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 purpose-built healthcare facilities and the leasing of those facilities to strong healthcare systems and physician groups 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, 2019 is presented to reflect pro forma adjustments as if the Company’s acquisition on April 15, 2019 of a portfolio of four in-patient rehabilitation facilities located in Las Vegas, Nevada; Surprise, Arizona; Oklahoma City, Oklahoma and Mishawaka, Indiana (collectively, the “CNL Portfolio”) was completed on March 31, 2019. The unaudited pro forma consolidated statements of operations for the three months ended March 31, 2019 and the twelve months ended December 31, 2018 are presented as if the acquisition of the CNL Portfolio on April 15, 2019 was completed on January 1, 2018. The unaudited pro forma consolidated statements of operations have also been adjusted to reflect the pro forma consolidated results of operations of the facilities that we acquired during the year ended December 31, 2018 and during the three months ended March 31, 2019, reflecting the pro forma operations of these acquisitions from the period January 1, 2018 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, 2019 and for the three months ended March 31, 2019, (ii) our audited consolidated financial statements as of December 31, 2018 and for the twelve months ended December 31, 2018, (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, 2019 assuming the transactions and adjustments reflected therein had been consummated on March 31, 2019 and what our actual consolidated results of operations would have been for the three months ended March 31, 2019 and the twelve months ended December 31, 2018 assuming the transactions and adjustments reflected therein had been completed on January 1, 2018, and additionally are not indicative of our consolidated future financial condition, consolidated results of operations, or consolidated cash flows, and should not be viewed as indicative of our future consolidated financial condition, consolidated results of operations, or consolidated cash flows.

 

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GLOBAL MEDICAL REIT INC.

Pro Forma Consolidated Balance Sheet

(unaudited and in thousands, except par values)

 

   As of March 31, 2019 
   Historical (a)   Pro Forma
Adjustments		   Pro Forma 
             
Investment in real estate:               
Land  $68,326    8,494(b)  $76,820 
Building   533,430    63,513(b)   596,943 
Site improvements   6,982    689(b)   7,671 
Tenant improvements   16,206    11,143(b)   27,349 
Acquired lease intangible assets   43,987    11,532(b)   55,519 
    668,931    95,371    764,302 
Less: accumulated depreciation and amortization   (35,771)   -    (35,771)
Investment in real estate, net   633,160    95,371    728,531 
Cash and cash equivalents   1,844    (4,152)(c)   (2,308)
Restricted cash   1,464    -    1,464 
Tenant receivables   3,559    -    3,559 
Escrow deposits   3,296    -    3,296 
Deferred assets   10,358    -    10,358 
Other assets   3,009    (357)(d)   2,652 
Total assets  $656,690    90,862   $747,552 
                
Liabilities and Stockholders’ Equity               
Liabilities:               
Credit facility, net of amortized discount of $3,682 at March 31, 2019  $219,993    90,000(c)  $309,993 
Notes payable, net of unamortized discount of $766 at March 31, 2019   38,652    -    38,652 
Accounts payable and accrued expenses   3,385    -    3,385 
Dividends payable   8,985    -    8,985 
Security deposits and other   4,122    -    4,122 
Due to related parties, net   1,100    -    1,100 
Derivative liability   5,520    -    5,520 
Other liability   2,367    -    2,367 
Acquired lease intangible liability, net   2,004    862(b)   2,866 
Total liabilities   286,128    90,862    376,990 
Stockholders' equity:               
Preferred stock, $0.001 par value, 10,000 shares authorized; 3,105 issued and outstanding at March 31, 2019 (liquidation preference of $77,625 at March 31, 2019)   74,959    -    74,959 
Common stock $0.001 par value, 500,000 shares authorized; 34,555 shares issued and outstanding at March 31, 2019   35    -    35 
Additional paid-in capital   322,359    -    322,359 
Accumulated deficit   (51,390)   -    (51,390)
Accumulated other comprehensive loss   (5,743)   -    (5,743)
Total Global Medical REIT Inc. stockholders’ equity   340,220    -    340,220 
Noncontrolling interest   30,342    -    30,342 
Total stockholders' equity   370,562    -    370,562 
Total liabilities and stockholders' equity  $656,690    90,862   $747,552 

 

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, 2019 
   Historical (a)   Previously
Disclosed
Acquisitions (b)		   Historical
plus
Previously
Disclosed
Acquisitions		   CNL
Portfolio
Pro Forma		   Pro Forma 
                     
Revenue                         
Rental revenue  $15,141    500    15,641    1,847(c)  $17,488 
Other income   59    -    59    -    59 
Total revenue   15,200    500    15,700    1,847    17,547 
                          
