Exhibit 99.2

 

GLOBAL MEDICAL REIT INC.

Overview to Unaudited Pro Forma Consolidated Financial Statements

 

Global Medical REIT Inc. (the “Company,” “our,” “we”) is a Maryland corporation engaged primarily in the acquisition of licensed, state-of-the-art, purpose-built healthcare facilities and the leasing of these facilities to strong clinical operators with leading market share.

 

The accompanying unaudited pro forma consolidated financial statements have been derived from our historical consolidated financial statements. The unaudited pro forma consolidated balance sheet as of March 31, 2018 is presented to reflect pro forma adjustments as if the Company’s acquisition on April 19, 2018 of a portfolio of four medical office buildings located in Belpre, Ohio (collectively the “Belpre Portfolio”), was completed on March 31, 2018. The unaudited pro forma consolidated statements of operations for the three months ended March 31, 2018 and the twelve months ended December 31, 2017 are presented as if the acquisition of the Belpre Portfolio on April 19, 2018 was completed on January 1, 2017. The unaudited pro forma consolidated statements of operations have also been adjusted to reflect the pro forma results of operations of the facilities that we acquired during the year ended December 31, 2017 and during the three months ended March 31, 2018, reflecting the pro forma operations of these acquisitions from the period January 1, 2017 through the respective dates of acquisition (refer to the “Previously Disclosed Acquisitions” columns).

 

The following unaudited pro forma consolidated financial statements should be read in conjunction with (i) our historical unaudited consolidated financial statements as of March 31, 2018 and for the three months ended March 31, 2018, (ii) our audited consolidated financial statements as of December 31, 2017 and for the twelve months ended December 31, 2017, (iii) the “Cautionary Note Regarding Forward-Looking Statements” contained in those filings, and (iv) the “Risk Factors” sections contained in those filings.

 

We have based the unaudited pro forma adjustments on available information and assumptions that we believe are reasonable. The following unaudited pro forma consolidated financial statements are presented for informational purposes only and are not necessarily indicative of what our actual consolidated financial position would have been as of March 31, 2018 assuming the transactions and adjustments reflected therein had been consummated on March 31, 2018 and what our actual consolidated results of operations would have been for the three months ended March 31, 2018 and the twelve months ended December 31, 2017 assuming the transactions and adjustments reflected therein had been completed on January 1, 2017, and additionally are not indicative of our consolidated future financial condition, results of operations, or cash flows, and should not be viewed as indicative of our future consolidated financial condition, results of operations, or cash flows.

 

 

 

 

GLOBAL MEDICAL REIT INC.

Pro Forma Consolidated Balance Sheet

(unaudited and in thousands, except par values)

 

   As of March 31, 2018 
   Historical (a)   Pro Forma Adjustments     Pro Forma 
Investment in real estate:                 
Land  $52,301    3,023  (b)  $55,324 
Building   436,185    50,506  (b)   486,691 
Site improvements   5,590    971  (b)   6,561 
Tenant improvements   9,201    2,992  (b)   12,193 
Acquired lease intangible assets   34,034    7,162  (b)   41,196 
    537,311    64,654      601,965 
Less: accumulated depreciation and amortization   (17,420)   -      (17,420)
Investment in real estate, net   519,891    64,654      584,545 
Cash and cash equivalents   3,351    (950) (c)   2,401 
Restricted cash   4,050    -      4,050 
Tenant receivables   1,253    -      1,253 
Escrow deposits   2,508    -      2,508 
Deferred assets   5,171    -      5,171 
Deferred financing costs, net   3,105    -      3,105 
Other assets   527    (330) (d)   197 
Total assets  $539,856    63,374     $603,230 
                  
Liabilities and Stockholders’ Equity                 
                  
Liabilities:                 
Revolving credit facility  $229,150    58,000  (c)  $287,150 
Notes payable, net of unamortized discount of $898 at March 31, 2018   38,577    -      38,577 
Accounts payable and accrued expenses   4,125    -      4,125 
Dividends payable   5,826    -      5,826 
Security deposits and other   4,912    -      4,912 
Due to related parties, net   1,035    -      1,035 
Acquired lease intangible liability, net   1,488    632  (b)   2,120 
Total liabilities   285,113    58,632      343,745 
Stockholders' equity:                 
Preferred stock, $0.001 par value, 10,000 shares authorized; 3,105 issued and outstanding at March 31, 2018 (liquidation preference of $77,625 at March 31, 2018)   74,959    -      74,959 
Common stock $0.001 par value, 500,000 shares authorized; 21,631 shares issued and outstanding at March 31, 2018   22    -      22 
Additional paid-in capital   205,788    -      205,788 
Accumulated deficit   (38,349)   -      (38,349)
Total Global Medical REIT Inc. stockholders’ equity   242,420    -      242,420 
Noncontrolling interest   12,323    4,742  (c)   17,065 
Total stockholders' equity   254,743    4,742      259,485 
Total liabilities and stockholders' equity  $539,856    63,374     $603,230 

 

The accompanying notes are an integral part of this unaudited pro forma consolidated financial statement.

