Business Context and Reporting Period
This Form 8-K Current Report was filed by NNN Healthcare/Office REIT, Inc. on September 5, 2007. The filing reports the completion of an asset acquisition and the creation of direct financial obligations related to that transaction.
Key Financial Metrics and Transaction Details
The company acquired the St. Mary Physicians Center in Long Beach, California, for a total purchase price of $13,800,000 plus closing costs. An acquisition fee of $414,000 (3.0% of the purchase price) was paid to the company's Advisor and its affiliate.
The acquisition was financed through two loans:
- Secured Loan: $8,280,000 from the Seller (St. Mary Physicians Center, LLC).
- Unsecured Loan: $6,100,000 from NNN Realty Advisors, Inc. (the company's sponsor).
The filing does not provide consolidated revenue, profit, cash flow, or margin data for the reporting period, as this is a current report focused on a specific transaction rather than a periodic financial statement.
Material Changes and Debt Obligations
The primary material change is the addition of the St. Mary Physicians Center to the company's portfolio and the assumption of $14,380,000 in new debt obligations.
Secured Loan Terms
- Principal: $8,280,000
- Interest Rate: 5.80% per annum
- Maturity: September 4, 2009
- Payments: Monthly interest-only payments of $40,020 beginning October 1, 2007.
- Default Rate: 24.0% per annum
Unsecured Loan Terms (Related Party)
- Principal: $6,100,000
- Interest Rate: 6.86% per annum
- Maturity: March 5, 2008
- Payments: Monthly interest-only payments beginning October 1, 2007.
- Default Rate: 8.86% per annum
Guidance, Outlook, and Risks
The filing does not contain forward-looking guidance, management commentary on future outlook, or specific risk factors beyond the standard terms of the debt agreements. The unsecured loan with the sponsor was approved by a majority of directors, including independent directors, and deemed fair and commercially reasonable.
Unusual Items: The filing notes that financial statements and pro forma information are not practical to provide at this time and will be filed as an amendment within 71 days of the filing deadline.
Investor Verification Checklist
- Verify the operational status and lease occupancy of the newly acquired St. Mary Physicians Center.
- Confirm the cash flow sufficiency to meet the combined monthly interest payments of approximately $79,000 starting October 1, 2007.
- Review the upcoming amendment to this Form 8-K for the required pro forma financial information.
- Monitor the short-term maturity of the $6,100,000 unsecured loan due March 5, 2008.