Expenses                         
General and administrative   1,606    -    1,606    -    1,606 
Operating expenses   1,323    139    1,462    18(d)   1,480 
Management fees – related party   1,334    -    1,334    -    1,334 
Depreciation expense   3,867    90    3,957    754(e)   4,711 
Amortization expense   1,002    6    1,008    324(f)   1,332 
Interest expense   4,025    118    4,143    1,037(g)   5,180 
Total expenses   13,157    353    13,510    2,133    15,643 
                          
Net income (loss)  $2,043    147    2,190    (286)  $1,904 
Less: Preferred stock dividends   (1,455)   -    (1,455)   -    (1,455)
Less: Net (income) loss attributable to noncontrolling interests   (60)   (15)   (75)   29    (46)
Net income (loss) attributable to common stockholders  $528    132    660    (257)  $403 
                          
Net income attributable to common stockholders per share – basic and diluted  $0.02                  $0.01 
                          
Weighted average shares outstanding – basic and diluted   27,380                   27,380 
                          

 

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, 2018 
   Historical (a)   Previously
Disclosed
Acquisitions (b)		   Historical
plus
Previously
Disclosed
Acquisitions		   CNL
Portfolio
Pro Forma		   Pro Forma 
                     
Revenue                         
Rental revenue  $53,138    11,540    64,678    7,388(c)  $72,066 
Other income   54    -    54    -    54 
Total revenue   53,192    11,540    64,732    7,388    72,120 
                          
Expenses                         
General and administrative   5,537    -    5,537    -    5,537 
Operating expenses   3,720    2,602    6,322    73(d)   6,395 
Management fees – related party   4,422    -    4,422    -    4,422 
Depreciation expense   13,644    2,622    16,266    3,018(e)   19,284 
Amortization expense   3,625    395    4,020    1,294(f)   5,314 
Interest expense   14,975    4,056    19,031    3,679(g)   22,710 
Acquisition fees   383    -    383    -    383 
Total expenses   46,306    9,675    55,981    8,064    64,045 
                          
Income (loss) before gain on sale of investment properties   6,886    1,865    8,751    (676)   8,075 
Gain on sale of investment property   7,675    -    7,675    -    7,675 
                          
Net income (loss)  $14,561    1,865    16,426    (676)  $15,750 
Less: Preferred stock dividends   (5,822)   -    (5,822)   -    (5,822)
Less: Net (income) loss attributable to noncontrolling interests   (1,071)   (235)   (1,306)   85    (1,221)
Net income (loss) attributable to common stockholders  $7,668    1,630    9,298    (591)  $8,707 
                          
Net income attributable to common stockholders per share – basic and diluted  $0.35                  $0.40 
                          
Weighted average shares outstanding – basic and diluted   21,971                   21,971 
                          

 

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 in-patient rehabilitation facilities located in Las Vegas, Nevada; Surprise, Arizona; Oklahoma City, Oklahoma and Mishawaka, Indiana (collectively, the “CNL Portfolio”). The unaudited pro forma consolidated statements of operations have also been adjusted to reflect the pro forma consolidated results of operations of the facilities that the Company acquired during the year ended December 31, 2018 and during the three months ended March 31, 2019, reflecting the pro forma operations of these acquisitions from the period January 1, 2018 through the respective dates of acquisition (refer to the “Previously Disclosed Acquisitions” columns). On April 15, 2019, the Company, through a wholly-owned subsidiary of Global Medical REIT L.P., the Company’s operating partnership (the “OP”) acquired the CNL Portfolio and assumed the sellers’ interest, as lessor, in four triple-net leases (collectively, the “CNL Portfolio Leases”) with (i) Encompass Health (Las Vegas, Nevada facility); (ii) a joint venture between Cobalt Rehabilitation and Tenet Healthcare (the Surprise, Arizona facility); (iii) a joint venture between Mercy Health and Kindred Healthcare (the Oklahoma City, Oklahoma facility); and (iv) St. Joseph’s Health System (the Mishawaka, Indiana facility). The CNL Portfolio Leases have a weighted average remaining lease term of approximately 8.3 years, with the Las Vegas, Nevada facility lease containing four, five-year renewal options; the Surprise, Arizona facility lease containing two, five-year renewal options; the Oklahoma City, Oklahoma facility lease containing three, 10-year renewal options and the Mishawaka, Indiana facility lease containing two, five-year renewal options. The aggregate purchase price for the CNL Portfolio was $94 million.