 

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GLOBAL MEDICAL REIT INC.

Pro Forma Consolidated Statement of Operations

(unaudited and in thousands, except per share amounts)

 

   For the Three Months Ended March 31, 2018 
   Historical (a)   Previously Disclosed Acquisitions (b)  

Historical plus Previously Disclosed Acquisitions

  

Belpre Portfolio Pro Forma

      Pro Forma 
Revenue                            
Rental revenue  $10,488    1,032    11,520    1,232  (c)   $12,752 
Expense recoveries   1,068    34    1,102    8  (d)    1,110 
Other income   8    -    8    -       8 
Total revenue   11,564    1,066    12,630    1,240       13,870 
                             
Expenses                            
Acquisition fees   117    -    117    -       117 
General and administrative   1,005    -    1,005    -       1,005 
Operating expenses   1,105    34    1,139    8  (d)    1,147 
Management fees – related party   1,081    -    1,081    -       1,081 
Depreciation expense   2,906    276    3,182    339  (e)    3,521 
Amortization expense   765    92    857    187  (f)    1,044 
Interest expense   2,684    376    3,060    555  (g)    3,615 
Total expenses   9,663    778    10,441    1,089       11,530 
                             
Net income  $1,901    288    2,189    151      $2,340 
Less: Preferred stock dividends   (1,455)   -    (1,455)   -       (1,455)
Less: Net income attributable to noncontrolling interests   (35)   (22)   (57)   (12)    (69)
Net income attributable to common stockholders   411    266    677    139       816 
                             
Net income attributable to common stockholders per share – basic and diluted  $0.02                     $0.04 
                             
Weighted average shares outstanding – basic and diluted   21,631                      21,631 

 

‘The accompanying notes are an integral part of this unaudited pro forma consolidated financial statement.

 

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GLOBAL MEDICAL REIT INC.

Pro Forma Consolidated Statement of Operations

(unaudited and in thousands, except per share amounts)

 

   For the Year Ended December 31, 2017 
   Historical (a)   Previously Disclosed Acquisitions (b)  

Historical plus Previously Disclosed Acquisitions

  

Belpre Portfolio Pro Forma

     Pro Forma 
Revenue                      
Rental revenue  $28,511    18,310    46,821    4,928  (c)  $51,749 
Expense recoveries   1,712    1,267    2,979    30  (d)   3,009 
Other income   121    -    121    -      121 
   Total revenue   30,344    19,577    49,921    4,958      54,879 
                            
Expenses                           
Acquisition fees   2,523    -    2,523    -      2,523 
General and administrative   5,489    -    5,489    -      5,489 
Operating expenses   1,860    1,267    3,127    30  (d)   3,157 
Management fees – related party   3,123    -    3,123    -      3,123 
Depreciation expense   7,929    4,846    12,775    1,355  (e)   14,130 
Amortization expense   2,072    1,364    3,436    750  (f)   4,186 
Interest expense   7,435    4,797    12,232    2,209  (g)   14,441 
Total expenses   30,431    12,274    42,705    4,344      47,049 
                            
Net (loss) income  $(87)   7,303    7,216    614     $7,830 
Less: Preferred stock dividends   (1,714)   -    (1,714)   -      (1,714)
Less: Net loss (income) attributable to noncontrolling interests   49    (199)   (150)   (17)    (167)
Net (loss) income attributable to common stockholders   (1,752)   7,104    5,352    597      5,949 
                            
Net (loss) income attributable to common stockholders per share – basic and diluted  $(0.09)                   $0.30 
                            
Weighted average shares outstanding – basic and diluted   19,617                     19,617 

 

The accompanying notes are an integral part of this unaudited pro forma consolidated financial statement.

 

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GLOBAL MEDICAL REIT INC.

