Notes Payable and Revolving Credit Facility |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Text Block] |
Note 4 Notes Payable and Revolving Credit Facility Summary of Notes Payable, Net of Discount The Company’s notes payable, net, includes two loans: (1) the Cantor Loan and (2) the West Mifflin Note, described in detail below. The following table sets forth the aggregate balances of these loans as of December 31, 2017 and 2016.
Costs incurred related to securing the Company’s fixed-rate debt instruments have been capitalized as a debt discount, net of accumulated amortization, and are netted against the Company’s Notes Payable balance in the accompanying Consolidated Balance Sheets. During the years ended December 31, 2017 and 2016, the Company incurred zero and $1,090 of financing costs capitalized as debt discount. Amortization expense incurred related to the debt discount was $132, $331, and $127 for the years ended December 31, 2017, 2016, and 2015, respectively, and is included in the “Interest Expense” line item in the accompanying Consolidated Statements of Operations.
Cantor Loan On March 31, 2016, through certain of the Company’s wholly owned subsidiaries, the Company entered into a $32,097 portfolio commercial mortgage-backed securities loan (the “Cantor Loan”) with Cantor Commercial Real Estate Lending, LP (“CCRE”). The subsidiaries are GMR Melbourne, LLC, GMR Westland, LLC, GMR Memphis, LLC, and GMR Plano, LLC (“GMR Loan Subsidiaries”). The Cantor Loan has cross-default and cross-collateral terms. The Company used the proceeds of the Cantor Loan to acquire the Marina Towers (Melbourne, FL) and the Surgical Institute of Michigan (Westland, MI) properties and to refinance the Star Medical (Plano, TX) assets by paying off the existing principal amount of the loan with East West bank in the amount of $9,224, and the Company granted a security interest in the Gastro One (Memphis, TN) assets. The Cantor Loan has a maturity date of April 6, 2026 and accrues annual interest at 5.22%. The first five years of the term require interest only payments and after that payments will include interest and principal, amortized over a 30-year schedule. Prepayment can only occur within four months prior to the maturity date, except that after the earlier of (a) 2 years after the loan is placed in a securitized mortgage pool, or (b) May 6, 2020, the Cantor Loan can be fully and partially defeased upon payment of amounts due under the Cantor Loan and payment of a defeasance amount that is sufficient to purchase U.S. government securities equal to the scheduled payments of principal, interest, fees, and any other amounts due related to a full or partial defeasance under the Cantor Loan. The Company is securing the payment of the Cantor Loan with the assets, including property, facilities, and rents, held by the GMR Loan Subsidiaries and has agreed to guarantee certain customary recourse obligations, including findings of fraud, gross negligence, or breach of environmental covenants by the GMR Loan Subsidiaries. The GMR Loan Subsidiaries will be required to maintain a monthly debt service coverage ratio of 1.35:1.00 for all of the collateral properties in the aggregate. No principal payments were made on this note for the years ended December 31, 2017 and 2016. The note balance as of December 31, 2017 and 2016 was $32,097. Interest expense incurred on this note was for the years ended December 31, 2017, 2016, and 2015 was $1,699, $1,280, and zero, respectively.
As of December 31, 2017, scheduled principal payments due for each fiscal year ended December 31 are listed below as follows:
West Mifflin Note In order to finance a portion of the purchase price for the West Mifflin facility, on September 25, 2015 the Company (through its wholly owned subsidiary GMR Pittsburgh LLC, as borrower) entered into a Term Loan and Security Agreement with Capital One to borrow $7,378. The note bears interest at 3.72% per annum and all unpaid interest and principal is due on September 25, 2020. Interest is paid in arrears and interest payments begin on November 1, 2015, and on the first day of each calendar month thereafter. Principal payments begin on November 1, 2018 and on the first day of each calendar month thereafter based on an amortization schedule with the principal balance due on the maturity date. The Company, at its option, may prepay the note at any time, in whole (but not in part) on at least thirty calendar days but not more than sixty calendar days advance written notice. The note has an early termination fee of two percent if prepaid prior to September 25, 2018. The facility serves as collateral for the note. The note requires a quarterly fixed charge coverage ratio of at least 1:1, a quarterly minimum debt yield of 0.09:1.00, and annualized Operator EBITDAR measured on a quarterly basis of not less than $6,000. The Operator is Associates in Ophthalmology, Ltd. and Associates Surgery Centers, LLC. No principal payments were made on this note for the years ended December 31, 2017 and 2016. The note balance as of December 31, 2017 and 2016 was $7,378. Interest expense incurred on this note was $278, $279, and $51 for the years ended December 31, 2017, 2016, and 2015, respectively.
As of December 31, 2017, scheduled principal payments due for each fiscal year ended December 31 are listed below as follows:
Asheville Note Payable In order to finance a portion of the purchase price of the Asheville facility, on September 15, 2014 the Company entered into a Promissory Note with the Bank of North Carolina to borrow $1,700 with interest on the outstanding principal balance at a fixed interest rate of 4.75% per annum. This note was paid in full on December 2, 2016 using proceeds from the Company’s senior revolving credit facility. In accordance with the terms of the note there was no prepayment penalty for the payoff of the note. The balance of the note was $1,662 as of December 31, 2015. Interest expense incurred on the note was zero, $76, and $81 for the years ended December 31, 2017, 2016, and 2015 respectively.
