Filing summary
Registrant: The filing is for Griffin-American Healthcare REIT IV, Inc., not American Healthcare REIT, Inc. as stated in the request metadata. It is an early-stage, externally advised healthcare REIT formed in January 2015. For the quarter ended March 31, 2016, it had not acquired or contracted to acquire any investments and had generated no revenue. Its intended portfolio includes medical offices, hospitals, skilled nursing facilities, senior housing and other healthcare-related assets.
Financial position and results
| Metric | March 31, 2016 / Q1 2016 |
|---|---|
| Total assets | $428,000, including $202,000 cash and $226,000 prepaid expenses |
| Total liabilities | $344,000, including $307,000 payable to affiliates |
| Equity | $82,000 |
| Debt | None outstanding |
| Revenue and operating income | No revenue; net operating income was $0 |
| General and administrative expense | $150,000 |
| Net loss and loss per share | $150,000 loss; $7.20 loss per share, basic and diluted |
| Cash flows | No net operating or financing cash flow for Q1; cash remained $202,000 |
The $150,000 loss mainly comprised professional and legal fees ($53,000), restricted-stock compensation ($32,000), director fees ($30,000) and directors’ and officers’ insurance ($29,000). Operating cash use was offset by noncash compensation and increases in payables, partly offset by prepaid expenses. The prior comparison is the period from inception on January 23, 2015 through March 31, 2015, when the company reported no expenses; it is not a like-for-like operating comparison. No operating margins are meaningful before property acquisitions and revenue.
Separately, $1.506 million of subscription funds remained in escrow at quarter-end and was excluded from reported assets because the minimum offering had not yet been met. The company reported no contractual obligations or off-balance-sheet arrangements.
Changes, outlook and risks
- The minimum offering was met on April 12, 2016, after quarter-end; proceeds were released from escrow on April 13. As of April 29, the company reported approximately $3.156 million of accepted subscriptions, subject to higher state-specific thresholds for certain investors.
- The company depends on offering proceeds to fund acquisitions and operations. Management cautioned that insufficient fundraising could limit diversification and leave fixed costs disproportionately high. The company had no identified probable investment as of March 31.
- Management expected general and administrative costs to rise as operations and investment activity increase. It said available cash resources, offering proceeds, operating cash flow and borrowings should meet cash needs for the foreseeable future, but the company had not yet established an operating portfolio or operating cash flow.
- The board authorized daily distributions for May 1 through June 30, 2016, at $0.001643836 per share per day, payable monthly in arrears only from legally available funds. The advisor agreed to waive asset-management fees up to the distributions due before the first investment. No distributions had been paid as of March 31. The company may use offering proceeds or borrowings for distributions if operating cash flow is insufficient.
- The company intends to elect REIT tax treatment beginning with 2016 or its first year of material operations; maintaining REIT status generally requires distributing at least 90% of annual ordinary taxable income. It anticipates a long-run leverage target of no more than 50% of asset market value, with a charter borrowing limit requiring independent-director approval above 300% of net assets.
- Risks include fundraising and acquisition execution, ability to diversify, real-estate market and tenant conditions, financing availability and interest rates, rising public-company compliance costs, and conflicts arising from the external-advisor and affiliate arrangements. The advisor or affiliates may receive substantial transaction and service fees. The company reported no material litigation and no material change in previously disclosed risk factors.
- Disclosure controls were assessed as effective at the reasonable-assurance level; no material change in internal control over financial reporting was reported.
Investor facts to verify
- Confirm the registrant identity and distinguish this filing from the company named in the request metadata.
- Verify that post-quarter offering proceeds were received, the amount available after offering costs, and state-specific subscription restrictions.
- Track initial property acquisitions, their financing and related-party fees, and whether the portfolio becomes diversified.
- Assess the source and sustainability of distributions, including the duration and terms of the advisor’s fee waiver.
- Monitor affiliate payables and offering and acquisition costs, as well as the company’s progress toward REIT qualification.