 

Unaudited Pro Forma Consolidated Balance Sheet

 

The accompanying unaudited pro forma consolidated balance sheet assumes the acquisition was completed on March 31, 2019. 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, 2019 and the year ended December 31, 2018, assumes the acquisition of the CNL Portfolio and all “Previously Disclosed Acquisitions” were completed on January 1, 2018 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, 2019 as presented in its Form 10-Q as of March 31, 2019.
(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 CNL Portfolio, as presented in the following table:

 

Land and site improvements  $9,183 
Building and tenant improvements   74,656 
In-place leases   6,977 
Above market lease intangibles   1,539 
Leasing costs   3,016 
Below market lease intangible   (862)
   Total purchase price  $94,509 

 

(c)Represents funding sources utilized for the acquisition of the CNL Portfolio consisting of borrowings received from the credit facility and cash paid from the Company’s available cash on hand.
(d)Represents capitalized pre-acquisition costs related to the CNL Portfolio that are removed from “other assets” commensurate with the completed acquisition and allocated to tangible and intangible assets acquired.

 

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Note 3 — Unaudited Pro Forma Consolidated Statement of Operations Adjustments – Three Months Ended March 31, 2019

 

(a)This column represents the historical amounts contained in the Company’s consolidated statement of operations for the three months ended March 31, 2019 as presented in its Form 10-Q for the quarter ended March 31, 2019.
(b)This column presents the consolidated results of operations for acquisitions that were completed during the three months ended March 31, 2019 as if the acquisitions occurred on January 1, 2018. The facilities acquired and the related acquisition dates are listed in the table below:

 

2019 Acquisitions:
   
Facility Date Acquired
   
Zachary February 28, 2019
Gilbert and Chandler March 19, 2019

 

(c)Represents rental revenue earned on the CNL Portfolio Leases. For leases with contingent rental escalators the pro forma adjustment is recorded based on the contractual cash rental payments due during the period. For leases with fixed annual rental escalators the pro forma adjustment is recorded on a straight-line basis over the initial lease term.
(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 amount included in rental revenue.
(e)Represents depreciation expense incurred on the buildings at the four facilities using an estimated remaining useful life of 35 to 45 years, on the site improvements over their estimated remain life of 4 to 8 years, and on the tenant improvements over the remaining lease term of 5.75 to 11.75 years.
(f)Represents amortization expense incurred on the in-place lease and leasing cost intangible assets computed over the remaining lease term of 5.75 to 11.75 years.
(g)Represents interest expense incurred on the borrowings from the credit facility used to fund the acquisition at an interest rate of approximately 4.6%, 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, 2018

 

(a)This column represents the historical amounts contained in the Company’s consolidated statement of operations for the year ended December 31, 2018 as presented in its Form 10-K for the year ended December 31, 2018. The Company reclassified the line item “expense recoveries” on its historical consolidated statement of operations to present this amount as a component of “rental revenue.” This presentation is consistent with the historical presentation for the three months ended March 31, 2019.
(b)This column presents the consolidated results of operations for acquisitions that were completed during year ended December 31, 2018 and the three months ended March 31, 2019 as if the acquisitions occurred on January 1, 2018. The facilities acquired and the related acquisition completion dates are listed in the table below:

 

2019 Acquisitions:
       
Facility Date Acquired    
       
Zachary February 28, 2019    
Gilbert and Chandler March 19, 2019    
       
2018 Acquisitions:
       
Facility Date Acquired Facility Date Acquired
       
Moline / Silvis January 24, 2018 Derby August 3, 2018
Freemont February 9, 2018 Bountiful October 12, 2018
Gainesville February 23, 2018 Cincinnati October 30, 2018
Dallas March 1,2018 Melbourne November 16, 2018
Orlando March 22,2018 Southern IL November 30, 2018
Belpre April 19, 2018 Vernon December 19, 2018
McAllen July 3, 2018 Corona December 31, 2018

 

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(c)Represents rental revenue earned on the CNL Portfolio Leases. For leases with contingent rental escalators the pro forma adjustment is recorded based on the contractual cash rental payments due during the period. For leases with fixed annual rental escalators the pro forma adjustment is recorded on a straight-line basis over the initial lease term.
(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 amount included in rental revenue.
(e)Represents depreciation expense incurred on the buildings at the four facilities using an estimated remaining useful life of 35 to 45 years, on the site improvements over their estimated remain life of 4 to 8 years, and on the tenant improvements over the remaining lease term of 5.75 to 11.75 years.
(f)Represents amortization expense incurred on the in-place lease and leasing cost intangible assets computed over the remaining lease term of 5.75 to 11.75 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 4.1%, 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, 2018. These estimated results do not purport to represent the consolidated 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  $8,707 
Net book depreciation in excess of tax depreciation   2,385 
Net book amortization in excess of tax amortization   2,461 
Gain on sale of investment property deferred for tax purposes   (7,675)
Other book / tax differences   108 
Estimated taxable operating income   5,986 
      
Adjustments:     
Depreciation   19,284 
Net book depreciation in excess of tax depreciation   (2,385)
Amortization   5,314 
Net book amortization in excess of tax amortization   (2,461)
Estimated cash to be made available from operations  $25,738 

 

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