Item 1.01. Entry into a Material Definitive Agreement.
May 30, 2014, following the completion of its due diligence review of St. Andrews Medical Parklocated in Venice, Florida("St. Andrews") and Countryside Medical Arts Facility located in Safety Harbor, Florida("Countryside" and collectively with St. Andrews, the "Properties"), American Realty Capital Healthcare Trust II, Inc.(the "Company") finalized the prerequisite conditions to acquire the Properties and assumed the obligations of an affiliate of its sponsor under the purchase and sale agreement, dated April 14, 2014, with AW St. Andrews, LLCand AW Countryside, LLC, as sellers, related to the Properties. Pursuant to the terms of the purchase and sale agreement, the Company's obligation to close upon the acquisition was subject to the satisfactory completion of a due diligence review of the Properties, among other customary conditions. The purchase and sale agreement contains customary representations and warranties by the seller.
The description of the Properties set forth in Item 2.01 of this Current Report on Form 8-K is incorporated by reference into this Item 1.01 in its entirety.
Item 2.01. Completion of Acquisition or Disposition of Assets.
May 30, 2014, the Company, through a wholly-owned subsidiary of its operating partnership, consummated its acquisition of St. Andrews for a purchase price of $13.3 million. The seller of St. Andrews has no material relationship with the Company and the acquisition was not an affiliated transaction. The Company funded the acquisition of St. Andrews with $6.5 millionin proceeds from its ongoing initial public offering of common stock and the assumption of $6.8 millionin existing mortgage debt allocated to St. Andrews under the Acquired Mortgage discussed below.
St. Andrews contains 60,441 rentable square feet and is 95.3% leased to 11 tenants as of
May 30, 2014. The following table provides information relating to lease commencement and termination dates, rentable square feet, rental escalations, renewal options and annualized cash rental income for the tenants that represent over 10% of the total annualized rental income of St. Andrews: Annualized Cash Lease Lease Rentable Rental Commencement Termination Square Income Rental Renewal Tenant Date Date Feet (in thousands) Escalations Options Surgicare of St. Andrews, April March 12,189 $0.3 million3.0% annually None LTD 2005 2016
2005 2020 or 3.0% Heart Institute of Venice August September 2017 7,383
$0.2 million3.0 % annually None P.L.L.C. 2005 _______________________
(1) Consumer Price Index
Countryside Medical Arts Facility,
May 30, 2014, the Company, through a wholly-owned subsidiary of its operating partnership, consummated its acquisition of Countryside for a purchase price of $9.3 million. The seller of Countryside has no material relationship with the Company and the acquisition was not an affiliated transaction. The Company funded the acquisition of Countryside with $3.2 millionin proceeds from its ongoing initial public offering of common stock and the assumption of $6.1 millionin existing mortgage debt allocated to Countryside under the Acquired Mortgage discussed below. Countryside contains 50,972 rentable square feet and is 100.0% leased to Diagnostic Clinic Medical Group, P.A. The lease is net whereby the tenant is required to pay substantially all operating expenses, excluding a majority of costs to maintain and repair the roof and structure of the building, in addition to base rent. The lease has an original 20-year term which commenced in January 2005and expires in December 2024and contains annual rental escalations equal to the CPI, not to exceed 4.0% and two five-year renewal options. The annualized cash rental income for the initial term is $0.8 million.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
Assumed General Electric Capital Corporation Mortgage Debt
The Properties are encumbered by an existing mortgage (the "Mortgage") pursuant to a loan agreement and related documents, dated as of
April 18, 2012, by and between AW St. Andrews, LLCand AW Countryside, LLC, as borrowers (the "Borrowers") and General Electric Capital Corporation (the "Lender"). In connection with the Company's acquisition of the Properties, the Company, American Realty Capital Healthcare Trust II Operating Partnership, L.P., the Company's operating partnership (the "OP"), the Borrowers and the Lender entered into an Assumption and Modification Agreement (the "Assumption Agreement"). Pursuant to the Assumption Agreement, the Borrowers confirmed their obligations under the Mortgage and the OP agreed to replace the Borrowers.
Pursuant to the Assumption Agreement, the Company paid the Lender aggregate transfer fees of
The Mortgage had an aggregate original principal balance of
$13.7 millionand was comprised of $13.2 millionof fixed rate debt and $0.5 millionof floating rate debt. At closing, the floating rate debt was repaid to the Lender and the Company assumed a $12.9 millionmortgage note payable (the "Acquired Mortgage") secured by the Properties. The Acquired Mortgage requires a payment of monthly principal and interest payments with all principal outstanding being due on the maturity date in April 2019. The Acquired Mortgage bears interest at 5.985% per annum through July 2017and thereafter bears interest at LIBOR plus 3.5% per annum. The Acquired Mortgage may be prepaid at any time, in whole or in part, with break costs, if applicable. In the event of a default, the lender has the right to terminate its obligations under the Acquired Mortgage and to accelerate the payment on any unpaid principal amount of the Acquired Mortgage.