Note 3 – Properties

Description of Properties

On September 25, 2015, the Company acquired a combined approximately 27,193 square foot surgery center and medical office building located in West Mifflin, Pennsylvania and the adjacent parking lot for approximately $11.35 million (approximately $11.6 million after including legal and related fees). The facilities are operated by Associates in Ophthalmology, LTD and Associates Surgery Centers, LLC, respectively, and leased back to those entities by the Company via two separate lease agreements that expire in 2030. Each lease has two successive options by the tenants to renew for five year periods. Base rent increases by 2% each lease year commencing on October 1, 2018. The property is owned fee simple. In connection with the acquisition of the facilities, the Company borrowed $7,377,500 from Capital One, National Association (“Capital One”) and funded the remainder of the purchase price with the proceeds from a convertible debenture (the “Convertible Debenture”) it issued to its majority shareholder in the total amount of $4,545,838. Refer to Note 4 – “Notes Payable Related to Acquisitions” and Note 6 – “Related Party Transactions” for details regarding the funding of this transaction.

The Company also owns an approximately 8,840 square foot medical office building known as the Orthopedic Surgery Center, located in Asheville, North Carolina that was acquired on September 19, 2014 for approximately $2.5 million and a 56-bed long term acute care hospital located at 1870 S 75^th Street, Omaha, Nebraska that was acquired on June 5, 2014 for approximately $21.9 million.

On September 30, 2015, the Company entered into an asset purchase agreement with an unrelated party Star Medreal, LLC, a Texas limited liability company, to acquire an approximately 24,000 square foot acute hospital facility located in Plano, Texas, along with all real property and improvements thereto for approximately $17.5 million. Additionally, the Company is obligated to pay a development fee of $500,000. The property will be leased back via a triple net lease agreement that expires in 2035. The tenant has two successive options to renew the lease for five year periods. The terms of the lease also provide for an allowance for a 6,400 square foot expansion for an incremental amount up to $2.75 million to be paid by the Company. The acquisition will be funded by third party debt and convertible borrowings from the Company’s majority shareholder. The acquisition is expected to be completed by no later than December 31, 2015.

Tenant Receivables

                As of September 30, 2015, the Company’s tenant receivable balance includes rent receivable from the West Mifflin facility of $13,061 that was earned since its acquisition on September 25, 2015 and rent due from the Omaha facility of $11,997 derived from a contractual rent increase that commenced in July 2015. These amounts are deemed collectible as of September 30, 2015.

Deferred Rent Receivable and Other Assets

                As of September 30, 2015 this amount represents the Company’s deferred rent receivable balance derived from the straight-line revenue recognition from the West Mifflin facility, commencing with its acquisition on September 25, 2015.