asset is a six-story medical office building in Reno, Nevada, comprising approximately 191,000 square feet and 100% leased to seven tenants.
- Acquisition Fees: A base acquisition fee of approximately $1,491,000 (2.25% of the purchase price) was paid to the advisor for the Reno MOB acquisition. A contingent advisor payment of the same amount has been accrued.
- Financing: The Reno MOB acquisition was financed using cash on hand and borrowings under a revolving line of credit with Bank of America, N.A. and KeyBank, National Association. The SW Illinois portfolio is intended to be financed through IPO proceeds and debt financing.
Material Changes and Transaction Status
The filing reports two distinct material events:
- Entry into Material Definitive Agreement: On March 13, 2017, the company entered into a Purchase and Sale Agreement for the SW Illinois Senior Housing Portfolio. The transaction is subject to a 45-day due diligence period and various conditions precedent. Closing is anticipated in the second quarter of 2017, though no assurance is given.
- Completion of Acquisition: On March 13, 2017, the company completed the acquisition of Reno MOB from Arlington Medical Properties, LLC.
Outlook, Risks, and Contingencies
- Closing Conditions: The SW Illinois acquisition is subject to substantial conditions. The company retains the right to terminate the agreement for any reason during the due diligence period with a return of the earnest money deposit.
- Indemnity Holdback: A portion of the purchase price for the SW Illinois portfolio will be held in escrow by Chicago Title Insurance Company for 12 months post-closing.
- Advisor Fees: The company has accrued a contingent advisor payment for the Reno MOB acquisition, payable subject to the satisfaction of certain conditions.
- Financial Statements: The filing states it is not practical to provide required financial statements at this time; they will be filed as an amendment within 71 days of the filing deadline.
Investor Verification Checklist
- Verify the satisfaction of conditions precedent for the SW Illinois Senior Housing Portfolio to confirm if the transaction will close in Q2 2017.
- Confirm the final terms of the revolving line of credit utilized for the Reno MOB acquisition and the impact on liquidity.
- Monitor the status of the contingent advisor fee accrual for the Reno MOB acquisition.
- Review the upcoming amendment to this Form 8-K for the required pro forma financial information.
- Assess the occupancy and lease terms of the newly acquired Reno MOB, specifically regarding the largest tenant, Prime Healthcare Services – Reno, LLC.