Omaha Note Payable In order to finance a portion of the purchase price for the Omaha facility, on June 5, 2014 the Company entered into a Term Loan and Security Agreement with Capital One to borrow $15,060 with interest at 4.91% per annum. The note was paid in full on July 11, 2016 using the proceeds from the Company’s initial public offering. In accordance with the terms of the note the prepayment resulted in the Company being required to pay an early termination fee in the amount of $301 because the note was paid in full prior to its maturity date. This fee was also paid on July 11, 2016 and is recorded as “Interest Expense” in the accompanying Consolidated Statements of Operations for the year ended December 31, 2016. The balance of the note was $14,748 as of December 31, 2015. Interest expense incurred on this note was zero, $488 (excluding the $301 early termination fee amount disclosed above), and $680 for the years ended December 31, 2017, 2016, and 2015.
Revolving Credit Facility As of December 31, 2017 and 2016, the Company had $164,900 and $27,700 of outstanding borrowings under its Revolving Credit Facility (as defined below), respectively. As described below, as of December 31, 2017, the maximum amount that the Company can borrow under the facility is $250,000. On December 2, 2016, the Company, the Operating Partnership, as borrower, and certain subsidiaries, (such subsidiaries, the “Subsidiary Guarantors”) of the Operating Partnership entered into a senior revolving credit facility (the “Credit Facility”) with BMO Harris Bank N.A., as Administrative Agent (“BMO”), which initially provided up to $75,000 in revolving credit commitments for the Operating Partnership. The Credit Facility included an accordion feature that provided the Operating Partnership with additional capacity, subject to the satisfaction of customary terms and conditions, of up to $125,000, for a total initial facility size of up to $200,000. On March 3, 2017, the Company, the Operating Partnership, as borrower, and the Subsidiary Guarantors of the Operating Partnership entered into an amendment to the Credit Facility with BMO, which increased the commitment amount to $200,000 plus an accordion feature that allows for up to an additional $50,000 of principal amount subject to certain conditions, for a total facility size of $250,000 (the “Revolving Credit Facility”). On September 28, 2017, the Company obtained commitments from certain of its lenders on the Revolving Credit Facility for the entire $50,000 accordion. The Subsidiary Guarantors and the Company are guarantors of the obligations under the Revolving Credit Facility. The amount available to borrow from time to time under the Revolving Credit Facility is limited according to a quarterly borrowing base valuation of certain properties owned by the Subsidiary Guarantors. The initial termination date of the Revolving Credit Facility is December 2, 2019, which could be extended for one year in the case that no event of default occurs.
Amounts outstanding under the Revolving Credit Facility bear annual interest at a floating rate that is based, at the Operating Partnership’s option, on (i) adjusted LIBOR plus 2.00% to 3.00% or (ii) a base rate plus 1.00% to 2.00%, in each case, depending upon the Company’s consolidated leverage ratio. In addition, the Operating Partnership is obligated to pay a quarterly fee equal to a rate per annum equal to (x) 0.20% if the average daily unused commitments are less than 50% of the commitments then in effect and (y) 0.30% if the average daily unused commitments are greater than or equal to 50% of the commitments then in effect and determined based on the average daily unused commitments during such previous quarter.
The Operating Partnership is subject to ongoing compliance with a number of customary affirmative and negative covenants, including limitations with respect to liens, indebtedness, distributions, mergers, consolidations, investments, restricted payments and asset sales. The Operating Partnership must also maintain (i) a maximum consolidated leverage ratio, commencing with the fiscal quarter ending December 31, 2016 and as of the end of each fiscal quarter thereafter, of less than (y) 0.65:1.00 for each fiscal quarter ending prior to October 1, 2019 and (z) thereafter, 0.60:1.00, (ii) a minimum fixed charge coverage ratio of 1.50:1.00, (iii) a minimum net worth of $119,781 plus 75% of all net proceeds raised through subsequent equity offerings and (iv) a ratio of total secured recourse debt to total asset value of not greater than 0.10:1.00. During the year ended December 31, 2017, the Company borrowed $244,200 under the Revolving Credit Facility and repaid $107,000 using funds primarily from the follow-on common stock offering and the preferred stock offering, for a net amount borrowed of $137,200. During the year ended December 31, 2016, the Company borrowed $27,700 under the Revolving Credit Facility and made no repayments. For the years ended December 31, 2017 and 2016, interest incurred on the Revolving Credit Facility was $4,234 and $46, respectively. No interest expense was incurred under the Revolving Credit Facility for the year ended December 31, 2015 as the Revolving Credit Facility was not in place. For a detail of the facilities that serve as collateral for the Revolving Credit Facility refer to Schedule III “Consolidated Real Estate and Accumulated Depreciation,” within Item 15 “Exhibits and Financial Statement Schedules.”
Deferred Financing Costs, Net
Costs incurred related to securing the Company’s Revolving Credit Facility have been capitalized as a deferred financing asset, net of accumulated amortization, in the accompanying Consolidated Balance Sheets. A rollforward of the deferred financing cost balance as of December 31, 2017, is as follows:
A rollforward of the deferred financing cost balance as of December 31, 2016 is as follows:
Amortization expense incurred related to the Revolving Credit Facility deferred financing costs was $1,092, $19, and zero for the years ended December 31, 2017, 2016, and 2015, respectively, and is included in the “Interest Expense” line item in the accompanying Consolidated Statements of Operations. Weighted-Average Interest Rate and Term
The weighted average interest rate and term of our debt was 3.72% and 2.94 years, respectively, at December 31, 2017, compared to 4.29% and 6.04 years, respectively, at December 31, 2016. |
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