Business Context and Reporting Period
This Form 8-K Current Report was filed by NNN Healthcare/Office REIT, Inc. (also referred to as Healthcare Realty Trust Inc in metadata) on May 11, 2007. The report details the completion of a significant asset acquisition and the creation of a new direct financial obligation to fund the transaction.
Key Financial Metrics and Transaction Details
- Asset Acquisition: Acquired "Thunderbird Medical Plaza" in Glendale, Arizona, consisting of two parcels (T-Bird 5410/5422 Land and T-Bird 5310 Land).
- Total Purchase Price: $25,000,000 ($11,500,000 for the first parcel and $13,500,000 for the second).
- Financing: Secured a $10,000,000 loan from Wachovia Bank, National Association.
- Net Proceeds Used: Approximately $9,651,000 from the loan (after closing costs and reserves) combined with funds from the company's initial public offering.
- Transaction Fees: Paid an acquisition fee of $750,000 (3.0% of the purchase price) to the Advisor and its affiliate.
- Loan Terms: Interest rate of 5.54% per annum; matures June 11, 2017. Secured by the "Commons V" property in Naples, Florida.
Material Changes and Amendments
The transaction involved several material adjustments between the initial agreement and closing:
- Price Adjustment: The purchase price for the T-Bird 5310 Land was amended from an initial $13,750,000 to $13,500,000.
- Removed Credit: A provision for a $250,000 credit to the buyer was removed during the amendment process.
- Assignment: The purchase agreement was originally entered into by Triple Net Properties, LLC, and subsequently assigned to NNN Healthcare/Office REIT Thunderbird Medical, LLC, a wholly-owned subsidiary.
Outlook, Risks, and Contingencies
- Financial Obligations: The new loan requires interest-only payments until June 11, 2008, followed by principal and interest payments of $57,030.12 monthly until maturity.
- Default Provisions: The loan agreement includes a default interest rate of 9.54% per annum and late charges of 3.0% on overdue payments.
- Guarantees: The parent company, NNN Healthcare/Office REIT, Inc., has guaranteed the performance of the promissory note.
- 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.
Key Facts for Investor Verification
- Verify the occupancy status and lease terms of the newly acquired Thunderbird Medical Plaza assets.
- Confirm the impact of the $10,000,000 debt on the company's leverage ratios and debt service coverage.
- Review the upcoming amendment to this 8-K for the required pro forma financial information.
- Assess the valuation of the "Commons V" property in Naples, Florida, which serves as collateral for the new loan.