Business Context and Reporting Period
This Form 8-K is a current report filed by NNN Healthcare/Office REIT, Inc. (referred to in the text as the registrant, though the metadata lists Healthcare Realty Trust Inc) on July 27, 2007. The filing reports the completion of a real estate acquisition and the assumption of related debt.
Key Financial Metrics
- Acquisition Price: $9,300,000 for the Gwinnett Professional Center in Lawrenceville, Georgia.
- Debt Assumed: $6,000,000 secured loan (original principal) with an unpaid principal balance of $5,734,000 at the time of assumption.
- Financing Source: Assumption of existing loan from LaSalle Bank National Association; remaining balance funded by proceeds from the company's initial public offering.
- Transaction Costs: An acquisition fee of $279,000 (3.0% of the purchase price) was paid to the Advisor and its affiliate.
- Loan Terms: Interest rate of 5.88% per annum; maturity date of January 1, 2014.
- Cash Flow Impact: Monthly principal and interest payments of $35,511.44.
Material Changes
The primary material change is the addition of the Gwinnett property to the company's portfolio. The company executed an Assignment and Assumption of the Real Estate Purchase Agreement on July 27, 2007, transferring the purchase rights from its managing member, Triple Net Properties, LLC, to its wholly-owned subsidiary, NNN Healthcare/Office REIT Gwinnett, LLC. Concurrently, the company assumed the existing mortgage obligation.
Outlook, Risks, and Contingencies
- Financial Statements: The filing states it is not practical to provide required financial statements or pro forma information at this time. These will be filed as an amendment within 71 days of the filing deadline.
- Loan Covenants: The assumed loan includes customary representations, warranties, covenants, and indemnities, as well as a provision for reserves.
- Default Provisions: The loan carries a default interest rate of 10.88% (or the maximum permitted by law) and late charges of 5.0% (or the maximum permitted by law) for payments not made within five days of the due date.
- Guarantee: Performance under the promissory note is guaranteed by NNN Healthcare/Office REIT, Inc.
Investor Verification Checklist
- Verify the final closing costs beyond the stated $279,000 acquisition fee.
- Confirm the exact cash outlay required at closing after accounting for the $5,734,000 unpaid principal balance assumption.
- Review the upcoming amendment to this Form 8-K for the required pro forma financial information.
- Examine the specific covenants and reserve requirements detailed in the attached loan documents (Exhibits 10.3 through 10.6).
- Confirm the occupancy status and lease terms of the Gwinnett Professional Center to assess immediate cash flow generation.