Notes to the Unaudited Pro Forma Consolidated Financial Statements

 

Note 1 — Overview of Unaudited Pro Forma Consolidated Financial Statements

 

The accompanying unaudited pro forma consolidated balance sheet and unaudited pro forma consolidated statements of operations for Global Medical REIT Inc. (the “Company”) presents the pro forma impact of the acquisition of a portfolio of four medical office buildings located in Belpre, Ohio (collectively the “Belpre Portfolio”). The unaudited pro forma consolidated statements of operations have also been adjusted to reflect the pro forma results of operations of the facilities that the Company acquired during the year ended December 31, 2017 and during the three months ended March 31, 2018, reflecting the pro forma operations of these acquisitions from the period January 1, 2017 through the respective dates of acquisition (refer to the “Previously Disclosed Acquisitions” columns). On April 19, 2018, the Company, through a wholly-owned subsidiary of Global Medical REIT L.P., the Company’s operating partnership (the “OP”) acquired the Belpre Portfolio and assumed the sellers’ interest, as lessor, in four triple-net leases (collectively, the “Belpre Portfolio Leases”) with Marietta Memorial Hospital, a subsidiary of Memorial Health System. The Belpre Portfolio Leases have a weighted average remaining lease term of approximately 11.35 years, with each of the Belpre Portfolio Leases containing three, five-year tenant renewal options. The aggregate purchase price for the Belpre Portfolio was $64.2 million, $5.5 million of which was paid in the form of common units (“OP Units”) in the Company’s OP.

 

Unaudited Pro Forma Consolidated Balance Sheet

 

The accompanying unaudited pro forma consolidated balance sheet assumes the acquisition was completed on March 31, 2018. Pro forma adjustments include only adjustments that give effect to events that are (1) directly attributable to the transaction and (2) factually supportable regardless of whether they have a continuing impact or are nonrecurring.

 

All pro forma adjustments are presented on the face of the accompanying unaudited pro forma consolidated balance sheet.

 

Unaudited Pro Forma Consolidated Statements of Operations

 

The accompanying unaudited pro forma consolidated statement of operations for the three months ended March 31, 2018 and the year ended December 31, 2017, assumes the acquisition of the Belpre Portfolio and all “Previously Disclosed Acquisitions” were completed on January 1, 2017 and the effect of all adjustments are computed through the end of the three and twelve-month periods presented. Pro forma adjustments include only adjustments that give effect to events that are (1) directly attributable to the transaction, (2) expected to have a continuing impact on the registrant, and (3) factually supportable.

 

All pro forma adjustments are presented on the face of the accompanying unaudited pro forma consolidated statements of operations for each period presented.

 

Note 2 — Unaudited Pro Forma Consolidated Balance Sheet Adjustments

 

(a)This column represents the historical amounts contained in the Company’s consolidated balance sheet as of March 31, 2018 as presented in its Form 10-Q as of March 31, 2018.

 

(b)Represents the preliminary fair value purchase price allocation of the tangible and intangible assets and intangible liability acquired in connection with the acquisition of the Belpre Portfolio.

 

(c)Represents the following funding sources utilized for the acquisition of the Belpre Portfolio (1) cash paid from the Company’s available cash on hand, (2) borrowings received from the revolving credit facility, and (3) equity issued from the Company’s wholly owned subsidiary operating partnership that were valued at $7.76 per unit, the Company’s closing stock price on April 19, 2018, the date the Belpre Portfolio was acquired.

 

(d)Represents capitalized pre-acquisition costs related to the Belpre Portfolio that are removed from “other assets” commensurate with the completed acquisition and included in the allocated tangible and intangible assets acquired.

 

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Note 3 — Unaudited Pro Forma Consolidated Statement of Operations Adjustments – Three Months Ended March 31, 2018

 

(a)This column represents the historical amounts contained in the Company’s consolidated statement of operations for the three months ended March 31, 2018 as presented in its Form 10-Q for the quarter ended March 31, 2018.

 

(b)This column presents the results of operations for acquisitions that were completed during the three months ended March 31, 2018 as if the acquisitions occurred on January 1, 2017.  The facilities acquired and the related acquisition completion dates are listed in the table below:

 

2018 Acquisitions:
 
Facility   Date Acquired   Facility   Date Acquired
Moline / Silvis   January 24, 2018   Dallas   March 1, 2018
Freemont   February 9, 2018   Orlando   March 22, 2018
Gainesville   February 23, 2018        

 

(c)Represents rental revenue earned on the Belpre Portfolio Leases using the straight-line basis over the terms of the leases.

