Business Context and Reporting Period
This Form 8-K is filed by Griffin-American Healthcare REIT IV, Inc. (the "Registrant") on October 25, 2017. The Registrant is an emerging growth company incorporated in Maryland. The filing reports the entry into material definitive agreements regarding the acquisition of a senior housing portfolio in Florida.
Key Financial Metrics and Transaction Details
The filing details amendments to purchase agreements for the "Central Florida Senior Housing Portfolio," consisting of nine senior housing facilities located in Lakeland, Sanford, Spring Hill, Winter Haven, Bradenton, Brooksville, Lake Placid, and Pinellas Park, Florida.
- Aggregate Contract Purchase Price: $109,500,000, plus closing costs.
- Spring Haven Portfolio (4 facilities): $66,500,000.
- Bayside Portfolio (5 facilities): $43,000,000.
- Price Adjustments: A $200,000 credit against the aggregate purchase price was established for repairs. Additional credits regarding generator compliance costs are contingent on estimates to be established by the parties.
The filing does not provide data on the Registrant's overall revenue, profit, cash flow, margins, debt, or liquidity for the reporting period.
Material Changes and Agreement Amendments
On October 25, 2017, the Registrant entered into "Third Amendments" to the Spring Haven and Bayside Purchase Agreements. Material changes include:
- Cessation of Repairs: Sellers must immediately cease all projects and expenditures related to "Repairs" and deliver complete lists of such projects within three days.
- Repair Credit: The Registrant receives a $200,000 credit against the purchase price related to the Repairs.
- Generator Provisions: The generator provision was replaced to address Emergency Rule 58AER17-1. Sellers must fund related costs due prior to closing. The Registrant is entitled to a credit at closing equal to one-half of the average of the estimated compliance costs, less amounts already expended and approved by the Registrant.
- Contingency: If cost estimates are not delivered by October 30, 2017, the parties will pursue a post-closing adjustment instead of a closing credit.
- Expenditure Approval: Sellers and Existing Operators must seek approval before making expenditures related to generator work; failure to do so results in the elimination of such costs from final estimates.
Outlook, Risks, and Management Commentary
The filing focuses on the execution of the Third Amendments to finalize terms regarding property condition and regulatory compliance prior to closing. No forward-looking guidance, general outlook, or management commentary regarding future financial performance is provided in this document. The primary risk identified is the potential for post-closing adjustments if cost estimates for generator compliance are not delivered by the October 30, 2017 deadline.
Investor Verification Checklist
- Verify the status of the $200,000 repair credit and the final calculation of the generator compliance credit.
- Confirm whether the cost estimates for Emergency Rule 58AER17-1 were delivered by the October 30, 2017 deadline to determine if a post-closing adjustment is required.
- Review the complete list of repair projects delivered by the Sellers within three days of the amendment effective date.
- Confirm the closing date and final purchase price after all credits and adjustments are applied.