Business Context and Reporting Period
This Form 8-K is filed by NNN Healthcare/Office REIT, Inc. (also referred to as Healthcare Realty Trust Inc in metadata) for the reporting period of September 27, 2007. The filing discloses the entry into a material definitive agreement and the creation of a direct financial obligation.
Key Financial Metrics
- Debt Obligation: Entered into a secured loan with Wachovia Financial Services, Inc. in the principal amount of $14,500,000.
- Cash Proceeds: Approximately $14,385,000 (net of closing costs).
- Use of Proceeds: Reimbursement of funds used to finance the acquisition of "1 and 4 Market Exchange" in Columbus, Ohio, acquired on August 15, 2007.
- Interest Rate: Variable rate at the registrant's option: (a) 30-day LIBOR plus 1.35% or (b) the Prime Rate.
- Maturity Date: September 30, 2010.
- Extension Terms: May be extended for two consecutive 12-month periods subject to conditions and an extension fee of 0.125% of the outstanding principal balance.
- Payment Terms: Monthly interest-only payments beginning October 1, 2007.
- Prepayment: Permitted in whole or in part without a prepayment premium.
Material Changes
The filing reports a new material debt obligation incurred on September 27, 2007. This transaction refinances the initial acquisition financing for the Columbus, Ohio property. The filing does not provide comparative financial data (revenue, profit, or cash flow) for prior periods as this is a current report regarding a specific transaction rather than a periodic financial statement.
Outlook, Risks, and Contingencies
- Collateral: The loan is secured by a Repayment Guaranty and an Open-End Mortgage on the 1 and 4 Market Exchange property.
- Default Provisions: Late charges of 4.0% apply if monthly installments are not received by the 15th day of the month. In the event of default, interest accrues at 4.0% per annum plus the greater of the LIBOR Rate or the Prime Rate.
- Environmental Indemnity: An Environmental Indemnity Agreement is in place for the benefit of the lender.
- Management Commentary: The filing contains no forward-looking guidance or management commentary beyond the terms of the loan agreement.
Investor Verification Checklist
- Verify the current status of the 1 and 4 Market Exchange property in Columbus, Ohio, as the primary collateral.
- Confirm the current LIBOR or Prime Rate to calculate the actual interest expense.
- Review the full text of the Loan Agreement (Exhibit 10.1) for specific covenants and conditions required for the two potential 12-month extensions.
- Assess the impact of the $14.5 million debt on the company's overall leverage ratios, noting that this filing does not provide total debt figures.