Business Context and Reporting Period
This Form 8-K was filed by Griffin-American Healthcare REIT IV, Inc. on May 22, 2017. The registrant is an emerging growth company incorporated in Maryland. The filing reports a material acquisition event occurring on the date of the report.
Key Financial Metrics and Transaction Details
- Acquisition Price: $31,800,000 contract purchase price, plus closing costs.
- Financing: Funded via cash proceeds from the initial public offering and borrowings under a revolving line of credit with Bank of America, N.A. and KeyBank, National Association.
- Advisor Fees: A base acquisition fee of approximately $716,000 (2.25% of purchase price) was paid. An additional contingent advisor payment of approximately $716,000 (2.25%) has been accrued, subject to conditions.
- Asset Details: The SW Illinois Senior Housing Portfolio includes five facilities in Columbia, Millstadt, Red Bud, and Waterloo, Illinois.
- Capacity: 229 units totaling approximately 190,000 square feet of gross leasable area.
- Occupancy: 100% occupied at the time of acquisition.
Material Changes
The primary material change is the expansion of the company's portfolio through the acquisition of the SW Illinois Senior Housing Portfolio from an unaffiliated third party, A&M Property Holding, LLC. This transaction increases the company's asset base and unit count immediately upon closing.
Outlook, Risks, and Contingencies
- Contingent Liabilities: The company has accrued a contingent advisor payment of approximately $716,000, which is payable only upon the satisfaction of certain conditions.
- Debt Utilization: The transaction utilized the company's revolving line of credit, impacting available liquidity under that facility.
- Management Commentary: The acquisition was announced via a press release issued on May 26, 2017, by American Healthcare Investors, LLC, a co-sponsor and managing member of the advisor.
Investor Verification Checklist
- Verify the specific terms and conditions attached to the accrued contingent advisor payment.
- Confirm the impact of the new borrowings on the company's total debt load and debt service coverage ratios.
- Review the press release (Exhibit 99.1) for additional strategic context regarding the acquisition.
- Assess the lease terms and rent rolls for the 229 newly acquired units to validate the 100% occupancy claim.