 

(d)Represents expense recoveries related to tenant reimbursement of real estate taxes, insurance, and certain other operating expenses.  We recognize these reimbursements on a gross basis meaning there is an equal impact on revenue and expense.

 

(e)Represents depreciation expense incurred on the buildings using an estimated remaining useful life of 45 years, on the site improvements over their estimated remain life of 10 years, and on the tenant improvements over the remaining lease term of approximately 11.35 years.

 

(f)Represents amortization expense incurred on the acquired lease intangible assets computed over the remaining lease term of approximately 11.35 years.

 

(g)Represents interest expense incurred on the borrowings from the revolving credit facility used to fund the acquisition at an interest rate of approximately 3.7%, as well as the amortization of the related deferred financing costs.

 

Note 4 — Unaudited Pro Forma Consolidated Statement of Operations Adjustments – Year Ended December 31, 2017

 

(a)This column represents the historical amounts contained in the Company’s consolidated statement of operations for the year ended December 31, 2017 as presented in its Form 10-K for the year ended December 31, 2017.

 

(b)This column presents the results of operations for acquisitions that were completed during year ended December 31, 2017 and the three months ended March 31, 2018 as if the acquisitions occurred on January 1, 2017.  The facilities acquired and the related acquisition completion dates are listed in the table below:

 

2018 Acquisitions:
 
Facility   Date Acquired   Facility   Date Acquired
Moline / Silvis   January 24, 2018   Dallas   March 1, 2018
Freemont   February 9, 2018   Orlando   March 22, 2018
Gainesville   February 23, 2018        

 

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2017 Acquisitions:
 
Facility   Date Acquired   Facility   Date Acquired
Cape Coral   January 10, 2017   Sandusky   August 15, 2017
Lewisburg   January 12, 2017   Lubbock   August 18, 2017
Las Cruces   February 1, 2017   Germantown   August 30, 2017
Prescott   February 9, 2017   Austin   September 25, 2017
Clermont   March 1, 2017   Fort Worth   November 10, 2017
Sandusky   March 10, 2017   Albertville   November 10, 2017
Great Bend   March 31, 2017   Moline   November 10, 2017
Oklahoma City   March 31, 2017   Lee’s Summit   December 18, 2017
Sandusky   April 21, 2017   Amarillo   December 20, 2017
Flower Mound   June 27, 2017   Wyomissing   December 21, 2017
Brockport   June 27, 2017   Saint George   December 22, 2017
Sherman  

June 30, 2017 

       

 

(c)Represents rental revenue earned on the Belpre Portfolio Leases using the straight-line basis over the terms of the leases.

 

(d)Represents expense recoveries related to tenant reimbursement of real estate taxes, insurance, and certain other operating expenses.  We recognize these reimbursements on a gross basis meaning there is an equal impact on revenue and expense.

 

(e)Represents depreciation expense incurred on the buildings using an estimated remaining useful life of 45 years, on the site improvements over their estimated remain life of 10 years, and on the tenant improvements over the remaining lease term of approximately 11.35 years.

 

(f)Represents amortization expense incurred on the acquired lease intangible assets computed over the remaining lease term of approximately 11.35 years.

 

(g)

Represents interest expense incurred on the borrowings from the revolving credit facility used to fund the acquisition at an interest rate of approximately 3.7%, as well as the amortization of the related deferred financing costs.

 

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GLOBAL MEDICAL REIT INC.

Pro Forma Statement of Taxable Operating Results and Cash to be Made Available by Operations

(unaudited and in thousands)

 

The following represents an estimate of the taxable operating results and cash to be made available by operations of the Company based upon the unaudited pro forma consolidated statement of operations for the year ended December 31, 2017. These estimated results do not purport to represent the results of operations for the Company in the future and were prepared based on the assumptions outlined in the unaudited pro forma consolidated statement of operations, which should be read in conjunction with this statement.

 

Net income attributable to common stockholders  $5,949 
Net book depreciation in excess of tax depreciation   704 
Net book amortization in excess of tax amortization   2,142 
Tax expenditures capitalized in excess of book expenditures   2,359 
Other book / tax differences   (432)
Estimated taxable operating income   10,722 
      
Adjustments:     
Depreciation   14,130 
Net book depreciation in excess of tax depreciation   (704)
Amortization   4,186 
Net book amortization in excess of tax amortization   (2,142)
Estimated cash to be made available from operations  $26,192 

 

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