Business Context and Reporting Period
This Form 8-K Current Report was filed by Grubb & Ellis Healthcare REIT, Inc. (also referred to as Healthcare Realty Trust Inc in metadata) on December 20, 2007. The filing reports the completion of a material asset acquisition and the creation of associated direct financial obligations.
Key Financial Metrics and Transaction Details
- Asset Acquired: Park Place Office Park located in Dayton, Ohio.
- Acquisition Date: December 21, 2007.
- Total Purchase Price: $16,200,000 (plus closing costs).
- Financing Structure:
- Secured Loan (Wachovia Financial Services): $10,943,000.
- Revolving Line of Credit (LaSalle Bank/KeyBank): $500,000.
- Remaining Balance: Funded via proceeds from the company's initial public offering.
- Acquisition Fee: $486,000 (3.0% of purchase price) paid to the Advisor and its affiliate.
- Debt Terms (Wachovia Loan):
- Maturity: December 31, 2010 (extendable for two consecutive 12-month periods).
- Interest Rate: Fixed at 5.52% per annum via interest rate swap (originally LIBOR + 1.55% or Prime).
- Payment Type: Monthly interest-only payments.
- Prepayment: Allowed without premium.
Material Changes Versus Prior Period
The filing details a specific transaction rather than a comparative period analysis. The purchase price was reduced from an initial agreement of $16,450,000 to $16,200,000 following amendments to the purchase agreement in November 2007. The company's debt load increased by approximately $11.44 million ($10.943M loan + $0.5M line of credit) to facilitate this acquisition.
Guidance, Outlook, and Risks
Management Commentary: The company executed an interest rate swap to fix the variable rate on the new loan at 5.52% through the maturity date, mitigating interest rate risk for this specific asset.
Risks and Contingencies:
- Default Provisions: The loan agreement includes a default interest rate of 4.0% per annum plus the greater of LIBOR or Prime Rate, and a late charge of 4.0% on missed monthly installments.
- Extension Conditions: Loan extensions are subject to satisfaction of certain conditions and payment of an extension fee equal to 0.125% of the principal balance.
- 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.
Investor Verification Checklist
- Verify the pro forma financial impact of the $16.2 million acquisition and $11.44 million debt load once the amendment with financial statements is filed.
- Confirm the occupancy status and lease terms of the Park Place Office Park to assess immediate cash flow generation.
- Review the terms of the $80 million revolving line of credit with LaSalle and KeyBank to understand remaining liquidity capacity.
- Monitor the 71-day deadline for the filing of the required financial statement amendment.