Notes Payable Related to Acquisitions and Revolving Credit Facility |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Text Block] |
Note 4 Notes Payable Related to Acquisitions and Revolving Credit Facility Summary of Total Proceeds Received from Notes Payable Related to Acquisitions A summary of the total proceeds received from notes payable related to acquisitions during the years ended December 31, 2016 and December 31, 2015, is as follows
Summary of Notes Payable Related to Acquisitions, Net of Debt Discount As disclosed in Note 2 “Summary of Significant Accounting Policies,” effective for the fiscal year ended December 31, 2015, the Company early adopted the provisions of ASU 2015-03, which requires retrospective application. The adoption of ASU 2015-03 represented a change in accounting principle. A detail of the impact of adopting ASU 2015-03 on the Company’s Notes Payable Related to Acquisitions, net of unamortized discount balances, as of December, 2016 and December 31, 2015, is as follows:
A rollforward of the unamortized debt discount balance as of December 31, 2016 is as follows:
A rollforward of the unamortized debt discount balance as of December 31, 2015 is as follows:
Amortization expense incurred related to the debt discount was $331,368 and $126,535 for the years ended December 31, 2016 and December 31, 2015, respectively, and is included in the “Interest Expense” line item in the accompanying Consolidated Statements of Operations. Summary of 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 Sheet. 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 was $19,076 for the year ended December 31, 2016 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 $32,097,400 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 $9,223,500, 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 year ended December 31, 2016. The note balance as of December 31, 2016 and December 31, 2015 was $32,097,400 and zero, respectively. Interest expense incurred on this note was for the year ended December 31, 2016 was $1,279,884. No interest expense was incurred on this note for the year ended December 31, 2015. As of December 31, 2016, scheduled principal payments due for each fiscal year ended December 31 are listed below as follows:
West Mifflin Note Payable 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 $7,377,500. 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 note may not be prepaid in whole or in part prior to September 25, 2017. Thereafter, 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 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 $6,000,000. 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, 2016 and December 31, 2015, respectively. The note balance as of December 31, 2016 and December 31, 2015 was $7,377,500. Interest expense incurred on this note was $279,017 and $51,078 for the years ended December 31, 2016 and December 31, 2015, respectively.
As of December 31, 2016, 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 $1,700,000. The note bears interest on the outstanding principal balance at the simple, fixed interest rate of 4.75% per annum and all unpaid principal and interest was due on February 15, 2017. Commencing on October 15, 2014, the Company made on the 15th of each calendar month until and including March 15, 2015, monthly payments consisting of interest only. Thereafter, commencing on April 15, 2015, the outstanding principal and accrued interest was payable in monthly amortizing payments on the 15th day of each calendar month. This note was paid in full on December 2, 2016 using proceeds from the Company’s senior revolving credit facility which is disclosed in the “Revolving Credit Facility” section of this footnote. In accordance with the terms of the note there was no prepayment penalty for the payoff of this note. The Company made principal payments in the amount of $1,662,101 and $37,899 for the years ended December 31, 2016 and December 31, 2015, respectively. The note balance as of December 31, 2016 and December 31, 2015 was zero and $1,662,101, respectively. Interest expense incurred on this note was $76,318 and $81,160 for the years ended December 31, 2016 and December 31, 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, National Association to borrow $15,060,000. The loan bears interest at 4.91% per annum and all unpaid interest and principal was due on June 5, 2017 (the “Maturity Date”). Interest was paid in arrears and payments began on August 1, 2014, and were due on the first day of each calendar month thereafter. Principal payments began on January 1, 2015 and were due on the first day of each calendar month thereafter based on an amortization schedule with the principal balance due on the Maturity Date. This note was paid in full on July 11, 2016 using the proceeds from the 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 $301,200 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 Company made principal payments in the amount of $14,748,464 and $311,536 for years ended December 31, 2016 and December 31, 2015, respectively. The note balance as of December 31, 2016 and December 31, 2015 was zero and $14,748,464, respectively. Interest expense incurred on this note was $487,714 (excluding the $301,200 early termination fee amount disclosed above) and $679,987 for the years ended December 31, 2016 and December 31, 2015, respectively.
Revolving Credit Facility On December 2, 2016, the Company, the Operating Partnership, as borrower, and certain subsidiaries (GMR Asheville LLC, GMR Watertown LLC, GMR Sandusky LLC, GMR East Orange LLC, GMR Omaha LLC, and GMR Reading LLC) (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, which will initially provide up to $75 million in revolving credit commitments for the Operating Partnership. The Credit Facility includes an accordion feature that provides the Operating Partnership with additional capacity, subject to the satisfaction of customary terms and conditions of up to $125 million, for a total facility size of up to $200 million. The Subsidiary Guarantors and the Company are guarantors of the obligations under the Credit Facility. The amount available to borrow from time to time under the 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 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 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 $119,781,219 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. For the year ended December 31, 2016, the Company drew down $27,700,000 on the Credit Facility and incurred interest expense of $46,297. No repayments were made on the Credit Facility during 2016. As disclosed in Note 12 “Subsequent Events,” on March 3, 2017 the Credit Facility was amended to increase the total commitment and the accordion feature. |
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