Business Context and Reporting Period
Company: NNN Healthcare/Office REIT, Inc. (Note: Input metadata referenced "Healthcare Realty Trust Inc," but the filing text identifies the registrant as NNN Healthcare/Office REIT, Inc.)
Filing Type: Form 8-K (Current Report)
Date of Report: October 12, 2007
Event: Entry into a material definitive agreement and creation of a direct financial obligation via an interest rate swap.
Key Financial Metrics and Obligations
- Loan Principal: $14,500,000 secured loan on the "1 and 4 Market Exchange" property.
- Lender: Wachovia Financial Services, Inc.
- Interest Rate Mechanism: Originally variable (30-day LIBOR + 1.35% or Prime Rate).
- Effective Fixed Rate: 5.97% per annum (via ISDA Agreement with Wachovia Bank, National Association).
- Swap Term: September 28, 2007, through September 28, 2010.
- Payment Structure: Monthly interest-only payments commencing November 1, 2007.
Material Changes
The filing reports the execution of an Interest Rate Swap Agreement (ISDA) to hedge the variable interest rate on the Market Exchange loan. This action converts the loan's interest obligation from a variable rate to a fixed effective rate of 5.97% for a three-year period, altering the company's future cash flow profile for this specific debt instrument.
Outlook, Risks, and Contingencies
Management Commentary: The filing is a disclosure of the agreement terms and does not contain forward-looking guidance or general management commentary beyond the specific transaction details.
Risks: 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 (Exhibits 10.1 through 10.5).
Unusual Items: None reported beyond the standard hedging transaction.
Investor Verification Checklist
- Verify the full text of the ISDA Agreement (Exhibit 10.1) for termination clauses and credit support provisions.
- Review the underlying loan documents (Exhibits 10.1 through 10.5 from the October 3, 2007 filing) for prepayment penalties or covenants.
- Confirm the current status of the "1 and 4 Market Exchange" property and its contribution to overall portfolio cash flow.
- Assess the company's total exposure to interest rate risk on other variable-rate debt not covered by this swap.